TaxTMI Updates e-Newsletter
Jan 10,2020

Benefit of input tax credit - commensurate reduction in prices - Section 171 of the CGST Act, 2017 - determination of profiteering - interest on profiteered amount - penalty under Section 171(3A) - remand for further investigation under Rule 133(4)

Benefit of input tax credit - commensurate reduction in prices - Section 171 of the CGST Act, 2017 - determination of profiteering - Whether the Respondent received additional benefit of input tax credit post-GST and failed to pass it on to home buyers in contravention of Section 171, and the resulting quantum of profiteering for the period 01.07.2017 to 31.12.2018. - HELD THAT: - The Authority accepted the DGAP's computation which compared the ratio of CENVAT/ITC to turnover in the pre GST period (2.76%) with the post GST period (7.28%), yielding an additional ITC benefit of 4.52% of turnover. The DGAP restricted the computation to units booked in the pre GST period and apportioned ITC to sold area; unsold units and any post December 2018 benefit were excluded from this investigation. Applying the 4.52% incremental ITC to the demands raised on units booked pre GST, recalibration produced a shortfall (profiteering) of Rs. 51,12,928 (inclusive of GST at 12%), of which Rs. 1,33,503 related to the complainant and Rs. 49,79,425 related to 99 identifiable other buyers. The Authority found the methodology appropriate on the facts of the case, noting that the DGAP had accounted for pre GST ITC in its comparison and had taken ITC only in respect of sold area. The Respondent's contentions about alternative formulae, market variations, discounts given for commercial reasons, and inclusion of GST within the profiteered amount were rejected as not substantiated or inconsistent with Section 171's mandate to pass on the benefit by commensurate reduction in prices. [Paras 14, 16, 23, 30, 39]

The Respondent benefited from additional ITC of 4.52% during 01.07.2017 to 31.12.2018 and has profiteered Rs. 51,12,928 (inclusive of GST), with Rs. 1,33,503 attributable to the complainant and Rs. 49,79,425 to other identifiable buyers; Section 171 was contravened.

Interest on profiteered amount - determination of profiteering - Relief and directions to be granted to eligible buyers and enforcement measures to ensure compliance. - HELD THAT: - The Authority ordered the Respondent to pass on the identified profiteered amounts to the eligible buyers along with interest at 18% per annum from the dates the excess was collected until payment, to be completed within three months. The Commissioners CGST/SGST Maharashtra were directed to monitor compliance under the supervision of the DGAP and report within four months. The Authority also directed reduction of future prices commensurate with any further ITC benefit accruing after 31.12.2018 and instructed the DGAP to carry out further investigation after receipt of the Occupancy Certificate to compute any additional benefit and submit a report within three months. [Paras 39, 40, 41, 43]

Respondent directed to refund/pass on the profiteered sums with 18% interest to the complainant and other identified buyers within three months; DGAP and Commissioners to monitor and ensure compliance and compute/pass on any future accruals.

Remand for further investigation under Rule 133(4) - Whether further investigation/remand is necessary to determine final quantum of benefit after project completion. - HELD THAT: - The Authority observed that its investigation covered only up to 31.12.2018 and that completion (Occupancy Certificate) was reported in June 2019. Given the possibility of additional ITC benefit or reversals at project completion, the Authority directed DGAP to carry out further investigation under Rule 133(4) and compute the final amount of ITC benefit to be passed on, to be reported within three months. This remand is for quantification following completion, not for re litigation of the findings already reached for the covered period. [Paras 40, 41]

DGAP to undertake further investigation post Occupancy Certificate and submit a computation of any additional ITC benefit to be passed on within three months; current order applies to profiteering determined for 01.07.2017 to 31.12.2018.

Penalty under Section 171(3A) - Whether prima facie offence under Section 171(3A) has been committed and if show cause notice for penalty is warranted. - HELD THAT: - Having found contravention of Section 171(1) for the period under investigation, the Authority held that the Respondent has committed an offence under Section 171(3A) and is prima facie liable for penalty. Consequently, the Authority directed issuance of a show cause notice calling upon the Respondent to explain why penalty under Section 171(3A) read with Rule 133(3)(d) should not be imposed; an earlier notice proposing penalties under other provisions was withdrawn to that extent. [Paras 42]

Show cause notice to be issued to the Respondent seeking explanation on imposition of penalty under Section 171(3A); prior notice proposing other penalties withdrawn to that extent.

Final Conclusion: The Authority accepted the DGAP's finding that the Respondent realized an incremental benefit of input tax credit of 4.52% for the period 01.07.2017 to 31.12.2018 and failed to pass it on, fixed profiteering at Rs. 51,12,928 (inclusive of GST) - allocating Rs. 1,33,503 to the complainant and Rs. 49,79,425 to identifiable other buyers - directed repayment with 18% interest within three months, ordered monitoring and further post completion investigation to compute any additional benefit, and issued a show cause notice for penalty under Section 171(3A).

Rejection of books of account - application of section 145 (rejection of book results) - reliance on excise show-cause materials in income-tax assessment - use of unadjudicated departmental materials and witness statements - assessing officer's satisfaction to estimate income

HC [2019 (6) TMI 1420 - GUJARAT HIGH COURT] allowed assessee appeal as held Rejection of books u/s 145 was not justified and additions based on such rejection could not be sustained - Additions based solely on excise departmental materials and unadjudicated witness statements were unsustainable and were correctly deleted -

HELD THAT:- Special Leave Petition is dismissed on the ground of low tax effect. However, the question of law is left open.

Reopening of assessment under Section 147/notice under Section 148 - reason to believe - subjective satisfaction of the Assessing Officer - failure to disclose fully and truly all material facts - production of books of account not conclusive of full disclosure

Reopening of assessment under Section 147/notice under Section 148 - reason to believe - subjective satisfaction of the Assessing Officer - production of books of account not conclusive of full disclosure - Validity of reassessment notice under Section 148/Section 147 and whether proceedings were barred by limitation or impermissible where books/documents were earlier available to the department - HELD THAT: - The court held that the statutory requirement for reopening is the Assessing Officer having reason to believe that income chargeable to tax has escaped assessment, and such belief is to be formed to the subjective satisfaction of the Assessing Officer. The Act does not preclude initiation of reassessment merely because documents or records were earlier submitted; omission or oversight by the AO at the original assessment does not bar reopening if relevant material is later found or appreciated. The Assessing Officer's reasons, as recorded, pointed to substantial unexplained cash payments (stated to be over Rs. 87 Lakhs) and payments not reflected in the books, including alleged illegal gratifications, which furnished prima facie material to form the requisite belief. Production of books of account is not ipso facto proof of full and true disclosure; what matters at the notice stage is whether there was relevant material on which a reasonable officer could form the belief. Reliance on the cited precedents was accepted to the extent that they recognise the Assessing Officer's wide powers to form such belief and that at the initiation stage the requirement is of reason to believe and not conclusive proof of escapement. Applying these principles to the facts, the court found sufficient material existed to justify issuance of the reassessment notice. [Paras 16, 17, 22, 23, 24]

Reassessment proceedings under Section 147/notice under Section 148 were validly initiated; the notice is not barred by limitation or by prior availability of documents.

Final Conclusion: Writ petition dismissed; reassessment proceedings initiated by the Assessing Officer upheld as supported by sufficient material and lawful formation of belief.

Reopening of assessment under Section 147 - reason to believe income escaped assessment - valuation under Section 50C - symbolic possession versus physical possession - application of Section 53A of the Transfer of Property Act - remand for determination of possession and valuation

Reopening of assessment under Section 147 - reason to believe income escaped assessment - Validity of reopening of assessment under Section 147 on the basis of information from the Inspector General of Stamps and Registration. - HELD THAT: - The Tribunal's finding that the Assessing Officer had material before him - namely the communication from the Inspector General of Stamps and Registration forwarded to the jurisdictional Assessing Officer - which could persuade formation of an opinion that income chargeable to tax had escaped assessment was affirmed. That material indicated a substantial difference between the registered guidance value and the declared sale consideration, and the Assessing Officer's belief to reopen the assessment was thus held to be justified. The Court found no legal error in the Tribunal negativing the cross-objection on jurisdiction and concluded that no substantial question of law arose from that contention. [Paras 6, 7]

Reopening of assessment under Section 147 was validly initiated on the available information; the Tribunal's conclusion on jurisdiction is sustained.

Symbolic possession versus physical possession - application of Section 53A of the Transfer of Property Act - Whether the agreement of sale dated 27.01.1995 effected transfer of physical possession such that the transfer for capital gains purposes occurred prior to the sale deed of 28.06.2008. - HELD THAT: - Clause 6 of the agreement of sale expressly records delivery of 'symbolic possession' and authorisation to negotiate with tenants to obtain vacant possession. The Tribunal applied the distinction between symbolic and physical possession and the legal effect of Section 53A of the Transfer of Property Act together with the definition in Section 2(47)(v) of the Income tax Act to hold that physical possession was not transferred under the 1995 agreement. Consequently, the Tribunal remanded the question of when possession was in fact handed over to the Commissioner of Income Tax (Appeals) for determination, since no earlier year was found to have transferred physical possession. The Court approved the Tribunal's factual approach and remand. [Paras 8, 9, 10]

Agreement delivered only symbolic possession; question of physical possession was remanded to the Commissioner of Income Tax (Appeals) for fresh determination.

Valuation under Section 50C - remand for determination of possession and valuation - Whether valuation for capital gains under Section 50C was properly determined and whether the Assessing Officer should have referred the matter to a valuation officer under Section 50C(2). - HELD THAT: - The Tribunal observed that the Assessing Officer had not referred the matter to the valuation officer as contemplated by the statute and remanded issues relating to valuation to the Commissioner of Income Tax (Appeals) for adjudication. The High Court declined to express any opinion on the correctness of valuation itself, leaving contentions on Section 50C open for consideration before the appellate authority. The finding that valuation and any required reference to a valuation officer are matters for further fact finding and adjudication was accepted as a factual and procedural conclusion not raising a substantial question of law for the High Court to decide. [Paras 6, 10]

Issue of valuation under Section 50C and the necessity of referral to a valuation officer remanded to the Commissioner of Income Tax (Appeals) for fresh adjudication; Court refrained from expressing a view on valuation.

Final Conclusion: The High Court dismissed the appeal. It upheld the Tribunal's finding that the reopening under Section 147 was justified on available information, agreed that the 1995 agreement conveyed only symbolic possession (remanding determination of actual possession to the Commissioner of Income Tax (Appeals)), and remanded valuation issues under Section 50C for fresh consideration without expressing any opinion on valuation.

Deduction under Section 54B - Requirement of agricultural operations within two years prior to sale - Concurrent findings of fact by Commissioner (Appeals) and ITAT - Substantial question of law under Section 260A - Application of Sarifa bibi v. CIT

Deduction under Section 54B - Requirement of agricultural operations within two years prior to sale - Concurrent findings of fact by Commissioner (Appeals) and ITAT - Validity of deletion of addition made by Assessing Officer denying deduction under Section 54B on the ground that no agricultural operations were carried out on the impugned land within two years prior to sale. - HELD THAT: - The Court examined the record and found that both the Commissioner (Appeals) and the Tribunal decided the matter on the factual question whether agricultural operations had been carried out within the statutory two year period, having regard to the materials placed before them. The Revenue did not advance before the lower authorities the specific contention in the precise manner now urged in this Court. The High Court held that the findings recorded by the Commissioner (Appeals) and affirmed by the Tribunal are concurrent findings of fact. In view of that factual conclusion and the absence of a substantial question of law arising from the concurrent factual findings, interference was not warranted. The Court further noted that the law laid down in Sarifa bibi was not in dispute; however, the present appeal concerns the application of factual materials to that legal test and therefore does not raise a substantial question of law for adjudication under Section 260A.

The deletion of the addition made by the Assessing Officer was held to be a matter of concurrent factual finding by the Commissioner (Appeals) and the ITAT, and the High Court declined to interfere.

Final Conclusion: Revenue's appeal under Section 260A is dismissed; the High Court declined to interfere with the concurrent factual findings of the Commissioner (Appeals) and the ITAT regarding entitlement to deduction under Section 54B.

Validity of search warrant under Section 132 of the Income-tax Act - Validity of notice under Section 153A of the Income-tax Act - Reason to believe standard for issuance of search and seizure authorization - Requirement of application of mind and bona fide formation of satisfaction - Judicial review confined to relevance of recorded reasons and not to their sufficiency or adequacy - Recording of reasons as basis for accountability in exercise of power under Section 132

Validity of search warrant under Section 132 of the Income-tax Act - Requirement of application of mind and bona fide formation of satisfaction - Recording of reasons as basis for accountability in exercise of power under Section 132 - The search warrant issued under Section 132 was valid as the authorized officers possessed information forming the basis for a reasonable belief and applied their mind bona fide before issuance. - HELD THAT: - The Court examined the departmental record produced under seal and noted contemporaneous notes by investigating officers and the satisfaction recorded by higher authorities. The material showed that the petitioner was alleged to be an associate of a group concealing income and possessing unaccounted money, bullion and other valuables, and the officers recorded that summons/notices would not produce the requisite books or documents. The Director and Director General recorded and approved satisfaction after consideration of the notes and discussions. In view of the Supreme Court precedents summarised in Spacewood Furnishers Private Limited, the authority must have information in its possession, apply its mind honestly and bona fide, and record reasons for the belief. The Court found these conditions satisfied on the record before it and that no extraneous or irrelevant material vitiated the belief. [Paras 4, 5, 7, 8, 9]

Warrant under Section 132 is lawful; formation of belief was relevant, bona fide and based on material in possession of the authorities.

