TaxTMI Updates e-Newsletter
Jan 08,2022

Amendment of GST registration - Deletion of partners from registration - Proposal under Form GST REG-03 - Duty to reply to administrative proposal - Judicial interference where no reply has been furnished

Proposal under Form GST REG-03 - Duty to reply to administrative proposal - Communications in Form GST Reg-03 dated 27.03.2020 and 20.07.2020 are proposals requiring a response and the petitioner's failure to reply disentitles it to immediate relief in writ jurisdiction. - HELD THAT: - The court found that the communications issued by the respondents in Form GST Reg-03 were proposals setting out reasons why the petitioner's request for deletion of partners could not be accepted. Those communications invited a reply and specifically directed the petitioner to file a response by a stated date. The petitioner did not comply with those directions and instead filed a fresh representation. In these circumstances the court held that there was no merit in entertaining the writ petition because the petitioner had not availed the administrative opportunity to answer the proposal. The determinative point is that where an administrative proposal has been issued and a reply is called for, the petitioner must first respond before seeking judicial relief; absence of such a response justified withholding substantive adjudication in the writ. [Paras 6]

The Form GST Reg-03 communications are proposals and, in the absence of the petitioner's reply, the writ petition cannot be sustained on merits.

Amendment of GST registration - Judicial interference where no reply has been furnished - Disposition of the writ by directing the petitioner to file an appropriate reply and directing the respondents to consider the same and pass orders on merits within a specified time-frame. - HELD THAT: - Rather than quashing the impugned communications, the court disposed of the petition by giving the petitioner one final administrative opportunity. The petitioner was directed to file a reply within fifteen days from receipt of the order; the respondents were directed to consider that reply and pass appropriate orders on merits in accordance with law within thirty days thereafter. The order treats the matter as pending administrative consideration and refrains from pre-emptive judicial determination where the administrative process has not been completed due to the petitioner's non-compliance. [Paras 7]

Writ petition disposed with directions for the petitioner to file a reply within fifteen days and for the respondents to decide on merits within thirty days thereafter.

Final Conclusion: Writ petition dismissed for want of merit in view of the petitioner's failure to reply to administrative proposals; petition disposed by directing the petitioner to file a reply within fifteen days and the respondents to consider and pass orders on merits within thirty days thereafter.

Advance Ruling - jurisdiction of Authority for Advance Rulings - scope of Section 97(2) of the CGST Act - tax invoice requirements under Section 31 of the CGST Act - tax invoice rules under Rule 46 of the CGST Rules - determination of taxable value

Advance Ruling - scope of Section 97(2) of the CGST Act - jurisdiction of Authority for Advance Rulings - tax invoice requirements under Section 31 of the CGST Act - tax invoice rules under Rule 46 of the CGST Rules - determination of taxable value - Whether the Authority for Advance Rulings can answer the applicant's questions on compliance with Section 31, Rule 46 and the interpretation of the invoice total as taxable value. - HELD THAT: - Section 97(2) of the CGST Act prescribes the specific categories of questions on which an advance ruling may be sought. The Authority examined the applicant's submissions seeking a ruling on whether the proposed tax invoice complies with Section 31, whether it satisfies Rule 46, and whether the total amount inclusive of GST in the main portion of the bill should be treated as the taxable value. These queries concern the form and interpretation of tax invoices and the proper determination of taxable value but do not fall within the categories enumerated in Section 97(2). Because the questions are outside the statutory scope of matters on which an advance ruling may be given, the Authority lacks jurisdiction to answer them. The Authority therefore declined to answer the questions. [Paras 7, 8, 9]

The Authority cannot answer the applicant's questions as they are not within the scope of Section 97(2) of the CGST Act and hence are outside the jurisdiction of the Authority for Advance Rulings.

Final Conclusion: The application for advance ruling is refused for lack of jurisdiction because the questions posed are not covered by Section 97(2) of the CGST Act; consequently the Authority declines to answer the queries on compliance with Section 31, Rule 46 and the interpretation of the invoice total as taxable value.

Rate of GST for composition taxpayers - composition scheme for manufacturers - manufacture of sweets and namkins - counter sale (retail sale) not for consumption on premises - determination of liability to pay tax

Rate of GST for composition taxpayers - composition scheme for manufacturers - manufacture of sweets and namkins - counter sale (retail sale) not for consumption on premises - Applicable rate of GST for a composition taxpayer manufacturing sweets and namkins and selling them by counter sale without provision for on premises consumption. - HELD THAT: - The Authority found the question admissible as it concerns determination of liability to pay tax. Notification No. 8/2017 Central Tax permits an eligible registered person who is a manufacturer, with aggregate turnover in the preceding financial year not exceeding the prescribed threshold, to opt to pay an amount in lieu of tax at the rate of one per cent. of turnover in the State. The applicant being a manufacturer of sweets and namkins making only counter sales (no facility for consumption on the premises) falls within the scope of that entry and therefore may opt for the composition rate subject to the conditions and eligibility prescribed in Notification No. 8/2017 and its subsequent amendments. [Paras 4, 10, 11, 12]

Composition taxpayers engaged in manufacture of sweets and namkins and doing only counter sales are taxable at one per cent (0.5% CGST and 0.5% SGST) subject to the conditions of Notification No. 8/2017 Central Tax and subsequent notifications.

Final Conclusion: The Advance Ruling authorises the applicant to apply the composition rate of one per cent (0.5% CGST + 0.5% SGST) for manufacture and counter sale of sweets and namkins, subject to the eligibility and conditions of Notification No. 8/2017 Central Tax and its amendments.

Revenue expenditure - business expenditure - deduction under Section 37(1) of the Income Tax Act, 1961 - positive and negative tests for determining revenue or capital nature of expenditure - appellate fact finding and concurrence between CIT(A) and Tribunal

Revenue expenditure - business expenditure - deduction under Section 37(1) of the Income Tax Act, 1961 - positive and negative tests for determining revenue or capital nature of expenditure - Allowability as business (revenue) expenditure of processing fees paid to a bank on a loan obtained by a third party and claimed as deduction under Section 37(1). - HELD THAT: - The Court treated the controversy as a factual question. The Commissioner (Appeals) after remand applied the recognized tests for distinguishing revenue and capital expenditure (referred to as positive and negative tests), and concluded that the payment was not for acquiring a brand but to facilitate acquisition of the brand and that it operated as brokerage/commission/service charges, i.e., revenue in nature. The Tribunal re examined the facts, concurred with the CIT(A)'s findings and accepted that the expenditure was incurred in the ordinary course of business and was therefore allowable. The High Court found no error of law in the concurrent factual findings of CIT(A) and the Tribunal and held that no substantial question of law arose for its consideration.

The Court upheld the concurrent factual findings that the expenditure was revenue in nature and allowable under Section 37(1), and found no substantial question of law.

Final Conclusion: The revenue appeal is dismissed; the concurrent findings of the Commissioner (Appeals) and the Income Tax Appellate Tribunal that the processing fee constituted revenue expenditure allowable under Section 37(1) are accepted and no substantial question of law is made out.

Faceless Assessment Scheme - procedure for issuance of draft assessment order and show cause notice - modification of return prejudicial to assessee - violation of statutory procedure vitiating assessment - judicial review under Article 226 for procedural vitiation

Procedure for issuance of draft assessment order and show cause notice - modification of return prejudicial to assessee - violation of statutory procedure vitiating assessment - Whether the assessment order Ext.P7 is sustainable where the Faceless Assessment Scheme's procedure for issuance of a draft assessment order and a show cause notice was not complied with before modifying the return - HELD THAT: - The Court examined Clause 5 of the Faceless Assessment Scheme (Ext.P8), particularly sub clauses dealing with preparation of draft assessment orders and the obligation of the National e assessment Centre to issue a show cause notice when a modification prejudicial to the assessee is proposed (clause 5(xvi)(b), (xxii) and (xxv)). The assessing officer proceeded to modify the return but the record shows that no draft assessment order or the show cause notice required under the Scheme was served on the assessee. The Scheme mandates that where a modification prejudicial to the assessee is proposed, the assessee must be given an opportunity to respond to the draft assessment order and, if required, a further opportunity before finalisation. Failure to follow this prescribed process resulted in a decision making process contrary to the Scheme and therefore vitiated by procedural illegality. In view of this procedural violation, the Court held that the assessment order cannot stand and remitted the matter to the assessing authority for fresh consideration in accordance with the Scheme, directing issuance of the draft assessment order and the necessary show cause notice and giving the assessee an opportunity to furnish objections/explanations within a reasonable time, after which a fresh decision must be taken in accordance with law. [Paras 9, 10, 11]

Ext.P7 set aside; matter remitted to the Assessing Officer to issue the draft assessment order and the requisite show cause notice under the Faceless Assessment Scheme, hear the assessee and pass fresh orders in a time bound manner.

Final Conclusion: Writ petition allowed: impugned assessment order quashed for failure to comply with the Faceless Assessment Scheme's mandated procedure; matter remitted for fresh adjudication after issuing the draft assessment order and show cause notice and affording the assessee an opportunity of hearing.

Carry forward of loss/deficit by charitable trust - set off of carried forward deficits against future income - binding effect of judicial precedent on similar trusts - non applicability of prospective statutory amendment to impugned assessment year

Carry forward of loss/deficit by charitable trust - set off of carried forward deficits against future income - binding effect of judicial precedent on similar trusts - Allowance of carry forward and set off of deficits claimed by the assessee trust was held to be permissible and was upheld. - HELD THAT: - The Tribunal examined the decision of the CIT(A), who allowed the assessee's claim to carry forward earlier years' deficits and set them off against current/ future income by relying on the jurisdictional High Court decision in DIT(Exemption) vs. MIDC and earlier authoritative decision in CIT vs. Institute of Banking Personnel Selection, as well as noting dismissal of Revenue's Special Leave Petition in the Supreme Court in Subros Educational Society. No infirmity was found in the appellate authority's application of those precedents to the facts of this case. The Tribunal also noted the subsequent statutory amendment (Explanation 2 to section 10(23C)) inserted by the Finance Act, 2021 with effect from 1 4 2022, and observed that its applicability is prospective, i.e., from assessment year 2022 23 onwards, and therefore it does not affect the impugned assessment proceedings. Having considered the submissions and the orders below, and in absence of any pointed infirmity by the Departmental Representative, the Tribunal upheld the CIT(A)'s conclusion allowing the carry forward and set off subject to adoption of correct figures by the Assessing Officer. [Paras 7, 8, 10, 11]

The CIT(A)'s order allowing carry forward and set off of deficits in favour of the assessee trust is upheld; departmental appeal dismissed.

Final Conclusion: The departmental appeal challenging allowance of carry forward and set off of deficits by the assessee trust is dismissed; the appellate order of the CIT(A) is upheld, the subsequent Finance Act, 2021 amendment being prospective and not affecting the impugned assessment.

Conversion of capital asset into stock in trade - Determination of fair market value on conversion under section 45(2) of the Income-tax Act - Use of guideline value versus market evidence for valuation - Valuation of closing stock for income computation

Conversion of capital asset into stock in trade - Determination of fair market value on conversion under section 45(2) of the Income-tax Act - Use of guideline value versus market evidence for valuation - Appropriate fair market value to be adopted on conversion of agricultural land into stock in trade for computation under section 45(2). - HELD THAT: - The Tribunal examined competing rates adopted by the parties for the date of conversion: the assessee's unsupported rate of Rs. 250 per sq.ft and the Assessing Officer's adopted rate of Rs. 100 per sq.ft which also lacked evidentiary support and was not reconciled with applicable guideline values. The Bench observed that guideline value is not invariably a sound indicator of fair market value and that both parties failed to justify their respective rates with evidence or comparables. In the absence of reliable evidence from either side, the Tribunal exercised its fact-finding function to fix an appropriate market value for adjudicatory settlement, determining Rs. 200 per sq.ft as the reasonable fair market value on the date of conversion. The Tribunal directed the Assessing Officer to adopt this rate and recompute the resultant taxable profit arising from the conversion.

Adopt Rs. 200 per sq.ft as the fair market value on conversion and direct the Assessing Officer to rework gross profit for taxation accordingly.

Valuation of closing stock for income computation - Use of guideline value versus market evidence for valuation - Validity of adopting guideline value for valuation of closing stock at the end of the financial year. - HELD THAT: - The Tribunal held that valuation of closing stock by mechanically adopting guideline value as on the balance-sheet date cannot be accepted where guideline value does not reliably reflect fair market price. The Tribunal rejected the use of guideline value as a sole basis for valuing the closing stock in the present facts, noting the lack of supporting evidence for the specific rates relied upon by the Assessing Officer and the assessee. Given the broader finding that neither party produced satisfactory evidence for their respective valuations, the Tribunal's approach was to fix a pragmatic fair market value (Rs. 200 per sq.ft) for the conversion, and to require recomputation of profit incorporating that valuation rather than upholding valuation by reference to guideline value alone.

Guideline value cannot be accepted as the sole basis for closing stock valuation; recomputation using the adopted fair market value is directed.

Final Conclusion: Appeal partly allowed. Both parties' valuations were found unsupported; the Tribunal fixed fair market value at Rs. 200 per sq.ft for the date of conversion and directed the Assessing Officer to recompute gross profit, if any, for assessment year 2012-13.

Deductibility of employees' contributions to PF and ESI where remitted after statutory due date but before return filing due - prospective effect of amendment by Finance Act, 2021 (Explanation to section 36(1)(va)) - disallowance of expenditure relatable to exempt income - application of Rule 8D where no exempt income

Deductibility of employees' contributions to PF and ESI where remitted after statutory due date but before return filing due - prospective effect of amendment by Finance Act, 2021 (Explanation to section 36(1)(va)) - Additions disallowing employees' contributions to PF and ESI for belated remittance were deleted. - HELD THAT: - The Tribunal accepted the view that prior to the Finance Act, 2021 amendment, there was ambiguity whether the due date for deduction was the date fixed under the respective statutes or the due date for filing the return of income. The coordinate Bench held that the Explanation inserted by the Finance Act, 2021 is prospective and not retrospective; therefore the amended provision cannot be applied to the assessment years before its effective date. Applying that principle, belated payment of employees' contributions after the statutory due date but before the due date for filing the return was allowable as deduction for the impugned assessment years. The Tribunal directed deletion of the additions made under the impugned provisions for both assessment years. [Paras 7, 8]

Assessing Officer directed to delete additions made towards disallowance of employees' contribution to PF & ESI for both assessment years.

Disallowance of expenditure relatable to exempt income - application of Rule 8D where no exempt income - Additions under section 14A read with Rule 8D in respect of expenses attributable to exempt income were deleted. - HELD THAT: - Relying on the jurisdictional High Court's decision that in the absence of exempt income no disallowance under section 14A/Rule 8D can be made, the Tribunal found on record that there was no exempt income for the impugned assessment years. Since exempt income was absent, the statutory mechanism for computing disallowance under Rule 8D could not be invoked. Consequently, the additions towards disallowance under section 14A read with Rule 8D were deleted for both years. [Paras 10, 11]

Assessing Officer directed to delete additions made under section 14A read with Rule 8D for both assessment years.

Final Conclusion: Both appeals are allowed; additions in relation to belated remittance of employees' PF and ESI contributions and additions under section 14A read with Rule 8D are deleted for assessment years 2014-15 and 2013-14.

