TaxTMI Updates e-Newsletter
Jan 10,2023

Inter-state supply - intra-state supply - IGST and CGST/RGST tax characterisation - refund mechanism under the GST law - temporary relief pending adjudication - challenge to constitutionality of statutory provisions

Inter-state supply - intra-state supply - IGST and CGST/RGST tax characterisation - Nature of the supply of manpower - whether the transactions in the stated assessment years are inter-state supplies taxable under IGST or intra-state supplies taxable under CGST+RGST. - HELD THAT: - The Court identified the core controversy as a legal question dependent on facts: whether supply of manpower by the petitioner to an entity in Rajasthan amounted to an inter-state supply (for which petitioner had deposited IGST) or an intra-state supply (for which respondents assessed CGST+RGST). The Court observed that this question requires deeper consideration of the factual matrix and legal principles and noted conflicting factual findings recorded by the authorities below, including the petitioner's subsequent registration in Rajasthan. Given the complexity and the pendency of challenges to the validity of certain statutory provisions, the writ petition was entertained and the State and Union were directed to file responses so the matter may be heard finally thereafter. The Court did not resolve the tax characterisation on merits and left the issue for adjudication after hearing submissions and considering the responses called for. [Paras 9, 10, 11]

Issue not decided on merits; matter is retained for final adjudication after responses are filed - the question whether the supplies in AYs 2017-18, 2018-19 and 2019-20 are inter-state or intra-state is to be considered and adjudicated on hearing.

Refund mechanism under the GST law - temporary relief pending adjudication - Interim relief permitting the petitioner to seek refund of IGST already paid and directions regarding deposit of the disputed CGST+RGST and release of attached accounts pending final adjudication. - HELD THAT: - The Court, while refraining from adjudicating the substantive tax characterisation, provided interim protective measures to prevent double recovery during pendency. The petitioner was permitted to apply for refund of the IGST in the prescribed form within two weeks; if the application is in order, the respondents were directed to process it within two months as provided under the rules. Concurrently, the petitioner was directed to deposit the remaining 65% of the assessed CGST+RGST within three months. Upon the petitioner making the refund application, accounts attached for realization of the disputed amount were ordered to be released. These directions balance the petitioner's grievance against double payment and the respondents' interest in revenue protection, without deciding the substantive issue. [Paras 12]

Interim directions granted: petitioner may apply for IGST refund within two weeks; respondents to process within two months if application is in order; petitioner to deposit 65% of CGST+RGST within three months; accounts attached shall be released on application for refund.

Final Conclusion: Writ petition entertained; State and Union to file responses within one month and the matter listed for final hearing; interim directions were granted permitting the petitioner to apply for refund of IGST (to be processed within two months if in order), mandating deposit of 65% of CGST+RGST within three months, and ordering release of attached accounts upon refund application, while the substantive question of tax characterisation for AYs 2017-18, 2018-19 and 2019-20 remains pending adjudication.

Advance ruling - input tax credit - audi alteram partem / right to be heard - impleading of affected parties in advance ruling proceedings - remand for fresh consideration - appellate remedy before appellate authority for advance ruling

Audi alteram partem / right to be heard - impleading of affected parties in advance ruling proceedings - Whether the Authority for Advance Ruling committed jurisdictional error by pronouncing an advance ruling affecting the appellants' invoices without issuing notice to or impleading the appellants. - HELD THAT: - The Court found that the advance ruling impugned related to input tax credit claimed on invoices raised by the appellants for the tax periods January, February and March, 2020, and that the appellants were not made parties nor heard by the authority. The appellants, being registered dealers and directly affected by the ruling, ought to have been put on notice or impleaded so that their factual contentions and documents could be considered. The absence of notice and opportunity to be heard rendered the authority's order procedurally infirm and liable to be set aside. [Paras 4, 8, 9]

The advance ruling was set aside insofar as it affected the appellants for having been pronounced without affording them notice or a hearing.

Remand for fresh consideration - appellate remedy before appellate authority for advance ruling - Whether the appropriate relief is to direct the appellants to pursue the appellate remedy or to remit the matter to the Authority for fresh consideration. - HELD THAT: - Although an appeal mechanism to the appellate authority exists for aggrieved persons, the Court accepted the appellants' contention that material factual details they wish to place were not before the authority and that directing them to the appellate forum may be ineffective because the underlying record lacks those facts. In view of the procedural defect identified, the Court exercised its supervisory jurisdiction to remit the matter to the Authority for Advance Ruling to enable fresh consideration on merits after issuing notices, permitting submission of documents and written submissions and hearing the parties afresh. [Paras 9, 10, 12]

The matter was remanded to the Authority for Advance Ruling for fresh consideration, with directions to issue notice to the appellants and the applicant, hear them, permit submissions and pass a reasoned order expeditiously.

Final Conclusion: The impugned advance ruling dated 9th August, 2021 was set aside insofar as it affected the appellants; the matter is remanded to the Authority for fresh consideration after issuing notice to the appellants and Eastern Coalfields Limited, permitting documents and written submissions and hearing the parties, to be completed preferably within eight weeks; no costs were awarded.