Validity of notice under Section 153A of the Income-tax Act - Judicial review confined to relevance of recorded reasons and not to their sufficiency or adequacy - Reason to believe standard for issuance of search and seizure authorization - Notice under Section 153A issued consequent to the search was lawful; the Court will examine relevance of reasons but not their sufficiency or adequacy. - HELD THAT: - Relying on the legal position articulated by the Supreme Court in Spacewood Furnishers Private Limited, the Court observed that once the search authorization is validly issued on the basis of recorded information and bona fide satisfaction, the consequent notice under Section 153A is in accordance with law. The Court emphasised that while reasons for belief should be recorded to ensure accountability, judicial scrutiny under Article 226 is limited to examining the relevance of those reasons and not to reassessing their adequacy or sufficiency. Having reviewed the material and the satisfaction recorded, the Court found no illegality in issuing the notice under Section 153A to the petitioner. [Paras 4, 5, 9, 10]

Notice under Section 153A is valid; court will not sit in appeal over the satisfaction of the authority and finds no infirmity in issuance of the notice.

Final Conclusion: Writ petition dismissed; the search authorization under Section 132 and the consequent notice under Section 153A were held to be lawfully issued after bona fide application of mind and on material in possession of the authorities, and no interference was warranted.

Bogus transactions - genuineness of transactions - verification by Transfer Pricing Officer - high seas sale/purchase - arm's length price - direction to Assessing Officer to verify

Verification by Transfer Pricing Officer - genuineness of transactions - arm's length price - Validity of TPO's exercise of jurisdiction to verify genuineness of specified domestic transactions and determination of ALP - HELD THAT: - The Tribunal records that the DRP and the authorities below have considered and rejected the assessee's contention that the TPO lacked jurisdiction to test genuineness. The DRP held that once the AO refers matters to the TPO, it is the TPO's obligation to verify whether the transactions are genuine and then determine ALP. The ITAT, after examining the detailed findings of AO, TPO and DRP, found no reason to interfere and upheld the verification and consequent determinations by the TPO/DRP. [Paras 10, 15, 16]

The TPO was rightly entitled to verify the genuineness of the transactions and determine ALP; the challenge to jurisdiction is dismissed.

High seas sale/purchase - bogus transactions - genuineness of transactions - Genuineness of high seas purchases of crude palm oil and confirmation of transfer pricing adjustment - HELD THAT: - The TPO found, and the DRP agreed, that the assessee's high seas purchase invoices and dates did not match originals, that counterparties belonged to the same group and that documents/endorsements required for genuine high seas transactions were not produced. The authorities concluded these transactions were a facade to mislead the revenue and set ALP at nil. The ITAT, having regard to the detailed findings below and supporting precedent on similar transactions, found no infirmity and upheld the addition. [Paras 1, 7, 10, 15, 16]

Transfer pricing adjustment treating the high seas purchases of crude palm oil as bogus and determining ALP at nil is upheld.

Bogus transactions - genuineness of transactions - Treatment of purchase of guar gum (split) as a bogus transaction on account of discrepant dates - HELD THAT: - The TPO observed that letters and warehouse intimations pre-dated the purchase booking, leading to the conclusion that purchases were not genuine. The DRP examined the documentary material, found the evidence to be self-serving and noted absence of prior production before AO or application under DRP rules; it therefore confirmed the TPO's finding that the purchases were bogus. The ITAT reviewed the reasoning of the authorities below and declined to interfere. [Paras 1, 8, 15, 16]

Purchase of guar gum (split) treated as bogus and transfer pricing adjustment confirmed.

Direction to Assessing Officer to verify - genuineness of transactions - Whether purchases of guar seed were to be re-examined as possibly being sales returns and corresponding verification directed - HELD THAT: - The DRP noted that the assessee may have shown guar seed as purchases instead of sales returns and directed the AO to verify whether corresponding sales were genuinely booked and, if so, to rectify the order. The DRP's direction was part of its disposal and was accepted by the ITAT which did not disturb the approach of the lower authorities but left the directed verification to the AO. [Paras 1, 10, 15, 16]

DRP's direction that the AO verify whether the transaction was incorrectly shown as purchase instead of sales return stands; the matter is to be verified and rectified by the AO as directed.

High seas sale/purchase - bogus transactions - Disallowance of alleged loss on high seas sales of crude palm oil - HELD THAT: - The AO found that the assessee had not executed requisite documents for genuine high seas transactions, that importing/clearing and actual high seas sales were done by another group entity and that the assessee merely recorded intermediary entries resulting in an unusual loss. The DRP concurred with the AO's detailed findings. The ITAT, on review of the material and the authorities' reasoning (including reliance on prior decisions on similar layered/group transactions), found no reason to interfere and upheld the disallowance. [Paras 11, 12, 13, 15, 16]

Disallowance of the alleged loss on high seas sales is confirmed.

Final Conclusion: The Tribunal finds no infirmity in the findings of the AO, TPO and DRP that the specified transactions were not genuine; the adjustments and disallowances made by the authorities below are upheld and the assessee's appeal is dismissed, subject to the DRP's direction to the AO to verify the guar seed/sales return matter as indicated.

Deduction under section 80P of the Income-tax Act - Inquiry into activities of a co-operative society for applicability of sub-section (4) of section 80P - Treatment of interest income from investments for deduction under section 80P(2)(d) - Rectification under section 154 for mistake apparent from record - Principle of mutuality

Deduction under section 80P of the Income-tax Act - Inquiry into activities of a co-operative society for applicability of sub-section (4) of section 80P - Whether the claim for deduction under section 80P(2) can be finally denied by CIT(A) without an inquiry into the factual activities of the assessee-society - HELD THAT: - The Tribunal held that in view of the Larger Bench decision in The Mavilayi Service Co-operative Bank Ltd. v. CIT the Assessing Officer must examine, for each assessment year, the factual activities of the society before deciding eligibility under section 80P after insertion of sub section (4). The CIT(A) erred in denying the claim without such examination; accordingly the issue of deduction under section 80P(2) is restored to the file of the Assessing Officer for enquiry and determination whether the assessee's activities conform to those of a co-operative society entitled to the deduction. [Paras 7]

Issue of deduction under section 80P(2) remitted to the Assessing Officer for factual enquiry and determination in accordance with the Larger Bench ruling.

Treatment of interest income from investments for deduction under section 80P(2)(d) - Deduction under section 80P of the Income-tax Act - Whether interest income from investments with banks, treasuries or cooperative banks is eligible for deduction under section 80P(2)(d) without factual examination - HELD THAT: - The Tribunal noted prior coordinate-Bench views that interest from investments may form part of the assessee's banking business, but emphasised that grant of deduction under section 80P(2)(d) must follow the law laid down by the Larger Bench in Mavilayi. The Assessing Officer is directed to examine the activities of the assessee-society before deciding entitlement to deduction on such interest income; the question is therefore remitted for verification in the assessment proceedings. [Paras 7]

Assessment authority to examine activities and determine whether interest on investments qualifies for deduction under section 80P(2)(d).

Rectification under section 154 for mistake apparent from record - Whether the CIT(A) could invoke section 154 to recall his earlier order in light of subsequent Larger Bench authority - HELD THAT: - The Tribunal accepted the assessee's additional ground and relevant precedents that where an authority has decided a matter in accordance with an earlier High Court decision which is subsequently reversed by a Larger Bench, the original order may contain a mistake apparent from the record and is amenable to rectification under section 154. The Larger Bench of the Kerala High Court reversed the Division Bench view relied upon by the CIT(A) earlier; accordingly the recall under section 154 was held to be justified. [Paras 7]

Invocation of section 154 to recall the earlier CIT(A) order was proper because of the subsequent Larger Bench decision, and the rectification was upheld.

Final Conclusion: The Tribunal allowed the appeals for statistical purposes by restoring the claim for deduction under section 80P to the Assessing Officer for factual enquiry (including interest on investments) in accordance with the Larger Bench ruling; the CIT(A)'s rectification under section 154 was held proper; the stay applications were dismissed as infructuous.

Eligibility for deduction under Section 80P(2) - Assessing Officer's duty to enquire into activities of a co-operative society for 80P - each assessment year to be separately verified for entitlement to 80P - treatment of interest income from investments as income from business - rectification of appellate order under Section 154

Eligibility for deduction under Section 80P(2) - Assessing Officer's duty to enquire into activities of a co-operative society for 80P - each assessment year to be separately verified for entitlement to 80P - Whether the claim for deduction under Section 80P(2) ought to be sustained without further enquiry or should be remitted to the Assessing Officer for verification of the assessee-society's activities - HELD THAT: - The Tribunal noted that the Larger Bench of the Kerala High Court in The Mavilayi Service Co-operative Bank Ltd. v. CIT has held that, after insertion of sub-section (4), an Assessing Officer must conduct an inquiry into the factual activities of a society before allowing deduction under Section 80P. The Tribunal observed that the CIT(A) had initially allowed the claim but subsequently rectified that order under Section 154 relying on the Larger Bench decision. Applying the law laid down by the Larger Bench and the principle that each assessment year is separate, the Tribunal held that the claim could not be denied without examination of the assessee's activities for the relevant year and therefore restored the issue to the file of the Assessing Officer for such enquiry and determination in accordance with law. [Paras 7]

Issue remitted to the Assessing Officer to examine the activities of the assessee-society for AY 2013-2014 and determine entitlement to deduction under Section 80P(2) in accordance with the Larger Bench decision.

Treatment of interest income from investments as income from business - eligibility for deduction under Section 80P on interest income subject to enquiry - Whether interest income on investments with treasuries and banks is to be treated as business income and whether deduction under Section 80P is allowable on such interest without further enquiry - HELD THAT: - The Tribunal referred to a coordinate bench decision which treated interest income from investments with treasuries and banks as part of the assessee's banking/business activity. However, as to the grant of deduction under Section 80P on such interest income, the Tribunal directed that the Assessing Officer must follow the law laid down by the Larger Bench in The Mavilayi case and examine the activities of the assessee-society before allowing any deduction. Thus, classification as business income is accepted by reference to precedent, but entitlement to 80P deduction on that income is remitted for factual verification. [Paras 7]

Interest on investments is to be treated as part of banking/business income; claim for deduction under Section 80P on such interest is remitted to the Assessing Officer for examination and adjudication in accordance with the Larger Bench ruling.

Final Conclusion: The appeal is allowed for statistical purposes by remitting the question of entitlement to deduction under Section 80P(2) (including on interest from investments) to the Assessing Officer for factual examination for AY 2013-2014 in accordance with the Larger Bench decision; the stay application is dismissed as infructuous.

Treatment of long term capital gains as unexplained cash credit under section 68 - exemption claimed under section 10(38) - principles of natural justice and right to confrontation/cross-examination of deponents - reliance on investigation reports and third party statements - remand for fresh adjudication with provision of documents and opportunity to rebut

Treatment of long term capital gains as unexplained cash credit under section 68 - reliance on investigation reports and third party statements - principles of natural justice and right to confrontation/cross-examination of deponents - remand for fresh adjudication with provision of documents and opportunity to rebut - Whether the addition of long term capital gain declared on sale of shares as unexplained cash credit was sustainable without confronting the assessee with the investigation reports and third party statements relied upon by the revenue. - HELD THAT: - The Tribunal found that the Assessing Officer's conclusion-that declared LTCG were accommodation entries-rested on investigation reports of the Directorate of Investigation and statements of third parties which were neither furnished to the assessee nor the deponents made available for confrontation or cross examination. In view of consistent decisions of this Bench and the Karnataka High Court emphasising that where additions are based on such reports/statements the assessee must be given copies for rebuttal and, if necessary, an opportunity to cross examine, the Tribunal set aside the orders of the AO and the CIT(A) and remanded the matter to the AO for de novo consideration. The AO is directed to provide the assessee copies of all documents, statements and investigation reports relied upon, permit the assessee to file rebuttal and, where statements are not merely secondary or subordinate material, allow cross examination of the deponents; thereafter the AO shall adjudicate the issue afresh. The Tribunal left all other issues open for fresh consideration and avoided making observations that could prejudice the parties in the remand proceedings. [Paras 14, 18, 19]

Order of AO and CIT(A) set aside; matter remanded to the AO for fresh adjudication after furnishing investigation reports/statements to the assessee and allowing opportunity for rebuttal and cross examination.

Final Conclusion: The appeals are allowed for statistical purposes; the question of treating the declared long term capital gains as unexplained cash credit is remitted to the Assessing Officer for fresh consideration in accordance with the directions to furnish the investigation material and permit rebuttal and cross examination (assessment year 2015-16).