Interest under section 244A - interest on interest / compensation for unlawful retention of refund - requirement of proving unlawful retention to claim compensation - precedent of Sandvik Asia Ltd. on compensation for prolonged retention

Interest under section 244A - interest on interest / compensation for unlawful retention of refund - requirement of proving unlawful retention to claim compensation - Whether the assessee is entitled to interest on interest or compensation for delayed payment of refund beyond the interest payable under section 244A for assessment year 2008-09. - HELD THAT: - The Tribunal found that the Assessing Officer initially omitted to compute interest under section 244A when giving effect to the CIT(A)'s order, and subsequently determined and paid interest under section 244A up to the date of that determination (03.11.2011), with interest being computed and paid by order dated 15.03.2018. The assessee sought interest on interest (compensation) for the period of delay between 03.11.2011 and 15.03.2018, relying on the Supreme Court's decision in Sandvik Asia Ltd., where compensation was awarded because the revenue had retained the refund without any valid reason for over 17 years. The Tribunal held that Sandvik Asia Ltd. is distinguishable: there was no finding here of unlawful retention without reason, the period of delay in the present case (6 years and 4 months) was materially shorter than the 17 years in Sandvik, and the assessee failed to establish unlawful retention by the department. The Tribunal further noted that section 244A prescribes payment of interest up to the date of granting the refund and contains no provision for interest on interest; absent proof of unlawful, prolonged retention akin to the facts in Sandvik, compensation cannot be awarded. The Tribunal also referred to a Karnataka High Court view that interest is payable as per section 244A and that Sandvik's award of compensation turned on exceptional facts of prolonged, unexplained retention. On these bases the Tribunal agreed with the CIT(A)'s conclusion rejecting the claim for interest on interest or compensation. [Paras 7, 8, 9, 10]

Claim for interest on interest or compensation for delayed payment of refund beyond interest under section 244A is rejected for assessment year 2008-09.

Final Conclusion: The appeal is dismissed; the assessee is entitled only to interest in accordance with section 244A up to the date determined by the Assessing Officer and is not entitled to interest on interest or compensation in the absence of proven unlawful or prolonged retention.

Cost of acquisition including interest - Indexed cost of acquisition - Section 14A disallowance - Rule 8D methodology - Application limited to investments yielding exempt income

Cost of acquisition including interest - Indexed cost of acquisition - Indexed interest paid on borrowings used to acquire shares is includible in the cost of acquisition and may be indexed for computation of long term capital gains where such interest has not been claimed as deduction under any other head. - HELD THAT: - The Tribunal found that the assessee borrowed by way of inter corporate deposits to acquire shares and did not claim the interest as a deduction in earlier years. Revenue did not place any contrary material to controvert the assessee's claim that the interest related to acquisition of the shares and was not claimed elsewhere. Relying on the coordinate bench decision in DCIT v. Fritz Desilva , and the decisions in CIT v. Maithreyi Pai and CIT v. Trishul Investments Ltd. , the Tribunal held that interest paid for acquisition of a capital asset partakes the character of the cost of the asset and, if not otherwise claimed as deduction, can be added to the cost of acquisition and indexed under the capital gains provisions. The Tribunal therefore directed the Assessing Officer to allow the indexed cost on account of interest while computing capital gains. [Paras 8]

Grounds 1 and 2 allowed; AO directed to allow indexed interest as part of cost of acquisition for computing capital gains.

Section 14A disallowance - Rule 8D methodology - Application limited to investments yielding exempt income - Disallowance under Section 14A read with Rule 8D can be invoked after the AO records reasons to discard the assessee's working; however, Rule 8D computation must be confined to investments that yielded exempt (dividend) income. - HELD THAT: - The Tribunal found that the Assessing Officer had called for the assessee's workings and, after considering the replies, recorded reasons for rejecting the assessee's claimed computation; accordingly the invocation of Rule 8D was not mechanical or without satisfaction. Nevertheless, the Tribunal accepted the assessee's alternate contention, supported by the factual (uncontroverted) claim that dividend was received only from specified investments, and relied on High Court authorities cited in the order - including Maxopp Investments Ltd. , CIT v. Holcim India Pvt. Ltd. , CIT v. Corrtech Engineering Pvt. Ltd. and CIT v. Shivam Motors (P.) Ltd. - for the proposition that Section 14A (and Rule 8D) should be applied only in relation to investments which actually yielded exempt income. In view of the unchallenged assertion about which investments yielded dividend, the Tribunal directed the AO to recompute the Section 14A disallowance under Rule 8D by considering only those investments that produced exempt dividend income. [Paras 13]

Grounds 3 to 5 partly allowed; AO directed to recompute disallowance under Section 14A r.w. Rule 8D limited to investments that yielded dividend (exempt) income.

Final Conclusion: Appeal partly allowed: (a) indexed interest incurred for acquisition of shares to be added to cost of acquisition and allowed for indexing in computation of capital gains; (b) Section 14A disallowance sustained in principle but remitted for recomputation under Rule 8D limited to investments which actually yielded exempt dividend income.

Disallowance under section 14A read with Rule 8D - Restriction of section 14A disallowance to the amount of exempt income - Computation of book profit for MAT under section 115JB - Allowability of ESOP expenses as revenue expenditure - Deductibility of late deposit of ESI/EPF contributions

Disallowance under section 14A read with Rule 8D - Restriction of section 14A disallowance to the amount of exempt income - Deletion of the addition made under section 14A read with Rule 8D was upheld where exempt income was limited. - HELD THAT: - The Tribunal affirmed the CIT(A)'s conclusion that disallowance under section 14A (as applied with Rule 8D) cannot exceed the exempt income for the relevant period and that no disallowance is warranted in the absence of exempt income. The CIT(A) relied on and followed coordinate-bench and Delhi High Court decisions (including Cheminvest Ltd. and Holcim India Ltd.) and analogous Tribunal orders which restricted section 14A disallowance to the amount of exempt income; applying that ratio to the facts, the excess disallowance was deleted. The Tribunal found no contrary binding precedent placed by Revenue and therefore affirmed the deletion. [Paras 9, 10]

Tribunal dismissed Revenue's challenge and affirmed deletion of the section 14A/Rule 8D disallowance.

Computation of book profit for MAT under section 115JB - Disallowance under section 14A read with Rule 8D - Addition under section 14A was not to be included in computation of book profit for MAT under section 115JB. - HELD THAT: - The Tribunal upheld the CIT(A)'s view - following the Delhi High Court in PR. CIT v. Bhushan Steel Ltd. and consistent precedents - that an addition under section 14A (a disallowance) is not mandatorily to be incorporated in book profit computation under section 115JB where the Explanation to Section 115JB does not specifically refer to section 14A. Applying that principle, the CIT(A)'s deletion of the addition from MAT computation was affirmed. [Paras 11, 15]

Tribunal affirmed deletion of the section 14A addition for purposes of computing MAT under section 115JB.

Allowability of ESOP expenses as revenue expenditure - Deletion of addition disallowing ESOP-related expenses was upheld and ESOP expense allowance affirmed. - HELD THAT: - The Tribunal confirmed the CIT(A)'s reliance on binding decisions of the Delhi High Court and coordinate-bench Tribunal orders in the assessee's own case for earlier assessment years, which held ESOP costs allowable as revenue expenditure. In view of those higher-court and Tribunal precedents binding on the Department, the CIT(A)'s deletion of the ESOP disallowance was affirmed. [Paras 16, 19]

Tribunal affirmed deletion of the ESOP-related disallowance.

Deductibility of late deposit of ESI/EPF contributions - Deletion of disallowance for late deposit of ESI/EPF contributions was upheld. - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the disallowance, following binding Delhi High Court authority (CIT v. AIMIL Ltd.) and subsequent decisions (PCIT v. Pro Interactive Service) which held that where employees' contributions are actually paid (even belatedly) before filing the return, the expenditure is allowable; the legislative intent is to allow deduction on actual payment and not to treat belated payment as deemed income. Applying these precedents, the CIT(A)'s view was affirmed. [Paras 20, 23]

Tribunal affirmed deletion of the disallowance relating to late ESI/EPF deposits.

Final Conclusion: The Revenue's appeal for AY 2014-15 is dismissed; the Tribunal affirms the CIT(A)'s deletions of disallowances under section 14A/Rule 8D, the exclusion of the section 14A addition from MAT computation under section 115JB, the allowance of ESOP expenses, and the deduction for belatedly paid ESI/EPF contributions.

Taxation of offshore supplies under presumptive scheme - attribution of profits to Permanent Establishment - Dependent Agent Permanent Establishment (DAPE) - cash basis taxation for project receipts vs mercantile basis - arm's length nature of commission accepted by Transfer Pricing Officer - precedential effect of coordinate-bench decisions in the assessee's own case

Taxation of offshore supplies under presumptive scheme - Article 7 of DTAA - Income from offshore supplies relating to Teesta and Purulia projects is not taxable in India under the presumptive scheme and DTAA principles as applied in the earlier coordinate-bench decisions. - HELD THAT: - The Tribunal followed its earlier coordinate-bench decisions in the assessee's own case and found no material distinguishing the year under consideration from those earlier years. For identical factual matrix, the Tribunal held that income from offshore supplies was not liable to tax in India under the presumptive provisions as contended by Revenue and under Article 7 of the DTAA. Revenue did not place any material to show that the prior Tribunal orders had been set aside or overruled by a higher forum; accordingly, the CIT(A)'s deletion of the addition was affirmed. [Paras 10]

Revenue's addition treating offshore supplies as taxable under section 44BBB / Article 7 was dismissed.

Attribution of profits to Permanent Establishment - precedential effect of coordinate-bench decisions in the assessee's own case - No income is liable to be attributed to the assessee in India from the operations of Mitsui India Pvt. Ltd.; AO's attribution at 50% of global gross profit was not sustained. - HELD THAT: - The Tribunal noted that identical issues had been decided in favour of the assessee in a series of earlier assessment years by the coordinate-bench which either held MIPL not to be a DAPE or, even if treated as DAPE, restricted or negated attributable income. No distinguishing facts were placed before the Tribunal and no contrary higher court order was shown. Following the reasoning of those earlier decisions, the Tribunal found no reason to interfere with the CIT(A)'s approach and held that no income was liable to be attributed to the assessee in India. [Paras 16, 17, 39, 40]

AO's 50% attribution was rejected; no income attributable to the assessee in India is sustained.

Arm's length nature of commission accepted by Transfer Pricing Officer - attribution of profits to Permanent Establishment - Commission paid to Mitsui India Pvt. Ltd. was to be allowed as per the TPO finding of arm's length price and, as a consequence, consumed the profits ascribed to Indian operations. - HELD THAT: - CIT(A) recorded that the TPO had held the commission received by MIPL to be at arm's length and therefore the full commission paid by the assessee was allowable. On that basis, the CIT(A) found that the commission payments effectively consumed any profit attributable to Indian operations and that no taxable income remained in India. The Tribunal followed the CIT(A)'s acceptance of the TPO determination and did not disturb this conclusion. [Paras 12]

Disallowance of commission by the AO was reversed; commission paid is allowable as per TPO and neutralises any attributable profit.

Cash basis taxation for project receipts vs mercantile basis - tax treatment under presumptive module - Income from Teesta and Purulia projects is to be taxed on cash (receipt) basis rather than on accrual (mercantile) basis for the year under consideration. - HELD THAT: - The Tribunal agreed with the CIT(A)'s reasoning that, insofar as the revenue sought to apply presumptive treatment, books were not determinative and the presumptive module requires taxation based on receipts. The Tribunal found no infirmity in the CIT(A)'s conclusion and upheld the decision to compute income from these projects on cash basis rather than mercantile basis. [Paras 24, 25, 26]

Protective addition based on accruals was not sustained; income from the projects is taxed on cash basis as held by CIT(A).

Dependent Agent Permanent Establishment (DAPE) - precedential effect of coordinate-bench decisions in the assessee's own case - Mitsui India Pvt. Ltd. is not to be treated as a Dependent Agent Permanent Establishment of the assessee in India. - HELD THAT: - On the cross objections the Tribunal considered earlier coordinate-bench decisions in the assessee's own case (A.Y. 2006-07 and subsequent years) which had concluded that MIPL was not a dependent agent PE. Finding no change in facts and no contrary higher court ruling, the Tribunal followed those earlier decisions and held that MIPL is not a DAPE of the assessee, allowing the assessee's ground. [Paras 34, 35]

Assessee's cross-objection allowed: MIPL is not a Dependent Agent PE of the assessee.

Final Conclusion: For A.Y. 2009-10 and A.Y. 2011-12 the Tribunal dismissed the Revenue's appeals and allowed the assessee's cross-objections: offshore supplies were not taxable in India under the presumptive scheme/DTAA, no income was attributable to the assessee in India from MIPL's operations (and MIPL was not to be treated as a DAPE), commission paid was allowable as per the TPO, and receipts from specified projects were to be taxed on a cash basis.

Exemption under section 54F - residential property - actual user test - mixed land use / conversion charges - inspector's report as admissible evidence of use - construction of beneficial taxing provision

Exemption under section 54F - residential property - actual user test - mixed land use / conversion charges - inspector's report as admissible evidence of use - Whether the property at L-82, Shastri Nagar was to be treated as a residential house for the purpose of denying exemption under section 54F, having regard to its actual use, payment of mixed-use conversion charges and the inspector's report. - HELD THAT: - The Tribunal examined authorities holding that eligibility under section 54F must be determined by actual use of the property and that beneficial tax provisions should be construed so as to advance their object. The assessee had paid mixed land-use conversion charges and the departmental inspector's site report recorded that the building was being used for business (ground floor office; upper floors as godown/stock for the assessee's business). The Revenue and lower authorities relied on municipal records and limited permitted residential-to-commercial coverage, but neither produced an MCD certificate negating commercial use nor successfully rebutted the inspector's factual findings. The Tribunal followed the Karnataka High Court decision in Navin Jolly and the ITAT Delhi reasoning in Sanjeev Puri (which treat municipal classification as not conclusive where actual user shows commercial use), and accepted that payment of mixed-use charges and the inspector's report established commercial usage of the relevant portions. On that basis the property (or the relevant portions thereof) could not be treated as an available residential house for disallowing exemption under section 54F. The Tribunal also noted that rental or other income from buildings is assessed under the head 'income from house property' does not convert a commercially used building into a residential house for section 54F purposes, and that the authorities below had not drawn adverse inference against the material relied upon by the assessee. [Paras 8]

The assessee is entitled to the exemption under section 54F for AY 2015-16; the orders of the authorities below are set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the actual commercial use of the Shastri Nagar property (supported by payment of mixed-use conversion charges and the inspector's report) precluded treating it as an available residential house for denial of exemption under section 54F for Assessment Year 2015-16.

Applicability of section 269SS to transactions between a partnership firm and its partners - Penalty under section 271D for contravention of section 269SS - Requirement of recording satisfaction before initiation of penalty proceedings

Requirement of recording satisfaction before initiation of penalty proceedings - Penalty under section 271D for contravention of section 269SS - Whether the penalty under section 271D could be sustained where the assessment order was passed without any reference to the penalty-initiating authority and no satisfaction for initiation of penalty proceedings was recorded. - HELD THAT: - The Tribunal noted that the assessment under section 143(3) r.w.s.153A was completed accepting the return without any variation and with prior approval of the Additional Commissioner. While a penalty under section 271D was subsequently levied by the JCIT, there was no reference from the AO to the JCIT nor any contemporaneous recording of satisfaction for initiating penalty proceedings at the time of assessment. The Tribunal applied the principle in CIT v. Jal Laxmi Rice Mills, holding that where no satisfaction is recorded for initiating penalty proceedings the penalty order must be set aside. On these facts the procedural requirement for initiation of penalty proceedings was not complied with and the penalty could not be sustained. [Paras 8, 9]

Penalty set aside for failure to record satisfaction and for omission of reference by the AO before levy of penalty.

