TaxTMI Updates e-Newsletter
Jan 07,2022

Revocation of cancellation of registration - restoration of GST registration - deposit as condition for consideration of revocation - interim abeyance of departmental order - limited period for decision upon deposit - non-implementation of adverse order for a short period

Deposit as condition for consideration of revocation - restoration of GST registration - Effect of depositing the specified balance tax dues on restoration of the petitioner's GST registration. - HELD THAT: - The Court directed that upon deposit of the stated balance tax dues by the petitioner, the registration that had been withdrawn shall stand restored. The restoration is ordered subject to the reservation that the rights and contentions of the revenue remain unaffected. The Court accepted the petitioner's undertaking to deposit the specified amount within the time stated and recorded that the portal for such deposit has been made available by the Revenue. The Court further clarified that it has not adjudicated the correctness of the de-activation order and that restoration by reason of deposit is without prejudice to the ultimate determination by the revenue.

Deposit of the specified balance tax dues will result in restoration of the petitioner's GST registration, without prejudice to the revenue's rights.

Limited period for decision upon deposit - revocation of cancellation of registration - Obligation of the Revenue to decide the petitioner's application for revocation/restoration after deposit and the timeframe for such decision. - HELD THAT: - The Court remitted the petitioner's application for restoration/revocation to the Revenue for fresh consideration upon deposit of the stated amount. The Revenue was directed to decide the application within three months from the date of such deposit and to communicate the order to the petitioner within one week of passing it. This is a direction for expeditious decision-making and not an adjudication on the merits of the application.

Revenue to decide the application for restoration within three months of deposit and communicate the decision within one week.

Non-implementation of adverse order for a short period - interim abeyance of departmental order - Consequences and interim protection if the Revenue's post-deposit decision is adverse to the petitioner. - HELD THAT: - The Court provided limited interim protection by directing that if the order passed by the Revenue upon consideration is adverse to the petitioner, that adverse order shall not be implemented for a period of one week from the date of its communication to the petitioner. Separately, the Court had earlier kept the departmental order declining revocation in abeyance and reiterated that if the petitioner fails to make the prescribed deposit within the time allowed, the impugned departmental order dated 4th August, 2021 rejecting revocation shall be restored.

An adverse order, if passed, shall not be implemented for one week from communication; failure to deposit within the prescribed time will result in restoration of the impugned departmental order.

Revocation of cancellation of registration - Whether the Court has adjudicated the correctness of the departmental order de-activating registration. - HELD THAT: - The Court expressly stated that it has not gone into the correctness of the impugned order de-activating the petitioner's registration and did not express any view on the merits of a departmental communication asserting a larger outstanding liability while an investigation is pending. Those substantive matters remain open for determination by the appropriate authority.

Court did not decide the merits of de-activation or the correctness of the departmental communication; those issues remain open.

Final Conclusion: The petition was disposed by directing the petitioner to deposit the specified balance tax dues within the time allowed, upon which the withdrawn GST registration shall stand restored; the Revenue is directed to decide the petitioner's application for revocation/restoration within three months of such deposit and communicate its order within one week, with any adverse order not to be implemented for one week; the Court did not adjudicate the merits of the de-activation or pending departmental claims.

Conditions of use of amount available in electronic credit ledger - blocking of electronic credit ledger - expiry of one year for restriction under Rule 86-A - provisional attachment - unblocking upon satisfaction of conditions

Blocking of electronic credit ledger - expiry of one year for restriction under Rule 86-A - provisional attachment - Whether the writ petition seeking relief against blocking of the petitioner's electronic credit ledger required adjudication where the revenue undertook to unblock the ledger. - HELD THAT: - The court recorded the revenue's concession that the ledger was blocked under Rule 86-A on account of alleged wrong availment of input tax credit and that no substantive proceedings had been initiated. The court noted the operation of sub rule (3) of Rule 86 A providing that such restriction ceases after one year from imposition, and that prima facie the one year period had expired. On instructions, the revenue counsel undertook that the electronic credit ledger would be unblocked immediately or by close of the next working day. Given the respondent's unequivocal undertaking to remove the restriction, the court treated the grievance as effectively redressed and found no need for further adjudication of the writ petition. [Paras 4, 5]

Captioned writ petition disposed of recording the revenue's stated position to unblock the electronic credit ledger; the connected writ miscellaneous petition disposed of as closed; no order as to costs.

Final Conclusion: The petition was disposed of as the revenue undertook to unblock the petitioner's electronic credit ledger (stating that the restriction under Rule 86 A had, prima facie, elapsed), and the connected miscellaneous petition was closed; no costs were awarded.

TRAN-1 under Section 140 of CGST/TNGST Act - Revision of TRAN-1 and correction of errors - Utilisation of accumulated Input Tax Credit under the TNVAT Act, 2006 - Delay in administrative response to statutory/transitional claims - Direction to respondent to respond to representation - Remedy by writ for disposal of pending representation

TRAN-1 under Section 140 of CGST/TNGST Act - Revision of TRAN-1 and correction of errors - Direction to respondent to respond to representation - Remedy by writ for disposal of pending representation - First respondent directed to respond to the petitioner's representation dated 25.06.2020 regarding revision/correction of TRAN-1 filed in 2017. - HELD THAT: - The petitioner filed TRAN-1 under Section 140 and a revised TRAN-1 in 2017 seeking correction to enable utilisation of accumulated Input Tax Credit under the TNVAT Act, 2006; subsequent representations, including an RTI request, remained unresponded to. The High Court did not adjudicate the merits of the TRAN-1 revision or the entitlement to credit but recorded that the petitioner's representation to the competent respondent had remained unaddressed. In exercise of its supervisory jurisdiction the Court disposed the writ petition by directing the first respondent to furnish a response to the representation dated 25.06.2020 within 30 days of receipt of the order, thereby securing administrative adjudication of the grievance without deciding the substantive claim. [Paras 3, 4]

Writ petition disposed by directing the first respondent to respond to the representation dated 25.06.2020 within 30 days; no costs.

Final Conclusion: The High Court disposed the writ petition by directing the first respondent to respond to the petitioner's representation dated 25.06.2020 concerning the revised TRAN-1 within 30 days of receipt of the order; the Court did not decide the substantive entitlement to credit and made no order as to costs.

Advance ruling admissibility under the first proviso to Section 98 - Classification of goods between a specific tariff heading and a general residual heading - Preference for a specific tariff description over a general description - Settlement under Sabka Vishwas Scheme by another entity not binding for classification of applicant - FSSAI product categorisation as material but not dispositive for tariff classification

Advance ruling admissibility under the first proviso to Section 98 - Settlement under Sabka Vishwas Scheme by another entity not binding for classification of applicant - Application for advance ruling is not maintainable and is rejected under the first proviso to Section 98 of the CGST Act, 2017 because the same question was pending in proceedings initiated by the Directorate General GST Intelligence, Pune Regional Unit. - HELD THAT: - The Authority examined the application and the submissions of the applicant and noted that the classification dispute in respect of the impugned product was already the subject-matter of proceedings initiated by the Directorate General GST Intelligence, Pune Regional Unit. Section 98(2) contains a proviso which bars admission of an application where the question raised is already pending or decided in any proceedings in the case of the applicant under the Act. Applying that proviso, the Authority held that it must refrain from answering the classification question. Although the applicant advanced arguments on merits (including reliance on FSSAI categorisation and the contention that another manufacturer's settlement under the Sabka Vishwas Scheme cannot be used against the applicant), the Authority did not adjudicate the substantive classification issue because the pending proceedings precluded admission of the advance ruling application under the statutory proviso. [Paras 5]

The application is not maintainable and is rejected under the first proviso to Section 98 of the CGST Act, 2017.

Final Conclusion: The Advance Ruling Authority refused to decide the tariff classification question because the identical question was pending in departmental proceedings; the application is therefore rejected as not maintainable under the first proviso to Section 98 of the CGST Act, 2017.

Supply in the course or furtherance of business - Services by an employee to the employer treated as neither supply (Schedule III, Entry 1) - Agreeing to the obligation to refrain from or tolerate an act treated as declared supply (Schedule II cl. 5(e)) - Consideration includes monetary value of any act or forbearance - Taxation of amounts already subjected to GST under third party invoices

Supply in the course or furtherance of business - Taxation of amounts already subjected to GST under third party invoices - Services by an employee to the employer treated as neither supply (Schedule III, Entry 1) - Whether GST is payable on recoveries made from employees for provision of subsidised canteen facility - HELD THAT: - The Authority found that for a transaction to qualify as 'supply' it must be made in the course or furtherance of business. The applicant's core business is developing, manufacturing and marketing pharmaceutical products and providing canteen facilities to employees is a welfare/mandated measure not connected to or advancing that business. The canteen services are in fact supplied by third party vendors to the applicant (who pays consideration and discharges GST on the vendor invoices) and the partial recoveries from employees form part of amounts paid to those vendors. Consequently the applicant is not supplying canteen services to employees and the recoveries are not a supply under Section 7; GST is therefore not leviable on such recoveries. [Paras 5]

GST is not payable on the recoveries made from employees towards subsidised canteen facility.

Supply in the course or furtherance of business - Taxation of amounts already subjected to GST under third party invoices - Services by an employee to the employer treated as neither supply (Schedule III, Entry 1) - Whether GST is payable on recoveries made from employees for provision of bus transportation facility and whether any exemption applies - HELD THAT: - Applying the same legal approach as for canteen services, the Authority held that arranging bus transportation for employees is a welfare, security and safety measure not connected with or advancing the applicant's pharmaceutical business and is not its output service. The transportation is procured from third party vendors who invoice the applicant and discharge GST; the subsidised recoveries from employees form part of amounts paid to those vendors. Authorities including prior AARs on similar facts were relied upon. Therefore such recoveries do not constitute a 'supply' by the applicant and GST is not leviable on them (the question of exemption under Notification No. 12/2017 need not be reached once no supply is found). [Paras 5]

GST is not payable on the recoveries made from employees towards bus transportation facility.

Agreeing to the obligation to refrain from or tolerate an act treated as declared supply (Schedule II cl. 5(e)) - Services by an employee to the employer treated as neither supply (Schedule III, Entry 1) - Consideration includes monetary value of any act or forbearance - Whether GST is payable on notice pay recoveries deducted by the employer from employees who do not serve the contractual notice period - HELD THAT: - The Authority examined whether such recoveries amount to consideration for the employer 'tolerating' an act within cl. 5(e) of Schedule II. Relying on precedents and detailed analysis, it observed that where the employment contract permits resignation by payment in lieu of notice (and resignation is not subject to acceptance), there is no act of forbearance or tolerance by the employer and no separate activity by the employer that would constitute a taxable supply. The recoveries are compensatory deductions related to the employment contract (in the nature of salary adjustment/compensation for non rendered services) and do not attract Schedule II declared supply. Consequently Schedule II does not come into play and the notice pay recoveries are not supplies liable to GST. [Paras 5]

GST is not payable on the notice pay recoveries made from employees for not serving the full notice period.

Final Conclusion: For the reasons stated, the Authority ruled that GST is not leviable on (i) recoveries from employees for subsidised canteen facility, (ii) recoveries from employees for bus transportation facility, and (iii) notice pay recoveries for failure to serve the contractual notice period.

Appeals to Appellate Authority - Condonation of delay - Refund under Section 54 of the CGST Act, 2017 - Electronic Cash Ledger debit (DRC-03) - Verification and processing of refund claims - Principle of natural justice

Appeals to Appellate Authority - Condonation of delay - Whether the appeal filed by the appellant, delayed by 11 days, should be admitted. - HELD THAT: - The appeal in Form GST APL-01 was filed on 16-11-2020, which was 11 days beyond the three-month period prescribed by Section 107(1) of the CGST Act, 2017. Sub-section (4) of Section 107 permits the Appellate Authority to allow presentation of an appeal within a further period of one month if satisfied that the appellant was prevented by sufficient cause from presenting the appeal within the prescribed period. The Appellate Authority examined the explanation for delay and, applying the statutory provision, was inclined to accept the delay and admit the appeal for decision on merits. [Paras 7]

Delay of 11 days in filing the appeal is condoned and the appeal is admitted for consideration on merits.

Refund under Section 54 of the CGST Act, 2017 - Electronic Cash Ledger debit (DRC-03) - Verification and processing of refund claims - Principle of natural justice - Whether the rejection of the refund claim should be sustained where the adjudicating authority found no debit in the Electronic Cash Ledger at the time of initial examination but the appellant subsequently produced evidence of a DRC-03 debit entry. - HELD THAT: - The adjudicating authority rejected the refund claim on the ground that no debit from the Electronic Cash Ledger was made prior to issuance of the appellate order or filing of the refund claim. The appellant explained lack of a debit entry at the time of filing as due to unfamiliarity with the refund process, and subsequently generated DRC-03 (Debit Entry No. DC0807200250413 dated 25-7-2020) debiting IGST and the equivalent penalty from the Electronic Cash Ledger, and furnished the copy in reply to the show cause notice. The Appellate Authority found that the DRC-03 and the appellant's submissions had not been considered by the adjudicating authority and, applying the principle of natural justice, considered it appropriate to have the records and submissions verified afresh. Rather than deciding the refund entitlement finally on the present record, the Appellate Authority directed verification of the debit entry and processing of the refund claim in accordance with Section 54 of the CGST Act and the rules thereunder, with the appellant required to cooperate with the department. [Paras 8, 9, 10, 11, 12]

The rejection is set aside for the purpose of verification; the matter is remitted for verification of the Electronic Cash Ledger debit and processing of the refund claim in accordance with law.