Disallowance under section 40(a)(i) - Tax deduction at source under section 195 - Royalty and fees for technical services - DTAA - Article 9 (Shipping profits) - DTAA - Article 13 (Royalties and Fees for Technical Services) - Most Favoured Nation clause (Protocol) - Cost-sharing / reimbursement - Retrospective applicability of Explanation 4 to section 9(1)(vi) - Beneficial provision under section 90(2)

DTAA - Article 9 (Shipping profits) - Cost-sharing / reimbursement - Characterisation of amounts paid to CMA CGM, France as profits from operation of ships for the purposes of the India-France DTAA. - HELD THAT: - On the terms of the LARA, DIVA and Ocean Agreements the software and IT tools were developed and provided to network agencies to facilitate and enable shipping operations (sales, bookings, container tracking, export/import documentation, disbursement accounts, operational reporting and related functions). Article 9(1) of the India-France DTAA confines taxation of profits derived by an enterprise of a Contracting State from operation of ships in international traffic to the State of residence. The Tribunal observed that the payments were inextricably linked to CMA CGM France's shipping business and therefore properly characterised as profits from operation of ships. The Tribunal also noted that if the arrangement were a pure cost sharing/reimbursement (no profit element), the receipts in the hands of the French entity would be non income; alternatively, even if there were a profit element, Article 9 applies and prevents taxation in India for the year under consideration (post the ten year transitional provisions). Reliance on A.P. Moller Maersk and the DTAA text supported treating the receipts as shipping profits rather than as income taxable in India. [Paras 15, 16, 17, 18, 19]

Amounts paid to CMA CGM, France in respect of LARA, DIVA and Ocean tools qualify as profits from the operation of ships under Article 9 of the India-France DTAA and are not chargeable to tax in India for AY 2012 13.

Royalty and fees for technical services - DTAA - Article 13 (Royalties and Fees for Technical Services) - Most Favoured Nation clause (Protocol) - Beneficial provision under section 90(2) - Whether the payments constituted 'royalty' or 'fees for technical services' taxable in India under the India-France DTAA (Article 13) or under domestic law. - HELD THAT: - Article 13(3) of the DTAA defines 'royalties' as payments for use of, or right to use, copyrights; merely permitting an enterprise to use software for its business (with no transfer of title or right to sublicense) does not amount to consideration for use of a copyright under the DTAA. The Agreements expressly limited the assessee to a licence to use the software for its sole business needs with no right to sublicense or transfer IP. Thus, the payments do not fall within Article 13(3) as 'royalty'. Maintenance services are of a managerial/technical nature and would, on their face, fall within 'fees for technical services'; however, the Protocol's MFN clause requires comparison with the India-Portugal DTAA (which narrows the scope of taxable fees by requiring either ancillary services to enjoyment of a right or that technical knowledge be made available). Because the payments did not satisfy the preconditions (notably the 'make available' or para 3 requirement) in the comparable treaty and because section 90(2) mandates application of the more beneficial treaty provision to the assessee, the DTAA (as read with the Protocol/MFN substitution) precluded taxation in India. Moreover, even under domestic law, the later insertion of Explanation 4 to section 9(1)(vi) cannot be used to impose at that earlier point an obligation to withhold tax. [Paras 28, 31, 32, 36, 38]

Payments do not constitute 'royalty' under Article 13(3) and, having regard to the Protocol/MFN clause and the more beneficial treaty position under section 90(2), payments (including maintenance components) are not taxable in India under the DTAA for AY 2012 13.

Tax deduction at source under section 195 - Disallowance under section 40(a)(i) - Retrospective applicability of Explanation 4 to section 9(1)(vi) - Whether the assessee was obliged to deduct tax at source and therefore liable to disallowance under section 40(a)(i) for non deduction of tax on the payments for AY 2012 13. - HELD THAT: - Section 195/section 40(a)(i) require withholding only where the sum paid is chargeable to tax in India in the hands of the recipient. Because the Tribunal held the payments not chargeable to tax in India (being shipping profits under Article 9 and/or excluded by the DTAA/MFN), no obligation to withhold arose. Separately, the Tribunal held that Explanation 4 to section 9(1)(vi) (clarifying software payments as royalty) introduced by Finance Act, 2012 cannot be read so as to compel withholding in an earlier period when the statutory provision was not in force; law cannot require compliance with a rule that did not exist at the time of payment. Consequently, retrospective amendment could not justify disallowance under section 40(a)(i) for AY 2012 13. [Paras 11, 12, 24]

There was no obligation on the assessee to deduct tax at source for AY 2012 13 and the disallowance under section 40(a)(i) is deleted.

Tax deduction at source under section 195 - Verification and credit of TDS and consequential interest relief. - HELD THAT: - The Tribunal directed the Assessing Officer to verify and allow the correct amount of TDS credit as per law. Grounds relating to levy of interest under sections 234B and 234C were treated as consequential to the deletion of the disallowance and were allowed. [Paras 39, 40]

AO to verify TDS credit and allow appropriate credit; interest under sections 234B and 234C granted consequential relief.

Final Conclusion: The appeal is allowed: the disallowance under section 40(a)(i) in respect of the software/maintenance payments is deleted for AY 2012 13 (payments held to be profits from shipping operations and/or not taxable in India under the DTAA/Protocol/MFN and section 90(2)); the AO is directed to verify and grant TDS credit and consequential relief for interest under sections 234B and 234C is allowed.

Deduction under section 10A - Computation of gross total income under Chapter IV - Precedence of deduction over set-off of losses - Set-off of unabsorbed losses and depreciation - Revisionary power under section 263 - erroneous and prejudicial

Deduction under section 10A - Precedence of deduction over set-off of losses - Revisionary power under section 263 - erroneous and prejudicial - Validity of Pr. CIT's exercise of revisional power under section 263 in setting aside the assessment for having allowed deduction under section 10A without giving effect to brought forward business losses. - HELD THAT: - The Tribunal considered whether the assessing officer's allowance of deduction under section 10A without first giving effect to carry forward business losses made the assessment order erroneous and prejudicial to the revenue so as to warrant revision under section 263. Reliance was placed on the decision of the Hon'ble Apex Court in CIT v. Yokogawa India Ltd., which holds that deduction under section 10A is a deduction to be allowed while computing the gross total income of the eligible undertaking under Chapter IV and that such deduction precedes the exercise of set-off of losses or unabsorbed depreciation under the provisions governing computation of total income. Applying that principle, the Tribunal held that the AO's approach-allowing the section 10A deduction before giving effect to carry forward losses-was in conformity with the law and therefore the Pr. CIT was not justified in treating the AO's order as erroneous and prejudicial to the interest of the revenue and in invoking section 263 to set aside the assessment. [Paras 6]

Order under section 263 quashed and the assessee's appeal allowed.

Final Conclusion: The order of the Pr. Commissioner of Income Tax under section 263 setting aside the assessment for AY 2011-12 is set aside; the assessing officer's allowance of deduction under section 10A prior to set-off of brought forward losses is upheld in view of the Apex Court's ruling, and the assessee's appeal is allowed.

Disallowance under section 14A - Computation of disallowance by estimation where Rule 8D is inapplicable - Classification of receipts as business income versus capital gains - Exemption of Long Term Capital Gains under section 10(38) - Treatment of Short Term Capital Gains as business income where transactions exhibit trading attributes - Rule of consistency in income tax assessments - Remand for fresh adjudication and admission of additional evidence

Disallowance under section 14A - Computation of disallowance by estimation where Rule 8D is inapplicable - Appropriateness and quantum of disallowance under section 14A for exempt income - HELD THAT: - The Tribunal held that Rule 8D did not apply to the year under consideration and therefore the disallowance under section 14A had to be computed on a reasonable estimated basis. Applying that principle to the assessee's financials, the CIT(A)'s adoption of a 10% estimate (reducing the AO's disallowance) was found to be fair and not liable to interference. The Tribunal noted the nature of expenditures debited (routine corporate expenses necessary to maintain corporate personality) and accepted the appellate authority's estimation as reasonable.

Disallowance under section 14A upheld to the extent computed by CIT(A) (10% estimate); grounds of both assessee and revenue on this issue dismissed.

Classification of receipts as business income versus capital gains - Exemption of Long Term Capital Gains under section 10(38) - Rule of consistency in income tax assessments - Remand for fresh adjudication and admission of additional evidence - Whether gains on sale of specified shares constitute Long Term Capital Gains eligible for exemption under section 10(38) or business income - HELD THAT: - On re adjudication after remand and on consideration of additional evidence (purchase documents, demat statements, ledger entries, past assessment treatment), the CIT(A) found and the Tribunal concurred that the scrips in question had been held as long term investments for many years, were reflected as non trade investments in the balance sheet, were not acquired out of interest bearing borrowings, and that the AO had earlier accepted similar treatment in other assessment years. Applying these factual findings and the consistency principle, the Tribunal concluded there were overwhelming materials to treat the surplus as Long Term Capital Gains and not business income, and accordingly dismissed the revenue's challenge.

Long Term Capital Gains held to be capital in nature and eligible for exemption as claimed; revenue's grounds dismissed.

Classification of receipts as business income versus capital gains - Treatment of Short Term Capital Gains as business income where transactions exhibit trading attributes - Whether short term gains disclosed by the assessee are to be assessed as capital gains or as business income - HELD THAT: - The CIT(A) examined holding periods and transaction patterns for the multiple scrips giving rise to the short term surplus and found that for most scrips the holding period was short (often below 45 days), transactions were single but involved short term holdings and multiple transactions in certain scrips indicative of trading activity. The appellate fact finding identified attributes of trading (short holding periods, multiple transactions with short selling) and concluded that the assessee acted as a trader in respect of those scrips. The Tribunal, after reviewing the CIT(A)'s detailed factual analysis and noting the assessee's inability to overturn those findings, concurred and refused to interfere.

Short term gains held to be assessable as business income; assessee's ground on this issue dismissed.

Final Conclusion: The Tribunal dismissed both cross appeals: the CIT(A)'s restriction of the section 14A disallowance by reasonable estimation was upheld; the CIT(A)'s allowance of the assessee's claim that specified gains were Long Term Capital Gains was affirmed; and the CIT(A)'s conclusion that certain short term surpluses constituted business income was also upheld.

Addition on account of unexplained cash deposits - Assessment on technical grounds despite disputed identity and alleged misuse of bank account - Peak bank balance method for determination of unexplained cash deposits - Proof of account ownership and effect of complaint/mutual settlement - Right of assessee to recover tax liability from third party

Addition on account of unexplained cash deposits - Peak bank balance method for determination of unexplained cash deposits - Assessment on technical grounds despite disputed identity and alleged misuse of bank account - Proof of account ownership and effect of complaint/mutual settlement - Right of assessee to recover tax liability from third party - Whether the cash deposits reflected in the bank account should be assessed in the hands of the assessee and, if so, the correct quantification of unexplained cash deposits to be added to income - HELD THAT: - The Tribunal found that the disputed bank account stood in the name of the assessee and the assessment had therefore been completed in the assessee's name; alleged misuse of identity and a criminal complaint/mutual settlement with the third party did not negate the technical position that the deposits appeared in the assessee's account. On the quantification, the Tribunal applied the peak bank balance approach in such cases of cash deposits and examined the account statements. The Tribunal observed that the peak credit balance as on 24-07-2007 was Rs.2,13,747 and that there was an opening cash deposit of Rs.2,13,747 on 04-04-2007 which rendered the initial deposit not unexplained. Applying the peak balance methodology, the Tribunal confirmed additions only to the extent of the peak balance and the opening unexplained deposit and deleted the balance of the additions made by the assessing officer. Although the Tribunal confirmed the taxability in the assessee's hands on a technical basis because the account stood in his name, it noted that the third party had accepted liability before the High Court and recorded the view that the assessee may recover any tax liability from that third party. [Paras 7]

Addition confirmed in part by applying the peak bank balance method; addition of Rs.4,13,747 confirmed and the balance deleted, appeal partly allowed.

Final Conclusion: The appeal is partly allowed: for Assessment Year 2008-09 the Tribunal confirmed additions only to the extent of Rs.4,13,747 (peak balance and initial unexplained deposit) and deleted the remaining additions, while observing that the assessment was made in the assessee's name on technical grounds and that the assessee may recover any tax liability from the third party who admitted liability.

Revision under section 263 - Erroneous and prejudicial to the interests of the revenue - One of permissible views - Application of mind - Deduction under section 37(1) - Amortisation under section 35D - Book profit under section 115JB - Provision for leave encashment and section 43B

Revision under section 263 - Erroneous and prejudicial to the interests of the revenue - One of permissible views - Application of mind - Assessee's appeal against the CIT(LTU)'s exercise of suo motu revision under section 263 in respect of the assessment order for AY 2010-11 - HELD THAT: - The Tribunal held that jurisdiction under section 263 requires coexistence of two conditions: (i) the assessing officer's order is erroneous; and (ii) that erroneous order is prejudicial to the interests of the revenue. Where the AO has called for information, considered submissions, applied his mind and adopted one of the permissible views, the mere fact that the Commissioner prefers a different view does not render the AO's order erroneous and prejudicial. The Tribunal examined the four contested matters (deduction for NCD issue expenses, foreign-exchange loss in computing book profits under section 115JB, provision for leave encashment under section 43B, and expenditure on discharge of FCCN) and found that the AO had made specific enquiries, received detailed explanations and documentary disclosures, and accepted the assessee's claims after applying legal precedents and accounting treatment. The CIT(LTU) merely adopted alternative views (treating certain expenditures as capital or exchange loss as contingent/diminution) without showing that the AO's enquiries were inadequate or that material on record prima facie demonstrated that the AO's conclusions were not in accordance with law. In particular, the Tribunal noted authority recognising that exchange differences taken to profit and loss may be allowable as revenue expenditure and that allowance of leave encashment was based on available judicial positions and conditions laid down by higher courts; accordingly, the CIT(LTU) failed to demonstrate that the AO's order was both erroneous and prejudicial to revenue. [Paras 9, 10, 11, 12, 16]

Order of the CIT(LTU) under section 263 set aside and the assessment order passed by the AO under section 143(3) r.w.s. 144C(13) restored.