Applicability of section 269SS to transactions between a partnership firm and its partners - Penalty under section 271D for contravention of section 269SS - Whether section 269SS and penalty under section 271D are attracted by cash transactions inter se between a partnership firm and its partners. - HELD THAT: - The Tribunal considered the legal position that a partnership firm is not a separate legal entity distinct from its partners for purposes of such transactions and relied on precedents of High Courts and Tribunals to the effect that section 269SS is not attracted to inter se dealings between a firm and its partners. On the facts, since the alleged cash loan was between the firm and its partner, the Tribunal held that section 269SS does not apply and consequential penalty under section 271D could not be sustained. Having affirmed the CIT(A)'s deletion of the penalty on this legal ground, the Tribunal found no merit in Revenue's challenge. [Paras 10]

Penalty cannot be imposed for alleged contravention of section 269SS in respect of transactions between the firm and its partners; CIT(A)'s deletion of penalty affirmed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal: the penalty order under section 271D was set aside for failure to record requisite satisfaction and because section 269SS does not apply to inter se transactions between a partnership firm and its partners; the order of the CIT(A) deleting the penalty is affirmed.

Admission of additional evidence on appeal - determination of actual sale consideration based on agreement - addition as income from other sources where sale consideration differs from registered sale deed - claim for deduction under section 54F can be made before appellate authorities - remand for fresh consideration to the Assessing Officer - application of principles in Comm. of Customs vs. M/s. Dilip Kumar & Co.

Admission of additional evidence on appeal - determination of actual sale consideration based on agreement - addition as income from other sources where sale consideration differs from registered sale deed - remand for fresh consideration to the Assessing Officer - Whether the excess amount alleged to have been received over and above the consideration recorded in the registered sale deed should be treated as unexplained income or be re-examined on the basis of additional evidence. - HELD THAT: - The Tribunal found that the dispute regarding actual sale consideration was not adjudicated on the basis of the additional evidence tendered by the assessee because the CIT(A) had rejected those additional documents. The Tribunal held that the CIT(A) ought to have admitted the additional evidence and considered the claim in light of that material. Consequently, the Tribunal did not finally determine whether the excess amount over the registered consideration was rightly treated as income from other sources; instead it directed that the Assessing Officer should first ascertain the actual sale consideration by examining the agreement between the parties and the evidence filed by the assessee, before arriving at any conclusion on the tax treatment of the excess receipts. [Paras 4, 6]

Issue remanded to the Assessing Officer for fresh determination of the actual sale consideration on the basis of the agreement and admitted evidence; no final adjudication on the taxability of the excess amount was made.

Claim for deduction under section 54F can be made before appellate authorities - application of principles in Comm. of Customs vs. M/s. Dilip Kumar & Co. - remand for fresh consideration to the Assessing Officer - Whether the assessee is entitled to press a fresh claim for deduction under section 54F before appellate authorities and whether the claim should be considered afresh by the Assessing Officer. - HELD THAT: - The Tribunal held that an assessee may make a fresh claim for deduction or relief under section 54F before the appellate authorities even if such claim was not made before the Assessing Officer, and that the Supreme Court decision in Goetze (India) Ltd. does not prohibit such a claim on appeal. However, the Tribunal did not itself decide entitlement to the deduction on merits. Instead, it directed that after determining the actual sale consideration, the Assessing Officer should examine the claim for deduction under section 54F in accordance with law and the principles laid down by the Supreme Court in Comm. of Customs vs. M/s. Dilip Kumar & Co., verifying whether the assessee satisfies the basic requirements to claim the benefit for the year under consideration and considering any evidence the assessee files in support. [Paras 5, 6]

The Tribunal permitted the making of a fresh claim for deduction under section 54F before appellate authorities and remanded the matter to the Assessing Officer to decide the claim afresh after determining the sale consideration and applying the legal principles indicated.

Final Conclusion: Both the question of the actual sale consideration (and consequent treatment of any excess as income) and the claim for deduction under section 54F were remanded to the Assessing Officer for fresh consideration; the Tribunal directed admission and examination of the assessee's evidence, allowed the grounds for statistical purposes, and remitted the matters for decision in accordance with the law and the authorities indicated.

Disallowance under section 14A - Mandatory satisfaction before invoking section 14A - Computation of book profit for MAT under section 115JB - Weighted deduction under section 35(2AB) - Deductibility of Education Cess as expenditure

Disallowance under section 14A - Mandatory satisfaction before invoking section 14A - Deletion of the disallowance of Rs. 38,29,184 made by the Assessing Officer under section 14A. - HELD THAT: - The Tribunal noted that in the two immediately preceding assessment years the AO had failed to record the mandatory satisfaction before making a disallowance under section 14A and the addition was deleted. The facts for the assessment year 2015-16 are mutatis mutandis similar, and the Departmental Representative accepted this fact. Following the precedent in the assessee's own case for earlier years, the Tribunal concluded that the AO had not satisfied the mandatory pre-condition required before invoking section 14A and therefore the addition could not be sustained. [Paras 4]

Deletion of the disallowance of Rs. 38,29,184 under section 14A.

Computation of book profit for MAT under section 115JB - Disallowance under section 14A - Removal of the increased disallowance under section 14A from the computation of book profit under section 115JB. - HELD THAT: - The Tribunal observed that the identical issue arose in preceding years and considered relevant authorities including the decision cited as Pr. CIT v. M/s. Bhushan Steel Ltd. The Tribunal followed the view that no disallowance under section 14A can be made in computing income under section 115JB and therefore the increase of disallowance in the MAT book profit could not be sustained. [Paras 5, 6]

Disallowance under section 14A excluded from the computation of book profit under section 115JB.

Weighted deduction under section 35(2AB) - Allowing weighted deduction in respect of the amount not allowed by DSIR (Rs. 29.00 lakh) which the AO disallowed. - HELD THAT: - The Tribunal noted that the factual position mirrors that of earlier assessment years where it had allowed the weighted deduction notwithstanding the DSIR's reduction, observing that the amendment to the relevant rules took effect only from 01-07-2016 and thus did not apply to the claim for the year under appeal. Applying the same reasoning to the instant year, the Tribunal held that the assessee's claim for weighted deduction on the disputed amount must be allowed. [Paras 8, 9]

Weighted deduction under section 35(2AB) allowed in respect of the amount disallowed by DSIR.

Deductibility of Education Cess as expenditure - Admission and allowance of the additional ground that Education Cess paid is deductible for the year, subject to verification. - HELD THAT: - Relying on the principle that a Tribunal may entertain a question of law not raised below where relevant facts are on record, the Tribunal admitted the additional ground. It observed that the Jurisdictional Bombay High Court in Sesa Goa Ltd. v. JCIT and the Rajasthan High Court in Chambal Fertilisers have held that Education Cess is not a disallowable expenditure under section 40(a)(ii). In view of these precedents, the Tribunal directed allowance of the deduction for Education Cess after verification of the claim. [Paras 10, 11, 12]

Deduction for Education Cess admitted and directed to be allowed after verification.

Final Conclusion: The appeal is partly allowed: the section 14A disallowance of Rs. 38,29,184 is deleted; that amount is excluded from book profit under section 115JB; the weighted deduction under section 35(2AB) is allowed for the disputed amount; and the claim for deduction of Education Cess is admitted and directed to be allowed subject to verification.

Validity of reopening of assessment - maintainability of appeal under section 249(4)(b) requiring deposit equal to advance tax - effect of filing original return under section 139(1)/139(4) and compliance with requisitions under section 148/142(1) - remand for fresh adjudication and requirement of effective opportunity of hearing

Maintainability of appeal under section 249(4)(b) requiring deposit equal to advance tax - effect of filing original return under section 139(1)/139(4) - Whether the first appellate authority was correct in holding the appeal not maintainable under section 249(4)(b) on the ground that the assessee had not filed the original return or paid admitted tax. - HELD THAT: - The Tribunal found that the CIT(A)'s conclusion that the appellant had not filed any return and therefore was barred by section 249(4)(b) was contrary to the material on record. The assessee had stated in Form 35 that the original return was filed and produced a copy of the return filed on 04.12.2009 along with details of taxes paid. The CIT(A) proceeded on the assumption of non-filing without seeking clarification from the assessee despite apparent inconsistency in his own order. The Revenue conceded that if the return was filed and admitted tax paid, the matter could be restored to the CIT(A) for adjudication on merits. In these circumstances the finding of inadmissibility under section 249(4)(b) was incorrect. [Paras 6]

Finding of inadmissibility by CIT(A) under section 249(4)(b) set aside as incorrect; appeal not to be rejected on that ground.

Remand for fresh adjudication and requirement of effective opportunity of hearing - validity of reopening of assessment - Whether the matter should be remanded to the CIT(A) for decision on merits after verification of filing of return and taxes paid. - HELD THAT: - Since the CIT(A) did not decide the appeal on merits and reached an inadmissibility conclusion de hors the material, the Tribunal directed that all issues and grounds raised before it be remitted to the CIT(A) for fresh adjudication on merits. The CIT(A) is to hear the assessee after giving due and effective opportunity and decide the issues in accordance with law, including any question relating to the validity of reopening, having regard to the fact that the return was filed and taxes paid as presented before the Tribunal. [Paras 6]

Appeal remanded to the CIT(A) for fresh decision on merits after giving the assessee effective opportunity of hearing.

Final Conclusion: The impugned appellate finding of inadmissibility under section 249(4)(b) is set aside; the matter is remitted to the CIT(A) to decide all issues on merits after affording effective opportunity to the assessee. Appeal allowed for statistical purposes.

Validity of penalty proceedings where notice under section 274 r.w.s. 271 does not specify the limb of section 271(1)(c) - Penalty under section 271(1)(c) - concealment of income vis-a -vis furnishing of inaccurate particulars - Requirement of a specific charge in penalty notice - Precedential application of PCIT vs. Sahara India Life Insurance Co. Ltd. regarding defective penalty notices

Validity of penalty proceedings where notice under section 274 r.w.s. 271 does not specify the limb of section 271(1)(c) - Requirement of a specific charge in penalty notice - Precedential application of PCIT vs. Sahara India Life Insurance Co. Ltd. regarding defective penalty notices - Whether the penalty proceedings and the penalty levied under section 271(1)(c) are invalid where the notice under section 274 r.w.s. 271 did not strike off inappropriate words and thus did not specify whether proceedings were for concealment of income or for furnishing inaccurate particulars. - HELD THAT: - The Tribunal examined the notice issued on 29th December, 2016 and found that the AO had not struck off inappropriate words so as to indicate under which limb of section 271(1)(c) the penalty proceedings were initiated. Applying the decision of the Hon'ble Delhi High Court in PCIT vs. Sahara India Life Insurance Co. Ltd., the Tribunal held that a penalty notice which fails to specify the proper charge under section 271(1)(c) - i.e., whether for concealment of income or for furnishing inaccurate particulars - is bad in law. Although other factual contentions were argued by the assessee regarding entries in books of account and non-availability of bank intimation/TDS, the Tribunal found the defect in the notice to be determinative and, following the stated precedent, directed deletion of the penalty levied by the AO and confirmed by the CIT(A). [Paras 8, 9, 10, 11]

Penalty proceedings held invalid for want of a proper charge in the notice; penalty levied under section 271(1)(c) deleted and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding the penalty proceedings to be not in accordance with law because the notice under section 274 r.w.s. 271 did not specify which limb of section 271(1)(c) was invoked; accordingly the penalty levied by the AO and sustained by the CIT(A) was deleted.

Entitlement to refund of terminal excise duty under the Foreign Trade Policy - ab initio exemption from payment of excise duty for EOUs - deemed exports and entitlements of DTA suppliers under Chapter 8 of FTP - availability of refund in cash or by reversal of CENVAT credit - authority and forum for refund claims under the Foreign Trade (Development & Regulation) Act, 1992 - clarificatory effect and validity of DGFT Policy Circular No.16 dated 15.03.2013

Ab initio exemption from payment of excise duty for EOUs - entitlement to refund of terminal excise duty under the Foreign Trade Policy - deemed exports and entitlements of DTA suppliers under Chapter 8 of FTP - Whether an Export Oriented Unit (EOU) is independently entitled to refund of Terminal Excise Duty (TED) under the FTP or is limited to ab initio exemption and only a transferred benefit of the DTA supplier's entitlements. - HELD THAT: - The Court held that under the FTP the EOU is entitled to import/procure goods from DTA without payment of excise duty (paras 6.2(b) and 6.11(c)(ii)) and that this constitutes an ab initio exemption for the EOU. Clause 6.11(a) allows the EOU, upon production of a suitable disclaimer from the DTA supplier, to avail the entitlements that are expressly provided to the DTA supplier in Chapter 8; this is a benefit transferred to the EOU and not a standalone entitlement of the EOU. Where an EOU has nonetheless paid TED, it cannot claim an independent entitlement to refund under FTP; it can only claim the DTA supplier's entitlement under Chapter 8 subject to the formalities (including the disclaimer and para 8.5 conditions). If CENVAT credit was utilised, refund will be by reversal to the CENVAT account; if TED was paid in cash and refund is allowed, refund is payable with simple interest at 6% per annum for delay as provided in para 8.5.1 (paras 16-19, 21, 24-31, 40-43). [Paras 28, 29, 40, 42, 43]

EOU is not independently entitled to TED refund; it has ab initio exemption and may only avail, subject to procedural conditions, the DTA supplier's entitlements under Chapter 8 of the FTP.

Deemed exports and entitlements of DTA suppliers under Chapter 8 of FTP - entitlement to refund of terminal excise duty under the Foreign Trade Policy - availability of refund in cash or by reversal of CENVAT credit - Whether a Domestic Tariff Area (DTA) supplier of goods to an EOU is entitled to refund of TED under the FTP and the mode of such refund. - HELD THAT: - The Court affirmed that supplies from DTA to EOU are regarded as deemed exports (para 6.11) and that Chapter 8 of the FTP grants entitlements to the DTA supplier, including refund of TED under para 8.3(c), subject to the conditions in paras 8.4 and 8.5. The entitlement to refund under FTP is independent of remedies under the Central Excise Act, 1944; accordingly a DTA supplier may pursue refund under FTP even if relief under the 1944 Act was unsuccessful. Where the supplier has utilised CENVAT credit, the proper mode of restitution is reversal of the commensurate CENVAT credit to its account; where TED was paid in cash, refund in cash is available with simple interest at 6% per annum for delayed refund as per para 8.5.1. The Court endorsed prior High Court decisions holding DTA suppliers entitled to TED refund under FTP, subject to compliance with formalities (paras 20-26, 30-31, 39-44). [Paras 24, 30, 31, 39, 44]

DTA suppliers of goods to EOUs are entitled to TED refund under Chapter 8 of the FTP subject to specified formalities; refund is by reversal of CENVAT credit if CENVAT was used, or in cash with 6% simple interest for delay if TED was paid in cash.

Clarificatory effect and validity of DGFT Policy Circular No.16 dated 15.03.2013 - authority and forum for refund claims under the Foreign Trade (Development & Regulation) Act, 1992 - Whether DGFT Policy Circular No.16 dated 15.03.2013 is merely clarificatory regarding TED exemption/refund and whether the authority implementing the FTP is the proper forum to decide refund claims arising under FTP. - HELD THAT: - The Court accepted that the impugned circular was issued to clarify that where supplies are ab initio exempted under FTP (including supplies to EOUs), Regional Authorities of DGFT/Development Commissioners should not provide TED refund (para 26). The Court held that entitlement and refund under FTP flow from the 1992 Act and FTP and therefore claims must be processed by the Authority tasked with implementing the FTP (DGFT/Development Commissioner) rather than under the Central Excise Act; the FTP regime is an independent dispensation and remedies under the 1944 Act do not preclude relief under FTP (paras 14, 41). The court also observed that earlier inconsistent practices of refund did not vest a right to continue such practice contrary to FTP (para 5). However, timing and applicability of the circular to pre circular supplies was considered in light of the FTP and prior judicial decisions deciding particular factual windows (paras 4, 6, 33-38). [Paras 5, 14, 26, 41]

DGFT Policy Circular No.16 is a clarificatory restatement of FTP position that supplies ab initio exempted shall not attract TED refund by DGFT authorities; claims under FTP must be adjudicated by the Authority implementing the FTP.