Final Conclusion: The appeal is admitted by condoning the delay; the previous rejection of the refund claim is vacated for verification and the refund claim is to be processed in accordance with Section 54 of the CGST Act, 2017 after verification of the Electronic Cash Ledger debit (DRC-03).

Interpretation of Section 40(a)(iib) of the Income tax Act, 1961 - exclusive levy on State Government undertakings - distinction between a 'fee or charge' and a 'tax' for disallowance under Section 40 - appropriation by State Government from State undertakings - remand to Assessing Officer for recomputation and fresh orders

Interpretation of Section 40(a)(iib) of the Income tax Act, 1961 - exclusive levy on State Government undertakings - gallonage fee, licence fee and shop rental (kist) - Whether gallonage fee, licence fee and shop rental (kist) payable in relation to FL 9 and FL 1 licences fall within the scope of Section 40(a)(iib) and are not deductible. - HELD THAT: - The Court held that the amended Section 40(a)(iib) was enacted to prevent shifting of profits from State Government undertakings into the State treasury by way of levies payable by those undertakings. The test of 'exclusivity' must be applied with reference to the nature of the undertaking on which the levy is imposed, not narrowly by counting the number of licence holders. Where licences and the statutory levies are granted to and payable by State Government undertakings (here KSBC and another State undertaking), those levies are to be treated as levies on State Government undertakings and fall within Section 40(a)(iib). Consequently the gallonage fee, licence fee and shop rental (kist) in respect of FL 9 and FL 1 licences are covered by Section 40(a)(iib) and are not deductible. [Paras 14, 16]

Gallonage fee, licence fee and shop rental (kist) relating to FL 9 and FL 1 licences fall within Section 40(a)(iib) and are not deductible.

Distinction between a 'fee or charge' and a 'tax' for disallowance under Section 40 - surcharge on sales tax and turnover tax - Whether surcharge on sales tax and turnover tax payable by the assessee are 'fee or charge' or otherwise covered by Section 40(a)(iib) and therefore not deductible. - HELD THAT: - The Court examined the language of Section 40(a)(iib) and the statutory scheme in which Section 40 differentiates between taxes and fees. A surcharge under the Kerala Surcharge on Taxes Act is an enhancement of the basic sales tax (levy under the Kerala General Sales Tax Act) and is to be treated as sales tax. The words in Section 40(a)(iib) refer to fees or charges (royalty, licence fee, privilege fee, service charge or similar) and do not extend to taxes or surcharges. Reading 'any other fee or charge' to include tax would obliterate the clear statutory distinction. Accordingly surcharge on sales tax and turnover tax are outside the scope of Section 40(a)(iib)(A) and (B), and the disallowance in respect of those items was rightly set aside. [Paras 14, 16]

Surcharge on sales tax and turnover tax are taxes (enhancements of sales tax) and not 'fee or charge' under Section 40(a)(iib); disallowance of these items cannot be sustained.

Remand to Assessing Officer for recomputation and fresh orders - Whether the matters should be remitted to the Assessing Officer for recomputation consistent with the Court's conclusions. - HELD THAT: - The Court set aside the assessments for the two assessment years and remitted the matters to the Assessing Officer to pass revised orders after computing tax liability in accordance with the determinations recorded (treating gallonage fee, licence fee and shop rental as non deductible under Section 40(a)(iib) while allowing deduction for surcharge and turnover tax). The Assessing Officer is to afford the assessee an opportunity of hearing and complete the needful steps within the time directed by the Court. [Paras 17, 24]

Assessments for AY 2014 2015 and 2015 2016 set aside and remitted to the Assessing Officer for recomputation and fresh orders within the directed period.

Final Conclusion: The appeals are disposed: the Court affirms that gallonage fee, licence fee and shop rental (kist) payable by the State undertaking fall within Section 40(a)(iib) and are not deductible; surcharge on sales tax and turnover tax are taxes (enhancements of sales tax) and fall outside Section 40(a)(iib), so disallowance of those items is set aside; assessments for AY 2014 2015 and 2015 2016 are set aside and remitted to the Assessing Officer for recomputation and fresh orders in accordance with these conclusions.

Reopening of assessment - reasons to believe - objections to reopening - quasi-judicial duty of the Assessing Officer to deal with objections - furnishing of investigation report and documents relied upon - independent application of mind by the Assessing Officer - sanctity of assessment under Section 143(3)

Objections to reopening - quasi-judicial duty of the Assessing Officer to deal with objections - GKN Driveshafts principle - Whether the reassessment was valid where the Assessing Officer did not separately deal with the assessee's objections to reopening as required by law. - HELD THAT: - The Court found as an admitted fact that the Assessee submitted objections to the reopening which were not dealt with separately by the Assessing Officer. Applying the principle in GKN Driveshafts, the exercise of reopening is a quasi-judicial function and the AO must consider and record reasons dealing with each objection. Failure to do so vitiates the reopening. The Court treated this defect as fatal to the reassessment and, on that short ground, held the reopening bad in law. [Paras 8, 11]

Reopening set aside for failure to deal with the assessee's objections; reassessment order quashed.

Furnishing of investigation report and documents relied upon - reasons to believe - independent application of mind by the Assessing Officer - sanctity of assessment under Section 143(3) - Whether the reasons recorded for reopening were sustainable where they merely reproduced an investigation report not supplied to the assessee and lacked independent application of mind by the AO. - HELD THAT: - The material on which the AO formed the reasons (notably the DDIT(Inv.) report) was not supplied to the Assessee and was said to be held in a fiduciary capacity. The reasons for reopening merely recited the language of that report without any independent evaluation by the AO. Relying on the requirement that reopening must be based on reasons to believe (not mere suspicion) and that reasons should paraphrase and enclose relevant portions of investigation reports, the Court found the reasons legally insufficient. In these circumstances the reassessment and consequential demands could not be sustained. [Paras 6, 9, 10, 11]

Reassessment set aside as reasons reproduced an investigation report not furnished to the assessee and lacked independent application of mind; consequential demand notices quashed.

Final Conclusion: Writ petition allowed; the impugned reassessment order dated 22nd August 2016 and consequential demand notices for AY 2011-12 are quashed for failure to deal with objections and for reasons that merely reproduce an unsupplied investigation report without independent application of mind; no order as to costs.

Unexplained expenditure - section 69C - capitalization of expenditure - capital work-in-progress - transfer entry - books of account and audit

Unexplained expenditure - section 69C - capital work-in-progress - transfer entry - books of account and audit - Whether the addition of Rs. 5,20,000/- as unexplained expenditure under section 69C was justified where the amount represented an amount capitalized by transfer from capital work-in-progress to fixed assets and no fresh expenditure was incurred in the year under consideration and the books of account were audited and accepted. - HELD THAT: - The Tribunal examined the balance sheet and the ledger for the preceding year and found that the impugned amount stood as capital work-in-progress as on 31.3.2011 and was only transferred to fixed assets in the assessment year under consideration. The material showed that no fresh expenditure was incurred in the year under consideration; the entries were transfer entries relating to earlier capital work. Section 69C applies to expenditure incurred in the financial year where the assessee offers no explanation about the source of such expenditure. In the present case the department did not contend that the source of the expenditure was unexplained and the expenditure had been routed through audited books of account which were accepted by the Assessing Officer. Given that the statutory rigours of section 69C are attracted only where expenditure is incurred in the year and the source is unexplained, the provision could not be invoked against a mere capitalization/transfer of earlier capital work-in-progress reflected in audited accounts. [Paras 5]

Addition under section 69C deleted and the Assessing Officer directed to delete the addition.

Final Conclusion: The Tribunal allowed the appeal, holding that section 69C could not be invoked against a transfer of earlier capital work-in-progress to fixed assets reflected in audited books where no fresh expenditure was incurred in the year and the source was not alleged to be unexplained; the addition of Rs. 5,20,000/- was deleted.

Credit of tax deducted at source - refund consequential to TDS credit - limitation under section 154(7) of the Act - duty of the assessing officer to grant TDS credit - undue enrichment by non performance of statutory duty - equity and avoidance of miscarriage of justice in rectification

Credit of tax deducted at source - refund consequential to TDS credit - limitation under section 154(7) of the Act - duty of the assessing officer to grant TDS credit - equity and avoidance of miscarriage of justice in rectification - Whether the assessee is entitled to TDS credit shown in Form 26AS and consequential refund despite the assessing officer treating the claim as barred by limitation under section 154(7), and whether the orders of the AO and CIT(A) refusing relief on limitation grounds should be set aside. - HELD THAT: - The Tribunal found that the factual matrix was not in dispute: the assessee offered the salary income to tax and the TDS deducted by the banks was reflected in Form 26AS. Under the statutory scheme governing TDS, once income on which tax was deducted is offered to tax and the TDS is reflected in departmental records, the credit must be allowed to the assessee. The authorities below denied the credit on the technical ground of limitation under section 154(7), but the Tribunal observed that the assessee had earlier written to the AO (letter dated 13/03/2013) within the prescribed period and that the AO failed to act on that communication. The Tribunal held that where the department's own records (Form 26AS) confirm the TDS and the assessee had claimed the credit in the return, nothing further remained for the assessee to perform; the AO was obliged to grant the credit. Reliance on the principle in S. Nagaraj (that procedural technicalities should not defeat justice and a court/authority must rectify mistakes to avoid miscarriage of justice) supported the conclusion that non performance by the AO resulting in withholding of an undisputed TDS credit amounted to undue enrichment of the department and warranted setting aside of the impugned orders. The Tribunal therefore directed grant of the TDS credit and consequential refund, instructing the AO to give effect to the claim. [Paras 5]

Impugned orders of the AO and CIT(A) set aside; TDS credit of the bank deduction allowed and the AO directed to grant the consequential refund.

Final Conclusion: The appeal is allowed: the Tribunal directed that the undisputed TDS credit reflected in Form 26AS be granted and the consequential refund paid to the assessee for A.Y. 2009 10, setting aside the orders which had refused relief on limitation/technical grounds.

Interference with completed assessment under search and seizure proceedings - invocation of section 153A in respect of completed assessments - requirement of incriminating material to justify reassessment or additions - nexus between seized material and the additions sought to be made - deletion of additions where no incriminating material relates to the assessment year

Invocation of section 153A in respect of completed assessments - requirement of incriminating material to justify reassessment or additions - nexus between seized material and the additions sought to be made - deletion of additions where no incriminating material relates to the assessment year - Whether additions made to the assessee's income for AY 2007-08 under reassessment consequent to search could be sustained where the original scrutiny assessment for that year was completed before the search and no incriminating material relating to that year was found. - HELD THAT: - The Tribunal noted that the assessment for AY 2007-08 stood completed under scrutiny before the search and that no incriminating material was recovered during the search concerning the long-term capital gain addition. It applied the consistent line of authority of the Delhi High Court (including Pr. CIT v. Sunny Infra Projects Ltd., CIT v. Kabul Chawla and Pr. CIT v. Meeta Gutgutia) establishing that a completed assessment can be reopened under provisions applicable to search only if there is incriminating material unearthed in the search which has nexus or relevance to the additions sought to be made. Absent such material, the Assessing Officer lacks jurisdiction to make additions in a concluded assessment. The Tribunal found that neither the Assessing Officer nor the Commissioner (Appeals) pointed to any new incriminating material specific to AY 2007-08 that justified disturbing the original completed assessment; reliance on the Tribunal's earlier procedural direction to afford opportunity did not cure the absence of incriminating material. Applying these principles, the Tribunal concluded that the invocation of section 153A for AY 2007-08 was without legal basis and that the addition on account of long-term capital gain was unjustified. [Paras 10, 14, 15, 16]

The addition made to the assessee's income for AY 2007-08 under the reassessment consequent to search is deleted and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that invocation of the search reassessment provisions in relation to AY 2007-08 was legally unsustainable in the absence of any incriminating material relating to that year; the disputed addition was therefore deleted.

Penalty under Section 271(1)(c) - Tax deduction at source - Liability to deduct tax under Section 194C - Liability to deduct tax under Section 195 - Burden of proof for non-deduction - Joint venture payments and subcontractor status - Tax treaty - business profits and interest - Requirement to obtain certificate under Section 195(2) - Reimbursement and disallowance under Section 40(ba)

Liability to deduct tax under Section 194C - Liability to deduct tax under Section 195 - Joint venture payments and subcontractor status - Tax treaty - business profits and interest - Requirement to obtain certificate under Section 195(2) - Burden of proof for non-deduction - Reimbursement and disallowance under Section 40(ba) - Whether the bank guarantee commission and related payments were not liable to deduction of tax at source and whether the assessee discharged the onus to show non deductibility - HELD THAT: - The Tribunal recorded that the assessee contended before the authorities below that payments of bank guarantee commission to JV partner and to a non resident were not subject to withholding under Section 194C/195, relying on the character of JV arrangements, decisions on scope of 'work' under Section 194C, treaty provisions distinguishing business profits and interest, and the consequence of Section 195(2). However, the Tribunal noted that the assessee placed no material on record to substantiate the contention that tax was not deductible. In the absence of supporting evidence or documentation demonstrating that the payments fell outside the charging provisions or were covered by treaty relief or a certificate under Section 195(2), the Tribunal found no infirmity in the conclusions reached by the Assessing Officer and the CIT(A) that deduction was required. The Tribunal therefore rejected the grounds seeking deletion of the addition/denial based on non deductibility for lack of proof. [Paras 4, 9]

Assessee failed to prove non deductibility of the payments; the authorities' view that tax deduction was required is upheld.