Final Conclusion: The Tribunal allowed the assessee's appeal, set aside the Commissioner (LTU)'s order under section 263 for AY 2010-11 and restored the assessment order passed under section 143(3) r.w.s. 144C(13).

Penalty under section 271AAB and its graded rates - admission in statement under section 132(4) and substantiation of manner of derivation - compliance with the "specified date" for payment of tax and filing of return - definition of "undisclosed income" for section 271AAB - application of minimum penalty @ 10% where conditions of clause (a) are satisfied

Penalty under section 271AAB and its graded rates - admission in statement under section 132(4) and substantiation of manner of derivation - compliance with the "specified date" for payment of tax and filing of return - definition of "undisclosed income" for section 271AAB - application of minimum penalty @ 10% where conditions of clause (a) are satisfied - Whether the penalty levied under section 271AAB is sustainable and, if so, at what rate - HELD THAT: - The Tribunal examined whether the undisclosed amount surrendered during search falls within the definition of "undisclosed income" under section 271AAB and whether the conditions of clause (a) of sub section (1) were satisfied so as to attract the minimum rate of penalty. Having regard to identical facts and reasoning in ITA No. 697/Chd/2017 (Palace Jewellers Pvt. Ltd.) - relied upon by the assessee and placed on record - the Bench held that the surrender disclosed in the course of search constituted "undisclosed income" within the scope of the Explanation to section 271AAB. Applying the precedent of the co ordinate Bench, the Tribunal concluded that the case falls under section 271AAB(1) rather than clause (c), and that the minimum penalty at the rate specified for cases covered by clause (a) is leviable. Following the earlier decision with identical facts and reasoning, the Tribunal modified the order below and directed the Assessing Officer to levy the minimum penalty at 10% of the undisclosed income for A.Y. 2013 14, notwithstanding earlier findings that tax payment had been made after the specified date in the assessment file, because the Bench followed the referred decision which adjudicated the same factual matrix and reached the outcome of minimum penalty @10%. [Paras 11, 12]

Penalty confirmed in principle but reduced and directed to be recomputed at the minimum rate of 10% of the undisclosed income; appeal partly allowed.

Final Conclusion: The Tribunal, following its earlier identical decision in ITA No. 697/Chd/2017, held that the surrendered amount qualifies as "undisclosed income" under section 271AAB and directed that the Assessing Officer levy the minimum penalty at 10% of the undisclosed income for A.Y. 2013 14; the appeal is partly allowed.

Time bar under Regulation 20(1) of the Customs Brokers Licensing Regulations, 2013 - jurisdictional invalidity of proceedings initiated after expiry of limitation - maintainability of writ petition despite availability of alternate remedy

Time bar under Regulation 20(1) of the Customs Brokers Licensing Regulations, 2013 - jurisdictional invalidity of proceedings initiated after expiry of limitation - Show cause notice dated 13.2.2017 issued beyond 90 days of the offence report dated 06.09.2016 and consequent jurisdictional validity of the impugned order. - HELD THAT: - Regulation 20(1) requires issue of a show cause notice within 90 days from the date of receipt of the offence report. The offence report in the present matter is dated 06.09.2016, which makes 04.12.2016 the last day for issuance of a show cause notice within the 90 day period. The show cause notice impugned in these proceedings was issued on 13.02.2017, which is beyond the 90 day period. A Division Bench decision of this Court in C.M.A. No. 730 of 2016 had held that a show cause notice issued beyond the 90 day period is time barred. Applying that precedent to the facts before the Court, the show cause notice must be treated as issued after the period of limitation and the proceedings founded thereon lack jurisdiction. The impugned Order in Original, which culminated from that time barred show cause notice, is therefore invalid. [Paras 11, 13]

The show cause notice issued on 13.02.2017 is beyond the 90 day limitation from the offence report dated 06.09.2016; the proceedings and the impugned order are without jurisdiction and are quashed.

Maintainability of writ petition despite availability of alternate remedy - Whether the writ petition should be dismissed on account of an available alternate remedy before the Appellate Tribunal. - HELD THAT: - The respondent relied on the existence of an alternate remedy before the Customs, Excise and Service Tax Appellate Tribunal and on the petitioner's prior withdrawal of an earlier writ. The Court observed that the prior writ (W.P. No. 26820 of 2017) had been withdrawn and that dismissal on that basis was irrelevant. Given that the legal point of limitation was squarely covered by the Division Bench decision in C.M.A. No. 730 of 2016, the Court exercised its discretion to entertain the writ petition rather than relegating the petitioner to the alternate remedy. The availability of an alternate forum did not preclude relief where the matter involved a settled jurisdictional question of limitation. [Paras 10, 12]

The writ petition is maintainable notwithstanding the existence of an alternate remedy; the Court declined to remit the petitioner to the alternate forum in view of the settled precedent on limitation.

Final Conclusion: The impugned Order in Original No. 59094 of 2017 dated 13.10.2017 is quashed as the show cause notice was issued beyond the 90 day limitation under Regulation 20(1) and the proceedings are thereby without jurisdiction; the writ petition is entertained despite the availability of an alternate remedy and is allowed with consequential relief, no costs.

Principles of natural justice - non-speaking order - show cause notice and right to personal hearing - remand for fresh consideration - setting aside administrative order for want of reasons

Principles of natural justice - non-speaking order - setting aside administrative order for want of reasons - Impugned orders directing remittance of duty were passed without affording the petitioners an opportunity to raise objections and without reasons, constituting violation of natural justice and rendering the orders non-speaking. - HELD THAT: - The Court found that the orders dated 29-3-2008 and 17-7-2008 did not record consideration of the petitioners' prior representations or objections and did not assign reasons for directing remittance of duty. The absence of any opportunity for the petitioners to put forward objections, coupled with the lack of reasoning in the impugned orders, amounted to a breach of the principles of natural justice and resulted in non-speaking orders. Consequently, the Court held that the respondents could not validly enforce the duty demand without first giving due consideration to the petitioners' objections and providing an opportunity of hearing. [Paras 4]

Impugned orders set aside as violative of natural justice and being non-speaking.

Show cause notice and right to personal hearing - remand for fresh consideration - Whether the matter should be remitted for fresh consideration and the appropriate procedural steps on remand. - HELD THAT: - Having set aside the impugned orders for want of opportunity and reasons, the Court granted liberty to the respondents to issue a fresh show cause notice and to consider the petitioners' objections afresh. The respondents were directed to extend the benefit of personal hearing to the petitioners during the course of consideration and to decide the matter in accordance with law. This action is procedural and intended to cure the procedural infirmity identified by the Court rather than to decide the substantive correctness of the duty demand on merits. [Paras 5]

Matter remitted: respondents may issue fresh show cause notice, afford personal hearing, and decide in accordance with law.

Final Conclusion: The writ petitions were allowed to the extent that the impugned orders dated 29-3-2008 and 17-7-2008 were set aside for violation of natural justice and being non-speaking; respondents given liberty to issue fresh show cause notice, afford personal hearing, and decide the matter afresh in accordance with law; writ petitions disposed of with no costs.

Long delay in adjudication - abandonment of show cause notice - prejudice caused by delay - quashing of show cause notice for delay - applicability of precedent

Long delay in adjudication - prejudice caused by delay - abandonment of show cause notice - quashing of show cause notice for delay - applicability of precedent - Validity of the show cause notice dated 28th March, 2002 issued to the petitioner in view of the long delay in taking up adjudication. - HELD THAT: - The Court applied its decision in M/s. Sanghvi Reconditioners Pvt. Ltd. (supra) and held that an unexplained and excessive delay in taking up adjudication proceedings is indicative of the Revenue's abandonment of the show cause notice. Such delay results in real prejudice to the noticee because witnesses and officials with knowledge may be unavailable, memories may have faded and relevant records may be irretrievable, making fair defence impossible. The Revenue offered no distinguishing facts or satisfactory explanation to justify the 16-year gap between the show cause notice dated 28th March, 2002 and the impugned hearing notices; accordingly the principle enunciated in Sanghvi Reconditioners applies. For these reasons the notice insofar as issued to the petitioner had to be quashed. [Paras 4, 5, 6]

The show cause notice dated 28th March, 2002 insofar as issued to the petitioner is quashed and set aside; petition allowed.

Final Conclusion: The petition is allowed: the show cause notice dated 28th March, 2002, insofar as it relates to the petitioner, is quashed on account of long, unexplained delay in adjudication which prejudices the noticee; the Court applied its earlier decision in Sanghvi Reconditioners Pvt. Ltd. (supra).

Confiscation and penalty under the Customs Act - amendment of bill of entry - advance authorization scheme - duty exemption - mens rea / intent in mis-declaration - proceedings initiated without acting on pending application

Proceedings initiated without acting on pending application - confiscation and penalty under the Customs Act - Whether initiation of adjudicatory proceedings and consequent confiscation and imposition of penalty could be sustained where an application to amend the bill of entry was pending and had not been acted upon - HELD THAT: - The Tribunal found that the request for amendment of the bill of entry to include goods omitted inadvertently had not been acted upon and remained pending before the competent authority. In that circumstance there was no justification for initiation of proceedings against the importer prior to disposal of the amendment application. The records did not demonstrate any contemporaneous basis for treating the omission as deliberate such as prior refusal to consider the amendment or a concluded investigation establishing culpability. The Tribunal therefore concluded that initiation of proceedings and the consequential confiscation and penalty were not warranted. [Paras 2, 5, 8]

Confiscation and penalty set aside and importer relieved of redemption fine and penalty.

Mens rea / intent in mis-declaration - advance authorization scheme - duty exemption - bill of lading mismatch and section 116 - Whether the omission of goods from the bill of entry amounted to deliberate mis-declaration justifying denial of duty exemption and criminal sanctions, in the absence of evidence of corresponding mis-declaration in the bill of lading or other evidence of intent - HELD THAT: - The Tribunal observed there was no evidence on record to show further investigation established an intention to mis-declare the goods. It noted that had the incompleteness in the declaration been supported by a mis-declaration in the bill of lading, proceedings under the relevant provision would have been attracted, but no such mis-match was shown. On the material before it, the Tribunal concluded the omission was inadvertent and not deliberate. While the consignment had been cleared after exclusion from the Advance Authorization Scheme and duty liability was discharged, the bona fides of the amendment application were accepted and the punitive measures predicated on deliberate misconduct were therefore unjustified. [Paras 6, 7]

Findings of deliberate mis-declaration and denial of scheme benefits did not stand; punitive measures set aside.

Final Conclusion: The order under appeal is modified: confiscation of the goods and the penalties imposed under the Customs Act are set aside, and the importer is relieved of the redemption fine and penalty; the pending application for amendment of the bill of entry should be disposed by the competent authority.

Misdeclaration of weight - rejection of transaction value under Rule 12 of the Customs Valuation Rules, 2007 - re-determination of assessable value on estimated weight - confiscation with option of redemption under Section 111(m) and Section 125(1) of the Customs Act, 1962 - penalty under Section 112(a) of the Customs Act, 1962

Misdeclaration of weight - re-determination of assessable value on estimated weight - rejection of transaction value under Rule 12 of the Customs Valuation Rules, 2007 - Whether the goods were misdeclared in weight and whether the transaction value could be rejected and re-determined on the basis of the revenue's estimation of undeclared weight. - HELD THAT: - The Tribunal examined the methodology adopted by the adjudicating authority for determining excess weight and for re-determining the assessable value. The revenue's approach rested on an estimation derived from selective weighing and measurement of a few rolls and a pro rata multiplication to all rolls, without establishing a consistent basis for unit weight or total length. The assessment as amended produced an internal inconsistency (net weight in the assessed Bill of Entry exceeding the gross weight) and the record does not explain how the figure of 2.270 MT was derived or why the consignment as a whole was not actually weighed. On these facts the Tribunal found the estimation method to be novel and self contradictory and concluded that misdeclaration of weight was not established so as to justify rejection of the transaction value and re determination of assessable value under Rule 12. [Paras 4]

The finding of misdeclaration of weight and the resultant rejection and re determination of the transaction value were set aside.