Final Conclusion: The appeals resolve that under the FTP supplies from DTA to EOUs are deemed exports: EOUs enjoy ab initio exemption from TED and cannot independently claim TED refund, but may (on disclaimer and compliance) avail the DTA supplier's Chapter 8 entitlements; DTA suppliers are entitled to TED refund under FTP subject to formalities, with refund by CENVAT reversal if CENVAT was used or in cash with 6% simple interest for delay; refund claims arising under FTP must be decided by the Authority implementing the FTP, and DGFT's Policy Circular No.16 (15.03.2013) is a valid clarification of that FTP position.

Summary order. Civil Appeal dismissed for non-availability of satisfactory explanation for a delay of 358 days in filing the appeal.

Import into India - confiscation under the Customs Act - goods in transit - distinction between goods as 'goods' and a conveyance carrying goods or people - volition of the owner in constituting an import - international duty to render assistance on distress calls (UNCLOS/SOLAS) - redemption fine as alternative remedy

Import into India - distinction between goods as 'goods' and a conveyance carrying goods or people - volition of the owner in constituting an import - goods in transit - confiscation under the Customs Act - Whether a foreign fishing vessel brought into Indian territorial waters by the Indian Coast Guard in response to a false distress call made by its crew, without the knowledge or consent of the owner, amounts to an 'import' rendering the vessel and its contents liable to customs duty and confiscation under the Customs Act, 1962. - HELD THAT: - The Court found as a factual conclusion that the vessel was a foreign vessel brought into Indian territorial waters after a fake distress call concocted by its Indian crew, and that the owner had no knowledge or involvement in that act (see findings recorded in the impugned order). While a vessel may fall within the definition of 'goods', the Court explained there is a critical distinction between a vessel imported into India as 'goods' and a foreign-going vessel brought in as a conveyance carrying goods or people; for confiscation or imposition of duty the primary requirement is an 'import' into India in the statutory and contextual sense. A literal application of the definition of 'import' would yield an absurd result where an owner, whose vessel was clandestinely taken to India by its crew and brought in pursuant to a distress call responded to by the Coast Guard, would be treated as having 'imported' the vessel. The Court relied on the contextual interpretation of 'import' and relevant authorities to hold that where the owner did not volitionally bring the vessel into India and the vessel and its contents have not been used, consumed, or merged with the domestic market, there is no import attracting customs duty or confiscation. Further, on the proved facts the Court held the vessel and its goods could at most be regarded as 'goods in transit' intended to be taken back to the flag State, and thus not liable to duties or confiscation provided they are not used in India. Applying these principles, the Court concluded that the statutory ingredients for confiscation (as found by the authority under the cited provisions) and for imposition of duty were not made out on the facts of this case. [Paras 21, 23, 24, 25, 26]

The confiscation order and the corrigendum imposing duty are set aside; the vessel and its goods are not liable to customs duty or confiscation under the Act provided they are not used in India and are taken out of the country, and custody is to be handed over to the petitioner subject to an undertaking that they will not be used in India and will be exported once sea worthy.

Final Conclusion: Writ petition allowed: the Court, declining to restrict the petitioner to the statutory appeal in view of the extraordinary facts, set aside the orders of confiscation and duty and directed release of the vessel and goods to the owner subject to an undertaking that they will not be used in India and will be taken out of the country.

Wrongful confiscation - Release of goods on payment of appropriate customs duty - Waiver of demurrage and storage charges caused by wrongful detention - Finality of appellate order - Issuance of certificate under Regulation 6(l) of the Handling of Cargo in Customs Areas Regulations, 2009

Wrongful confiscation - Finality of appellate order - Release of goods on payment of appropriate customs duty - Waiver of demurrage and storage charges caused by wrongful detention - Petitioner entitled to release of goods and exemption from liability for demurrage/storage charges in consequence of the CESTAT allowing the appeal and holding confiscation to be incorrect. - HELD THAT: - The CESTAT, by its order dated 16.08.2021, set aside the order of confiscation and directed the Customs authorities to release the goods on payment of appropriate customs duty which the appellant had already paid. The High Court records that the confiscation was contrary to law and that the petitioner suffered injustice as a result. The respondents accepted the CESTAT order and have not challenged it. In view of the finality of that appellate order, the petitioner cannot be mulcted with liability for demurrage or storage charges which arose solely because of the wrongful confiscation; consequently the petitioner is entitled to the consequential reliefs granted by the Tribunal, including release of the goods without any liability for demurrage/storage. [Paras 2, 3, 4, 5]

The Court upheld the effect of the CESTAT order: goods are to be released on payment of appropriate duty already paid and the petitioner is not liable for demurrage/storage charges arising from the wrongful confiscation.

Issuance of certificate under Regulation 6(l) of the Handling of Cargo in Customs Areas Regulations, 2009 - Waiver of demurrage and storage charges caused by wrongful detention - Respondent Customs directed to consider and, if appropriate, issue the certificate contemplated by Regulation 6(l) to enable the release of goods and waiver of demurrage/storage charges. - HELD THAT: - Regulation 6(l) obligates the custodian (third party CFS) not to charge rent or demurrage on goods seized, detained or confiscated upon production of a certificate from the Commissioner of Customs to that effect. Given the CESTAT's order and its finality, the Court found that consequential reliefs, including issuance of the certificate under Regulation 6(l), ought to follow. The Court noted delay in issuing the certificate despite the Tribunal's order and directed the 1st respondent to consider the petitioner's case in light of the judgment and to issue appropriate orders under Regulation 6(l) within ten days of receipt of the judgment. [Paras 6, 7, 8]

The 1st respondent is directed to consider issuance of the Regulation 6(l) certificate and pass appropriate orders within ten days to enable release of the detained goods without liability for demurrage/storage.

Final Conclusion: The writ petition is allowed in part: the High Court applied the final CESTAT order, held that the petitioner is not liable for demurrage/storage arising from wrongful confiscation, and directed the Customs authority to consider and issue the certificate under Regulation 6(l) of the Handling of Cargo in Customs Areas Regulations, 2009 within ten days to facilitate release of the goods.

Fair inquiry and opportunity of hearing - right to cross-examination during inquiry - requirement to take oral evidence in inquiry - mandated form and submission of Inquiry Report - mechanical imposition of penalty - setting aside penalty for procedural infirmity

Fair inquiry and opportunity of hearing - requirement to take oral evidence in inquiry - right to cross-examination during inquiry - mandated form and submission of Inquiry Report - Whether the inquiry conducted under Regulation 17 of the Customs Brokers Licensing Regulations, 2018 complied with the mandatory procedural requirements and afforded the appellant a fair opportunity of hearing. - HELD THAT: - The Tribunal found that the Inquiry Officer largely reproduced the Show Cause Notice and the appellant's written reply but failed to comply with Regulation 17(3) by taking oral evidence and did not afford the appellant any opportunity of being heard. Regulation 17(4) entitles the customs broker to cross-examine, but in the absence of any hearing notice the appellant was deprived of that right. The Inquiry Report also appears not to have been submitted as mandated under Regulation 17(5). These procedural deficiencies indicate that the inquiry was treated as a formality and did not satisfy the statutory requirements for a fair inquiry. [Paras 4]

Inquiry was procedurally defective for non-compliance with the statutory requirements and denial of the appellant's right to be heard and cross-examine.

Mechanical imposition of penalty - setting aside penalty for procedural infirmity - Whether the penalty imposed under Regulation 18 read with Regulation 14 for alleged contraventions is sustainable in the light of the defective inquiry. - HELD THAT: - The Tribunal noted that in respect of the specific allegation under Regulation 10(q) the appellant furnished a plausible explanation which the Inquiry Report recorded, and the Assistant Commissioner did not deny the appellant's bona fides. Given the fundamental procedural infirmities in the inquiry and absence of a proper adjudicatory process, the imposition of penalty was held to be mechanical and unsustainable. The Tribunal set aside the impugned order accordingly. [Paras 5, 6]

Impugned penalty set aside as unsustainable due to procedural infirmity in the inquiry and lack of proper adjudication on merits.

Final Conclusion: The appeal is allowed; the impugned order imposing penalty is set aside because the inquiry did not comply with mandatory procedural requirements and the penalty was imposed mechanically without affording the appellant a fair opportunity to be heard.

Provisional release of seized goods - mutilation as condition for release - bond and bank guarantee for provisional release - payment of differential duty on reassessment - prohibition of import under Gas Cylinder Rules and Explosives Act - misdeclaration / classification dispute between HMS and CRGO

Provisional release of seized goods - misdeclaration / classification dispute between HMS and CRGO - Provisional release of the impugned goods subject to conditions - HELD THAT: - The Tribunal accepted the Commissioner(Appeals)'s approach of allowing provisional release while declining to enter into the merits of classification since those matters remained under investigation and adjudication. The Commissioner(Appeals) had observed that on a prima facie view the materials appeared to be scrap (end cuttings/used pieces with oil) and relied on a prior order permitting release after mutilation in a similar case. The Tribunal found no reason to interfere with the decision to allow provisional release of goods (including those alleged to be CRGO sheets and empty gas cylinders) on the condition that they be mutilated so as to render them scrap, noting that once mutilated the regulatory prohibition premised on reuse/import for filling would not apply. The Tribunal therefore upheld provisional release subject to mutilation and related safeguards. [Paras 24, 25, 26, 27]

Provisional release of the impugned goods was lawful and is upheld, subject to mutilation to render them scrap and other conditions imposed for release.

Mutilation as condition for release - bond and bank guarantee for provisional release - payment of differential duty on reassessment - Legality and propriety of the conditions imposed for provisional release (mutilation; bond equal to value; BG of 30% of value; payment of differential duty) - HELD THAT: - The Tribunal examined each condition imposed by the Commissioner(Appeals). It found the requirement of mutilation appropriate to ensure the goods cannot be reused and consistent with past practice in similar reclassified consignments. The requirement to execute a bond equal to the value of the goods and to pay any differential duty assessed was also treated as acceptable in the circumstances, particularly where the importer had agreed to pay differential duty and the goods would be rendered unusable. However, the Tribunal held that imposing a Bank Guarantee equal to 30% of the value of the goods was not warranted where the importer had already paid duty on declared value, agreed to pay any differential duty, and accepted mutilation and a bond. The Tribunal reviewed the authorities relied upon and concluded those decisions directed payment of a percentage of differential duty (20-30%) rather than a blanket BG of a percentage of the goods' value; accordingly the BG requirement was set aside. [Paras 28, 29, 30, 31]

Condition of mutilation, bond equal to value and payment of differential duty upheld; condition to furnish Bank Guarantee of 30% of the value of the goods set aside.

Final Conclusion: The appeals are disposed by upholding the Commissioner(Appeals)'s order to allow provisional release of the detained goods subject to mutilation, execution of a bond equal to the value of the goods and payment of any differential duty, but modifying the order by waiving the requirement to furnish a Bank Guarantee equal to 30% of the goods' value; the importer's appeal is partly allowed to that limited extent and the Revenue's appeal is dismissed.

Dispensing with meetings of shareholders and creditors under sections 230-232 of the Companies Act, 2013 - Scheme of Arrangement (Demerger) - Consent by affidavit of shareholders and creditors as basis for dispensation - Statutory auditors' certification of accounting treatment under Section 133 - Filing of second motion application

Dispensing with meetings of shareholders and creditors under sections 230-232 of the Companies Act, 2013 - Consent by affidavit of shareholders and creditors as basis for dispensation - Scheme of Arrangement (Demerger) - Dispensation of convening and holding meetings of equity shareholders, secured creditors and unsecured creditors of the Transferor Company in relation to the proposed Scheme of Arrangement (Demerger). - HELD THAT: - The Tribunal examined the application, annexed Scheme and supporting documents including the list of members/creditors and affidavits recording consent. For the Transferor Company the record shows all equity shareholders' affidavits and the secured creditor's affidavit placed on record, and affidavits of unsecured creditors representing the specified majority in value have been filed. The statutory auditors have certified the accounting treatment in terms of the Scheme. On that basis the Tribunal exercised its power under the Companies Act, 2013 to dispense with the requirement of convening meetings of the equity shareholders, secured creditor and unsecured creditors of the Transferor Company, as the necessity of holding such meetings was negated by the filed consents and supporting certifications. [Paras 4, 13]

Necessity of holding meetings of equity shareholders, the secured creditor and the unsecured creditors of the Transferor Company is dispensed with; the application in respect of the Transferor Company is allowed on that basis.

Dispensing with meetings of shareholders and creditors under sections 230-232 of the Companies Act, 2013 - Consent by affidavit of shareholders and creditors as basis for dispensation - Scheme of Arrangement (Demerger) - Dispensation of convening and holding meetings of equity shareholders, secured creditors and unsecured creditors of the Transferee Company in relation to the proposed Scheme of Arrangement (Demerger). - HELD THAT: - The Tribunal noted the lists and affidavits filed on behalf of the Transferee Company showing that all equity shareholders and the secured creditor have given their consents by affidavit, and that unsecured creditors holding the requisite majority in value have filed affidavits of consent. The Scheme and supporting certifications, including the auditors' certificate as to accounting treatment, were placed on record. Given these recorded consents and certifications, the Tribunal found that convening statutory meetings was not necessary and dispensed with the meetings under the provisions invoked in the application. [Paras 5, 13]

Necessity of holding meetings of equity shareholders, the secured creditor and the unsecured creditors of the Transferee Company is dispensed with; the application in respect of the Transferee Company is allowed on that basis.

Filing of second motion application - Direction as to the filing of the second motion application pursuant to allowance of the petition. - HELD THAT: - After allowing the application and dispensing with the meetings for both companies, the Tribunal directed compliance with the procedural requirement of filing the second motion application. This is an administrative/directional order arising from allowance of the Company Application and does not involve substantive adjudication of issues beyond permitting dispensation of meetings. [Paras 14]

Applicant Companies are directed to file the second motion application within 14 days from receipt of the order.

Final Conclusion: The Tribunal allowed the joint Company Application under Sections 230-232 of the Companies Act, 2013 for the proposed Scheme of Arrangement (Demerger), dispensed with convening meetings of equity shareholders, secured creditors and unsecured creditors of both the Transferor and Transferee companies on the basis of filed consents and certifications, and directed the filing of the second motion application within 14 days.