Penalty under Section 271(1)(c) - Tax deduction at source - Burden of proof for non-deduction - Whether penalty under Section 271(1)(c) for failure to deduct tax should be sustained - HELD THAT: - The Assessing Officer imposed penalty after making an addition for disallowance of guarantee commission and initiating proceedings for non deduction. The assessee appealed before the CIT(A) and continued to maintain non applicability of TDS but did not produce material evidence in support. The Tribunal, hearing the appeal on the record in the absence of the assessee, found that because the assessee did not discharge the onus to demonstrate that TDS was not deductible, there was no ground to interfere with the imposition of penalty. The Tribunal therefore affirmed the findings of the lower authorities sustaining the penalty. [Paras 4, 5, 9, 10]

Penalty under Section 271(1)(c) is sustained; the appeal challenging the penalty is dismissed.

Final Conclusion: The Tribunal dismissed the assessee's appeal for Assessment Year 2007 08, upholding the finding that the assessee failed to prove non deductibility of the bank guarantee commission and confirming the penalty imposed under Section 271(1)(c).

Disallowance of interest for failure to deduct tax at source under Section 40(a)(ia) - Verification of inclusion of income by deductee and grant of relief upon production of certificates - Disallowance of expenditure for payments in cash under Section 40A(3) and exemption under Rule 6DD

Disallowance of interest for failure to deduct tax at source under Section 40(a)(ia) - Verification of inclusion of income by deductee and grant of relief upon production of certificates - Whether the disallowance of interest paid to NBFCs under Section 40(a)(ia) for non-deduction of tax at source should be sustained or relief granted on verification of certificates showing inclusion of such interest in the deductees' returns. - HELD THAT: - The Tribunal noted that the Commissioner (Appeals) examined the submissions and documents furnished by the assessee, including certificates from chartered accountants and interest certificates from the financial institutions showing breakup of EMI into principal and interest and the inclusion of such interest in the deductees' returns. The Commissioner (Appeals) directed the Assessing Officer to verify those certificates and allow interest expenses in respect of those NBFCs where such verification confirms inclusion and tax payment by the deductees. The Tribunal found no infirmity in that approach and upheld the Commissioner (Appeals) direction that relief be granted after verification. [Paras 4, 6]

Uphold the Commissioner (Appeals) direction to permit proportionate relief for interest paid to NBFCs upon verification of certificates showing inclusion of the interest in the deductees' returns.

Disallowance of expenditure for payments in cash under Section 40A(3) and exemption under Rule 6DD - Whether the disallowance of cash payments made for purchase of milk and related items under Section 40A(3) is sustainable or whether such payments fall within the exemption under Rule 6DD. - HELD THAT: - The Commissioner (Appeals) sustained the Assessing Officer's disallowance, observing that the assessee had not placed credible evidence to substantiate the necessity for cash payments. On appeal, the Tribunal examined the factual material regarding the assessee's plant location, urgent procurement from local suppliers in remote area, lack of nearby banking facilities and the practical exigencies of purchasing milk and related items. The Tribunal found that the reasons advanced support application of the exemption contained in Rule 6DD to the impugned payments and that the Assessing Officer's disallowance was not legally sustainable. Accordingly, the Tribunal set aside the Commissioner (Appeals) order on this point and decided the issue in favour of the assessee. [Paras 7, 9]

Set aside the disallowance under Section 40A(3) and hold that the impugned cash payments fall within the exemption under Rule 6DD; allow the assessee's claim.

Final Conclusion: Appeal partly allowed: the Tribunal upheld the Commissioner (Appeals) direction to verify certificates and grant relief in respect of interest disallowed under Section 40(a)(ia), and reversed the disallowance under Section 40A(3) by holding the impugned cash payments covered by the exemption in Rule 6DD.

Applicability of amendment to section 200A prospectively - Levy of fee under section 234E through intimation under section 200A - Processing of TDS statements and scope of adjustments under section 200A - Prospective operation of Finance Act, 2015 amendment

Applicability of amendment to section 200A prospectively - Levy of fee under section 234E through intimation under section 200A - Processing of TDS statements and scope of adjustments under section 200A - Amendment to section 200A by Finance Act, 2015 effective from 1st June 2015 cannot be applied to sustain levies of fee under section 234E effected by issuance of intimations under section 200A prior to 1st June 2015; such levy is unsustainable. - HELD THAT: - Section 234E (inserted by Finance Act, 2012) imposes a fee for late furnishing of TDS/TCS statements, while section 200A provides machinery for processing TDS statements and issuing intimations. By the Finance Act, 2015 clauses (c) to (e) of section 200A were substituted with effect from 1st June 2015 to permit computation and adjustment of fee under section 234E during processing. Prior to 1st June 2015, section 200A(1) permitted only specified adjustments (arithmetical errors, incorrect claims apparent from the statement, and interest computation) and did not enable adjustment for levy of fee under section 234E. Where the Assessing Officer issued intimations under section 200A before 1st June 2015 and sought to levy fee under section 234E by way of that intimation, such levy exceeded the scope of permissible adjustments under section 200A as it then stood. The Tribunal followed coordinate-bench decisions (including detailed reasoning in Sibia Healthcare Pvt. Ltd.) holding that the Finance Act, 2015 amendment is prospective and cannot cure the absence of an enabling provision at the time the intimation was issued; accordingly, levies effected through pre-1 June 2015 section 200A intimations are not sustainable and must be deleted. [Paras 10, 11, 12, 13]

The levies of late filing fee under section 234E confirmed by intimation/orders under section 200A issued prior to 1st June 2015 are unsustainable and are deleted; the appeals are allowed.

Final Conclusion: The Tribunal held that the 2015 amendment to section 200A operates prospectively from 1st June 2015 and cannot be applied to sustain demands for fee under section 234E raised by intimations under section 200A issued before that date; the impugned levies were deleted and the appeals were allowed.

Deemed dividend under section 2(22) - exemption under section 10(33) - dividend distribution tax and finality of tax under section 115-O - distribution in course of liquidation and section 46(2)

Deemed dividend under section 2(22) - exemption under section 10(33) - Whether the receipt of Rs. 25,00,000 is taxable as dividend under the definition in section 2(22) for AY 2003-2004 in the absence of section 10(33). - HELD THAT: - The Tribunal noted that the impugned amount was received in the previous year relevant to AY 2003-2004 and that exemption under section 10(33) was not available for that year (section 10(33) having been omitted by the Finance Act, 2002). On the facts, the Assessing Officer treated the amount as dividend under section 2(22) and the first appellate authority upheld that view. The Tribunal examined the timing of receipt and the legislative position and found no basis to treat the amount as exempt dividend for the year in question. Consequently, the Tribunal found no error in treating the amount as taxable dividend under section 2(22). [Paras 7]

The receipt of Rs. 25,00,000 is taxable as dividend under section 2(22) for AY 2003-2004 in the absence of exemption under section 10(33).

Distribution in course of liquidation and section 46(2) - dividend distribution tax and finality of tax under section 115-O - Whether the impugned payment should be treated as return of capital under section 46(2) because it arose in the course of liquidation, notwithstanding that dividend was declared earlier and DDT paid. - HELD THAT: - The Tribunal recorded that the dividends were declared on 05.07.1999 while the company paid dividend distribution tax on 31.01.2001, and that the payments to the assessee occurred in the previous year relevant to AY 2003-2004. Because the dividend was declared prior to liquidation and the company had discharged dividend distribution tax under section 115-O, the Tribunal held that the provisions of section 46(2) dealing with distributions in course of liquidation did not apply to convert the payment into a capital distribution for the purpose of avoiding tax as dividend. On this basis the Tribunal upheld the authorities' view that the amount retained character of dividend and was taxable accordingly. [Paras 7]

Section 46(2) does not apply because the dividend was declared before liquidation and dividend distribution tax was paid, so the payment is not to be treated as return of capital exempt from tax as dividend.

Final Conclusion: The Tribunal dismissed the appeal and upheld the Assessing Officer's and CIT(A)'s decision treating the Rs. 25,00,000 as taxable dividend under section 2(22) for AY 2003-2004, rejecting the contention that section 46(2) or the omitted section 10(33) rendered the receipt non-taxable.

Valuation of immovable property - fair market value - proviso to section 50C(1) - tolerance band for variation between declared value and stamp/DVO valuation - retrospective application of amendment to section 50C(1) - role of District Valuation Officer (DVO) in determination of FMV - substitution of consideration under section 56(2)(vii)(b) based on stamp/DVO valuation

Proviso to section 50C(1) - tolerance band for variation between declared value and stamp/DVO valuation - retrospective application of amendment to section 50C(1) - valuation of immovable property - Whether additions based on DVO/stamp valuation can be sustained where the DVO value exceeds the declared (registered) consideration by 5.77%, having regard to the proviso to section 50C(1) as held to apply retrospectively. - HELD THAT: - The Tribunal examined the percentage variation between the value declared in the sale deeds and the value accepted by the Valuation Officer for the two properties in question and found the difference to be 5.77%. The Tribunal accepted the assessee's submission, and followed coordinate-bench decisions holding that the amendment to section 50C(1) inserting a proviso raising the tolerance from 5% to 10% applies retrospectively. Applying that principle, a variation of 5.77% falls within the retrospective tolerance band and the addition based on substitution of value cannot be sustained. The Tribunal therefore directed deletion of the addition qua those properties and remitted direction to the AO to act accordingly. [Paras 12]

Addition in respect of the properties where variation is 5.77% deleted; AO directed to delete the addition qua those properties.

Proviso to section 50C(1) - tolerance band for variation between declared value and stamp/DVO valuation - fair market value - role of District Valuation Officer (DVO) in determination of FMV - Whether the assessee is entitled to benefit of the proviso to section 50C(1) where the DVO value exceeds the declared consideration by 14.77% and 14.58% respectively. - HELD THAT: - For the other two properties the percentage differences (14.77% and 14.58%) exceed the maximum tolerance band of 10% under the proviso to section 50C(1). The Tribunal rejected the assessee's reliance on unrelated precedents from other chapters and fact-matrices, holding those authorities inapplicable on the present facts. Applying the proviso's tolerance limit, the Tribunal found that the benefit cannot be extended to the assessee for these properties and accordingly sustained the additions made by the AO/CIT(A). [Paras 13]

Additions in respect of the properties where variation exceeds 10% upheld.

Final Conclusion: Appeal partly allowed: additions deleted for the two properties where variation from DVO valuation is 5.77% (within retrospective 10% tolerance); additions upheld for the two properties where variation exceeds 10%.

Deductibility of lease premium as revenue expenditure - application of precedent of DCIT v. Sun Pharmaceuticals Industries Ltd. to similar facts - allowability of depreciation on leasehold/intangible lease rights - remand limited to directions of appellate forum - disallowance under section 14A read with Rule 8D - allocation of administrative expenses for exempt income - deduction under section 80-IA - meaning of 'profits and gains derived from the business' - treatment of various receipts (insurance claims, bad-debt recoveries, late-payment charges, unfulfilled-guarantee fees, scrap sales, rent) for section 80-IA - computation of book profit under section 115JB and scope of Explanation 1 clause (f) - allowability of feasibility study/legal/technical fees as revenue expenditure - option to choose initial assessment year under section 80-IA(2)

Deductibility of lease premium as revenue expenditure - application of precedent of DCIT v. Sun Pharmaceuticals Industries Ltd. to similar facts - remand limited to directions of appellate forum - Whether the lump-sum payments for 99-year leases are deductible as revenue expenditure in view of Sun Pharmaceuticals (Gujarat High Court) and the ITAT's remand direction - HELD THAT: - The Tribunal examined the facts of the assessee's leases against the decision in DCIT v. Sun Pharmaceuticals and held that, except for quantum of nominal rent, the facts are not distinguishable. The Tribunal emphasised that in the set-aside proceedings the AO's inquiry was confined to applying the High Court ratio to the present facts. It rejected reliance on book treatment alone and noted absence of dispute on genuineness; applied authorities that accounting entries do not determine deductibility. On the merits, after considering authorities distinguishing mining/asset-creation cases, the Tribunal held that the lease premium paid was in substance advance/nominal rent conferring only the facility to carry on the business and therefore deductible as revenue expenditure; the addition was deleted and matter remitted as per directions already complied with. [Paras 13]

Impugned lease premium allowed as revenue deduction; order of authorities below reversed and AO directed to delete the addition.

Allowability of depreciation on leasehold/intangible lease rights - Whether depreciation claimed on the lease premium (treated as intangible asset) is allowable after the Tribunal's finding on revenue treatment of lease premium - HELD THAT: - The Tribunal observed that, having held the lump-sum lease payment to be allowable as revenue expenditure in the earlier adjudication for the same factual matrix, the question of depreciation on the same amount does not arise. The Tribunal therefore treated the depreciation issue as infructuous once the amount is allowed as revenue expenditure. [Paras 23]

Claim for depreciation dismissed as infructuous because lease premium was allowed as revenue expenditure.

Disallowance under section 14A read with Rule 8D - allocation of administrative expenses for exempt income - Whether disallowance under section 14A r.w. Rule 8D (interest and administrative expenses) could be made where company had sufficient own funds and whether part of administrative expenses must be disallowed - HELD THAT: - On the facts the Tribunal found the assessee's net owned funds substantially exceeded the investments yielding exempt income, drawing on precedent that where interest-free funds suffice, a presumption arises that investments were from such funds and no interest disallowance is warranted. The Tribunal therefore deleted the interest component of disallowance. For administrative expenses, the Tribunal held that some allocation is appropriate because management/staff involvement in investment decisions cannot be denied; since the assessee failed to demonstrate absence of such expenses, the Rule 8D administrative disallowance was upheld (subject to limit of exempt income). Overall the appeal was partly allowed. [Paras 21]

Interest disallowance under section 14A deleted; administrative-expense disallowance under Rule 8D confirmed (subject to exempt-income limit); appeal partly allowed.