Confiscation with option of redemption under Section 111(m) and Section 125(1) of the Customs Act, 1962 - penalty under Section 112(a) of the Customs Act, 1962 - Whether the orders of confiscation with option of redemption and the penalty imposed on the importers could be sustained in view of the Tribunal's findings on weight and valuation. - HELD THAT: - The impugned adjudication imposed confiscation with a redemption option and a separate penalty based on the presumption of undervaluation arising from the re determined weight and value. Having concluded that the method of estimation was unsound and that misdeclaration of weight was not proved, the legal basis for the confiscation, redemption fine and the penalty fell away. The Tribunal therefore held that those consequential measures could not stand. [Paras 1, 4, 5]

The confiscation with option of redemption and the penalty imposed were not sustained.

Final Conclusion: Appeal allowed; the impugned order of the Commissioner (Appeals) upholding the original adjudication is set aside because the revenue's estimation of undeclared weight and consequent rejection and re determination of transaction value were unsound, and the resultant confiscation, redemption fine and penalty cannot be sustained.

Custodia legis - permanent stay of winding up under Section 466 - court appointed Committee of Management - court supervision of assets of a company in liquidation - cut off date for filing claims - forensic audit and appointment of auditors by court - prioritisation and quantification of claims by court mechanism - filtering of claims to acquisition compensation lying in court

Custodia legis - permanent stay of winding up under Section 466 - court supervision of assets of a company in liquidation - Whether the Company/BJF remains under the supervision and custody of the Court and whether there is a permanent stay of winding up. - HELD THAT: - Having reviewed the chronology of orders from the winding up order of 1987 through subsequent supervisory appointments (Committees of Management, Joint Special Officers, Official Liquidator and BIFR proceedings) and relevant authorities on the exercise of power to stay winding up, the Court concluded that the Company has consistently been monitored by judicial mechanisms and its assets are in custodia legis. The observations in In Re: Radheshyam Ajitsaria were to be read in context and did not displace the broader principles governing Section 466 applications nor operate to create an automatic permanent stay without terms and conditions imposed by the Company Court. Applying the established tests (bonafides, commercial morality, evidence of misfeasance, compliance with statutory duties, benefit to creditors and public interest), the Court held that ipso facto there is no permanent stay of winding up and the Court continues as custodia legis of BJF.

The Company/BJF remains custodia legis of the Court and there is no automatic or ipso facto permanent stay of winding up.

Court appointed Committee of Management - forensic audit and appointment of auditors by court - prioritisation and quantification of claims by court mechanism - cut off date for filing claims - Whether a court appointed management should be constituted, and what its constitution, powers and initial financial and administrative arrangements should be. - HELD THAT: - In light of the Court's conclusion that the Company remains under judicial custody and given unresolved disputes about management, entitlement to funds and the state of the company's accounts, the Court appointed a three member Committee of Management (CoM) to manage the transition and to report. The CoM is authorised to appoint an auditor of quality to conduct a complete audit including a forensic audit and to take advisory assistance from professionals. All creditors, workers and other claimants are to submit claims to the CoM which shall quantify, prioritise and submit a schedule of payments in consultation with the auditors and experts. The Court fixed the cut off period for filing claims as the time when the Company was referred to BIFR for rehabilitation. The Court also fixed initial remuneration and secretarial expenses for the CoM and provided for limited initial funds from the monies lying with the Registrar to enable the CoM to commence work.

A three member CoM is appointed with authority to order a complete (including forensic) audit, receive and prioritise claims (cut off: referral to BIFR), consult experts, and submit recommendations to the Court; initial fees and seed funds are sanctioned.

Filtering of claims to acquisition compensation lying in court - court supervision of assets of a company in liquidation - Whether the present management is automatically entitled to withdraw or appropriate the compensation monies deposited by NHAI with the Registrar. - HELD THAT: - Given that the assets and compensation monies are held under orders safeguarding the compensation and the Company remains under judicial supervision, the Court held that entitlement to the acquisition compensation is not automatic in favour of the present purported management. Claims to the compensation must be 'filtered through' the Court mechanism established in this order (i.e., via the CoM and the Court) so that the rights of creditors, workers and other stakeholders may be adjudicated in accordance with the statutory framework and the CoM's findings. The Court emphasised past orders (including recordings by higher courts) which intended protection of the compensation and restricted unregulated appropriation or utilisation without leave of the Court.

The present management has no automatic right to withdraw or appropriate the NHAI compensation; entitlement must be determined through the Court directed process (CoM and subsequent Court orders).

Court appointed Committee of Management - initial seed funding from Court deposits - What interim financial provisions are to be made from the funds lying with the Registrar to enable the CoM to function. - HELD THAT: - To enable the CoM to engage auditors and experts and to commence its functions, the Court directed that out of the monies presently with the Registrar a specified initial sum be placed at the disposal of the CoM, to be kept in a separate account in a Nationalised Bank and operated by joint signatures of two CoM members. The Court also directed that the initial remuneration of CoM members and initial secretarial expenses be met from these funds and that costs of the audit and expert advisory opinions be borne initially from the same seed money as specified in the order.

A lump sum from the Registrar's deposit is placed at the disposal of the CoM as seed money, to be operated jointly and to meet initial remuneration, secretarial costs and audit/expert expenses as directed.

Court supervision of assets of a company in liquidation - alleged change in management and oppression - Whether the complaints of alleged surreptitious change of management and oppressive conduct by the existing management are to be adjudicated at this stage. - HELD THAT: - The Court observed that the contested issues concerning alleged illegal wresting of management and oppressive conduct require examination but, given the present step of appointing a CoM and the need for the CoM's report, those specific Company Applications raising such issues were not decided substantively at this stage. The Court directed that certain Company Applications which raise the question of surreptitious change of management and oppression be made returnable with CP 2/1987 for consideration after the CoM's report and further proceedings.

The substantive complaints about alleged illegal takeover and oppression are not finally decided now; specified CAs raising those issues are made returnable with CP 2/1987.

Alleged change in management and oppression - returnable with main petition - Identification of Company Applications to be heard together with CP 2/1987 for determination of alleged change in management/oppression. - HELD THAT: - The Court expressly ordered that Company Applications which raise the issues of alleged surreptitious change in management and oppressive conduct (listed in the judgment) be made returnable with CP 2/1987. Those matters therefore remain pending for further consideration in conjunction with the main petition and the CoM's report. This preserves the forum for fuller adjudication rather than deciding them at this interim stage.

CAs 905/2016, 586/2010, 388/2013, 99/2017 and 480/2017 (as specified) are made returnable with CP 2/1987 for joint disposal; the issues are retained for further adjudication.

Final Conclusion: The Court held that Baranagore Jute Factory PLC remains custodia legis and there is no automatic permanent stay of winding up; it appointed a three member Court Committee of Management with power to order a comprehensive (including forensic) audit, to receive, quantify and prioritise claims (cut off being referral to BIFR), and to submit recommendations to the Court. Interim seed funds and remuneration were sanctioned to enable the CoM to function. Claims to the NHAI compensation are not automatically payable to the present management but must be determined through the Court directed process; specified Company Applications challenging the legitimacy of the present management are preserved for adjudication along with CP 2/1987 after the CoM's report.

Restoration of company name - creditor standing - striking off and effect of affidavit and indemnity - futility of restoration where company has no assets and has not filed returns - personal remedy against directors who gave indemnity

Creditor standing - restoration of company name - futility of restoration where company has no assets and has not filed returns - Whether the appellant established locus as a creditor and whether restoration of the struck-off company's name should be ordered. - HELD THAT: - The Tribunal found that the company's name was struck off on 31.01.2007 and that no balance sheets or returns were filed by the company after 1998. The balance sheets produced by the appellant record the claimed amount as an "unsecured loan," not a deposit, but there are no intervening records after 1998 to prove the outstanding nature of the liability as on the date of striking off. The applicants who procured striking off filed affidavits and an indemnity bond in 2005 stating the company had no assets or liabilities and undertaking to indemnify and settle any lawful claims arising thereafter. In these circumstances, and given the absence of company assets or filings, the Tribunal concluded that restoring the company's name would be futile. [Paras 8]

Appellant failed to establish entitlement to restoration of the company's name; restoration was refused as futile.

Striking off and effect of affidavit and indemnity - personal remedy against directors who gave indemnity - Whether the appellant has any alternative remedy in view of the affidavits and indemnity bonds executed by the persons who applied for striking off. - HELD THAT: - The Tribunal noted the undertaking in the affidavits and indemnity bonds submitted by the respondents when applying for striking off, which included indemnification to pay and settle lawful claims arising after striking off. On that basis the Tribunal held that although restoration was refused, the appellant was not remediless and could proceed against the directors (or persons) who furnished those affidavits and indemnities before the appropriate forum to enforce any lawful claim. [Paras 8, 9]

Appellant may seek remedy against the persons who gave affidavits and indemnity bonds; no order for restoration was made.

Final Conclusion: The appeal is dismissed: restoration of the company's name is refused as futile given lack of assets and no filings since 1998; the appellant may pursue claims against those who furnished the affidavits and indemnity bonds.

Consent terms amounting to a consent decree - Binding effect of valuation by an independent valuer save in case of fraud - Permissibility of withholding escrowed part consideration pending challenge to valuation - Appropriate remedies to secure balance consideration (bank guarantee, simultaneous exchange of shares)

Consent terms amounting to a consent decree - The Tribunal erred in treating the consent terms as non-final and in refusing to release the part consideration deposited in escrow. - HELD THAT: - The Tribunal's order dated 12th October, 2017 recorded consent terms under which the shares of the appellants were to be purchased at a value determined by the Independent Valuer and brought the company petition to an end. The consent terms, recorded by the Tribunal, operate as a consent decree determinative of the petition insofar as the appellants' exit from the company is concerned. Having regard to those terms and the fact that part consideration was duly deposited in an escrow account, there was no justification for withholding the release of the deposited amount in favour of the appellants where there is no allegation that the appellants themselves had resiled from or breached the consent terms.

Set aside the Tribunal's refusal and direct release of the deposited part consideration to the appellants against delivery of share transfer formalities.

Binding effect of valuation by an independent valuer save in case of fraud - Permissibility of withholding escrowed part consideration pending challenge to valuation - The Valuation Report by the Independent Valuer cannot be lightly set aside for choice or non-application of certain valuation methodologies; challenge is permissible only on the limited ground of fraud. - HELD THAT: - The Independent Valuer adopted the CCM methodology and explained the non-application of other methodologies for want of information. An expert may select appropriate methodologies in his judgment; mere non-application of other methodologies or an error in application does not, by itself, establish misconduct. Paragraph IX of the consent terms expressly limited challenge to the valuation to cases of fraud. Therefore, the pendency of a challenge alleging fraud does not justify withholding the part payment deposited under the consent terms where no fraud has been found and the appellants have complied with the consent arrangement.

The Tribunal's reliance on the pending challenge to the valuation to deny interim release was legally unsustainable; the valuation is binding except on proven fraud and does not justify withholding the escrowed amount.

Appropriate remedies to secure balance consideration (bank guarantee, simultaneous exchange of shares) - Equitable measures to protect respondents' interest while releasing part consideration were available and should have been adopted instead of withholding the payment. - HELD THAT: - While the appellants were entitled to the part payment, the Tribunal could and should have provided for protective measures - for example, insisting on simultaneous delivery of share certificates/transfer forms to the Tribunal registry when releasing the part payment, or securing the balance consideration by bank guarantee or other appropriate mode. Any subsequent variation in final valuation can be addressed by recovery of differential amounts after the Tribunal determines and approves the final share price.

Direct release of the deposited amount upon delivery of transfer forms, subject to payment of any differential after final determination; Tribunal to ensure directions are implemented expeditiously.

Final Conclusion: The appeal is allowed: the impugned order is set aside; the respondents are directed to release the part consideration to the appellants upon delivery of share transfer formalities to the Tribunal registry, and the Tribunal shall ensure expeditious compliance and payment of any differential after final determination of share price.

Challenge to Committee of Creditors' approval - vested right of a resolution applicant - maintainability of appeal under Section 61 of the I&B Code - proviso to Section 31(4) of the I&B Code - requirement of Competition Commission of India approval - directory versus mandatory character of statutory proviso - interpretation of Section 5 of the Competition Act and applicability of exemption under Section 54

Challenge to Committee of Creditors' approval - vested right of a resolution applicant - maintainability of appeal under Section 61 of the I&B Code - Whether an unsuccessful resolution applicant can challenge the Committee of Creditors' approval of another resolution plan before the Appellate Tribunal under Section 61 prior to adjudicating authority's approval - HELD THAT: - The Tribunal applied the principle in Arcelormittal India Pvt. Ltd. v. Satish Kumar Gupta & Ors. as authority that a resolution applicant has no vested right to insist on approval of its plan. At the stages prior to the adjudicatory determination under Section 31, statutory scheme contemplates that an unsuccessful resolution applicant cannot invoke the adjudicatory process by way of challenge to the Committee of Creditors' decision. Given that the Committee of Creditors approved a competing plan by majority, and in the absence of final approval by the Adjudicating Authority, the appeal under Section 61 is not maintainable. The Appellant's substantive contentions about comparative superiority of its plan do not confer a legal right to challenge the CoC decision at this stage. [Paras 9, 10, 11, 16]

Appeal dismissed as not maintainable; the unsuccessful resolution applicant has no vested right to challenge the Committee of Creditors' approval at this stage.