Scheme of Arrangement under section 230-232 of the Companies Act, 2013 - Dispensation of meetings of shareholders and creditors by consent affidavits - Approval of accounting treatment by Statutory Auditors in conformity with Section 133 - Appointed date

Dispensation of meetings of shareholders and creditors by consent affidavits - Scheme of Arrangement under section 230-232 of the Companies Act, 2013 - Whether meetings of equity shareholders, secured creditors and unsecured creditors of the transferor and transferee companies could be dispensed with on the basis of consents filed by affidavit. - HELD THAT: - The Tribunal considered the application for sanction of the Scheme and the affidavits of consent placed on record by the respective classes of stakeholders. For each applicant company the record contains lists of equity shareholders and certificates from chartered accountants identifying secured and unsecured creditors together with affidavits evidencing consent: Transferor Company 1 (all 13 equity shareholders; 1 secured creditor; unsecured creditors representing 92.13% in value) (paras. 4, 17); Transferor Company 2 (all 14 equity shareholders; 2 secured creditors; unsecured creditors representing 95.19% in value) (paras. 5, 17); Transferor Company 3 (all 13 equity shareholders; 1 secured creditor; unsecured creditors representing 91.45% in value) (paras. 6, 17); Transferee Company (all 13 equity shareholders; 1 secured creditor; unsecured creditors representing 91.13% in value) (paras. 7, 17). The Statutory Auditors have certified the accounting treatment in terms of the Companies Act, 2013 (para. 16). Having perused the scheme and the documents on record, and noting that consents by affidavit from the entirety of the equity shareholders and the requisite secured/unsecured creditor consents in value have been placed on record for each company, the Tribunal exercised its power to dispense with convening meetings of the equity shareholders, secured creditors and unsecured creditors of each of the applicant companies and directed filing of the second motion within 14 days (para. 17). [Paras 5, 6, 7, 16, 17]

Meetings of equity shareholders, secured creditors and unsecured creditors of Vedha Spinning Mills Pvt. Ltd., Sudhan Spinning Mills Pvt. Ltd., Adisankara Spinning Mills Pvt. Ltd. and Sri Shanmugavel Mills Pvt. Ltd. are dispensed with on the basis of the consents by affidavit placed on record; application allowed and second motion to be filed within 14 days.

Final Conclusion: Application allowed; the Tribunal dispensed with convening meetings of all classes of stakeholders for the four companies on the basis of the affidavits of consent and directed the applicant companies to file the second motion within 14 days.

Computation of limitation period under the Insolvency and Bankruptcy Code - obligation to apply for certified copy upon pronouncement under Section 61 and Rule 22(2) - effect of Suo Motu extension of limitation by the Supreme Court (COVID-19 orders) - exclusion of time while prosecuting another proceeding under Section 14(2) of the Limitation Act

Computation of limitation period under the Insolvency and Bankruptcy Code - obligation to apply for certified copy upon pronouncement under Section 61 and Rule 22(2) - Limitation for filing the appeal under the Code did not commence from the date the appellant received a free certified copy but from the date of pronouncement where the appellant was aware and had the means to apply for a copy. - HELD THAT: - The Tribunal held that, in the context of the IBC regime, the period of limitation for an appeal is to be computed from the date of pronouncement of the order and an aggrieved party is expected to exercise due diligence and apply for a certified copy upon pronouncement in terms of Section 61 read with Rule 22(2). Reliance was placed on the reasoning in [V. Nagarajan v. SKS Ispat and Power Ltd.] and the decision in [Sagufa Ahmed and Ors. v. Upper Assam Polywood Products Pvt. Ltd. & Ors.] where it was held that a party cannot await receipt of a free copy to defeat the statutory limitation under a special code like the IBC. The Tribunal noted that the appellant was aware of the order by 03.12.2019 and had even recorded an intention to challenge the order, so he could not wait until receiving a free certified copy on 05.02.2021 to start limitation anew. Earlier decisions of this Tribunal applying the principle that waiting for a free copy does not extend limitation where the party was aware were also noted. The result was that the appeal filed on 17.06.2021 was held to be time-barred on this ground. [Paras 15, 16, 17, 18]

Limitation commenced from the date of pronouncement/awareness and the appellant cannot rely on receipt of a free certified copy to extend the limitation; appeal is barred on this ground.

Effect of Suo Motu extension of limitation by the Supreme Court (COVID-19 orders) - computation of limitation period under the Insolvency and Bankruptcy Code - The appellant is not entitled to benefit from the Supreme Court's Suo Motu extension of limitation because the limitation for the appeal had already expired prior to the retrospective period covered by that order. - HELD THAT: - The Tribunal observed that the Supreme Court's suo motu directions extending limitation from 15.03.2020 operate only where the period of limitation had not already ended before that date. Since the 30-day limitation for the appellant expired on 10.12.2019, long before 15.03.2020, the appellant could not avail of the retrospective extension granted during the COVID-19 period. Accordingly, the Suo Motu order did not revive the appellant's time to file the appeal. [Paras 19]

The appellant cannot claim benefit of the Supreme Court's Suo Motu extension; the extension is inapplicable as limitation had already expired.

Exclusion of time while prosecuting another proceeding under Section 14(2) of the Limitation Act - The appellant is not entitled to exclusion of time under Section 14(2) because the proceeding prosecuted in the Bombay High Court did not suffer from a defect of jurisdiction or a like cause rendering that forum unable to entertain it. - HELD THAT: - Section 14(2) excludes time spent prosecuting another civil proceeding only where that proceeding was prosecuted in good faith in a forum which, from defect of jurisdiction or a similar cause, was unable to entertain it. The Tribunal accepted that a respondent prosecuting a claim may seek exclusion (per Explanation (b)), but emphasised the additional pre-condition that the earlier proceeding must be in a forum unable to entertain the matter. The writ petition in the Bombay High Court was filed under Article 226 and there was no finding that the High Court lacked jurisdiction; therefore the pre-condition for exclusion under Section 14(2) was not satisfied. The Tribunal distinguished the appellant's reliance on [Sesh Nath Singh and Ors. v. Baidyabati Sheoraphuli Co-operative Bank Ltd. & Ors.] , noting that in that case the earlier proceedings were prima facie without jurisdiction and had been stayed on that ground. [Paras 20, 21, 22, 24, 25]

No exclusion of time under Section 14(2) is available; the writ petition did not suffer from defect of jurisdiction and thus cannot extend limitation for the appeal.

Final Conclusion: The appeal filed on 17.06.2021 is dismissed as barred by time; no relief under Section 5 or Section 14(2) of the Limitation Act or the Supreme Court's COVID-19 suo motu extension is available to the appellant.

Existence of financial debt - status as financial creditor - default - record/evidence of default - satisfaction of the Adjudicating Authority under section 7 - period of limitation / time barred section 7 application

Existence of financial debt - status as financial creditor - record/evidence of default - default - Respondent No.1 failed to prove existence of a financial debt and thereby failed to establish entitlement to be treated as a financial creditor under the IBC. - HELD THAT: - The Tribunal examined the definitions of "debt" and "default" and the statutory requirement that a section 7 application must set out the existence of a financial debt and record of default. The Adjudicating Authority had sought clarifications and documents from Respondent No.1, who produced bank statements, ledger entries and a letter dated 20.7.2015. The Tribunal found material inconsistencies between the monetary transfers and the dates and signatures on the purported acknowledgement, absence of any written/oral agreement, lack of prior demand or notice, and no record from an information utility or other conclusive evidence of a loan. In view of these deficiencies, the Tribunal held that Respondent No.1 did not satisfactorily prove that the amounts were advanced as a loan giving rise to a financial debt or that there was a default by the Corporate Debtor, and therefore was not entitled to invoke section 7 proceedings. [Paras 13, 14, 15, 16, 17]

Findings recorded that Respondent No.1 had not proven the claimed loan or default and thus was not a financial creditor entitled to proceed under section 7.

Period of limitation / time barred section 7 application - date of default - Even assuming the transaction amounted to a financial debt, the section 7 application was barred by limitation. - HELD THAT: - Having taken the date of default as 31.7.2015 (as inferred from the party's own letter), the Tribunal applied the limitation period and observed that a section 7 application ought to have been filed within three years from that date. The application in the present case was filed on 14.9.2018, beyond the three year period ending 30.7.2018. Consequently, the section 7 petition was time barred even on the assumption that a financial debt had existed. [Paras 14, 16]

Section 7 application held to be barred by limitation if the claimed date of default is taken as 31.7.2015.

Final Conclusion: The appeal is allowed: the impugned order dated 15.3.2021 is set aside, the Corporate Debtor is released from the rigors of CIRP, all conditions enforced in compliance with the impugned order are removed, and no order as to costs.

Limitation - finality of adjudicating authority's order - misconceived review application under NCLT rules - non-substantive order seeking police assistance - prohibition on transfer of corporate debtor's assets during moratorium

Limitation - finality of adjudicating authority's order - Whether the appeal against the Adjudicating Authority's order dated 26.09.2019 was barred by limitation and liable to be dismissed. - HELD THAT: - The Tribunal found that the Adjudicating Authority's order dated 26.09.2019 directing handover of custody of specified vehicles had attained finality as it was not challenged within the prescribed limitation period. The appellant's reliance on a purported review application before the Adjudicating Authority did not afford any extension of time because review under the IBC is not permissible and the review application was correctly treated as misconceived. The record shows the appellant had knowledge of the 26.09.2019 order and, even if the period during which the review application was prosecuted is given benefit, the extended period for filing the appeal expired on 19.12.2020. The appeal was filed on 01.02.2021, well after the expiry of the extended limitation period, and the appellant failed to satisfactorily explain the delay of over 40 days. Adopting a liberal approach to computation did not bring the appeal within time; accordingly the appeal is barred by limitation. [Paras 9, 10, 11, 12, 13]

The appeal is barred by limitation and is dismissed.

Misconceived review application under NCLT rules - non-substantive order seeking police assistance - Whether the order dated 04.11.2020 constituted a substantive adjudication affecting the limitation analysis or otherwise remedied the appellant's failure to appeal against the 26.09.2019 order. - HELD THAT: - The Tribunal held that the order dated 04.11.2020 merely recorded that a review application had been filed and was dismissed as misconceived because there is no provision for review of Adjudicating Authority orders under the IBC. The 04.11.2020 order was limited to seeking police assistance for locating the vehicles and did not constitute a substantive order that would alter the finality of the 26.09.2019 order or revive the appellant's right to challenge it. Consequently, the 04.11.2020 order could not operate to extend or revive the period for filing an appeal against the 26.09.2019 order. [Paras 3, 10, 11]

The 04.11.2020 order is non-substantive and does not affect the limitation bar on the appeal; the review application was misconceived.

Final Conclusion: Both appeals are dismissed as barred by limitation; the appellant is directed to comply with the Adjudicating Authority's order dated 26.09.2019 so that the insolvency resolution/liquidation process may proceed. No order as to costs.

Security interest - classification as secured or unsecured creditor - jurisdiction of Adjudicating Authority under Section 60(5) over questions of priorities - inapplicability of limitation under Section 42 to applications maintainable under Section 60(5) - registration of charge under Section 77 of the Companies Act, 2013 - effect of a judicial decree/order on unregistered charge - proving security interest under Regulation 21 of the Liquidation Process Regulations - relinquishment of security interest under Section 52(1)(a) of the Code

Jurisdiction of Adjudicating Authority under Section 60(5) over questions of priorities - inapplicability of limitation under Section 42 to applications maintainable under Section 60(5) - Maintainability of the Application under Section 60(5) and whether the 14-day limitation under Section 42 applied to the I.A. filed by the Appellant. - HELD THAT: - The Adjudicating Authority erred in treating the I.A. under Section 60(5) as an appeal under Section 42 and applying the 14 day limitation. Section 60(5) confers jurisdiction on the Adjudicating Authority to entertain applications concerning claims and questions of priorities arising out of liquidation. The Appellant's grievance related to its classification as a secured or unsecured creditor, a question of priority and therefore maintainable under Section 60(5). Section 42 provides a separate remedy - an appeal against a liquidator's decision within fourteen days - but that limitation is inapplicable to an independent application properly brought under Section 60(5). Consequently, the period of limitation for an appeal under Section 42 could not be imported to bar the I.A. filed under Section 60(5). [Paras 15, 16, 17, 18]

I.A. No.33 of 2021 was maintainable under Section 60(5) and could not be rejected as time barred by applying Section 42.

Registration of charge under Section 77 of the Companies Act, 2013 - effect of a judicial decree/order on unregistered charge - proving security interest under Regulation 21 of the Liquidation Process Regulations - relinquishment of security interest under Section 52(1)(a) of the Code - classification as secured or unsecured creditor - Whether non-registration of the charge under Section 77(3) precluded the Appellant from being treated as a secured creditor where there was a decree/order of the Debt Recovery Tribunal in favour of the Appellant. - HELD THAT: - The Adjudicating Authority wrongly rejected the Appellant's claim to secured status solely on the ground of non registration under Section 77(3). The DRT had adjudicated the Appellant's claim and directed recovery from the sale of mortgaged and hypothecated properties if payment was not made within the period fixed; that direction transformed the contractual mortgage/hypothecation into an enforceable judicial remedy. Precedents establish that where an unregistered charge forms part of a decree or judgment and the decree keeps the charge alive or provides for sale of secured assets, the requirement of registration does not defeat the creditor's right to realize security. The Appellant's claim was supported by the DRT order, the liquidation-stage classification had earlier recognised the Appellant as secured, and the Appellant later relinquished its security interest as contemplated by Section 52(1)(a). Regulation 21 prescribes modes of proving security, but where a decree/directive of a competent tribunal already confers the right to realize secured assets, non registration under Section 77 does not nullify that right. [Paras 20, 23, 26, 32, 33]

Non registration under Section 77 did not disentitle the Appellant from being treated as a secured creditor in view of the DRT judgment; the Adjudicating Authority's rejection on that ground was erroneous.

Final Conclusion: The appeal is allowed. The order of the Adjudicating Authority dated 28th April, 2021 is set aside, I.A. No.33 of 2021 is allowed, and the Liquidator is directed to rectify the classification of the Appellant's claim as a secured claim; no order as to costs.

Eligibility and ineligibility under Section 29A - power of the Committee of Creditors to approve a resolution plan - duty of the Resolution Professional to examine resolution plans under Section 30 - Regulation 39 - evaluation and voting on resolution plans by the Committee of Creditors - natural justice - opportunity to cure defects and reconsideration

Eligibility and ineligibility under Section 29A - natural justice - opportunity to cure defects and reconsideration - The Adjudicating Authority's direction to the Committee of Creditors to take a call on whether the third respondent was ineligible under Section 29A and to consider its revised plan was in accordance with law. - HELD THAT: - The Adjudicating Authority, after hearing parties, kept open the objections taken by the Resolution Professional and directed the Committee of Creditors (COC) to determine whether the third respondent was truly ineligible under Section 29A(e) and to consider any revised plan. The Tribunal held that this direction was consistent with principles of natural justice by affording the resolution applicant an opportunity for reconsideration and to cure defects. The Tribunal declined to re adjudicate the merits of the eligibility determination and confined its review to the lawfulness of the Adjudicating Authority's order, finding no infirmity or illegality in directing the COC to consider the objections and the revised plan. [Paras 19, 23, 24]

The order of the Adjudicating Authority directing the COC to consider the ineligibility and the revised plan is lawful and contains no legal infirmity.

Power of the Committee of Creditors to approve a resolution plan - duty of the Resolution Professional to examine resolution plans under Section 30 - Regulation 39 - evaluation and voting on resolution plans by the Committee of Creditors - Whether the Committee of Creditors has the power to consider eligibility/ineligibility under Section 29A and to evaluate and approve resolution plans. - HELD THAT: - The Tribunal analysed Section 30 (submission and examination of resolution plans) together with the proviso that the COC shall not approve a plan where the resolution applicant is ineligible under Section 29A, and the procedure in Regulation 39 empowering the RP to submit compliant plans and the COC to evaluate and vote on them. On this statutory and regulatory matrix, the Tribunal concluded that the COC has authority to evaluate resolution plans, consider feasibility and viability, and to take a decision on approval, which includes considering whether a resolution applicant is eligible or ineligible under Section 29A(e). The Tribunal therefore held that the Adjudicating Authority was correct in directing the COC to take a call on eligibility as part of its evaluative function. [Paras 21, 22, 23]

The COC is empowered by the Code and Regulations to evaluate and approve resolution plans and to consider the eligibility/ineligibility of resolution applicants under Section 29A.