Deduction under section 80-IA - meaning of 'profits and gains derived from the business' - treatment of various receipts (insurance claims, bad-debt recoveries, late-payment charges, unfulfilled-guarantee fees, scrap sales, rent) for section 80-IA - Which categories of receipts are 'derived from' the power distribution business for computing deduction under section 80-IA - HELD THAT: - The Tribunal applied authorities interpreting 'derived from' as requiring direct/proximate nexus with the eligible business. It held: (a) insurance receipts and bad-debt recoveries that relate to amounts previously deducted or written off require factual verification of character and were remitted to AO for limited verification (statistical allowance); (b) interest/late-payment charges and unfulfilled-guarantee fees arise from sale/contractual relationship and constitute business receipts eligible under section 80-IA (following Nirma/Cambay principles); (c) streetlight maintenance receipts and certain miscellaneous receipts lacking direct nexus with power distribution were held not to be profits 'derived from' the eligible business and excluded; (d) scrap sales predominantly relating to sale of assets must be adjusted against respective block of assets (the Tribunal reduced the eligible scrap amount accordingly); (e) rent from staff quarters lacked immediate nexus and was excluded (netting of related expenses directed). The Tribunal directed remand/verification where requisite and allowed or disallowed items accordingly, often for statistical purposes. [Paras 59, 65, 73, 86, 88]

Mixed outcomes: late-payment interest, delayed-payment charges and unfulfilled-guarantee receipts allowed as derivable from eligible business; insurance/bad-debt recoveries and some miscellaneous items remitted/verified; streetlight maintenance, certain miscellaneous receipts and staff rent excluded from 80-IA (with directions for adjustments where appropriate).

Computation of book profit under section 115JB and scope of Explanation 1 clause (f) - disallowance under section 14A read with Rule 8D - Whether disallowance under section 14A r.w. Rule 8D can be imported into computation of book profit under section 115JB and, if not, what adhoc measure should apply - HELD THAT: - Following judicial and tribunal precedents, the Tribunal held that disallowances computed under section 14A/Rule 8D should not be mechanically transposed into the clause (f) computations of Explanation 1 to section 115JB. The Tribunal accepted that clause (f) is a self-contained code and that section 14A machinery is not directly applicable; however, some adjustment for expenditure relatable to exempt income must be made under clause (f). To avoid protracted proceedings, the Tribunal directed an adhoc disallowance of 1% of exempt income for clause (f) purposes and restored other identical cases to AO only where further computation was necessary. [Paras 124]

Section 14A/Rule 8D disallowance not to be imported into section 115JB computation; adhoc disallowance of 1% of exempt income directed for clause (f) purposes; Revenue appeal partly allowed on this point.

Allowability of feasibility study/legal/technical fees as revenue expenditure - Whether fees paid for feasibility/study of a project in same line of business are capital or revenue - HELD THAT: - The Tribunal followed precedent that where expenditure is incurred for expansion or extension of the existing business (and not for starting a new separate business), such feasibility/consultancy expenses are revenue in nature. The AO's capitalisation was reversed on the uncontroverted finding that the studies related to expansion in same line of activity. [Paras 100]

Fees for feasibility study held to be revenue expenditure and allowed as deduction.

Option to choose initial assessment year under section 80-IA(2) - Whether assessee may, at its option, choose the initial assessment year for the 10-year window under section 80-IA(2) - HELD THAT: - The Tribunal, relying on statutory text, CBDT clarification and precedents, held that the assessee has an option to select the first year of the 10 consecutive assessment years out of the prescribed block of 15 (or 20) years; once the option is exercised the chosen year is the initial assessment year for the deduction period, provided conditions are satisfied. The AO was directed to respect the assessee's choice where conditions are met. [Paras 108]

Assessee entitled to choose initial assessment year for section 80-IA; CIT(A)'s allowance on this ground upheld.

Treatment of receipts which were previously allowed as deductions when recovered (insurance/bad-debt recoveries/reversal of provisions) - Whether insurance receipts, bad-debt recoveries or written-back provisions that correspond to earlier deductions are to be treated as eligible business income for section 80-IA - HELD THAT: - The Tribunal held that where earlier years had allowed deductions for loss/bad debts, subsequent receipts/recoupments restoring those earlier reductions have a direct nexus with the business and may be treated as income of the undertaking; it remitted issues to AO for limited factual verification to confirm whether prior deductions were actually taken and whether the receipts are revenue or capital in nature. The Tribunal directed AO to determine character and allow 80-IA benefit if receipts are revenue and nexus established. [Paras 32, 45]

Receipts that recoup prior deductible losses/remissions are prima facie eligible for 80-IA treatment subject to AO's verification; issues remitted for factual determination.

Admission of new legal grounds by Tribunal under section 254 - Whether Tribunal may admit additional grounds (purely legal) not raised before lower authorities - HELD THAT: - Following Supreme Court precedent, the Tribunal exercised its discretion to admit purely legal additional grounds where facts are on record and the question goes to correct assessment of tax liability. Where such additional grounds were legal and facts present, issues were restored to AO for de novo consideration after hearing. [Paras 92, 154, 180, 231, 233]

Additional purely legal grounds allowed and remitted to AO for fresh adjudication where appropriate.

Final Conclusion: The Tribunal delivered a mixed decision across multiple assessment years. It allowed the lease-premium claim as revenue expenditure (thereby negating depreciation on the same), restricted the scope for importing section 14A/Rule 8D disallowances into section 115JB (directing an adhoc 1% clause-(f) adjustment), deleted certain interest disallowances where own funds sufficed while upholding limited administrative allocations, held that several receipts (late-payment interest, delayed-payment charges, unfulfilled-guarantee fees) qualify as business receipts for section 80-IA whereas others (certain streetlight maintenance receipts, staff rent, non-proximate miscellaneous items) do not, directed factual verification and limited remands on insurance/bad-debt recoveries and written-back provisions, confirmed feasibility-study fees as revenue, upheld the assessee's option to select the initial assessment year under section 80-IA(2), and admitted certain additional legal grounds for de novo consideration by the AO. Appeals were therefore allowed, partly allowed or dismissed as recorded for each assessment year.

Time-bar / reasonable limitation for initiation of tax-collection proceedings - tax collection at source (TCS) - scope of "scrap" under the Explanation to section 206C - assessee in default under section 206C(6)/(6A) and consequent liability under section 206C(7) / section 201(1)/(1A) - admission of additional grounds raising jurisdictional/limitation plea

Time-bar / reasonable limitation for initiation of tax-collection proceedings - assessee in default under section 206C(6)/(6A) and consequent liability under section 206C(7) / section 201(1)/(1A) - Validity of orders passed by the Assessing Officer under section 206C(6)/(6A) read with section 206C(7) (and section 201(1)/(1A)) for AY 2012-13 and AY 2013-14 on the ground of limitation - HELD THAT: - The Tribunal applied the established principle that where a statutory provision does not prescribe a limitation period, proceedings must be initiated within a reasonable time. Having considered precedents and analogous provisions governing TDS (section 201), the Tribunal accepted the consistent judicial view that four years from the end of the relevant financial year is a reasonable period within which action to treat a person as an assessee in default under TCS/TDS provisions should be initiated. For FY 2011-12 (AY 2012-13) and FY 2012-13 (AY 2013-14) four years from the end of the respective financial years had elapsed before the impugned orders dated 15.01.2018 were passed. Applying the four-year reasonable limitation, the Tribunal held the AO's orders to be beyond the permissible period and therefore invalid. The Tribunal noted that, once those orders were quashed as time-barred, the merits of the TCS liability in those years became infructuous.

Impugned orders for AY 2012-13 and AY 2013-14 quashed as barred by limitation; appeals allowed for those years.

Tax collection at source (TCS) - scope of "scrap" under the Explanation to section 206C - assessee in default under section 206C(6)/(6A) - Whether a trader in scrap (not a manufacturer) is liable to collect TCS as 'scrap' under the Explanation to section 206C for AYs 2014-15 to 2016-17 - HELD THAT: - The Tribunal examined the definition of "scrap" in Explanation (b) to section 206C - viz., 'waste and scrap from manufacture or mechanical working of materials which is definitely not usable as such because of breakage, cutting up, wear and other reasons' - and the line of decisions of the jurisdictional High Court and co-ordinate Benches. On the facts, the assessee was a trader dealing in paper and similar items and did not generate scrap from manufacturing or mechanical working. Following judicial authorities that treat the words 'waste and scrap' as requiring nexus with manufacture/mechanical working (and which hold that materials usable as such do not fall within that definition), the Tribunal concluded the transactions did not fall within the statutory meaning of 'scrap'. Consequently, the assessee could not be treated as an assessee in default under section 206C(6)/(6A) for AYs 2014-15 to 2016-17. The Tribunal relied on and followed the decisions which reconciled the Special Bench view and the jurisdictional High Court's interpretation in favour of non-applicability where the goods sold are usable and not generated by manufacture.

Appeals for AYs 2014-15 to 2016-17 allowed; assessee not liable to collect TCS as "scrap" for those years and not an assessee in default.

Admission of additional grounds raising jurisdictional/limitation plea - Admissibility of additional grounds asserting limitation/time-bar for AYs 2012-13 and 2013-14 - HELD THAT: - The Tribunal admitted the additional grounds because they raised a jurisdictional/legal question of limitation based on facts already on record and requiring no further evidence. The admission complied with the principle that such jurisdictional issues may be entertained where the necessary facts are available on the record.

Additional grounds admitted and adjudicated on the merits (leading to quashing of orders for the relevant years).

Final Conclusion: The Tribunal allowed the consolidated appeals. The AO's orders under section 206C(6)/(6A) read with section 206C(7) (and section 201(1)/(1A)) for AY 2012-13 and AY 2013-14 were quashed as barred by limitation; for AYs 2014-15 to 2016-17 the Tribunal held that the assessee, being a trader whose goods were not 'scrap' arising from manufacture or mechanical working, was not liable to collect TCS and therefore was not an assessee in default, and those appeals were allowed.

Revision under section 263 - assessment erroneous and prejudicial to the interest of revenue - deduction under Section 80P(2)(a)(i) - deduction under Section 80P(2)(d) - mutuality and business nexus - statutory obligation to invest under the State Co operative Societies Act - binding precedent of the Hon'ble Apex Court and High Court

Revision under section 263 - assessment erroneous and prejudicial to the interest of revenue - Whether the Principal Commissioner was justified in invoking jurisdiction under section 263 to set aside the assessment. - HELD THAT: - The Tribunal examined the assessment order dated 30.11.2016 and found that the Assessing Officer granted deduction under section 80P without making necessary inquiries or recording material findings. The absence of appropriate enquiry and discussion in the assessment rendered the order susceptible to being erroneous and prejudicial to the revenue. For these reasons the exercise of revisional jurisdiction by the Principal Commissioner under section 263 was upheld. [Paras 7]

The invocation of section 263 was valid and is upheld; the assessment which lacked necessary inquiry was rightly set aside.

Deduction under Section 80P(2)(a)(i) - deduction under Section 80P(2)(d) - binding precedent of the Hon'ble Apex Court and High Court - Whether the interest income in question was properly deductible under section 80P(2)(a)(i) or 80P(2)(d), such that the AO's allowance was correct on merits. - HELD THAT: - On review of judicial precedents, including the reasoning in the Totgars line of decisions and subsequent High Court determinations, the Tribunal held that interest earned on investments/deposits generally does not fall within the categories specified in section 80P(2)(a)(i) unless attributable to the business of providing credit to members; and that section 80P(2)(d) applies only to interest/dividend earned from investments with other cooperative societies. In light of these authorities the Principal Commissioner was justified in concluding that the interest in question was not clearly deductible under either clause and in directing the AO to re examine the matter. [Paras 14]

CIT was justified in directing reassessment to consider whether the interest income fell outside the scope of section 80P(2)(a)(i) and 80P(2)(d); the AO must reassess accordingly.

Statutory obligation to invest under the State Co operative Societies Act - mutuality and business nexus - deduction under Section 80P(2)(a)(i) - Whether interest earned on deposits made in compliance with the Karnataka Co operative Societies Act and Rules (grounds 5 to 7) constitutes business income attributable to providing credit to members and thereby qualifies for deduction under section 80P(2)(a)(i). - HELD THAT: - The Tribunal recognised that where state law or rules impose a statutory obligation to invest reserve/surplus funds in particular cooperative banks, the question whether the interest so earned has a business nexus and is attributable to the business of providing credit requires factual and legal examination. This aspect was not considered by the Principal Commissioner and was not determined on merits by him. Given the binding guidance from the Hon'ble Apex Court in Mavilayi and the relevance of statutory compulsion and mutuality, the Tribunal directed that the specific grounds (grounds 5-7) be remanded to the Assessing Officer for fresh enquiry and determination, applying the Apex Court's dictum. [Paras 7, 18]

Grounds 5 to 7 are remanded to the Assessing Officer for fresh examination and decision in accordance with law and the Apex Court's guidance; other parts of the CIT's order are confirmed.

Final Conclusion: The Tribunal upheld the exercise of revisional jurisdiction under section 263 because the assessment was completed without requisite inquiry, confirmed that the interest in question is not clearly deductible under section 80P(2)(a)(i) or 80P(2)(d) on the material before the CIT, but remanded the limited factual/legal issue arising from grounds 5-7 (statutory obligation to invest and resulting business nexus) to the Assessing Officer for fresh consideration in accordance with the Apex Court's decisions; appeal allowed for statistical purposes.