Proviso to Section 31(4) of the I&B Code - requirement of Competition Commission of India approval - directory versus mandatory character of statutory proviso - Whether the proviso to Section 31(4) requiring Competition Commission of India approval prior to Committee of Creditors' approval is mandatory or directory - HELD THAT: - The Tribunal held that the proviso to sub-section (4) of Section 31 is directory and not mandatory. The Committee of Creditors may approve a resolution plan subject to the condition that Competition Commission approval is obtained; the commercial and viability assessment by the Committee of Creditors can be made without treating the proviso as a bar to approval. The Tribunal also recorded that, in the present matter, Competition Commission approval was subsequently obtained for the approved plan. [Paras 15]

Proviso to Section 31(4) is directory; Committee of Creditors may approve a plan subject to subsequent CCI approval.

Interpretation of Section 5 of the Competition Act and applicability of exemption under Section 54 - Whether the Tribunal decided if the successful resolution applicant falls within Section 5 of the Competition Act or is entitled to exemption under the notification issued under Section 54 - HELD THAT: - The Tribunal expressly refrained from deciding whether the successful resolution applicant falls within the meaning of 'combination' under Section 5 of the Competition Act or whether it can claim the benefit of the exemption notified under Section 54. The question of applicability of Section 5 or of the exemption was left open for determination and was not adjudicated in this order. [Paras 14]

Left undecided; the applicability of Section 5 and any exemption under Section 54 was not determined by the Tribunal.

Final Conclusion: The appeal is dismissed as not maintainable because an unsuccessful resolution applicant has no vested right to challenge the Committee of Creditors' approval at this stage; the proviso to Section 31(4) of the I&B Code is directory and CCI approval may be obtained subsequently; the question whether the successful applicant falls within Section 5 of the Competition Act or is covered by the Section 54 notification was not decided.

Security interest - secured creditor - unpaid seller's lien - statutory charge - liquidation estate held as a fiduciary - proof of security interest under liquidation regulations - overriding effect of the Insolvency Code over inconsistent laws - quid pro of issuing sale certificate prior to adjudication of claims

Security interest - secured creditor - transaction - Appellant's status as a secured creditor - HELD THAT: - The Tribunal examined whether any security interest was "created" or "provided for" in favour of the appellant within the meaning of the IBC definitions and related terms (including "transaction" and "transfer"). The code requires creation/provision of security by an agreement or arrangement in writing which effects a transfer of right, title, possession or lien. The LOA and NIT were reviewed and no clause was found that created or provided a security interest in favour of the appellant; the initially envisaged LC (which would have secured payment) had been waived and no alternate written arrangement securing payment was shown. Consequently, statutory provisions such as the Sale of Goods Act and Transfer of Property Act could not be read to create a security interest inconsistent with the IBC scheme. On these grounds the appellant was held not to possess any security interest and therefore could not be treated as a secured creditor. [Paras 29, 31, 32, 33, 35]

Appellant is not a secured creditor; no security interest was created in its favour.

Overriding effect of the Insolvency Code over inconsistent laws - unpaid seller's lien - statutory charge - Applicability of Sale of Goods Act and Transfer of Property Act to create/enforce lien/charge in liquidation - HELD THAT: - The Tribunal considered the interplay between the IBC and other statutes relied upon by the appellant. It held that IBC is a complete code and that where its specific provisions govern creation/proof of security interest, inconsistent results under other statutes cannot be applied. The Tribunal therefore rejected the contention that lien/charge under the Sale of Goods Act or the Transfer of Property Act could be applied to create a security interest contrary to the IBC scheme. At the same time the Tribunal observed that regulations (Regulation 20/21) provide modes to prove security interest and are directory in nature but do not preclude other relevant documents from proving such interest. [Paras 30, 36, 37, 38, 40]

Provisions of Sale of Goods Act and Transfer of Property Act cannot be applied to create a security interest inconsistent with IBC; IBC/its regulations govern creation and proof of security interest.

Liquidation estate held as a fiduciary - quid pro of issuing sale certificate prior to adjudication of claims - reasoned order by liquidator under section 40 - Whether the liquidator complied with the Tribunal's direction dated 10.05.2019 and consequences of issuing sale certificate before deciding the appellant's security claim - HELD THAT: - The Tribunal reviewed the earlier order which remitted the matter to the liquidator to pass a reasoned order rejecting/allowing/partly allowing the appellant's claim within 30 days. The liquidator issued the sale certificate on 20.05.2019 before deciding the security/lien claim and thereafter passed the so called reasoned order on 03.06.2019. The Tribunal held that the remand required the liquidator to decide the claim afresh prior to taking actions that could render the claim infructuous; issuing the sale certificate before adjudicating the security claim was incorrect and contrary to the spirit of the Tribunal's directions and the liquidator's fiduciary duties. The liquidator ought to have sought clarification from the Adjudicating Authority rather than proceed with the sale while the question of security interest remained pending. [Paras 69, 71, 72, 76, 81]

Liquidator did not comply with the Tribunal's direction in spirit by issuing sale certificate before deciding the appellant's claim; that approach was incorrect and contrary to his fiduciary duties.

Auction cancellation and restitution - fiduciary duties of liquidator - limited remedial scope under IBC - Whether the auction should be cancelled and restitution ordered; interim directions regarding removal/lifting of material - HELD THAT: - The Tribunal evaluated factual realities (age of plant, extensive dismantling, site spread and physical impossibility of restoring goods) and legal constraints under the IBC. It concluded that cancellation of the auction and restitution of the dismantled plant was not practicable and would not serve the objectives of the Code; moreover, the purchaser was a bonafide purchaser who had paid full consideration and had not been put on notice of any vested security interest. The Tribunal observed that complaints against the liquidator's conduct and any claim for disgorgement or restitution are matters principally for the IBBI/disciplinary mechanism (sections dealing with misconduct and disgorgement) rather than for the Adjudicating Authority by way of ordering restitution in these proceedings. To avoid future disputes, the Tribunal directed the liquidator to give notice to the appellant before further lifting and to allow the appellant's representative to oversee lifting; the auction purchaser should lift only material cleared by the appellant, and the appellant must respond to lifting requests within two days or be deemed to have approved. [Paras 94, 95, 96, 97, 98]

Auction will not be cancelled and restitution is not ordered; liquidator is directed to coordinate lifting with appellant's oversight and follow the procedural directions given.

Admission and quantification of monetary claim - interest claim in absence of contract - Reduction of appellant's monetary claim on account of interest - HELD THAT: - The liquidator reduced the interest component of the appellant's claim on the basis that no contractual provision for the claimed rate of interest was shown. The Tribunal examined that reduction and found no merit in the appellant's claim for the higher rate of interest; the liquidator's reduction (to a base rate) was sustained. [Paras 45]

The reduction of the interest component of the appellant's monetary claim is upheld; that ground of appeal is rejected.

Final Conclusion: The Tribunal held that BHEL did not possess any security interest and therefore is not a secured creditor; provisions of the Sale of Goods Act and Transfer of Property Act cannot be invoked to create a security interest inconsistent with the IBC. The liquidator erred in issuing the sale certificate before adjudicating BHEL's security claim and thereby failed in his fiduciary obligation, but cancellation of the auction and restitution of already dismantled assets was refused as impracticable; instead limited procedural directions were issued to regulate further lifting, and challenges to the liquidator's conduct and claims for disgorgement/restoration are to be pursued through the appropriate IBBI/disciplinary and statutory mechanisms. The monetary reduction in BHEL's interest claim was sustained.

Realisation of security interest under Section 52 of the Insolvency and Bankruptcy Code, 2016 - verification of security interest by the liquidator under Section 52(3) - relinquishment of security interest to the liquidation estate and distribution under Section 53 - exclusive or first charge / priority of charges among secured creditors - maintainability of application to the Adjudicating Authority under Section 52(6) where no resistance under Section 52(5) is pleaded - deposit of surplus proceeds with the liquidator after enforcement under Section 52(7)

Maintainability of application to the Adjudicating Authority under Section 52(6) where no resistance under Section 52(5) is pleaded - realisation of security interest under Section 52 of the Insolvency and Bankruptcy Code, 2016 - Application under Section 52(6) filed directly before the Adjudicating Authority by a secured creditor in the absence of any resistance as envisaged by Section 52(5) is maintainable or not. - HELD THAT: - Section 52 permits a secured creditor to realise its security interest (Section 52(1)(b)) but prescribes a sequence: inform the liquidator and identify the asset (Section 52(2)); the liquidator must verify the existence of the security interest (Section 52(3)); and a secured creditor may enforce realisation in accordance with applicable law (Section 52(4)). Only where a secured creditor faces resistance in the course of realisation may it invoke the Adjudicating Authority under Section 52(5)-(6). In the present case there is no allegation of resistance and there is no evidence that the 1st Respondent followed the processes in subsections (2)-(4). The Tribunal held that an application under subsection (6) filed directly, absent the cause of action in subsection (5) and without the pre-steps in subsections (2) and (3), is not maintainable and the Adjudicating Authority had no jurisdiction to entertain it. [Paras 31, 32, 36, 38, 40]

The application under Section 52(6) filed by the secured creditor without pleading resistance and without following the verification and notice procedure under Section 52(2)-(4) was not maintainable; the impugned order based on such application is set aside.

Exclusive or first charge / priority of charges among secured creditors - deposit of surplus proceeds with the liquidator after enforcement under Section 52(7) - relinquishment of security interest to the liquidation estate and distribution under Section 53 - Whether more than one secured creditor can enforce their security interest over the same secured asset and consequences of first enforcement. - HELD THAT: - Section 52(7) requires a secured creditor who realises security to account for and tender any surplus to the liquidator. The Tribunal reasoned that once a secured creditor enforces its right and realises the secured asset, any excess proceeds are to be deposited with the liquidator and, consequently, a subsequent secured creditor cannot thereafter enforce its right over the same asset to obtain a further recovery from that asset. Therefore, only one secured creditor may effectively enforce and realise the same secured asset under Section 52; competing claims to the same asset must be addressed by verification and, if necessary, adjudication of priorities before enforcement or in the liquidation process under Section 53. [Paras 33, 34, 35]

Only one secured creditor can enforce and realise a particular secured asset under Section 52; excess proceeds must be tendered to the liquidator, and competing secured creditors cannot sequentially realise the same asset to the detriment of others.

Verification of security interest by the liquidator under Section 52(3) - realisation of security interest under Section 52 of the Insolvency and Bankruptcy Code, 2016 - relinquishment of security interest to the liquidation estate and distribution under Section 53 - Remedial direction on how competing claims and disputes about first charge are to be dealt with in the liquidation: whether the Adjudicating Authority or the liquidator should determine priority and how to proceed when a civil suit is pending. - HELD THAT: - The Tribunal found that the Adjudicating Authority had directed symbolic possession to the 1st Respondent without record of compliance with Section 52(2)-(3) and despite multiple secured creditors claiming rights over the same asset and a pending civil suit on priority. The impugned order was set aside. The matter is remitted to the liquidator to act under Section 52(3): verify security interests from records maintained by an information utility or as specified by the Board, determine who has first charge from those records, and, if a dispute is pending before a civil court, inform parties and proceed in accordance with Section 52(3) and Section 53. The liquidator is to follow the statutory sequence rather than abdicate responsibility. [Paras 20, 21, 39, 41, 42]

Impugned order set aside; the matter remitted to the liquidator to verify competing security interests and determine priority in accordance with Section 52(3) and, where appropriate, Section 53, and to proceed lawfully if a civil dispute on first charge is pending.

Final Conclusion: The appeal is allowed: the Adjudicating Authority's order directing symbolic possession to the 1st Respondent is set aside for lack of maintainability and failure to follow the Section 52 sequence; the matter is remitted to the liquidator to verify and determine competing security interests and proceed in accordance with Sections 52 and 53 of the I&B Code.

Franchise Service - representational right - Retail Agent Agreement vs franchisee - security deposit as indemnity not franchise fee

Franchise Service - representational right - Retail Agent Agreement vs franchisee - Whether the relationship between the appellant and the retail agents amounted to provision of Franchise Service. - HELD THAT: - The Tribunal examined the definition of Franchise Service (as amended w.e.f. 16.05.2005) and the concept of representational right, observing that the defining characteristic of a franchise is the grant of a representational right whereby the franchisee, for practical purposes, loses its separate identity and represents the franchisor. The impugned agreement is titled "Retail Agent Agreement" and, on its terms, appoints agents to collect bill payments on behalf of the company, provides for payment by the company to the agent on a per-transaction basis, acknowledges company ownership of terminals, and expressly disclaims partnership or representational authority. Clause 9.2 expressly prohibits the retail agent from making representations or incurring liability on behalf of the company. The Tribunal found that these features denote an agency/collection arrangement and not a grant of representational rights characteristic of a franchise. The earlier four-fold test applicable prior to the amendment was held to have been superseded by the amended definition; reliance on pre-amendment cumulative ingredients was therefore not appropriate. Applying these principles to the contract terms, the Tribunal concluded that the agents collect on behalf of the appellant without subsuming their identity into that of the appellant and that the arrangement is inconsistent with franchise services. [Paras 9, 12, 13, 14, 16]

The agreement does not create a Franchise Service; the finding of the authorities below to the contrary is set aside and the appeals allowed on this issue.