Final Conclusion: The appeal is dismissed as devoid of merit and the order of the Adjudicating Authority dated 25th March 2021 is upheld; no costs are awarded.

Dissolution of corporate debtor - order under section 54(2) of the Insolvency and Bankruptcy Code, 2016 - final report and Compliance Certificate in Form H - compliance with Regulation 45(3) of the IBBI (Liquidation Process) Regulations - distribution of available funds under section 53 - discharge of the liquidator - directions to Registrar of Companies and IBBI for record and custody of books and files

Dissolution of corporate debtor - order under section 54(2) of the Insolvency and Bankruptcy Code, 2016 - final report and Compliance Certificate in Form H - compliance with Regulation 45(3) of the IBBI (Liquidation Process) Regulations - Application for dissolution of the corporate debtor was allowed and the corporate debtor was ordered to be dissolved. - HELD THAT: - The Liquidator filed the final report and the Compliance Certificate in Form H in accordance with Regulation 45(3) of the IBBI (Liquidation Process) Regulations and placed on record the details of valuation, realised sale proceeds and distribution. The Stakeholders Consultation Committee, at its final meeting, resolved for dissolution. Having satisfied itself that no further assets remain to be utilised or disposed of and that no further proceedings remain in the liquidation process, the Adjudicating Authority exercised its power under section 54(2) of the IBC to order dissolution of the corporate debtor from the date of the order.

Order dissolving M/s. Shree Santosh Cotton Spin Private Limited was passed and the corporate debtor stands dissolved with effect from the date of the order.

Discharge of the liquidator - distribution of available funds under section 53 - The liquidator was discharged from his duties and responsibilities consequent to the dissolution, after distribution of realisable funds as per law. - HELD THAT: - The Tribunal recorded that the total realised sale proceeds and available funds had been distributed in accordance with section 53 of the IBC and related regulations. In view of the dissolution and completion of the liquidation process, the Liquidator, who had been appointed earlier and who conducted the liquidation and distributions, was discharged from his duties and responsibilities.

Liquidator Mr. Bhupendra Singh Narayan Singh Rajput was discharged from his duties and responsibilities as liquidator.

Directions to Registrar of Companies and IBBI for record and custody of books and files - Directions were issued to transmit the order and the corporate debtor's books and files to the Registrar of Companies and to forward a copy to the IBBI and concerned parties. - HELD THAT: - As a consequence of dissolution, the Tribunal directed the Liquidator and the Registry to send a copy of the dissolution order along with all books and files of the corporate debtor to the Registrar of Companies, Gujarat within seven days, and further ordered that a copy of the order be forwarded to the IBBI and concerned parties for their records. These directions implement the post-dissolution administrative and record-keeping obligations.

Liquidator and Registry to send copy of the order and books/files to ROC, Gujarat within seven days; copy of the order to be forwarded to IBBI and concerned parties.

Final Conclusion: Application under section 54(1) read with Regulation 45(3)(b) was allowed; the corporate debtor was dissolved, the liquidator discharged, and administrative directions given for transmission of the order and custody of records.

Voluntary liquidation - Dissolution under section 59 of the Insolvency and Bankruptcy Code, 2016 - Declaration of Solvency - Regulatory compliance with IBBI (Voluntary Liquidation Process) Regulations, 2017 - Final report and auditors' certificate on liquidation - Preservation of liquidation records - Registrar of Companies report on pending actions

Voluntary liquidation - Dissolution under section 59 of the Insolvency and Bankruptcy Code, 2016 - Declaration of Solvency - Regulatory compliance with IBBI (Voluntary Liquidation Process) Regulations, 2017 - Final report and auditors' certificate on liquidation - Registrar of Companies report on pending actions - Whether the company may be dissolved under section 59 of the IBC upon satisfaction of statutory and regulatory compliance by the voluntary liquidator - HELD THAT: - The Tribunal recorded that the shareholders passed a special resolution for voluntary liquidation and appointed an insolvency professional as liquidator; the company filed a Declaration of Solvency and audited financial statements with the Registrar; statutory notifications and newspaper publications required by the IBBI Regulations were made; no creditors or claims were received by the last date for submission; the liquidator realized and distributed available proceeds to shareholders in accordance with the Code; the liquidator submitted a Final Report with an auditors' certificate; the Registrar of Companies reported no pending inquiry/inspection/complaint/legal action against the company. The Tribunal found these steps satisfied the requirements of section 59 of the Code and the IBBI (Voluntary Liquidation Process) Regulations, 2017 and that there was no legal impediment to dissolution. [Paras 4, 5]

The prayer to dissolve the company under section 59 of the IBC is allowed and the company is dissolved with effect from the date of the order; the liquidator must preserve the reports, registers and books of account referred to in Regulations 8 and 10 for at least eight years after dissolution and a copy of the order shall be filed with the Registrar of Companies within the statutory period.

Final Conclusion: The Tribunal allowed dissolution of M/s. Medanta Duke Research Institute Private Limited under section 59 IBC on satisfaction of the procedural and substantive compliance required for voluntary liquidation, directed preservation of liquidation records for eight years and directed filing of the order with the Registrar of Companies.

Writ of Mandamus - statutory requirement for electronic filing - manual acceptance of returns contrary to statutory procedure - consideration of electronically filed return by the department

Writ of Mandamus - manual acceptance of returns contrary to statutory procedure - Prayer for issuance of a writ of mandamus directing respondents to accept the return filed manually was not in accordance with the statutory provision and the High Court did not err in refusing that relief. - HELD THAT: - The petition before the High Court sought a writ of mandamus compelling the respondents to accept a manually filed return. The Supreme Court observed that such a prayer, seeking manual acceptance where the statutory scheme prescribes electronic filing, was not in accordance with the statutory provision relied upon and therefore could not be granted. The Court found no error in the High Court's refusal to issue the writ directing manual acceptance of the return. The conclusion rests on the incompatibility of the requested relief with the governing statutory procedure rather than an evaluation of the substantive validity of any return filed.

The request for mandamus to accept the return manually is unsustainable and the High Court's refusal is upheld.

Statutory requirement for electronic filing - consideration of electronically filed return by the department - The petitioner subsequently filed the return electronically (by email), a fact not presented to the High Court; the Supreme Court did not decide the merits of that electronically filed return and left it to the department to consider in accordance with law. - HELD THAT: - Counsel for the petitioner stated that after the High Court proceedings the return was filed electronically by email, which was not the case before the High Court. The Supreme Court expressly refrained from expressing any view on the merits or legality of the electronically filed return. Instead, the Court directed that if the electronically filed return is found to be in order and permissible under law, the department may consider it in accordance with law. This amounts to leaving the question of validity and acceptance of the electronically filed return to the departmental process for adjudication, without adjudicating the substantive issue at the appellate level.

The electronically filed return is not adjudicated by this Court; the department is permitted to consider it in accordance with law.

Final Conclusion: The Special Leave Petition is dismissed: the Court upheld the High Court's refusal to direct manual acceptance of the return and declined to rule on the merits of a subsequently filed electronic return, leaving its consideration to the department in accordance with law.

Condonation of delay - limitation for filing appeals - exclusion of period during pendency of proceedings - right to appeal under Section 85 of the Finance Act, 1994 - issuance of certified copy of order - suspension of coercive recovery

Condonation of delay - limitation for filing appeals - exclusion of period during pendency of proceedings - right to appeal under Section 85 of the Finance Act, 1994 - Whether the petitioner can prefer an appeal against the order in original dated 27.11.2020 and whether periods for limitation should be excluded/condoned. - HELD THAT: - Having regard to the Supreme Court orders in In Re: Cognizance for Extension of Limitation, the period of limitation for filing appeals is treated as condoned from 15.03.2020 up to 02.10.2021. The petitioner may therefore prefer an appeal under Section 85 of the Finance Act, 1994 against the order dated 27.11.2020 by seeking condonation of delay for the period from 27.11.2020 till 02.10.2021. Further, the period during which this writ petition was pending from 12.10.2021 until the date of the judgment is to be excluded for the purpose of computing limitation. The Court held that exclusion of these periods will not prejudice the respondents and preserves the petitioner's right to pursue the statutory appellate remedy. [Paras 8, 10]

Petitioner entitled to prefer an appeal under Section 85; period from 27.11.2020 to 02.10.2021 may be condoned and the period of pendency of this writ petition from 12.10.2021 to date of judgment shall be excluded for limitation purposes.

Issuance of certified copy of order - suspension of coercive recovery - Whether the respondents should be directed to furnish a fresh certified copy of the order in original and whether coercive proceedings should be kept in abeyance. - HELD THAT: - The Court found it appropriate, regardless of whether the earlier order dated 27.11.2020 was previously served, to provide the petitioner with a fresh certified copy to enable exercise of the appellate remedy. Consequently, the 1st respondent was directed to issue the certified copy of Order No.21/2020-2021 ST (AC) dated 27.11.2020 within seven days of receipt of the judgment. In order to afford the petitioner time to pursue the appellate remedy, coercive proceedings arising from the demand notice Ext.P9 were ordered to be kept in abeyance for ten days from receipt of a copy of the judgment. [Paras 9, 11, 12]

Respondent to furnish certified copy of the order dated 27.11.2020 within seven days; coercive proceedings pursuant to Ext.P9 stayed in abeyance for ten days from receipt of the judgment.

Final Conclusion: Writ petition disposed of by permitting the petitioner to prefer an appeal under Section 85 of the Finance Act, 1994 with specified exclusions and condonation of limitation as noted; respondent directed to furnish a certified copy of the order within seven days and coercive proceedings kept in abeyance for ten days.

Extended period of limitation - suppression of facts - mere failure to declare vs. willful suppression - goods transport agency service (GTA) - reverse charge mechanism

Extended period of limitation - suppression of facts - mere failure to declare vs. willful suppression - Validity of invoking the extended period of limitation for demands prior to April 2016 - HELD THAT: - The Tribunal found on the material on record that the Department had knowledge of the appellant's GTA activities as early as January 2016 through correspondence initiated on 29.1.2016 and the appellant's responsive communications of 10.3.2016 and 31.3.2016. There is no finding of fraud or factual suppression by the appellant; absence of further departmental communication led the appellant to presume satisfaction. The Court applied the settled principle that mere non-declaration or failure to declare does not amount to willful suppression or mis-declaration warranting invocation of the extended period. In the absence of evidence of fraud or suppression, the extended period could not be invoked and demands covering the earlier years therefore fall beyond the normal limitation period. [Paras 6]

Demand for the period 2013-14 to 2015-16 based on invocation of the extended period is quashed.

Goods transport agency service (GTA) - reverse charge mechanism - Liability to pay service tax for GTA services provided to proprietorship concerns for the period April 2016 to June 2017 - HELD THAT: - For the period April 2016 to June 2017, which falls within the normal limitation period, the Tribunal examined certificates submitted by the appellant showing that the proprietorship concerns were registered as factories. Applying Section 68(2) read with Notification No.30/2012-ST, the Tribunal concluded that where the recipient is a factory (or other specified entity), the total service tax on GTA services is payable by the recipient under the reverse charge mechanism. Because the recipients in these transactions were found to be registered as factories, the liability to pay service tax did not rest on the appellant for that period. The appellant's alternate plea on threshold exemption was noted but not decided, since the Tribunal's finding on factory registration and reverse charge made it unnecessary to adjudicate the exemption point. [Paras 7]

Demand for the period April, 2016 to June, 2017 is set aside as service tax liability lies on the recipients under the reverse charge mechanism.

Final Conclusion: The appeal is allowed. The demands for the periods 2013-14 to 2015-16 (quashed for being barred by limitation as extended period was improperly invoked) and April 2016 to June 2017 (set aside as liability rests on recipients under reverse charge) are annulled; the appellant is entitled to consequential relief as per law.

Cost Petroleum - Profit Petroleum - consideration for rendering services - mining services - Production Sharing Contract - joint venture - unincorporated association - capital contribution - principle of burden to prove consideration - Circular dated 12.02.2018

Cost Petroleum - Profit Petroleum - consideration for rendering services - mining services - Production Sharing Contract - joint venture - capital contribution - Circular dated 12.02.2018 - Entitlement to Cost Petroleum and Profit Petroleum under the Production Sharing Contract is not consideration for rendering mining services to the Government of India. - HELD THAT: - The Tribunal found on a review of the Production Sharing Contract and its Accounting Procedure that 'Cost Petroleum' and 'Profit Petroleum' are mechanisms for recovery and sharing of contract costs and surplus under a joint venture framework rather than payments flowing from the Government to the contractor as consideration for services. The contract terms (Articles 7, 13 and 14, Appendix C) show contractors undertake Petroleum Operations at their sole risk and recover aggregated Exploration, Development and Production costs out of produced petroleum, with any surplus shared by pre agreed percentages. The nature of the arrangement is a public private joint venture in which each co venturer contributes resources (including manpower and capital) for a common commercial enterprise; such contributions enter a common pool and are not a quid pro quo paid by the Government as consideration for a service. The Tribunal applied the principle that a taxable service requires an identifiable provider recipient relationship and consideration paid as compensation for a service, and observed that the Department did not discharge the burden of proving such a rendition of service and corresponding consideration. The view is supported by the departmental Circular of 12.02.2018 which clarifies that contractors carry out operations for themselves and that Cost Petroleum is not per se consideration to the Government. Reliance on precedent concerning PPPs/joint ventures (including Mormugao Port Trust and related decisions) underpinned the conclusion that the arrangements fall within joint venture/partnership character rather than a service contract attracting service tax. [Paras 36, 40, 42]

Impugned orders confirming service tax demands are set aside; appeals allowed.

Final Conclusion: The Tribunal held that under the Production Sharing Contract the entitlements described as Cost Petroleum and Profit Petroleum do not constitute consideration from the Government of India for mining services and therefore cannot be subjected to service tax for the periods under dispute; the impugned adjudication orders are set aside and the appeals are allowed.

Limitation period for recovery of service tax - extended period of limitation for short levy - show cause notice barred by limitation - audit report as a bar to invoking extended limitation - suppression of facts

Limitation period for recovery of service tax - show cause notice barred by limitation - audit report as a bar to invoking extended limitation - extended period of limitation for short levy - suppression of facts - Whether the show cause notice dated 21.04.2017 invoking the extended period of limitation for alleged short levy/non-payment of service tax for 2012-13 and 2013-14 was barred by limitation in view of an earlier audit which raised no objection. - HELD THAT: - The Tribunal found that audits for the impugned period were undertaken on 28.03.2014 and 02.04.2014 and the audit report did not raise any objection of short payment or non-payment of service tax. The show cause notice was issued on 21.04.2017, which is beyond the one-year normal limitation period. There was no finding of suppression of facts by the appellant; accordingly, the extended five-year period relied upon by the Revenue (as in Nizam Sugar Factory) was not held to be applicable because the Larger Bench decision did not consider the factual matrix where an audit had already been conducted and no objections recorded. Given the absence of suppression and the prior audit, the Tribunal concluded that the demand could not be sustained as the notice was time-barred. [Paras 5, 6]

The show cause notice dated 21.04.2017 is barred by limitation and the demand cannot be sustained; the impugned order is set aside and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal and set aside the impugned order because the show cause notice issued beyond the one-year limitation period could not be sustained in view of the prior audit that raised no objection and absence of any suppression by the appellant.