Right to cross-examine expert witnesses - conflicting expert reports - reliability of scientific test reports - rejection and redetermination of declared assessable value under the Customs Valuation Rules - confiscation under Section 111(m) of the Customs Act - option of redemption under Section 125 of the Customs Act - penalty under Section 112 and Section 114AA of the Customs Act

Right to cross-examine expert witnesses - conflicting expert reports - reliability of scientific test reports - Whether the appellants should be permitted to cross examine the chemical examiners whose test reports were relied upon before a final order is passed. - HELD THAT: - The impugned order relied on multiple laboratory reports which described the samples variously as "may be base oil", "prima facie the consignment being base oil" and containing observations that do not categorically state the samples are base oil and not machinery oil. The reports, as reproduced in the order, do not definitively conclude that the imported goods are not the machinery oil as declared by the importer, thereby creating ambiguity. In the factual matrix where the buyer's tests indicated conformity with base oil specifications and the departmental reports are non categorical, fairness requires that the appellants be allowed to cross examine the chemical examiners so that a clear and authentic finding can be recorded on whether the goods are base oil, machinery oil, or both. Consequently, without adjudicating the substantive merits, the Tribunal directed that the appellants be afforded the opportunity to cross examine all experts whose reports were relied upon and that the Commissioner, after giving reasonable opportunity of hearing, decide the matter afresh.

Matter remanded to the Commissioner of Customs with direction to allow cross examination of the experts whose reports were relied upon and to pass a fresh order after hearing the parties; impugned order set aside.

Final Conclusion: The impugned order is set aside and the appeals are allowed for the limited purpose of remand: the Commissioner of Customs is directed to permit cross examination of the chemical examiners whose reports were relied upon and, after affording a reasonable opportunity of hearing, to decide all issues afresh.

Interest on delayed refunds - Claim for refund of duty - Computation of limitation where refund arises from judicial or appellate direction

Interest on delayed refunds - Claim for refund of duty - Computation of limitation where refund arises from judicial or appellate direction - Denial of interest on refund of customs duty - HELD THAT: - The Tribunal applied Section 27(1) and Section 27(1B)(b) to conclude that the refund claim was filed and sanctioned within the statutory timeframe. The adjudicating authority dropped the demand on 31.08.2018 pursuant to remand and the appellant filed the refund application on 01.10.2018; the refund was sanctioned on 22.10.2018. Section 27A entitles an applicant to interest only where the refund is not made within three months from receipt of the refund application. Because the refund was sanctioned within one month of the application, the condition for payment of interest under Section 27A was not satisfied. The Tribunal therefore found no infirmity in withholding interest and upheld the order rejecting interest. [Paras 5, 6]

Order declining interest on the sanctioned refund is upheld; appeal dismissed.

Final Conclusion: The appeal is dismissed; the order sanctioning refund without interest is sustained on the ground that the refund was made within three months of the refund application and therefore no interest under Section 27A was payable.

RBI directive binding on banking companies - withholding payment bona fide under RBI embargo - fraudulent preference / suspect spell under Section 531 Companies Act - holder in due course - waiver / acquiescence and accord and satisfaction - constructive res judicata - discretionary award of interest under Section 34 CPC

RBI directive binding on banking companies - Validity and binding effect of the RBI communication dated 09.06.1997 on the defendant bank - HELD THAT: - The Court held that the RBI communication of 09.06.1997 was a direction traceable to the statutory powers of the Reserve Bank under the RBI Act and the Banking Regulation Act and thus carried statutory force. Omission by RBI to cite a specific enabling provision did not denude the communication of its statutory character where its authority is otherwise traceable; the 09.06.1997 communication was issued to implement and give effect to the earlier 10.04.1997 notification and was binding on the banking defendant. The plaintiff never challenged the legality of the RBI notifications in the suit and did not implead RBI, a lacuna relevant to relief in the suit. [Paras 8, 15]

The RBI communication dated 09.06.1997 was a binding statutory direction on the defendant.

Fraudulent preference / suspect spell under Section 531 Companies Act - Whether there was a reasonable cloud over the title to the Bonds by reason of suspect spell / fraudulent preference - HELD THAT: - The Court found that transfers executed within the six month suspect period preceding presentation of the winding up petition fall within the mischief of Section 531 read with Section 441(2) of the Companies Act, 1956. The transfer to Shankar Lal Saraf took place during that suspect spell, and both RBI and the Official Liquidator treated the transfer as tainted; although the Company Court later held the transactions genuine, the existence of that earlier dispute put a legitimate shadow over title at the relevant time. [Paras 9, 15]

There was a real and reasonable cloud over the predecessor's title arising from the suspect spell / potential fraudulent preference.

Withholding payment bona fide under RBI embargo - Whether the defendant's withholding of payment was bona fide - HELD THAT: - Applying the binding RBI direction and the contemporaneous dispute about fraudulent preference, the Court concluded the defendant acted prudently and in good faith by seeking guidance from the Official Liquidator and withholding payment until the Company Court resolved the dispute. The defendant transferred sums to an accrued interest head and did not derive an undue benefit; payment was promptly made after the Company Court's favourable order. [Paras 5, 10, 15]

The withholding of payment by the defendant was bona fide and justified.

Holder in due course - Whether the plaintiff qualified as a holder in due course entitled to immediate payment notwithstanding the embargo - HELD THAT: - Under the Negotiable Instruments Act the transferee must acquire the instrument for consideration and without sufficient cause to believe in a defect in title. Because the predecessor's transfer occurred during the suspect spell and title was in dispute until the Company Court's decision, the plaintiff's status as a holder in due course was suspect. The bank was therefore entitled to withhold payment pending resolution. [Paras 11]

The plaintiff was not clearly entitled to the protection of a holder in due course at the relevant time.

Discretionary award of interest under Section 34 CPC - pendente lite interest - Whether interest for delayed payment (including pendente lite interest) should have been awarded to the plaintiff - HELD THAT: - Award of interest is discretionary under Section 34 CPC and requires equitable considerations; following Clariant the Court must find money wrongfully withheld and equitable grounds for interest. Given the binding RBI direction, the suspect spell, the bona fide conduct of the defendant, absence of undue benefit to the bank, and prompt payment after court determination, the conditions for awarding interest were not satisfied. The plaintiff also had not pressed a serious claim for pendente lite interest at trial. [Paras 12]

No entitlement to additional interest or pendente lite interest.

Waiver / acquiescence and accord and satisfaction - Whether the plaintiff's acceptance of payment barred its later claim by waiver, acquiescence or accord and satisfaction - HELD THAT: - The plaintiff accepted payment warrants and endorsed them with 'Received' and raised protest only later about TDS and, after several months, claimed interest. The Court treated this conduct as sub silencio acceptance amounting to waiver/acquiescence and found the plaintiff barred from later asserting delayed payment interest as the acceptance operated as accord and satisfaction in the circumstances. [Paras 5, 6, 13]

The plaintiff's conduct amounted to waiver/acquiescence and precluded its later claim for delayed interest.

Constructive res judicata - Whether the suit was barred by constructive res judicata - HELD THAT: - The Court observed that the plaintiff had opportunities to raise the claim earlier (including in writ proceedings) and did not do so; the cause of action arose when payments were first delayed. The failure to raise the claim earlier in available proceedings led to the conclusion that the suit was barred by the principle of constructive res judicata. [Paras 14]

The plaintiff's suit was barred by constructive res judicata.

Final Conclusion: The appeals are allowed in favour of the defendant: the Division Bench's judgment is set aside and the Trial Court's judgment restored. The plaintiff's cross appeal is rejected. Appeals disposed of with no order as to costs.

Scheme of Amalgamation - Dispensing with meetings of shareholders - Dispensing with meetings of creditors - Affidavit of consent by shareholders - Auditor's certificate verifying nil creditors - Service of notice under Section 230(5) - Form No. CAA-3 compliance

Dispensing with meetings of shareholders - Affidavit of consent by shareholders - Meetings of equity shareholders of both applicant companies dispensed where all equity shareholders have given consent by affidavit. - HELD THAT: - The Tribunal examined the application under Sections 230(1) and 232(1) of the Companies Act, 2013 and the affidavits annexed to the petition showing that all equity shareholders of both applicant companies had given their consent to the Scheme of Amalgamation. On that basis the Tribunal found that holding meetings of the equity shareholders was unnecessary and dispensed with such meetings.

Meetings of all equity shareholders of both applicant companies are dispensed with.

Dispensing with meetings of creditors - Auditor's certificate verifying nil creditors - Meetings of secured and unsecured creditors and other liability holders dispensed where auditors' certificates show there are no creditors or liability holders. - HELD THAT: - The applicants filed auditors' certificates verifying that there are no secured creditors, unsecured creditors or other liability holders for either applicant company as on the stated date. Having regard to the absence of any creditors or liability holders, the Tribunal concluded that there is no requirement to obtain consent from creditors or to hold meetings of creditors, and accordingly dispensed with such meetings.

Meetings of secured and unsecured creditors and other liability holders are dispensed with.

Service of notice under Section 230(5) - Form No. CAA-3 compliance - Directions issued for service of notice and accompanying documents under Section 230(5), with specification of recipients, timelines and procedure for filing representations. - HELD THAT: - Despite dispensing with meetings, the Tribunal directed service of notice under Section 230(5) of the Companies Act, 2013 along with the Scheme and statement in the prescribed form (with necessary variations) on the Regional Director (Eastern Region), Registrar of Companies (West Bengal), Official Liquidator, High Court Calcutta, Income Tax Department having jurisdiction and Reserve Bank of India. The notice is to be sent by hand delivery, post or email within three weeks from receipt of the order and must specify that any representation be filed before the Tribunal within 30 days of receipt, with a copy to the applicants' authorised representative. The Tribunal stated that absence of representation within that period would be taken as no representation being made.

Applicants to serve the specified authorities with the notice and documents in accordance with Section 230(5) and Rule 8(2)/Form No. CAA-3 directions, and to allow 30 days for representations.

Proof of service - Compliance affidavit - Applicants directed to file affidavit proving service of notices and compliance with Tribunal's directions. - HELD THAT: - The Tribunal required the applicants to file an affidavit evidencing service of the notices and compliance with the directions contained in the order, so that the Tribunal's record reflects compliance before further proceedings.

Applicants to file an affidavit proving service of notices and compliance with all directions.

Final Conclusion: The application under Sections 230(1) and 232(1) is allowed: meetings of equity shareholders and of creditors/liability holders are dispensed with for the reasons recorded; applicants must serve statutory authorities with notice and documents under Section 230(5)/Form No. CAA-3 within the prescribed timelines, allow 30 days for representations, and file an affidavit proving service and compliance. The company application is disposed of accordingly.

Restoration of struck off company - Discretion under Section 252 of the Companies Act, 2013 - Strike off under Section 248 of the Companies Act, 2013 - Requirement to file pending financial statements and annual returns - Prohibition on alienation of assets pending compliance - Directors' disqualification under Section 164 not automatically removed - Payment of cost for revival - Undertaking regarding accounts and demonetization

Restoration of struck off company - Discretion under Section 252 of the Companies Act, 2013 - The Tribunal allowed restoration of the name of M/s. Vox Crafts India Private Limited which had been struck off by the Registrar. - HELD THAT: - The Tribunal exercised the discretionary power under Section 252 of the Companies Act, 2013 to restore the company's name, upon being satisfied from the materials placed on record that the company was carrying on business and was active at the time of strike off. The applicant produced Income Tax acknowledgements, audited financial statements up to 31.03.2019, bank statements showing transactions from 01.09.2014, GST returns and payroll records; the Tribunal found these documents sufficiently demonstrated that the company was running and that restoration would be just and in the interest of stakeholders. Having considered the RoC's report (which raised no significant objection but sought proof of operation and compliance), the Tribunal concluded restoration was warranted and ordered the Registrar to restore the company's status as if it had not been struck off. [Paras 8, 9]

Application allowed and the Registrar directed to restore the company to the register.

Requirement to file pending financial statements and annual returns - Payment of cost for revival - Prohibition on alienation of assets pending compliance - Directors' disqualification under Section 164 not automatically removed - Undertaking regarding accounts and demonetization - Registrar's power to proceed for late filing - Restoration was made subject to specific conditions relating to compliance, costs, undertakings and preservation of assets. - HELD THAT: - The Tribunal conditioned restoration on the company filing all pending financial statements, annual returns and other statutory compliances for the period of default within 30 days of restoration, with requisite fees and additional late charges. The company was directed to pay a specified cost for revival through the MCA portal and to file an affidavit of compliance within two months. Until all compliances are made, the company was restrained from alienating or disposing of valuable assets. The shareholders were directed to submit a joint undertaking that the accounts were not used to transact tainted money during demonetization. The Tribunal further clarified that the order of restoration would not automatically revive any directorships disqualified under Section 164; restoration of directorships, if applicable, would follow law. Finally, the order did not preclude the Registrar from initiating proceedings for alleged late filing or other statutory non-compliances. [Paras 9]

Restoration granted subject to the enumerated conditions, compliances and payment of cost; other statutory actions by the Registrar are not barred.

Final Conclusion: The Tribunal allowed the application to restore M/s. Vox Crafts India Private Limited to the register under Section 252 of the Companies Act, 2013, having found the company was carrying on business; restoration is ordered subject to filing of all pending returns and compliances within specified timeframes, payment of costs, prescribed undertakings and restrictions, and without prejudice to the Registrar's statutory powers or to any disqualification of directors under law.