Security deposit as indemnity not franchise fee - Franchise Service - Whether the one time fee and the security deposit received from agents constituted a franchisee fee taxable as Franchise Service. - HELD THAT: - The Tribunal analysed the contractual provisions dealing with the one time sign up payment and the security deposit. It noted that the agreement provides for a refundable security deposit returned on termination (with interest) and envisages payment by the company to the agent per transaction. The Tribunal found that the sign up payment and security deposit functioned as indemnity or security related to collections by the agents rather than as consideration for purchase of representational rights. Given the absence of any grant of representational authority and the per transaction remuneration structure, the payments could not be characterised as franchise consideration under the amended definition of Franchise Service. [Paras 3, 13, 15, 16]

The one time fee and the security deposit are not franchisee fees liable to service tax as Franchise Service; the impugned orders confirming tax on those amounts are set aside.

Final Conclusion: The Tribunal held that the contractual arrangement between the appellant and its retail agents did not constitute Franchise Service and that the one time fee and security deposit were not consideration for representational rights; the orders under challenge were set aside and the appeals allowed.

CENVAT credit admissibility - refund of unutilised CENVAT credit - nexus between input services and exported services - challenge to admissibility at the refund stage - requirement of adjudication / show cause notice before denying refund on admissibility grounds - binding effect of earlier adjudication/acceptance of CENVAT credit

CENVAT credit admissibility - refund of unutilised CENVAT credit - challenge to admissibility at the refund stage - requirement of adjudication / show cause notice before denying refund on admissibility grounds - Entitlement to refund of unutilised CENVAT credit where admissibility of input service credit was not questioned at the time of availment and nexus was challenged only at the refund stage. - HELD THAT: - The Tribunal held that where CENVAT credit has been availed by the assessee and no question of inadmissibility was raised at the time of availment, the same cannot be assailed for the first time while adjudicating a refund claim. If the revenue considered any input service to be inadmissible, it ought to have initiated adjudication by issuing a show cause notice and proceeded to determine admissibility; summary rejection of the refund on the ground of inadmissibility without such adjudication is impermissible. The Tribunal relied on the appellant's earlier decision for a prior period affirming that the services in question constituted input services and that the adjudicating authority erred in rejecting part of the refund without adjudicating admissibility. Applying that reasoning, the Tribunal found that the appellant was entitled to refund of the unutilised CENVAT credit. [Paras 3, 6, 7]

Refund claim allowed; impugned orders set aside and appeals allowed with consequential relief.

Final Conclusion: The appeals are allowed: the appellant is entitled to refund of the unutilised CENVAT credit as admissibility was not challenged at the time of availment and the refund could not be rejected without prior adjudication; impugned orders are set aside with consequential relief.

Eligibility for Cenvat credit under Rule 2(l) of Cenvat Credit Rules - Keyman insurance as an input service - company as beneficiary under an insurance policy - reversal of Cenvat credit - requirement of nomination where policyholder is a company

Eligibility for Cenvat credit under Rule 2(l) of Cenvat Credit Rules - Keyman insurance as an input service - company as beneficiary under an insurance policy - Whether Cenvat credit availed on premium paid for Keyman insurance policy is admissible to the appellant - HELD THAT: - The Tribunal found the issue identical to an earlier decision in the appellant's own Service Tax appeal, where the policy documents expressly showed that the benefit under the policy was payable to the policyholder (the appellant company). The Tribunal explained that nomination is ordinarily relevant to confer benefit upon a nominee, but where the policyholder is a company having perpetual existence, nomination is not required and the company itself is the beneficiary. Applying that reasoning, the Tribunal held that the Keyman insurance premium constitutes an input service eligible for Cenvat credit under Rule 2(l) of the Cenvat Credit Rules. The Tribunal therefore set aside the orders of the lower authorities which had confirmed reversal of credit, interest and penalty, and allowed the appeal.

Appeal allowed; impugned order set aside and appellant held entitled to Cenvat credit on Keyman insurance premium with consequential relief.

Final Conclusion: The Tribunal allowed the appeal, holding that the Keyman insurance premium paid by the appellant is an admissible input service and that the appellant company, being the policyholder and beneficiary, is entitled to Cenvat credit under Rule 2(l); the impugned order was set aside with consequential benefits.

CENVAT credit - debit notes as valid document for availing CENVAT credit - Rule 9 of the CENVAT Credit Rules, 2004 - requirement of invoice particulars under Rule 9 - binding effect of Tribunal and High Court precedents

CENVAT credit - debit notes as valid document for availing CENVAT credit - Rule 9 of the CENVAT Credit Rules, 2004 - requirement of invoice particulars under Rule 9 - CENVAT credit claimed on the basis of debit notes issued by the service provider is admissible if the debit notes contain the particulars required under Rule 9 of the CENVAT Credit Rules, 2004. - HELD THAT: - The Tribunal noted that the appellant produced debit notes and a consolidated invoice and that the decision in earlier authorities consistently holds that debit notes may qualify as valid documents for availing CENVAT credit provided they incorporate the details prescribed by Rule 9 of the CENVAT Credit Rules, 2004. The Commissioner (Appeals) had relied on an earlier tribunal decision to deny credit, but subsequent appellate authority and High Court decisions have accepted debit notes where Rule 9 particulars are present. In the present case the debit notes produced contain all particulars required by Rule 9, and therefore satisfy the documentary requirement for claiming CENVAT credit. Applying the ratio of the cited decisions, the impugned order denying credit was found unsustainable.

The impugned order denying CENVAT credit was set aside and the appellant's appeal was allowed, the debit notes being valid documents for claiming CENVAT credit as they contain the particulars required by Rule 9 of the CCR, 2004.

Final Conclusion: Appeal allowed; impugned order set aside and CENVAT credit admitted as the debit notes produced contained the particulars mandated by Rule 9 of the CENVAT Credit Rules, 2004.

Interim stay of penalty - contempt for non-compliance of interim order - inapplicability of precedential ruling on interim orders in criminal and civil matters to tax proceedings - direction for expeditious adjudication of appeal

Interim stay of penalty - contempt for non-compliance of interim order - inapplicability of precedential ruling on interim orders in criminal and civil matters to tax proceedings - Disposition of contempt petition alleging breach of the High Court's interim order staying operation of penalty and applicability of Asian Resurfacing precedent. - HELD THAT: - The contempt petition arising from alleged non-compliance with the Court's interim order of 22-12-2015 (which stayed operation of the order insofar as it imposed penalty) is disposed of. The Court observed that the decision in Asian Resurfacing of Road Agency Pvt. Ltd. and Another v. Central Bureau of Investigation concerns interim orders granted by High Courts in criminal and civil matters and is not applicable to tax matters. Having recorded that observation, the Court directed registry to list the underlying Central Excise Appeal No. 3 of 2015 before the appropriate bench dealing with central excise appeals for final disposal at the next sitting, and directed both parties to cooperate and avoid adjournments so the appeal may be decided expeditiously. [Paras 3, 4, 5]

Contempt petition disposed of with the observation that Asian Resurfacing is inapplicable to tax matters; appeal to be listed for final hearing and parties directed to cooperate without seeking adjournments.

Final Conclusion: The contempt petition was disposed of; the Court held the Asian Resurfacing precedent inapplicable to tax proceedings, directed expeditious listing and final hearing of Central Excise Appeal No. 3 of 2015, and commanded cooperation of the parties to avoid adjournments.

Benefit of input tax credit under the Modvat Credit Procedure - classification as agricultural machinery and liability to duty - entitlement to set-off/credit against duty and excess credit - appeal on a substantial question of law - precedent: Formica India Division

Classification as agricultural machinery and liability to duty - Nil rate of duty - Correctness of the Tribunal's conclusion that the goods manufactured by the assessee were not exigible to excise duty as agricultural machinery and that the Commissioner's demand was unsustainable. - HELD THAT: - The High Court accepted the Tribunal's factual and legal conclusion on classification which resulted in the setting aside of the Commissioner's order. The Tribunal's conclusion that the goods fell within the category treated as agricultural machinery and therefore were not exigible to duty was not disturbed. The court found no reason to interfere with the Tribunal's view and treated that determination as consistent with the material and legal position before the lower forum.

Tribunal's finding that the goods were not exigible to duty is maintained; the Commissioner's order is set aside on this point.

Benefit of input tax credit under the Modvat Credit Procedure - entitlement to set-off/credit against duty and excess credit - precedent: Formica India Division - Whether the assessee was entitled to input tax credit under the Modvat procedure which would offset any duty in demand (and result in a net credit in the assessee's favour), and whether denial of such credit was permissible. - HELD THAT: - Relying on the law as laid down by the Supreme Court in Formica India Division and on the Tribunal's application of that precedent, the High Court held that the assessee could not be denied the benefit of input tax credit under the Modvat procedure. The Tribunal's conclusion that the assessee possessed credit in excess of any duty in demand and that such credit entitlement could not be withheld was accepted. The court observed that the Tribunal's order accords with settled legal position and that there is no substantial question of law warranting interference.

Tribunal's allowance of the assessee's claim for input tax credit under the Modvat procedure is upheld; denial of such credit is rejected.

Final Conclusion: The High Court declined to admit the appeal under the substantial question of law route, found the Tribunal's conclusions (both on classification/exigibility and entitlement to Modvat credit) to be consistent with settled law and precedent, and dismissed the appeal accordingly.

Rule 6 of the Cenvat Credit Rules, 2004 - option to reverse credit under Rule 6(3) - proportionate reversal of CENVAT credit - demand under Rule 6(3)(i) (10% on value of exempted goods) - limitation bar - audit objection does not amount to suppression of facts - department cannot substitute assessee's statutory option

Proportionate reversal of CENVAT credit - option to reverse credit under Rule 6(3) - demand under Rule 6(3)(i) (10% on value of exempted goods) - department cannot substitute assessee's statutory option - Whether reversal of proportionate CENVAT credit for April 2008 to March 2010 precludes demand under Rule 6(3)(i) for payment of 10% of the value of exempted goods. - HELD THAT: - The Tribunal found that the appellant had reversed the proportionate credit attributable to input services for the period April 2008 to March 2010, the reversal being accepted and appropriated in the SCN. Applying the settled position that an assessee may choose any of the alternatives in Rule 6(3) and that the Department cannot impose its own option, the Tribunal held that where proportionate reversal as contemplated by the Rules has been made, the consequential demand under Rule 6(3)(i) for payment of 10% on the value of exempted goods does not arise. The conclusion follows the authority of earlier decisions of Tribunals and High Courts cited in the record and the reasoning that Rule 6 is intended to prevent wrongful availing of credit, not to extract an amount in excess of credit attributable to exempted use. [Paras 6, 7]

Demand under Rule 6(3)(i) for April 2008 to March 2010 set aside as proportionate reversal was made and accepted.

Limitation bar - audit objection does not amount to suppression of facts - Whether the demand relating to July 2005 to March 2008 is barred by limitation and whether proceedings founded on audit objections permit allegation of suppression. - HELD THAT: - The Tribunal examined the period July 2005 to March 2008 and concluded the demand is time-barred. The reasoning notes that the period was marked by unsettled statutory interpretation of Rule 6 and a subsequent retrospective amendment by the Finance Act, 2010, undermining any inference of mala fide intent. Further, since the proceedings originated from departmental audit observations and the Department's own Audit Note records prior audits (up to March 2008) with no prior objection, the Tribunal held that suppression with intent to evade duty cannot be imputed. Reliance was placed on precedents holding that audit-based SCNs do not, by themselves, justify allegations of wilful suppression. [Paras 6, 7]

Demand for July 2005 to March 2008 held barred by limitation and not maintainable on the basis of alleged suppression arising from audit objections.

Final Conclusion: The impugned order is set aside and the appellant's appeal is allowed: demands confirmed for April 2008-March 2010 are negated in view of proportionate reversal of credit and the demand for July 2005-March 2008 is held time-barred and unsustainable.

Relevancy of statements under Section 9D - Cross-examination in departmental adjudication proceedings - Admissibility of statements recorded during investigation - Requirement to record reasons when permitting or disallowing cross-examination - Remand for fresh adjudication on account of procedural infirmity - Demand, interest and penalty provisions invoked in adjudication (proviso to Section 11A(1); Section 11AB; Section 11AC)

Relevancy of statements under Section 9D - Cross-examination in departmental adjudication proceedings - Admissibility of statements recorded during investigation - Requirement to record reasons when permitting or disallowing cross-examination - Remand for fresh adjudication on account of procedural infirmity - Whether the adjudicating authority and Commissioner (Appeals) were justified in admitting statements recorded during investigation without allowing the cross examination sought by the appellant and thus upholding the demand, interest and penalty. - HELD THAT: - Section 9D makes statements recorded before a Gazetted Central Excise Officer relevant in adjudication only if admitted in evidence in accordance with clause (b) or where clause (a) applies. The Tribunal applied the principle that if cross examination is required to establish the relevance and truth of such statements, the adjudicating authority must record a reasoned conclusion on the request for cross examination and, if allowing it, provide the opportunity before admitting the statement in evidence. The adjudicating authority had initially fixed a date for cross examination but proceeded to adjudicate when the cross examination did not occur on that date, treating the opportunity as having been granted and exhausted. The Tribunal held that cross examination in adjudication is not a mere formality and that the authorities should not admit investigative statements without first dealing, with reasons, with the request for cross examination. While recognizing that authorities may curtail requests used to delay proceedings if supported by reasons (and that principles like those in Rasheed apply), the Tribunal found a procedural infirmity here and directed remand for fresh adjudication to consider and, as appropriate, allow the cross examination and then re adjudge the claims of demand, interest and penalty.