Principles of natural justice - opportunity of personal hearing - service tax reverse charge for ocean freight - notice by e-mail - restoration and remand for fresh adjudication

Principles of natural justice - opportunity of personal hearing - notice by e-mail - restoration and remand for fresh adjudication - Ext.P3 order was passed in breach of the principles of natural justice and must be set aside, and Ext.P2 appeal restored for fresh adjudication with proper notice to the petitioner. - HELD THAT: - The Court accepted that while a person who fails to avail an opportunity cannot ordinarily complain of denial of natural justice, the present case did not disclose a consistent default by the petitioner in attending hearings. The notice relied upon by the respondent was sent to a generic e-mail address ('[email protected]') making it impossible to ascertain whether it reached the officer who would represent the petitioner. In these circumstances the Court referred to the established importance of affording a hearing and held that the appeal ought to have been adjudicated only after giving proper notice to the petitioner. Accordingly Ext.P3 was set aside and Ext.P2 restored for fresh adjudication, with a direction that notice may be served by e-mail on an address specified by the petitioner in writing within one week, and that the first respondent should endeavour to dispose of the appeal within six months. [Paras 6, 7]

Ext.P3 is set aside; Ext.P2 is restored to file and shall be adjudicated afresh after service of notice by e-mail on an address to be specified by the petitioner within one week; the first respondent shall endeavour to dispose of Ext.P2 within six months.

Final Conclusion: Writ petition allowed; the impugned order is set aside and the appeal is remanded for fresh adjudication after giving the petitioner proper notice by e-mail, with directions for expeditious disposal.

Relegation to adjudicating authority - Scope of interference by appellate court - Dismissal of appeal

Relegation to adjudicating authority - Scope of interference by appellate court - The appeals are dismissed and the Tribunal's order relegating the parties to the adjudicating authority is upheld. - HELD THAT: - The Supreme Court heard the parties and found no reason to diverge from the view taken by the Tribunal. The Court concurred with the Tribunal's direction to relegate the parties to the adjudicating authority for appropriate consideration, and therefore declined to exercise its power to interfere with the Tribunal's order. No separate reasons for interference were recorded, and the Tribunal's decision to remit the matter for further proceedings before the adjudicating authority was allowed to stand.

Appeals dismissed; Tribunal's order relegating the parties to the adjudicating authority is affirmed and the matters are remitted for further adjudication.

Final Conclusion: The Civil Appeals are dismissed; the Supreme Court declines to interfere and affirms the Tribunal's direction to relegate the parties to the adjudicating authority, with pending applications disposed of.

Eligibility for exemption under Notification No. 30/2004-CE - availing of Cenvat credit - Rule 6(3) of the Cenvat Credit Rules, 2004 - Rule 6(3D) of the Cenvat Credit Rules, 2004 - non-speaking order - remand for de novo adjudication

Eligibility for exemption under Notification No. 30/2004-CE - availing of Cenvat credit - Rule 6(3D) of the Cenvat Credit Rules, 2004 - Impugned adjudication failed to consider Rule 6(3D) while deciding whether availing Cenvat credit breached the conditions of Notification No. 30/2004-CE and thereby affected eligibility for exemption. - HELD THAT: - The Tribunal found that the core dispute concerned whether the appellants' availing of Cenvat credit negated their entitlement to exemption under Notification No. 30/2004-CE or whether compliance with Rule 6(3D) (by making the prescribed reversal/payment) would amount to non availment of credit and preserve the notification benefit. The adjudicating authority did not address Rule 6(3D) in its reasoning. Because the appellants' primary defence before the adjudicating authority and on appeal was founded on Rule 6(3D), the absence of any independent finding on that provision rendered the orders non speaking. The Tribunal therefore concluded that the legality of denial of exemption could not be sustained without fresh consideration of Rule 6(3D) and its effect on the asserted breach arising from availing Cenvat credit. [Paras 4]

Finding that the adjudicating authority failed to consider Rule 6(3D) and that, for that reason, the orders are non speaking and unsustainable.

Remand for de novo adjudication - non-speaking order - Appropriate remedy in view of the adjudicating authority's omission and the need for fresh adjudication on the applicability of Rule 6(3D). - HELD THAT: - Given the absence of a reasoned finding on Rule 6(3D), the Tribunal exercised its appellate discretion to set aside the impugned orders and remand the matters to the adjudicating authority for fresh, de novo adjudication. The remand is directed to ensure that the adjudicating authority considers the appellants' contentions on Rule 6(3D), determines whether reversal/payment under that provision remedies the alleged breach of the notification conditions, and passes a speaking, reasoned order addressing demand, interest and penalty as may be appropriate. [Paras 5]

Impugned orders set aside and matters remanded to the adjudicating authority for a fresh de novo order to be passed within three months.

Final Conclusion: The appeals were allowed by setting aside the impugned orders as non speaking and remanding the matters to the adjudicating authority for fresh de novo adjudication (to consider Rule 6(3D) and related contentions) with a direction to decide the matters within three months.

Mandatory procedure under Section 9D for admissibility of statements - Reliance on statements recorded during investigation in clandestine removal cases - Remand for de novo adjudication where mandatory procedure not followed - Right to opportunity of hearing before adjudicating authority

Mandatory procedure under Section 9D for admissibility of statements - Reliance on statements recorded during investigation in clandestine removal cases - Failure to follow the procedure prescribed in Section 9D when relying on statements recorded during investigation vitiates the adjudication and such statements must either be admitted only after compliance or discarded. - HELD THAT: - The Court examined the mandatory language of Section 9D(i) and held that clauses (a) and (b) prescribe the circumstances in which statements made and signed before a gazetted Central Excise Officer during inquiry or proceedings are relevant for proving the truth of their contents. The use of the word 'shall' renders the procedure compulsory. Consequently, if the adjudicating authority relies on such statements without following the Section 9D procedure, the adjudication process is vitiated. The Court noted that clandestine removal cases commonly rest on statements recorded during investigation and emphasised that the legislatively prescribed procedure cannot be bypassed; where compliance is not possible the statements must be discarded rather than relied upon. [Paras 4]

The adjudication which relied on investigation statements without observing the Section 9D procedure was held to be vitiated.

Remand for de novo adjudication - Right to opportunity of hearing before adjudicating authority - Matter remitted to the adjudicating authority for de novo adjudication with direction to afford the appellant an opportunity of hearing. - HELD THAT: - On the ground that the mandatory procedure under Section 9D had not been followed, and notwithstanding earlier opportunities granted by the adjudicating authority, the Court held that justice requires re-adjudication in the prescribed manner. The Court set aside the impugned order without deciding the merits and directed that the adjudicating authority proceed afresh, giving the appellant an opportunity to be heard and to attend hearings fixed by that authority. [Paras 4, 5]

Impugned order set aside and matter remanded to the adjudicating authority for de novo adjudication after affording opportunity of hearing to the appellant.

Final Conclusion: The appeal was disposed of by setting aside the impugned order and remitting the matter for fresh adjudication because the mandatory Section 9D procedure was not followed; the adjudicating authority is to hear the appellant and proceed de novo.

Interest on pre-deposit - deposit during investigation deemed to be under protest - entitlement to interest under Section 35FF - date of deposit as commencement of interest - rate of interest 12% p.a. - disbursement of interest within fixed period

Interest on pre-deposit - entitlement to interest under Section 35FF - date of deposit as commencement of interest - rate of interest 12% p.a. - Whether the appellant was entitled to interest on the amount deposited during investigation from the date of deposit until the date of refund and at what rate - HELD THAT: - The Tribunal examined whether interest should be granted on amounts deposited by the appellant during the course of investigation, noting that the adjudicating authority had allowed refund of the deposit but denied interest, and the Commissioner (Appeals) limited interest to commencement after three months from filing the refund application. Relying on the Division Bench decision in Parle Agro (P) Ltd. and the Apex Court ruling in Sandvik Asia Ltd., the Tribunal held that Section 35FF authorises grant of interest on amounts deposited during investigation from the date of deposit until the date of refund. The Tribunal accepted the view that deposits made during investigation are to be treated as under protest and that, where the demand is ultimately dropped, interest accrues from the date of deposit. Applying the precedent, the Tribunal directed payment of interest at the rate of 12% per annum from the respective dates of deposit up to the date of refund and directed the adjudicating authority to disburse the interest within a specified period. [Paras 6, 7]

Appeal allowed; interest to be paid at 12% p.a. from date of deposit till date of refund and to be disbursed within 45 days from service of this order.

Final Conclusion: The Tribunal allowed the appeal and directed payment of interest at 12% per annum on the amounts deposited during investigation from the dates of deposit until the date of refund, to be disbursed by the authority within 45 days.

Valuation under Section 4 vis-a -vis Section 4A of the Central Excise Act, 1944 - MRP requirement for assessment under Section 4A - Standards of Weights & Measures (Packaged Commodities) Rules, 1977 - intention for retail sale evidenced by MRP on multi-piece packs - duty liability under Section 4A discharged correctly

Valuation under Section 4 vis-a -vis Section 4A of the Central Excise Act, 1944 - MRP requirement for assessment under Section 4A - intention for retail sale evidenced by MRP on multi-piece packs - Whether the goods manufactured and cleared in multi-piece packs with MRP printed are to be valued under Section 4A or under Section 4 of the Central Excise Act, 1944. - HELD THAT: - The Tribunal applied its earlier reasoning that assessment under Section 4A is conditioned on the goods being packaged for retail sale with Maximum Retail Price printed on the package, a mandate deriving from the Standards of Weights & Measures (Packaged Commodities) Rules, 1977 rather than from the Central Excise Act. Printing of MRP on multi-piece packs at the point of clearance from the factory is evidence of the manufacturer's intent to market the goods for retail sale. That intent, as manifested by the prescribed declarations on the package, is the operative test for assessment under Section 4A. Commercial possibilities at the retail stage (such as breaking up multi-packs) do not negate the fact of packaging and declaration at clearance. Applying that principle to the present appeals, where MRP was printed on the multi-piece packs, the appellant correctly discharged duty under Section 4A and the Revenue's contention for assessment under Section 4 was unsustainable.

The Tribunal held that the goods were correctly valued and duty discharged under Section 4A of the Act as the packaging with MRP printed evidenced intent for retail sale.

Final Conclusion: The impugned orders are set aside; the appeals are allowed and it is held that the appellant correctly discharged duty under Section 4A of the Central Excise Act, 1944, with consequential relief, if any.

Penalty under Rule 26 of the Central Excise Rules, 2002 - Imposition of penalty on directors - Cenvat credit irregularity due to alleged bogus invoices - Requirement of corroborative evidence to sustain penalty - Burden of proof in penalty proceedings

Penalty under Rule 26 of the Central Excise Rules, 2002 - Imposition of penalty on directors - Requirement of corroborative evidence to sustain penalty - Whether penalties under Rule 26 could be imposed on the appellants (directors) for irregular availment of Cenvat credit on the basis of invoices alleged to be bogus where there was no corroborative evidence that inputs were not received. - HELD THAT: - The appeal arose from penalties imposed after an investigation at the instance of the Assistant Commissioner, CGST, Bhiwadi, which probed issuances of invoices by certain suppliers allegedly without any manufacturing activity. The appellants, directors of the receiver company, stated that they had received the inputs on the invoices relied upon, had used them in manufacture and had cleared finished products on payment of duty. The adjudicating authority relied on the investigation against the suppliers but the record contains no corroborative evidence linking the appellants to procurement without receipt of goods (for example, no evidence from transporters or independent verification disproving receipt). In that factual matrix, and in the absence of independent corroboration to rebut the appellants' positive statements regarding receipt and utilisation of inputs, the imposition of penalties on the appellants was unsustainable. The Tribunal therefore set aside the penalty orders. [Paras 6, 7]

Penalties imposed under Rule 26 are set aside for lack of corroborative evidence; appeals allowed.

Final Conclusion: The Tribunal allowed the appeals, set aside the penalty orders imposed under Rule 26 on the appellants (directors) and granted consequential relief, holding that in the absence of corroborative evidence disproving receipt and use of inputs the penalties could not be sustained.

Principles of natural justice - ex-parte adjudication - opportunity of personal hearing - right to perusal of relied-upon documents - de novo adjudication on remand

Principles of natural justice - ex-parte adjudication - right to perusal of relied-upon documents - opportunity of personal hearing - Adjudicating authority's proceedings violated principles of natural justice by passing an ex parte order without supplying relied upon documents and without affording effective personal hearing to the appellants. - HELD THAT: - The Tribunal found that appellants repeatedly sought supply of relied upon documents and requested adjournments or further opportunity for hearing, including specific letters referencing missing pages and requests to inspect documents and to list witnesses for cross examination. Despite these requests and explanations for non appearance, the adjudicating authority proceeded to pass an ex parte order and did not return seized records or furnish the documents. Such conduct amounted to gross violation of the requirements of fair adjudication, since provision of relied upon material and an effective opportunity of personal hearing are foundational to any adjudicatory process. [Paras 4, 5]

Finding of violation of principles of natural justice; impugned adjudication set aside on that ground.

De novo adjudication on remand - opportunity of personal hearing - right to perusal of relied-upon documents - Appropriate remedy is to remit the matter to the adjudicating authority for fresh adjudication after supplying all relied upon documents and affording sufficient opportunity of personal hearing. - HELD THAT: - Having concluded that the original proceedings were vitiated by denial of natural justice, the Tribunal did not decide the merits of the substantive Cenvat credit and penalty allegations. Instead, it directed that the adjudicating authority comply with natural justice by providing the documents requested by the appellants and affording an effective personal hearing, and then pass a de novo adjudication order. The remand is for fresh consideration rather than a decision on merits. [Paras 6]

Matter remanded to the adjudicating authority to conduct de novo adjudication after supplying documents and granting adequate personal hearing.

Final Conclusion: Appeals disposed of by remanding the matters to the adjudicating authority for de novo adjudication after furnishing all relied upon documents and affording the appellants sufficient opportunity of personal hearing.

Applicability of Rule 6(3) of the Cenvat Credit Rules, 2004 - definition of "manufacture" under Section 2(f) - deeming fiction of marketability in Section 2(d) - excisability of agricultural residue - liability to pay 5% of value of exempted goods

Applicability of Rule 6(3) of the Cenvat Credit Rules, 2004 - definition of "manufacture" under Section 2(f) - excisability of agricultural residue - Whether the appellant was liable under Rule 6(3) to pay 5% of the value of exempted goods (bagasse) produced during manufacture of dutiable goods. - HELD THAT: - The Tribunal applied the decision of the Hon'ble Supreme Court in Union of India v. DSCL Sugar Ltd and held that the deeming fiction in amended Section 2(d) (marketability) can be invoked only if the process falls within the definition of "manufacture" in Section 2(f). The revenue could not point to any process in the Section or Chapter notes treating bagasse as the result of a specified process; bagasse is an agricultural residue and not the product of a manufacturing process. In absence of "manufacture" within Section 2(f), the deeming provision does not attract and bagasse cannot be treated as excisable. Consequently Rule 6(3) of the Cenvat Credit Rules, 2004, which would mandate payment of 5% of the value of exempted goods where separate accounts are not maintained, is not applicable to the facts of this case. The impugned demand under Rule 6(3) is therefore unsustainable. [Paras 3, 4]

The demand under Rule 6(3) for payment of 5% of the value of bagasse is not sustainable; the impugned order is set aside and the appeal is allowed.

Final Conclusion: Appeal allowed; impugned order confirming demand under Rule 6(3) qua bagasse set aside in view of the Supreme Court's reasoning that bagasse is an agricultural residue not subject to excise as it does not fall within the definition of "manufacture."