Locus standi of Resolution Professional - void ab initio for fraudulent misrepresentation - look-back period under Section 46 of IBC - exclusive jurisdiction of Adjudicating Authority under Section 60(5)(c) of IBC - effect of prior civil settlement on entitlement to relief - legal consequence of a registered tripartite instrument treated as lease

Locus standi of Resolution Professional - exclusive jurisdiction of Adjudicating Authority under Section 60(5)(c) of IBC - Resolution Professional had no locus to file the application under Section 60(5)(c) seeking declaration of the tripartite/sub-lease as void ab initio and restoration of possession. - HELD THAT: - The Tribunal found that the RP's application was founded solely on a letter from Respondent No.1 and that the RP had not produced claim forms or a list of allottees to substantiate the alleged claims. The RP did not show that the CoC had directed filing of the application and did not verify the contents of the letter. The Association of allottees had not pursued cancellation of the sub-lease in the prior civil proceedings and therefore were not aggrieved by the transfer to R-1. On these facts the RP lacked the necessary standing to seek the remedies claimed before the Adjudicating Authority. [Paras 30, 31, 32, 33, 36]

Application dismissed for want of locus; no interference with impugned order.

Void ab initio for fraudulent misrepresentation - look-back period under Section 46 of IBC - The allegation that the sub-lease was actuated by fraud and therefore not subject to the two-year look-back under Section 46 of the IBC was not established. - HELD THAT: - The Tribunal observed that the transfer by registered instrument took place on 27.09.2016, while CIRP commenced on 26.11.2018. The RP failed to show that the sub-lease was executed with intent to deprive homebuyers of their rights, and the Association, which had litigated earlier, did not claim cancellation of the sub-lease. In absence of pleaded or proved fraud, the Tribunal held that the RP had no ground to challenge a transaction more than two years prior to CIRP as being excepted from the look-back period. [Paras 27, 31, 34, 35]

Fraud exception to the two-year/look-back challenge not made out; challenge to sub-lease time-barred.

Effect of prior civil settlement on entitlement to relief - legal consequence of a registered tripartite instrument treated as lease - The prior settlement in the civil suit and the nature of the registered tripartite instrument negated the claimed entitlement to relief against R-1. - HELD THAT: - The Tribunal noted that the Association had instituted civil proceedings and subsequently settled with the Corporate Debtor without seeking cancellation of the sub-lease, indicating the Association was not aggrieved by the transfer to R-1. The Tripartite Agreement, though titled a sub-lease, for practical purposes operated as a lease with R-1 paying rent directly to GNIDA and no obligations to the Corporate Debtor. Given these circumstances, the Tribunal found no basis to direct cancellation of the registered instrument or restoration of possession in favour of the RP. [Paras 23, 24, 25, 27, 35]

Prior settlement and the character of the registered instrument preclude the relief sought by the RP against R-1.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the Adjudicating Authority's dismissal of the RP's application on grounds that the RP lacked locus, the allegation of fraud was not established to except the 2 year look-back, and prior civil settlement together with the character of the registered tripartite instrument undermined the claimed entitlement; costs were imposed on the RP.

Extension of CIRP beyond 330 days in exceptional cases - commercial wisdom of Committee of Creditors - project-wise resolution for real estate assets - resolution preferred over liquidation - application of Essar Steel India Ltd. ratio

Extension of CIRP beyond 330 days in exceptional cases - commercial wisdom of Committee of Creditors - project-wise resolution for real estate assets - Validity of the Adjudicating Authority's refusal to extend the CIRP and the consequent direction to proceed with liquidation despite the Committee of Creditors' decision to pursue project-wise resolution. - HELD THAT: - The Tribunal examined whether the Adjudicating Authority erred in rejecting I.A. No.2118 of 2021 filed by the Resolution Professional seeking extension of the CIRP to permit a re-run of the process on a project-wise basis. The CoC on 8 September 2021 resolved to divide the corporate debtor's assets into eight projects and authorized the RP to invite fresh expressions of interest for project-wise/partial resolution; the RP received 25 expressions of interest thereafter. The Adjudicating Authority treated the CoC's decision as taken under pressure from homebuyers and declined extension, observing undue delay. Applying the legal principle in Committee of Creditors of Essar Steel India Ltd. that ordinarily 330 days is the outer limit but extensions may be granted in exceptional cases where extension would serve stakeholders' interests and delay is not attributable to the litigants, the Tribunal held that the Adjudicating Authority overlooked (a) that the statutory outer limit had only expired in September 2021 after earlier extensions, (b) the CoC's commercial wisdom in opting for project-wise resolution, and (c) concrete indications of market interest (25 EoIs) for that course. Given the nature of real estate projects and the established position that project-wise resolution may be appropriate for such corporate debtors, the Tribunal concluded that a reasonable extension ought to have been granted to enable the RP and CoC to proceed with the project-wise process, rather than prematurely directing liquidation. [Paras 14, 18, 19, 22, 23]

The Tribunal set aside the Adjudicating Authority's order, allowed I.A. No.2118 of 2021 and granted a 90-day extension from the date of the order to enable the Resolution Professional and the Committee of Creditors to complete the project-wise resolution process.

Final Conclusion: Appeals allowed; NCLT order dated 29.09.2021 set aside, I.A. No.2118 of 2021 allowed and CIRP extended for 90 days to permit completion of the project-wise resolution as decided by the Committee of Creditors.

Condonation of delay under Section 5 of the Limitation Act - acknowledgement in balance sheet as restarting limitation under Section 18 of the Limitation Act - applicability of the Limitation Act to applications under Section 7 of the Insolvency and Bankruptcy Code - assessment of "sufficient cause" for condonation of delay in a justice oriented, liberal manner

Condonation of delay under Section 5 of the Limitation Act - assessment of "sufficient cause" for condonation of delay in a justice oriented, liberal manner - Whether the Adjudicating Authority was justified in condoning the delay in filing the Section 7 application by applying Section 5 of the Limitation Act. - HELD THAT: - The Tribunal upheld the Adjudicating Authority's exercise of discretion in condoning the delay. It reviewed the facts and sequence of steps taken by the Financial Creditor (notice under SARFAESI, recovery proceedings before DRT, possession order, attempts at settlement and auction) and applied the established principles for "sufficient cause" as requiring a liberal, justice oriented approach. The Tribunal held that, on the material before the Adjudicating Authority, the Bank was not negligent in prosecuting its remedies and had shown sufficient cause to condone the delay of less than two years, and that the Adjudicating Authority's conclusion was not perverse or contrary to law. [Paras 10, 15]

Delay was rightly condoned by the Adjudicating Authority under Section 5 of the Limitation Act; the exercise of discretion is upheld.

Acknowledgement in balance sheet as restarting limitation under Section 18 of the Limitation Act - Whether the corporate debtor's acknowledgement of liability in the balance sheet of 31st March, 2015 operates as an acknowledgement under Section 18 of the Limitation Act and shortens the period of delay. - HELD THAT: - Relying on settled precedent, the Tribunal endorsed the Adjudicating Authority's finding that inclusion of the liability in the balance sheet constituted an acknowledgement within the meaning of Section 18 of the Limitation Act. Consequently, a fresh period of limitation was held to accrue from that acknowledgement (extending limitation until 31.03.2018), thereby reducing the computed delay in filing the Section 7 application. The Tribunal found no error in this legal conclusion. [Paras 8, 9]

Acknowledgement in the balance sheet was properly treated as an acknowledgement under Section 18, reducing the period of delay.

Applicability of the Limitation Act to applications under Section 7 of the Insolvency and Bankruptcy Code - Whether the Limitation Act applies to applications under Section 7 of the IBC and whether Section 238 A or related developments affect that applicability. - HELD THAT: - The Tribunal accepted existing Supreme Court authority that the Limitation Act applies to Section 7 applications and noted the legislative and judicial background (including the rationale in the Insolvency Law Committee Report and the decision in B.K. Educational) that limitation governs the trigger for CIRP. It therefore proceeded on the basis that applications under Section 7 are subject to the Limitation Act, and that Section 18 acknowledgements and Section 5 condonation principles apply. [Paras 13, 14]

The Limitation Act is applicable to Section 7 applications; the Tribunal proceeded accordingly.

Final Conclusion: The appeal is without merit; the Tribunal upholds the Adjudicating Authority's condonation of delay (applying Section 5 and Section 18 of the Limitation Act and relevant precedents) and dismisses the appeal. No costs.

Duties of the resolution professional - absence of adjudicatory power of the resolution professional - applicability of the law of limitation to claims in insolvency proceedings - time barred debt cannot revive the Corporate Insolvency Resolution Process - jurisdiction of adjudicating authority under Section 60 to decide claims and questions of law or fact - limits of interference with commercial wisdom of the Committee of Creditors

Duties of the resolution professional - absence of adjudicatory power of the resolution professional - Whether the Resolution Professional can adjudicate on the legal validity of claims or merely receive, collate and verify them prima facie. - HELD THAT: - The Code and Regulations assign administrative functions to the interim/resolution professional-collecting, receiving, collating and maintaining an updated list of claims and calling for evidence to substantiate claims-while not conferring adjudicatory powers. Regulation 10 empowers the RP to call for evidence; Regulation 12 permits late submission and inclusion in the CoC once admitted; Regulation 13 provides for verification. The Supreme Court in Swiss Ribbons confirms the RP has no adjudicatory powers. Thus the RP's role is limited to prima facie satisfaction based on documents submitted and not final adjudication of the legal validity of claims. [Paras 6, 7, 8, 9, 10]

Resolution Professional has only administrative, prima facie verification duties and cannot finally adjudicate the legal validity of claims.

Applicability of the law of limitation to claims in insolvency proceedings - time barred debt cannot revive the Corporate Insolvency Resolution Process - Whether a claim barred by limitation can be admitted in CIRP and whether such a time barred claim can be the basis to trigger or augment a Section 7 application or voting share in the CoC. - HELD THAT: - The court relies on the reasoning in B.K. Educational and Innoventive to hold that the Code was not intended to give a new lease of life to time barred debts. The Insolvency Law Committee's report endorses that the legislature did not intend to enable stale claims to trigger CIRP or to be included in resolution processes. A Section 7 application based on a debt barred by limitation cannot be entertained; consequently, any addition to claims that falls within the category of time barred debts cannot be admitted. The adjudicating authority must therefore consider such challenges on merits when raised under its jurisdiction. [Paras 14, 15, 16, 17]

Claims barred by limitation cannot be used to trigger CIRP or be admitted as valid claims; time barred debts do not revive under the Code and may be rejected on that ground.

Jurisdiction of adjudicating authority under Section 60 to decide claims and questions of law or fact - limits of interference with commercial wisdom of the Committee of Creditors - Whether the Adjudicating Authority was justified in refusing to adjudicate the Appellant's challenge to admission of the assignee's claim on the ground that the CoC's commercial wisdom cannot be interfered with. - HELD THAT: - Section 60 confers on the Adjudicating Authority jurisdiction to entertain applications relating to claims by or against the corporate debtor and to decide questions of law or fact arising in insolvency proceedings. The Adjudicating Authority's reliance on the doctrine that commercial wisdom of the CoC is generally not to be interfered with (as in Essar) was misplaced where the challenge relates to the legal validity of a claim (i.e., that the assignment from United Bank of India resulted in admission of a time barred debt, thereby affecting voting share). The Appellant was entitled to approach the Adjudicating Authority under Section 60(2)/(5) to seek adjudication on whether the added claim was time barred. Because the Adjudicating Authority did not consider the objection on merits, its order was set aside and the matter remitted for fresh consideration. [Paras 11, 12, 13, 17, 18]

Adjudicating Authority has jurisdiction to decide the Appellant's challenge to the admission of the assignee's claim; the prior order refusing to consider the objection was unsustainable and the matter is remitted for fresh consideration on merits.

Final Conclusion: The impugned order rejecting I.A. No.415 of 2020 is set aside; the Adjudicating Authority must freshly consider the Appellant's challenge to the admission of the assignee's claim (alleged to be time barred) and decide its merits, provided the Resolution Plan has not yet been approved; if the Resolution Plan has been approved, the Application need not be considered further.

Jurisdiction of the adjudicating authority under Section 60(5) of the IBC to entertain disputes - residuary jurisdiction of the NCLT/NCLAT over disputes arising out of or in relation to insolvency - public law decisions and judicial review of administrative action - interim reliefs affecting implementation of administrative orders - orders under the National Disaster Management Act and powers of the District Magistrate

Jurisdiction of the adjudicating authority under Section 60(5) of the IBC to entertain disputes - interim reliefs affecting implementation of administrative orders - orders under the National Disaster Management Act and powers of the District Magistrate - residuary jurisdiction of the NCLT/NCLAT over disputes arising out of or in relation to insolvency - Whether the Adjudicating Authority had jurisdiction to pass an interim order restraining implementation of the District Magistrate's order permitting residents to choose other internet service providers - HELD THAT: - The Tribunal held that the District Magistrate's order dated 22nd August, 2020, issued under the National Disaster Management Act, 2005, permitting residents to use internet services of their choice, is an action in the realm of public law and does not arise out of or in relation to the Insolvency Resolution Process. Reliance was placed on the Supreme Court decisions discussed in the judgment (Embassy Property Developments Pvt. Ltd. v. State of Karnataka and Tata Consultancy Services v. Vishal Ghisulal Jain) which establish that the NCLT/NCLAT's residuary jurisdiction under Section 60(5) of the IBC cannot be extended to adjudicate disputes that are essentially administrative or statutory in nature and amenable to judicial review in the appropriate forum. The interim order dated 27.10.2020 of the Adjudicating Authority, which restrained implementation of the District Magistrate's order and thereby affected citizens' choice of internet service provider during the Covid-19 period, was therefore outside the jurisdiction of the Adjudicating Authority. The impugned order dated 5th July, 2021 correctly dismissed the application and removed the restraint so as to permit compliance with the District Magistrate's order. [Paras 7, 8, 9, 10, 11]

The Adjudicating Authority lacked jurisdiction to pass the interim restraint against implementation of the District Magistrate's order; the application was rightly dismissed and the interim restraint vacated.