Impugned orders set aside; matter remanded to the adjudicating authority for fresh adjudication after permitting and conducting the cross examination requested by the appellant (with directions that the appellant must appear on appointed dates and that failure to do so will permit adverse inferences).

Remand for fresh adjudication on account of procedural infirmity - Whether the departmental appeal filed by the respondent (co noticee) abates on his death. - HELD THAT: - The Tribunal recorded that the respondent, Shri R.M. Mohatta, in the departmental appeal has expired. The appeal concerning that respondent was treated as abating. This finding led to separate disposal of the two appeals before the Tribunal: one appeal allowed and remanded; the other abated.

Appeal No. E/583/2009 abates.

Final Conclusion: The Tribunal set aside the adjudicating authority's order and the impugned appellate order insofar as they admitted investigative statements without properly dealing with the appellant's request for cross examination, remanding the matter for fresh adjudication after allowing the cross examination; the co noticee's departmental appeal abates.

Deduction of sales tax at source - First point of sale taxation - Onus of proof for payment of sales tax - Authority to insist on production of tax payment receipts from a subsequent purchaser - Non-liability on subsequent sale where tax levied at first point of sale under section 11(2) of the Act

Deduction of sales tax at source - Onus of proof for payment of sales tax - First point of sale taxation - Authority to insist on production of tax payment receipts from a subsequent purchaser - Whether the Railways was entitled to deduct sales tax at source from the respondent's bills despite production of original bills and documents showing tax had been levied and collected at the first point of sale. - HELD THAT: - The High Court found, and this Court concurs, that the respondent produced original cash memos, invoices and other documents showing that sales tax had been collected at the first point of sale and that the Railways did not dispute the genuineness or correctness of those documents. The authorities ought to have verified with the Commercial Taxes Officer if required, before making any deduction. Clause 16(1) of the contract placed the onus on the subsequent seller to produce proof of payment of tax at first sale; that onus was discharged by production of the original documents. Absent a positive finding after verification that no first sale occurred or that the documents were not genuine, the Railways had no power to make the deduction. In law, where tax is levied at the first point of sale, no further tax is payable on a subsequent sale in terms of section 11(2) of the Act, and the Railways could not insist on receipts of payment from the respondent who had paid the tax-inclusive price to its supplier. [Paras 14, 15, 16]

The Railways was not entitled to deduct sales tax at source from the respondent's bills; production of original bills and documents discharged the respondent's onus and barred further deduction.

Final Conclusion: Appeal dismissed. The withheld amount deducted by the appellant shall be released to the respondent within three months with interest at 6% per annum from the date of deduction until payment.

Jurisdiction to assess - power to transfer proceedings - amnesty scheme - adjournment to enable availing scheme - best judgment assessment under GVAT Act - principles of natural justice

Jurisdiction to assess - power to transfer proceedings - Validity of the assessment orders insofar as the assessing authority lacked jurisdiction - HELD THAT: - The Court found on the material before it, including the reply obtained under the Right to Information Act, that the proceedings in respect of the petitioners had not been transferred to the second respondent. Section 17 (power to transfer proceedings) contemplates an express transfer by the Commissioner after notice and by an order in writing. In the absence of any such transfer, the second respondent did not have jurisdiction to make the assessments. An order passed by an authority which lacked jurisdiction is null and void. For these reasons the impugned assessment orders were held to be without jurisdiction and liable to be set aside. [Paras 17]

Impugned assessment orders quashed as having been passed by an authority that lacked jurisdiction.

Amnesty scheme - adjournment to enable availing scheme - principles of natural justice - best judgment assessment under GVAT Act - Whether the assessing officer was obliged to keep proceedings in abeyance to enable the petitioners to avail the amnesty scheme and whether it was permissible to determine eligibility under the scheme while making a best judgment assessment - HELD THAT: - The amnesty scheme was designed to resolve old disputes and recover outstanding dues expeditiously; it applied to pending assessment cases and enforcement cases as per its terms. When a bona fide request was made to adjourn assessment proceedings to permit the petitioner to apply under the scheme, the officer was expected to respect that request and afford sufficient time. The second respondent proceeded ex parte to make a high pitched best judgment assessment and, in the same order, adjudicated on the petitioners' eligibility for the amnesty scheme. The Court held that it was impermissible while making a best judgment assessment to decide eligibility under the amnesty scheme, and that the failure to keep proceedings in abeyance had the effect of frustrating the petitioners' avenue to obtain relief under the scheme and offended the principles of natural justice. [Paras 16, 18, 19]

Second respondent erred in not keeping proceedings in abeyance and in determining amnesty eligibility in the assessment order; such conduct could not be upheld.

Best judgment assessment under GVAT Act - amnesty scheme - adjournment to enable availing scheme - Relief to be granted and consequential directions after quashing the assessment orders - HELD THAT: - In view of the lack of jurisdiction and the improper conduct in proceeding despite the petitioners' request to avail the amnesty scheme, the Court quashed and set aside the impugned assessment orders. The Court directed respondent authorities to process the petitioners' applications under the amnesty scheme in accordance with law. To safeguard revenue interests, the Court clarified that, if the petitioners do not avail of or are held ineligible for the amnesty, the authorities remain entitled to initiate assessment proceedings for the relevant period. [Paras 20, 21, 22]

Assessment orders quashed; authorities directed to process amnesty applications; if amnesty is not availed or is not granted, revenue may initiate assessment proceedings afresh.

Final Conclusion: The petitions are allowed: the assessment orders dated 27.9.2019 are quashed as having been passed by an authority without jurisdiction and for improperly denying the petitioners an opportunity to avail the amnesty scheme; the respondents are directed to process the amnesty applications in accordance with law, subject to the clarification that revenue may proceed with assessments if amnesty is not availed or granted.

Jurisdiction of a statutory arbitral tribunal to grant interim measures under Section 17 of the Arbitration and Conciliation Act, 1996 - application of Part I of the Arbitration and Conciliation Act to arbitral proceedings under another enactment - bar on civil courts' jurisdiction under a special enactment and transfer of arbitration proceedings to a statutory tribunal - validity of interim orders restraining appropriation/withholding of amounts pending adjudication - doctrine of per incuriam as to precedent reliance

Jurisdiction of a statutory arbitral tribunal to grant interim measures under Section 17 of the Arbitration and Conciliation Act, 1996 - bar on civil courts' jurisdiction under a special enactment and transfer of arbitration proceedings to a statutory tribunal - application of Part I of the Arbitration and Conciliation Act to arbitral proceedings under another enactment - The Gujarat Public Works Contract Disputes Arbitration Tribunal has jurisdiction to grant interim measures in terms of Section 17 of the A&C Act in disputes falling under the Gujarat Act. - HELD THAT: - The Court held that Part I of the A&C Act applies to arbitrations in India and, except where inconsistent, applies to arbitrations under other enactments. The Gujarat Act compulsorily refers works-contract disputes to the Tribunal and recognises power to make interim awards. Section 13 bars civil courts from granting injunctions in respect of actions taken under the Gujarat Act and Section 21 transfers arbitration proceedings to the Tribunal where the Arbitration Act is inconsistent with the Gujarat Act. There is no inconsistency between Section 17 of the A&C Act and the Gujarat Act as regards grant of interim relief; Section 17 therefore complements and is exercisable by the Tribunal constituted under the Gujarat Act. For these reasons the Tribunal is the appropriate forum to determine legality of the State's notice and to consider prima facie entitlement to interim relief, and the High Court erred in entertaining the writ and granting the relief impugned in these proceedings. [Paras 1, 16, 17, 18, 21]

Tribunal has jurisdiction to entertain and grant interim measures under Section 17 of the A&C Act in disputes governed by the Gujarat Act; the High Court should not have granted the relief it did.

Doctrine of per incuriam as to precedent reliance - validity of interim orders restraining appropriation/withholding of amounts pending adjudication - The reliance on Gangotri Enterprises Limited (which followed Raman Iron Foundry) was held to be per incuriam and cannot be followed on the point considered. - HELD THAT: - The Court examined Gangotri Enterprises and the earlier precedents it relied upon. It noted that Raman Iron Foundry's view was specifically overruled by a subsequent three-Judge Bench decision in H.M. Kamaluddin Ansari, rendering Gangotri's reliance on Raman Iron Foundry incorrect. Consequently Gangotri's ratio on the power of courts to restrain appropriation in the manner applied there is per incuriam and not a correct statement of law in the present context. [Paras 19, 20]

Gangotri Enterprises' reliance on Raman Iron Foundry is per incuriam and does not govern the present question.

Bar on civil courts' jurisdiction under a special enactment and transfer of arbitration proceedings to a statutory tribunal - application of Part I of the Arbitration and Conciliation Act to arbitral proceedings under another enactment - Remedial direction that the contractor must approach the Gujarat Tribunal and protective directions as to limitation were ordered. - HELD THAT: - Having held that the Tribunal has jurisdiction, the Court set aside the High Court's judgment and directed that the contractor may approach the Gujarat Public Works Contract Disputes Arbitration Tribunal. The Tribunal is required to decide the matter on merits; if the Tribunal is approached within two months the Tribunal shall not dismiss the claim on limitation grounds. Pending applications, if any, were directed to stand disposed of and the appeals of the State were allowed. [Paras 22]

High Court judgment set aside; matter remitted to the Gujarat Tribunal for adjudication on merits with protection against dismissal on limitation if filed within two months.

Final Conclusion: The appeals are allowed. The Gujarat Public Works Contract Disputes Arbitration Tribunal has jurisdiction to grant interim measures under Section 17 of the A&C Act in disputes falling under the Gujarat Act; the High Court's orders are set aside and the matter is remitted to the Tribunal to be decided on merits, with a two month window provided to the contractor to approach the Tribunal without the claim being barred on limitation.

Applicability of amended Section 148 of the Negotiable Instruments Act - Suspension of sentence subject to deposit of interim compensation - Vacatur of conditional suspension for non compliance - Purposive interpretation of statutory amendments

Applicability of amended Section 148 of the Negotiable Instruments Act - Purposive interpretation of statutory amendments - Whether amended Section 148 of the Negotiable Instruments Act applies to appeals arising from convictions in complaints filed before 01.09.2018. - HELD THAT: - The Court held that Section 148, as amended by Amendment Act No. 20/2018 which came into force w.e.f. 01.09.2018, is applicable to appeals against conviction and sentence under Section 138 even where the underlying criminal complaints were filed prior to that date. The Court relied on a purposive construction, noting the Statement of Objects and Reasons and Parliament's intent to curb delay tactics by accused-appellants; the amendment does not take away any vested substantive right of appeal but regulates the appellate stage procedure. The amended provision confers power on the first appellate court to direct deposit of a minimum sum (construed as a general rule rather than a mere exception), and that construction furthers the objects of the amendment and of Section 138 itself. Prior decisions relied upon by the appellants were held distinguishable or inapplicable on this purposive basis. [Paras 8, 9, 11, 12, 15]

Amended Section 148 is applicable at the appellate stage to appeals against convictions under Section 138 even if the complaints were filed before 01.09.2018; the appellate court may, in exercise of its powers, direct deposit of the prescribed interim sum.

Suspension of sentence subject to deposit of interim compensation - Vacatur of conditional suspension for non compliance - Whether an appellate court may suspend sentence subject to deposit of a specified percentage of compensation and whether failure to comply with that condition permits the appellate court to hold that the suspension stands vacated. - HELD THAT: - The Court upheld the practice of suspending sentence on condition of depositing a portion of the compensation awarded by the trial court, observing that such conditional suspension is consistent with the amended Section 148 and the legislative purpose. Where suspension is expressly made conditional upon deposit of the specified sum, non compliance with that condition is a valid ground for the court which granted suspension (or the appellate court) to declare that the suspension has been vacated. The Additional Sessions Judge's order declaring the suspension vacated for failure to deposit 25% of compensation was therefore within jurisdiction and correctly taken. The Court rejected submissions that non-deposit could only be remedied by post conviction recovery provisions and emphasised that it is for the appellate court to decide appropriate steps upon non compliance. [Paras 13, 18, 19]

Appellate suspension of sentence may be made conditional on deposit of interim compensation; failure to comply with the condition lawfully permits the appellate court to treat the suspension as vacated and to take appropriate steps.

Final Conclusion: The appeals are dismissed; the Court affirmed that amended Section 148 applies to the appeals in question and upheld the appellate court's conditional suspension of sentence and its decision to deem the suspension vacated upon non compliance with the deposit condition.