Admissibility and consideration of affidavits in appellate proceedings - independence of appellate fact-finding - best judgment assessment and rejection of books of account - remand for fresh consideration by the Tribunal

Admissibility and consideration of affidavits in appellate proceedings - independence of appellate fact-finding - Tribunal and the authorities below failed to properly consider the affidavits filed by third parties claiming ownership of goods found during survey and thus erred in declining to give independent factual consideration to that material. - HELD THAT: - The dealer filed affidavits asserting that the loose parchas and goods seized during the survey belonged to other persons and were not connected with the dealer's business. The Tribunal merely echoed the assessing authority's observations without independently examining or dealing with the affidavits. This frustrated the purpose of second appeal as the Tribunal, being the final fact-finding forum in the appeal chain, was required to consider material placed before it rather than be influenced by the assessing authority's conclusions. Further, the counter-affidavit filed on the Court's specific direction did not address why the affidavits were not considered by the lower fora, thereby failing to comply with the court's direction and not assisting in resolving the deficiency. For these reasons the Court found that the affidavits were not duly considered and set aside the Tribunal's order, directing reconsideration by the Tribunal without being influenced by the assessing authority and with proper appraisal of the affidavits. [Paras 7, 8, 11, 12]

Affidavits were not properly considered; Tribunal's order set aside and matter remanded for fresh consideration of the affidavits by the Tribunal uninfluenced by the assessing authority.

Best judgment assessment and rejection of books of account - remand for fresh consideration by the Tribunal - The rejection of the dealer's books of account and the consequential best judgment enhancement of turnover require fresh consideration by the Tribunal in light of the affidavits and independent appellate fact-finding. - HELD THAT: - The assessing authority made adverse inferences and enhanced taxable turnover on the basis of loose parchas seized during the survey because the proprietor was not present to produce books. The dealer contested that the seized documents were unrelated to its business by filing affidavits. The Tribunal accepted the assessing authority's observations without independently evaluating the evidentiary significance of the books or the affidavits. Given the Tribunal's failure to independently assess whether the account books should have been accepted or whether best judgement assessment was justified, the Court concluded that the question could not be finally resolved without the Tribunal's fresh fact-finding and directed remand for reconsideration on merits. [Paras 4, 7, 8, 12]

Rejection of books and best judgment assessment not finally upheld; matter remanded to the Tribunal for fresh consideration on merits.

Final Conclusion: Revisions allowed; the Tribunal's order dated 9.9.2013 is set aside and the matters remitted to the Tribunal to be reconsidered afresh - in particular the affidavits filed and the question of rejection of books/best judgment assessment - without being influenced by the assessing authority. The order is directed to be placed before the Commissioner, Commercial Tax Tribunal and the Chief Secretary, U.P., for appropriate action.

Violation of principles of natural justice - service of notice - effective opportunity of being heard - lockdown/containment zone and COVID-19 pandemic affecting service and notice - remand by Appellate Tribunal with direction to produce documents and grant reasonable opportunity - setting aside assessment order and remanding for fresh assessment

Service of notice - effective opportunity of being heard - violation of principles of natural justice - lockdown/containment zone and COVID-19 pandemic affecting service and notice - Whether service of the hearing notice on the petitioner's security guard during the COVID-19 lockdown constituted effective service and complied with principles of natural justice thereby affording a reasonable opportunity of being heard. - HELD THAT: - The Court found that although the notice was technically served on the security guard on 22.09.2020, the circumstances prevailing in Mumbai and Maharashtra-complete lockdowns and containment zone restrictions and widespread work-from-home arrangements-meant the petitioner had no practical knowledge of service and was unable to avail an effective opportunity to be heard. The Appellate Tribunal's remand order required production of documents within a time limit and further directed that a reasonable opportunity be granted before passing assessment. The admitted technical service on the security guard, in the extraordinary conditions of the pandemic and containment restrictions, could not be treated as effective service for the purpose of complying with the Tribunal's direction to grant a reasonable opportunity. For these reasons the Court concluded that, through no fault of the Assessing Officer, the petitioner was deprived of an effective or reasonable opportunity of being heard, amounting to a breach of the principles of natural justice. [Paras 6, 7, 8, 9, 11]

Technical service on the security guard during the lockdown did not constitute effective service and resulted in denial of a reasonable opportunity to be heard; principles of natural justice were not satisfied.

Remand by Appellate Tribunal with direction to produce documents and grant reasonable opportunity - setting aside assessment order and remanding for fresh assessment - Whether the assessment order should be set aside and the matter remanded to the Assessing Officer for fresh disposal permitting the petitioner an opportunity to produce documents and be heard. - HELD THAT: - In view of the finding that no effective opportunity of hearing was afforded, the Court held that the interests of justice required setting aside the impugned assessment order (Ext.P1) and granting the petitioner another opportunity to be heard and to produce documents, subject to preventing undue delay. The Court directed that the petitioner appear before the first respondent and produce all documents on a specified date, treating the judgment as sufficient notice, and ordered the Assessing Officer to hear the petitioner and complete assessment expeditiously thereafter. [Paras 12, 13, 14]

Ext.P1 set aside and matter remitted for fresh assessment; petitioner granted one final opportunity to appear and produce documents on the date fixed, and Assessing Officer to pass appropriate orders expeditiously.

Final Conclusion: Writ petition allowed: impugned assessment order set aside because technical service during COVID-19 lockdown did not afford an effective opportunity of hearing; matter remitted for fresh assessment with a single, time-bound opportunity for the petitioner to produce documents and be heard, and directions for expeditious disposal.

Exhaustion of alternative remedy - dispensing with statutory appellate remedy - jurisdictional error - judicial review under Article 226 of the Constitution - powers of appellate authorities to correct errors of law and jurisdiction - separation of powers between legislature, executive and judiciary

Exhaustion of alternative remedy - dispensing with statutory appellate remedy - Whether the writ petitions can be entertained without first availing the statutory appeal/revision remedies provided under the TNVAT Act. - HELD THAT: - The Court held that exhausting the statutory appellate remedy is the general rule and dispensing with that remedy is an exception requiring exceptional circumstances. The statutory scheme under the TNVAT Act provides a multi-tiered appellate framework (appeal to Appellate Deputy Commissioner, Appellate Tribunal, High Court and revision), and those authorities are vested with procedures and powers to rectify errors, including jurisdictional errors. Institutional respect and the doctrine of separation of powers require that appellate remedies be availed so that findings of original and appellate authorities, which are valuable for judicial review, are placed on record. The Court emphasised established principles that Article 226 is discretionary and that a writ petition should not ordinarily be entertained where an efficacious alternative remedy exists, except in cases of gross injustice, violation of fundamental rights, or other exceptional circumstances specified in precedent. Accordingly, routine or frivolous bypassing of the appeal process is impermissible and not preferable. [Paras 9, 10, 11, 13, 18]

Petitioner is bound to exhaust the statutory appellate remedies under the TNVAT Act; the writ petitions cannot be entertained in lieu of those remedies except in exceptional circumstances, which were not shown.

Jurisdictional error - powers of appellate authorities to correct errors of law and jurisdiction - judicial review under Article 226 of the Constitution - Whether the alleged application of the post-amendment provision of Section 19 to assessment years prior to the amendment constituted a jurisdictional error justifying immediate writ relief without resort to appeal. - HELD THAT: - The Court noted the petitioner's contention that the Assessing Officer applied the post-amendment provision of Section 19 to pre-amendment assessment years, characterising that as non-application of mind or jurisdictional error. However, the Court observed that appellate authorities possess adequate powers to consider and correct errors of law or jurisdiction and to adjudicate contested legal grounds after affording opportunity. Jurisdictional errors, unless of a nature that falls within recognised exceptions (for example, actions ultra vires, total violation of principles of natural justice, or where immediate relief is necessary to prevent irreparable harm), are generally rectifiable by appellate or revisional forums. The Court expressed that jurisdictional irregularities should not result in exoneration of liability and that quashing without remand would defeat the statutory scheme. Consequently, the petitioner must seek appropriate relief through the appellate process (with condonation of delay where necessary). [Paras 4, 5, 12, 15, 16]

Alleged erroneous application of amended Section 19 to earlier years did not constitute ground to bypass the statutory appeal mechanism; petitioner directed to pursue appeal/revision before the competent appellate authority, with condonation of delay to be considered by that authority.

Final Conclusion: Writ petitions dismissed on the ground of non-exhaustion of statutory appellate remedies; petitioner is at liberty to file appeals/revisions before the appropriate appellate authorities under the TNVAT Act (delay, if any, to be condoned by the appellate authority). No costs.

Conviction under Section 138 of the Negotiable Instruments Act - Presumption under Section 139 of the Negotiable Instruments Act - Burden to rebut presumption of discharge of debt or liability - Dishonour of cheque for insufficiency of funds - Compliance with demand notice requirement and limitation - Judicial discretion in awarding compensation

Conviction under Section 138 of the Negotiable Instruments Act - Presumption under Section 139 of the Negotiable Instruments Act - Burden to rebut presumption of discharge of debt or liability - Conviction under Section 138 of the Negotiable Instruments Act affirmed on facts and law. - HELD THAT: - The Court found that the accused had admitted issuance of the impugned cheques and the cheques (Exbts.5 and 6) were produced on record. The statutory presumption under Section 139 was thereby attracted and the defendant (D.W.-1) failed to rebut the presumption that the cheques were issued for discharge of a debt or liability. Documentary material produced by the accused did not displace the presumption; instead it corroborated the existence of a business transaction and payments towards interest. Having considered the evidence and authorities cited, the High Court held that there was no infirmity in the concurrent findings of the Trial and Appellate Courts that the offence under Section 138 was made out. [Paras 12, 13, 14]

The conviction under Section 138 was upheld as the presumption under Section 139 was attracted and not rebutted.

Dishonour of cheque for insufficiency of funds - Compliance with demand notice requirement and limitation - Statutory requirements of service of demand notice and filing within the prescribed period were satisfied. - HELD THAT: - The Court observed that the cheque(s) were dishonoured and the return memos were on record. The demand notice was issued and served (Exbt.8 with postal receipt and A/D card Exbts.8/1 and 8/2) within the statutory time frame, and the complaint was filed within the prescribed period thereafter. These facts met the procedural prerequisites under the Negotiable Instruments Act for prosecution under Section 138. [Paras 12]

The complaint complied with the demand notice and limitation requirements; procedural prerequisites were satisfied.

Judicial discretion in awarding compensation - Award of compensation by the Trial Court was within judicial discretion and not vitiated by illegality despite difference from cheque amount. - HELD THAT: - The High Court noted that the Trial Court did not elaborate why compensation was not equal to the cheque amount, but observed that the complainant did not challenge the quantum and that awarding compensation is within the court's discretion. The Appellate Court had also considered this point and found no illegality in exercising discretion to fix compensation at the amount ordered. Accordingly, the difference between the cheque amount and awarded compensation did not render the sentence or order illegal or improper. [Paras 13]

The award of compensation was a discretionary exercise and not vitiated by illegality.

Final Conclusion: The High Court dismissed the criminal revision and upheld the concurrent judgments of the Trial and Appellate Courts: the conviction under Section 138 of the Negotiable Instruments Act and the sentence (one day's imprisonment and compensation) were sustained.

Summoning of accused in proceedings under the Negotiable Instruments Act - liability of company director under Section 141 of the Negotiable Instruments Act - basic averment that director was in charge of and responsible for conduct of company's business - prima facie requirement at the stage of issuance of process - quashing of complaint under Section 482 Cr.P.C.

Liability of company director under Section 141 of the Negotiable Instruments Act - basic averment that director was in charge of and responsible for conduct of company's business - prima facie requirement at the stage of issuance of process - quashing of complaint under Section 482 Cr.P.C. - Validity of quashing the summoning order qua respondent No. 2 who is a director of the accused company in proceedings under Section 138 read with Section 141 N.I. Act. - HELD THAT: - The Court examined whether the complaint contained the essential averment that respondent No. 2 was "in-charge of, and responsible for the conduct of business of the company" at the time of the alleged offence, a requirement for attracting personal liability under Section 141. The complaint expressly alleged that respondent No. 2 was a director and was "involving in the day to day affairs" of the accused company; the petitioner also produced balance sheets signed by respondent No. 2 as director and the legal notice was addressed to her. No unimpeachable or incontrovertible material was placed on record to show that respondent No. 2 was not responsible for day-to-day affairs, and no reply denying responsibility was shown. Applying the settled principle that at the stage of issuance of process the magistrate need be satisfied only on a prima facie view of the allegations and supporting materials, the Court held that the basic averment in the complaint satisfies the requirement of Section 141 for the purpose of summoning. Consequently, there was no ground to quash the summoning order by exercising power under Section 482 Cr.P.C., and the Revisional Court's order setting aside the summoning was found to be infirm. The question of the precise role of respondent No. 2 is left open for trial where evidence may be led by both parties. [Paras 11, 14, 15, 16]

The revisional court's order setting aside the summons to respondent No. 2 is set aside; the Magistrate's summoning order is restored and the trial court is directed to proceed against respondent No. 2 in accordance with law.

Final Conclusion: Petition allowed; impugned revisional order set aside and the Trial Court directed to proceed against respondent No. 2. The question of the director's precise role is to be determined at trial on evidence.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttal of statutory presumption by probabilisation - existence of legally enforceable debt - material contradiction in prosecution case - relevance of complainant's financial capacity to lend - setting aside of conviction on perverse findings

Presumption under Section 139 of the Negotiable Instruments Act - rebuttal of statutory presumption by probabilisation - relevance of complainant's financial capacity to lend - Whether the accused successfully rebutted the statutory presumption arising under Section 139 by probabilising that the complainant lacked means to advance the alleged loan. - HELD THAT: - The Court accepted that issuance of the cheque and the signature thereon were admitted, thereby attracting the statutory presumption under Section 139. The determinative question was whether the accused discharged the burden of proof by probabilising an alternative case. The evidence adduced by the defence included the bank account opening form and statement (Ex.D1, Ex.D2) showing the complainant's limited monthly income, an overdrawn account and that the account balance did not exceed nominal amounts around the relevant period. The trial and appellate findings were examined and the High Court found those findings perverse in light of the bank records. The Court held that evidence of the complainant's financial incapacity to advance the alleged sum, together with the defence evidence, amounted to sufficient probabilisation to rebut the presumption, shifting back the burden upon the complainant to prove source of funds. Consequently, the conviction founded on the unrebuffed presumption could not be sustained on these facts. [Paras 11, 13, 17, 18, 20]

The accused successfully demonstrated a rebuttal of the statutory presumption by probabilising that the complainant lacked means to lend the alleged amount; the presumption was held to be rebutted on the material on record.

Existence of legally enforceable debt - material contradiction in prosecution case - setting aside of conviction on perverse findings - Whether there existed a legally enforceable debt between the complainant and the accused and whether material contradictions in the prosecution case vitiated the conviction. - HELD THAT: - The Court examined the complaints, the legal notice (Ex.P3) and the deposition of the complainant (P.W.1) and found material contradictions as to who received consideration and the role of the partner who issued the cheque. The acquittal of one co-accused at trial and the absence of consistent evidence of passing of consideration further clouded the prosecution's case. In light of the defence evidence regarding the complainant's financial position and the noted contradictions, the Court concluded that it was not established that a legally enforceable debt existed between the parties on the date of issuance of the cheque. The High Court held that the lower courts' adverse findings were perverse for failing to account for Ex.D1 and related defence material, warranting interference with the conviction. [Paras 19, 20, 22, 23]

The prosecution failed to prove existence of a legally enforceable debt and the material contradictions and perverse findings warranted setting aside the conviction.

Final Conclusion: Criminal Revision allowed; the conviction and sentence recorded by the trial Court and confirmed on appeal were set aside on the ground that the accused successfully rebutted the statutory presumption and the prosecution failed to prove a legally enforceable debt; the revision petitioner is acquitted and released, and any bail bond cancelled.