Final Conclusion: Appeal dismissed. The Adjudicating Authority's order dated 5th July, 2021, dismissing IA No.4052 of 2020 and permitting respondents to provide internet services through other agencies, is affirmed as within law, since the action challenged arose from an administrative order under the National Disaster Management Act and fell outside the NCLT's residuary jurisdiction under Section 60(5) of the IBC.

Appointment of resolution professional under Section 97 of the I&B Code - Adjudicating Authority's functions at the stage of applications filed under Section 95 and interim steps under Section 96 - Role and report of the resolution professional under Section 99 - Recording of 'default' prior to adjudication under Section 100

Appointment of resolution professional under Section 97 of the I&B Code - Adjudicating Authority's functions at the stage of applications filed under Section 95 and interim steps under Section 96 - Whether the Adjudicating Authority's failure to direct the Board as required by Section 97(1) warranted interference with its order in the circumstances of this case. - HELD THAT: - Section 97 mandates that where an application under Section 94 or 95 is filed through a resolution professional, the Adjudicating Authority shall direct the Board within seven days to confirm whether disciplinary proceedings are pending and the Board must communicate confirmation or rejection within prescribed time. The Tribunal noted that although the Adjudicating Authority did not seek the Board's confirmation as envisaged by Section 97(1), the appellants did not contend that any disciplinary proceedings were pending against the Resolution Professional who filed the application. Given the factual matrix and the lapse of time (the impugned order having been passed more than three months earlier), the Tribunal found no useful purpose would be served by directing a fresh compliance with Section 97 and declined to interfere with the Adjudicating Authority's order on this ground.

No interference with the Adjudicating Authority's order on the ground of non-compliance with Section 97(1), in view of absence of any disciplinary proceedings against the Resolution Professional and the delay since the order.

Role and report of the resolution professional under Section 99 - Recording of 'default' prior to adjudication under Section 100 - Whether the Adjudicating Authority was entitled to record a finding of 'default' at the stage before the Resolution Professional had submitted the report under Section 99. - HELD THAT: - The Tribunal applied its earlier reasoning in Mr. Ravi Ajit Kulkarni (cited in the judgment) that the procedural sequence requires (i) acting on the application under Section 95 read with Section 96, (ii) appointment/confirmation of the Resolution Professional under Section 97, (iii) the Resolution Professional acting and submitting a report under Section 99, and only thereafter (iv) adjudication under Section 100 when findings on default are to be considered. Recording a conclusive finding of default at the earlier stage prejudices the independent role of the Resolution Professional and may improperly foreclose a negative report. The Adjudicating Authority's observation that there was a 'default' was therefore inappropriate at that stage. The Tribunal accepted the respondent's submission that some observations may be prima facie, but held that, in law, the Adjudicating Authority ought not to have made such a finding prior to receipt of the Section 99 report and consequently deleted those observations from the impugned order, while preserving the liberty of the Resolution Professional to make recommendations with reasons as required by Section 99.

Observations in the impugned order recording a finding of 'default' prior to the Section 99 report are deleted; the Resolution Professional must be allowed to submit the report under Section 99 and the Adjudicating Authority's adjudication on default is to await the stage under Section 100.

Final Conclusion: Appeals partly allowed: the Tribunal declined to set aside the order for non-compliance with Section 97 in the facts of this case, but deleted the Adjudicating Authority's premature finding of default and preserved the Resolution Professional's obligation and liberty to submit a reasoned report under Section 99 for subsequent adjudication.

Condonation of delay - admission of additional documents in appeal - financial debt - default for initiation of CIRP - admission of application under Section 7 - effect of board ratification of loans - admission by corporate debtor as evidence

Condonation of delay - I.A. No. 1415 of 2020 for condonation of delay of 15 days in filing the appeal is allowed. - HELD THAT: - The Tribunal accepted the explanation that the appellant was absent due to family reasons (daughter's pregnancy and related events) and held the 15 day delay to be neither wilful nor wanton. In the interest of justice the application for condonation is allowed and no costs are imposed. [Paras 1]

I.A. No. 1415 of 2020 allowed; delay of 15 days condoned.

Admission of additional documents in appeal - I.A. No. 1414 of 2020 for bringing additional documents on record in the appeal is allowed. - HELD THAT: - The Tribunal found the additional documents to be material and necessary for effective adjudication of controversies relating to financial debt in CP (IB) No.1/BB/2019. Given the Adjudicating Authority had made findings of misrepresentation and related issues, permitting the additional documents was appropriate to secure ends of justice. The application is allowed without costs. [Paras 2, 3, 4]

I.A. No. 1414 of 2020 allowed; additional documents permitted to be brought on record.

Financial debt - default for initiation of CIRP - admission by corporate debtor as evidence - admission of application under Section 7 - effect of board ratification of loans - The NCLAT set aside the Adjudicating Authority's dismissal and held that the amounts advanced by the appellant constituted a financial debt and that default was established, directing the Adjudicating Authority to admit the Section 7 petition and proceed in accordance with law. - HELD THAT: - The Tribunal analysed the record, including bank transfers from the appellant's personal account to the corporate debtor, entries in the ledger and balance sheets for FY 2016-17 and 2017-18 recording the liability, board minutes ratifying the loan (with interest and repayment term), correspondence admitting liability and requests for time to repay, and the corporate debtor's reply before the Adjudicating Authority. It held that the definition of 'financial debt' under the Code is inclusive and may cover the present transactions; admissions by the corporate debtor and contemporaneous records 'clinchingly' establish existence of debt and default. The Adjudicating Authority's contrary view - that loans made while the appellant was a director could not be financial debt because they were not "money borrowed" enforceable under the Code - was held legally untenable. Given the cumulative evidence of disbursement, recording in company books, ratification and admissions, the pre requisites for admission under Section 7 were satisfied and the impugned order was interfered with. The Tribunal directed restoration of the petition to the file and its admission for further proceedings. [Paras 71, 72]

Impugned order dated 28.01.2020 set aside; CP(IB) No.1/BB/2019 to be restored and admitted; matter to proceed as per law.

Final Conclusion: The appellate tribunal allowed the interlocutory applications (condonation of 15 days' delay and filing of additional documents) and allowed the appeal on merits by holding that the amounts advanced by the appellant constituted a financial debt and default was established; the NCLT order dismissing the Section 7 petition was set aside and the petition is to be restored and admitted for further proceedings.

Limitation - time-barred debt in insolvency petition - Insolvency proceedings under Section 9 of the Code - applicability where claim is barred by limitation

Limitation - time-barred debt in insolvency petition - The Company Petition is barred by limitation and therefore not maintainable on merits. - HELD THAT: - The petition sought initiation of CIRP under Section 9 based on 174 invoices dated between 31.03.2015 and 25.09.2016. The petition was filed on 24.10.2019. None of the invoices fall within three years prior to the filing date. The respondent's concession that two invoices might be within limitation was examined against the tribunal records and the petition filing stamp, which confirmed the filing date as 24.10.2019 and established that those two invoices were also time-barred. Given that all invoices relied upon to establish the debt are outside the three-year period, the petition is hopelessly barred by limitation. Because dismissal was grounded on limitation, the tribunal declined to adjudicate other contested contentions (such as maintainability of a proprietary firm's claim, alleged bogus or inflated invoices). [Paras 10, 11, 12, 13]

Company Petition dismissed as hopelessly barred by limitation.

Final Conclusion: The Tribunal dismissed the Company Petition under Section 9 as time barred because the invoices relied upon to establish the operational debt fell outside the three year limitation period prior to the filing date; other objections were not adjudicated.

Default bail under the proviso to Section 167(2) Cr.P.C. - completion of investigation as demarcated by filing of charge-sheet / police report - further investigation and subsequent complaint under Section 44 Explanation (ii) of PMLA - parity between Section 44 Explanation (ii) of PMLA and Section 173(8) Cr.P.C. - inability to defeat statutory time-limits by filing interim or piecemeal reports

Default bail under the proviso to Section 167(2) Cr.P.C. - completion of investigation as demarcated by filing of charge-sheet / police report - Whether accused are entitled to statutory/default bail under the proviso to Section 167(2) Cr.P.C. when the Enforcement Directorate has filed a complaint but admits that investigation is still continuing. - HELD THAT: - The court held that the right to default bail arises when the investigating agency fails to complete investigation and file the charge-sheet within the statutory period; filing of a report under Section 173(2) Cr.P.C. (or a complaint by ED) ordinarily marks completion of investigation for the purposes of Section 167(2). Allowing investigating agencies to file interim or piecemeal reports would erase the demarcation point on which statutory bail rights depend and would defeat the protective purpose of Section 167(2). Where the prosecuting agency itself, in its complaint and remand application, admits that investigation qua the accused remains incomplete, the report/complaint cannot be treated as a final report that defeats the entitlement to default bail. Applying these principles to the facts, the ED's admission that further investigation was in progress despite filing the complaint rendered the investigation incomplete and entitled the arrested persons to statutory bail. [Paras 14, 16, 24, 26, 28]

Accused are entitled to be released on default bail under the proviso to Section 167(2) Cr.P.C. because the ED's own averments show investigation was not complete despite filing the complaint.

Parity between Section 44 Explanation (ii) of PMLA and Section 173(8) Cr.P.C. - further investigation and subsequent complaint under Section 44 Explanation (ii) of PMLA - inability to defeat statutory time-limits by filing interim or piecemeal reports - Interpretation and effect of Explanation (ii) to Section 44 of PMLA - whether it permits filing of successive complaints so as to prolong investigation beyond the limits fixed for statutory bail. - HELD THAT: - The court analysed Explanation (ii) to Section 44 PMLA (inserted by the 2019 amendment) and found it to be in pari materia with Section 173(8) Cr.P.C., permitting further investigation and filing of a subsequent complaint only upon obtaining further evidence after the initial investigation is complete. The Explanation does not validate filing of interim or incomplete complaints as a means to extend detention of accused beyond the statutory period. While acknowledging the complex nature of money laundering investigations, the court held that Explanation (ii) cannot be invoked to defeat the protective purpose of Section 167(2) Cr.P.C.; the ED must complete investigation within the applicable time-frame or the accused must be released on statutory bail. [Paras 23, 24, 26]

Explanation (ii) to Section 44 PMLA permits subsequent complaints only in aid of further investigation after completion of the earlier investigation and cannot be used to justify piecemeal filing that defeats the accused's statutory right to default bail.

Final Conclusion: On the admitted facts that the ED's complaint itself stated that investigation remained incomplete, the arrested persons were held entitled to statutory bail under Section 167(2) Cr.P.C.; the court directed their release on bail subject to conditions, and clarified that Section 44 Explanation (ii) of PMLA does not permit piecemeal complaints to defeat the time bound right to default bail.

Service tax on renting of immovable property - Services by Government or local authority under the negative list / Article 243W and Twelfth Schedule - Invocation of extended period of limitation under proviso to Section 73 - Waiver of penalty under Section 80 - Remand for re examination and redetermination of taxable value - Non recovery of right of way (ROW) charges following Notification No.1/2018 ST

Non recovery of right of way (ROW) charges following Notification No.1/2018 ST - Service tax on fees for Pay & Park and Bazar auction/Bazar fees - Remand for re examination and redetermination of taxable value - Demands in respect of Pay & Park, Bazar auction/Bazar fees and Rasta Nuksan Bharpai (ROW) are to be reconsidered and remitted to the adjudicating authority; past demands are set aside for fresh examination aligned with the subsequent order dated 29.05.2020. - HELD THAT: - The Tribunal found two divergent approaches in the adjudicating orders: an earlier order confirmed demands while a later order (29.05.2020) dropped demands in respect of Pay & Park, Bazar fees and ROW (with reliance on the Tribunal decision in Nagar Nigam and Notification No.1/2018 ST). Revenue has not challenged the later order. In view of this divergence and to permit the revenue an opportunity to re examine earlier period demands in a similar manner, the Tribunal set aside the confirmed demands in the order dated 23.01.2018 and remanded these heads to the original authority for reconsideration and alignment with the subsequent approach. The remand is directed to enable re examination rather than to finally decide the merits for the earlier period. [Paras 4, 5]

Demands for Pay & Park, Bazar auction/Bazar fees and ROW set aside for the period 2011 12 to 2015 16 and remanded to the original authority for reconsideration consistent with the later order.

Service tax on renting of immovable property - Services by Government or local authority under the negative list / Article 243W and Twelfth Schedule - Remand for re examination and redetermination of taxable value - Leviability of service tax on Ground/Market Rent, Marriage Hall (Mandap), Bhade Patti (BOT), Stall/Ground Rent and Hospital/Blood Bank rent is affirmed; value of taxable services and consequent tax to be redetermined by the adjudicating authority. - HELD THAT: - Having considered precedents (including Cuddalore Municipality, Mormugao Municipal Council and related authorities) and the parties' admissions, the Tribunal agreed with the Commissioner that mere constitutional status under Article 243W and Schedule 12 does not automatically exempt these receipts from service tax. The appellants themselves admitted liability in respect of certain heads (BOT lease rent, mandap services, blood bank rent) and the Tribunal found that leviability was correctly upheld. However, the Tribunal observed that the quantum/valuation of taxable services requires fresh determination and allowable deductions must be considered; accordingly the matter is remitted to the original authority to re determine value and tax payable after affording opportunity of hearing. [Paras 4, 5]

Leviability upheld for the listed categories; quantum/value of taxable service remanded for redetermination by the original authority.

Invocation of extended period of limitation under proviso to Section 73 - Mens rea and investigation based extension of limitation - Invocation of the extended period of limitation under the proviso to Section 73 is justified in the facts of this case. - HELD THAT: - The Commissioner had found that the noticee's conduct - including obtaining service tax registration for some services while asserting exemption for others and non disclosure detectable only on investigation and scrutiny of records - established sufficient grounds to invoke the extended five year period. The Tribunal agreed with the Commissioner's approach and held that invocation of the extended period was sustainable on the record, while noting that the waiver of penalty under Section 80 should be considered separately. [Paras 4]

Extended period under proviso to Section 73 is invokable for the demands confirmed in the impugned order.

Waiver of penalty under Section 80 - Discretion to mitigate penalties for statutory bodies - Penalties imposed on the municipal authority are to be waived by invoking Section 80. - HELD THAT: - The Tribunal endorsed the Commissioner's second order conclusion that, in view of the statutory status of the municipal authority and the nature of the case, imposition of penalty was not warranted. The Tribunal agreed that cases of this character are fit for relief under Section 80 and directed that penalties be waived, while clarifying that such waiver does not preclude invocation of extended limitation for assessment purposes. [Paras 4]

Penalties imposed are to be waived by application of Section 80.

Final Conclusion: The appeals are partly allowed. Demands relating to Pay & Park, Bazar auction/Bazar fees and ROW for the earlier period are set aside and remitted to the original authority for reconsideration aligned with the later order; leviability of service tax on Ground/Market Rent, Mandap, BOT, Stall rent and Hospital/Blood Bank rent is affirmed but the taxable value is remitted for redetermination; the extended period under Section 73 is held invokable; penalties are directed to be waived under Section 80. The original authority is directed to complete remand proceedings within three months after hearing the appellants.

CENVAT Credit reversal under Rule 6(3) and Rule 6(3A) of CENVAT Credit Rules, 2004 - Computation of attributable credit using value of common inputs and common input services - Exempted goods treated as nil-rated supplies for CENVAT purposes - Inapplicability of penalty under Section 11AC for short reversal where reversal has been made

CENVAT Credit reversal under Rule 6(3) and Rule 6(3A) of CENVAT Credit Rules, 2004 - Computation of attributable credit using value of common inputs and common input services - Exempted goods treated as nil-rated supplies for CENVAT purposes - Whether the adjudicating authority and Commissioner (Appeals) erred in computing the amount of CENVAT credit liable to be reversed by using the total value of all inputs/input services instead of only the value of common inputs/input services used in relation to the exempted electricity sold outside. - HELD THAT: - The Tribunal found that electricity generated by the appellant is an exempted (nil-rated) excisable good and that Rule 6 governs the reversal of CENVAT credit where inputs/input services are commonly used for manufacture of dutiable and exempted goods. Because the appellant did not maintain separate accounts, reversal must be computed by reference to common inputs/common input services actually used in generation of the electricity sold outside, and not by taking the total value of all inputs or all input services used in manufacture of all goods. The adjudicating authority and Commissioner (Appeals) incorrectly used the total value of inputs and input services in their computation; instead the value of coal (inputs) and coal handling service (input service) attributable to generation of the electricity sold outside ought to have been used (M/NxP style computation under Rule 6(3)/(3A)). Board Circular No. 754/70/2003 and departmental clarifications confirm that the reversal percentage and computation are intended to apply to common inputs/input services. Consequently the shortfall of reversal computed by Revenue (the amount of Rs. 10,43,996/- as short reversed) resulted from wrong calculation and is not sustainable. The Tribunal relied on precedents that support restricting computation to common inputs/input services and set aside the impugned calculation. [Paras 10, 11, 12, 13, 14]

Calculation based on total value of inputs/input services is incorrect; only value of common inputs and common input services used in generation of electricity sold outside is to be used for reversal under Rule 6(3)/(3A); the demand based on the wrong calculation is set aside.

Inapplicability of penalty under Section 11AC for short reversal where reversal has been made - Whether penalty under Section 11AC of the Central Excise Act, 1944 can be imposed for alleged non-payment of the amount due under Rule 6(3) where the assessee had made reversal of CENVAT credit. - HELD THAT: - Relying on Tribunal precedent, the Court held that penalty under Section 11AC cannot be imposed in respect of alleged non-payment where the assessee has already effected reversal of CENVAT credit. In the present case the appellate findings established that reversal had been made by the appellant and the finding of short payment was not tenable; therefore imposition of penalty was unwarranted. [Paras 15]

Penalty under Section 11AC cannot be imposed; the penalty finding is set aside.

Final Conclusion: The impugned order is held to be wrong and is set aside; the appeal is allowed insofar as the computation of reversal and the imposition of penalty are concerned.

Tax liability on alteration of goods purchased under Form 3-A - penalty under section 15-A(1)(o) of UP Trade Tax Act - use and evidentiary significance of Form 31 and Form 32 - taxability of spare parts replaced under warranty

Penalty under section 15-A(1)(o) of UP Trade Tax Act - tax liability on alteration of goods purchased under Form 3-A - use and evidentiary significance of Form 31 and Form 32 - Validity of levy of penalty for alleged tax evasion where chassis purchased against Form 3-A were sent out of State for body mounting and returned without accompanying Form 31, and whether there was intention to evade tax. - HELD THAT: - The Court found on the record that chassis were purchased against Form 3-A and sent outside Uttar Pradesh for mounting of bodies, with provisional registration and transit insurance taken in the dealer's name and Form C issued to the body-builder. Final bills were raised after body mounting showing separate values for chassis and body and Form 31 was used on return, which indicated ownership remained with the revisionist. The revisionist gave inconsistent dates in agreements and invoices. Given that Form 3-A is conditional on sale in the same form and condition, mounting a body altered the character of the goods and created immediate tax liability which the revisionist had not discharged in prior years. The tribunal and lower authorities were therefore justified in inferring an intention to avoid tax and in initiating and upholding penalty proceedings under the statutory provision complained of. [Paras 9, 10, 11, 12]

Penalty under the statute was lawfully imposed; the revision is dismissed.

Tax liability on alteration of goods purchased under Form 3-A - taxability of spare parts replaced under warranty - Whether tax under the Act was rightly levied on 16 chassis purchased against Form 3-A after bodies were mounted, and whether tax was rightly imposed on spare parts replaced under warranty. - HELD THAT: - The Court held that goods purchased under Form 3-A must be sold in the same form and condition; mounting a body on a chassis changes its character into a new commodity and therefore attracts tax at the point of sale to the consumer. The factual matrix - provisional registration and transit insurance in the dealer's name, use of Form 31 on return, discrepancies between agreement and invoice dates - supported the conclusion that the chassis were not sold in the same form and condition and that levies under the relevant provision were properly applied. Regarding spare parts replaced under warranty, the Court noted that the contention raised in revision was not taken before the Tribunal and could not be permitted for the first time in revision; further, earlier precedents of this Court and the Apex Court were held to support taxing such transactions, and the levy was sustained. [Paras 22, 23, 24, 25, 26]

Tax on the chassis with mounted bodies and on spare parts replaced under warranty was lawfully sustained; the revision is dismissed.

Final Conclusion: Both revisions challenging the Tribunal's orders for assessment year 2005-06 are dismissed; the Court affirmed the taxability of chassis altered by mounting bodies and upheld the imposition of penalty and the tax on spare parts warranty replacements.

Jurisdiction of High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 - forfeiture of party's right to appoint arbitrator upon filing of Section 11(6) petition - consequences of party's inaction, laches and acquiescence in arbitration proceedings - validity of constitution of arbitral tribunal by parties' conduct - ex parte award and availability of challenge under Section 34/Section 37

Jurisdiction of High Court under Section 11(6) of the Arbitration and Conciliation Act, 1996 - forfeiture of party's right to appoint arbitrator upon filing of Section 11(6) petition - Whether filing of an application under Section 11(6) vests exclusive jurisdiction in the High Court to appoint an arbitrator and thereby precludes the opposite party from appointing an arbitrator. - HELD THAT: - The Court reaffirmed the settled law that once an application under Section 11(6) is filed for appointment of an arbitrator, the opposite party forfeits its right to appoint an arbitrator and the High Court alone has jurisdiction to make the appointment. This principle was applied to the facts of the case to assess whether the respondents' subsequent appointment could be treated as valid in law notwithstanding the pending Section 11(6) petition filed by the appellant. [Paras 12, 16]

The legal principle is affirmed: filing of a Section 11(6) petition vests jurisdiction in the High Court and ordinarily deprives the other party of the right to appoint an arbitrator.

Consequences of party's inaction, laches and acquiescence in arbitration proceedings - validity of constitution of arbitral tribunal by parties' conduct - ex parte award and availability of challenge under Section 34/Section 37 - Whether, on the peculiar facts of this case (appellant's failure to prosecute the Section 11(6) petition, selection of arbitrators by the appellant from the respondents' panel, participation in proceedings and subsequent inaction leading to an ex parte award), the High Court erred in dismissing the Section 11(6) petition. - HELD THAT: - The Court examined the material facts: the appellant filed ARBP No. 61 of 2009 but took no steps to pursue it or serve notice on respondents; upon being asked the appellant selected two names from the respondents' panel; an arbitral tribunal was constituted and both parties participated (the appellant filed its statement of claim) but thereafter failed to pursue proceedings, resulting in an ex parte award. Given this conduct, the High Court declined to exercise its Section 11(6) jurisdiction and dismissed the petition while granting liberty to challenge the ex parte award under Section 34 or 37. The Supreme Court found no error in that exercise of discretion, treating the appellant's inaction and acquiescence as decisive in the circumstances. [Paras 13, 14, 15, 16]

On the facts, the High Court correctly dismissed the Section 11(6) petition; the appellant's conduct disentitled it to relief and it was left to challenge the ex parte award under the appropriate provisions.

Final Conclusion: The appeal is dismissed. The settled legal rule on Section 11(6) jurisdiction is reiterated, but on the facts-marked by the appellant's failure to prosecute the petition and its acquiescence in constitution and conduct of the arbitral tribunal-the High Court did not err in dismissing the petition and leaving the appellant to challenge the ex parte award under Section 34 or 37.

Remission under Section 34(4) of the Arbitration and Conciliation Act, 1996 - curable defect - lack of reasons or gaps in reasoning - patent illegality vitiating an arbitral award - distinction between finding and reasons - court's discretion to adjourn proceedings to enable arbitral tribunal to eliminate grounds for setting aside - accord and satisfaction as a plea affecting enforceability of award

Remission under Section 34(4) of the Arbitration and Conciliation Act, 1996 - patent illegality vitiating an arbitral award - court's discretion to adjourn proceedings to enable arbitral tribunal to eliminate grounds for setting aside - Remission under Section 34(4) is not appropriate where there is no finding on a contentious issue and the award prima facie exhibits patent illegality. - HELD THAT: - The Court held that Section 34(4) permits remission where it is appropriate to give the arbitral tribunal an opportunity to resume proceedings or take action to eliminate curable defects in the award. However, remission is confined to curing defects such as absence of reasons or gaps in reasoning in respect of findings already recorded. Where there is no finding at all on a contentious issue (here, whether the contract was illegally and abruptly terminated) and the challenge to the award amounts to a plea of patent illegality arising from that omission or from ignoring material evidence, such aspects are to be examined by the Court and are not amenable to cure by remittal. The words "where it is appropriate" confer a judicial discretion which must be exercised by examining the grounds raised under Section 34(1), and remission cannot be used as a device to enable the arbitrator to supply a finding that he failed to make or to re-write the award. [Paras 20, 21]

Application for remission was rightly rejected because there was no finding on the central contentious issue and the award prima facie suffered from patent illegality; High Court order dismissing remission was upheld.

Curable defect - lack of reasons or gaps in reasoning - distinction between finding and reasons - accord and satisfaction as a plea affecting enforceability of award - Where a finding is recorded but the reasons are inadequate or contain gaps, the Court may remit the matter to the arbitral tribunal to supply or supplement reasons; but where the dispute is that the tribunal ignored material evidence and thereby failed to make a finding, remission is not the proper remedy. - HELD THAT: - The Court reiterated that Section 31 requires an award to state the reasons on which it is based (unless parties agree otherwise), and Section 34(4) serves as a curative mechanism to preserve an award by enabling the tribunal to fill gaps in reasoning or provide additional reasons supporting an existing finding. The authorities relied upon by the appellant establish that remission is available where there is a recorded conclusion lacking adequate reasoning. But there is a clear legal difference between a 'finding' (a decision on an issue) and 'reasons' (the links between materials and conclusions). If the tribunal has recorded a finding but omitted sufficient reasons, remission may be appropriate; by contrast, if no finding exists or the tribunal has ignored material evidence so as to give rise to patent illegality, that ground must be addressed by the Court under Section 34(1)/(2A) and cannot be cured by remittal. [Paras 16, 19, 20]

Remission is available to cure inadequate reasoning where a finding exists, but not to supply a missing finding or to cure patent illegality arising from ignored material evidence.

Final Conclusion: The High Court did not err in refusing to remit the award to the arbitrator under Section 34(4); the appeal is dismissed and the conditional rejection of the appellant's request for remission is affirmed.