Notice and order for demand under Section 73 of TN-GST Act - mandatory compliance of FORM GST DRC-01 and FORM GST DRC-01A - amendment to Rule 142 TN-GST Rules converting 'shall' to 'may' - requirement of show cause notice for revision under Section 73 - rectification under Section 161 for 'errors apparent on the face of record' - right to statutory appeal under Section 107 of TN-GST Act subject to limitation and pre-deposit

Mandatory compliance of FORM GST DRC-01 and FORM GST DRC-01A - amendment to Rule 142 TN-GST Rules converting 'shall' to 'may' - Impugned order under Section 73 was not vitiated for want of issuance/upload of FORM GST DRC-01 or FORM GST DRC-01A. - HELD THAT: - The Court examined Rule 142 of the TN-GST Rules and noted the amendment to sub rule (1A) which, from 15.10.2020, replaced the operative word 'shall' with 'may' for the actions previously prescribed. Consequently, issuance or electronic upload of FORM GST DRC-01 and FORM GST DRC-01A is no longer statutorily mandatory but optional at the instance of the proper officer. Reliance upon an earlier decision of this Court (Shri Tyres) to the contrary was held to be superseded by the amendment; consistency with precedent was disclaimed in favour of correctness in light of the changed statutory position. [Paras 7, 8, 9]

The challenge to the impugned order on the ground that it was not preceded by FORM GST DRC-01/DRC-01A fails.

Requirement of show cause notice for revision under Section 73 - notice and order for demand under Section 73 of TN-GST Act - It is not imperative to issue a show cause notice before passing an order under Section 73 in the circumstances of this case. - HELD THAT: - Applying principles previously articulated by this Court in the context of the erstwhile TNVAT Act and upheld by a Division Bench, the Court held that issuance of a show cause notice is not a statutory precondition to making a revision/order under the provisioning analogous to Section 73. The petitioner's contention that a personal hearing recorded in the impugned order did not in fact occur was immaterial because personal hearing is not statutorily mandatory in the circumstances. [Paras 9]

The objection to the impugned order for want of a show cause notice or personal hearing is rejected.

Rectification under Section 161 for 'errors apparent on the face of record' - right to statutory appeal under Section 107 of TN-GST Act subject to limitation and pre-deposit - The rectification request filed under Section 161 did not qualify as a rectification of an 'error apparent on the face of the record'; the petitioner retains the right to prefer a statutory appeal under Section 107. - HELD THAT: - The Court scrutinised the communication dated 13.07.2022 relied upon as a rectification application and found that it raised matters of output mismatch between GSTR 1 and GSTR 3B and non-reversal of credit notes - issues which are not errors so obvious as to require no inferential process. Such grievances may constitute grounds for a statutory appeal but do not fall within the narrow scope of Section 161. The Court therefore declined to treat the communication as entitling the petitioner to rectification under Section 161, while expressly preserving the petitioner's right to approach the Appellate Authority under Section 107 subject to limitation and pre-deposit conditions and to seek extension under Section 14 of the Limitation Act if so advised. [Paras 9, 10, 11]

The rectification plea under Section 161 is not maintainable as an 'error apparent on the face of record'; remedies by statutory appeal are preserved.

Final Conclusion: Writ petition dismissed. The court held that issuance/upload of FORM GST DRC-01/DRC-01A is optional post amendment to Rule 142, a show cause notice or personal hearing was not mandatory in the circumstances, and the rectification application did not disclose an 'error apparent on the face of the record'; all rights to pursue a statutory appeal under Section 107 (subject to limitation and pre-deposit) are preserved.

Summary order. The writ petition was disposed of by directing that the second refund application already filed be refiled as a statutory appeal before the appellate authority and be treated as having been presented on 12.07.2022, with the appellate authority to decide the matter on merits. The Court expressly treated the arrangement as a one-off measure on the facts of the case and refrained from expressing any view on the refund claim.

Installation services - Construction services - Composite supply - Works contract - Immovable property - Transfer of property in goods - Classification under SAC 9954 and SAC 99546/995461 - Concessional rate under Entry 3(iv)(a) of Notification No. 11/2017-C.T.(Rate)

Installation services - Construction services - Classification under SAC 9954 and SAC 99546/995461 - Concessional rate under Entry 3(iv)(a) of Notification No. 11/2017-C.T.(Rate) - Classification of the applicant's supply and entitlement to concessional GST rate under Entry 3(iv)(a) of Notification No. 11/2017-C.T.(Rate). - HELD THAT: - The Authority examined the scope of the service order and the Scheme of Classification of Services (SAC). The supply comprised design, supply, erection, installation, testing and associated civil works for a highway lighting system. The Explanatory Notes to the SAC prefer the most specific description where differential treatment is possible. The activities fall squarely within electrical installation/illumination services for roads (SAC 99546 / 995461 and related installation/illumination service codes) rather than general construction services of highways (SAC 995421) because the predominant character of the supply is electrical installation and related specialized works. The Notification benefit at Entry 3(iv)(a) is available only to services that fall under Heading 9954 as construction services of roads. Since the applicant's supply is correctly classifiable as electrical installation services and not as construction services of a road under Heading 9954, the basic eligibility for the concessional rate under Entry 3(iv)(a) is not satisfied.

The supply is classifiable as electrical "Installation services" (illumination for roads) and the applicant is not eligible for the concessional 12% GST under Entry 3(iv)(a) of Notification No. 11/2017-C.T.(Rate).

Composite supply - Whether the supply of highway lighting system by the applicant constitutes a composite supply. - HELD THAT: - The service order bundled supply of goods (poles, luminaires, cables, etc.) with services (design, erection, installation, testing, civil works for foundations) that are naturally bundled and supplied in conjunction in the ordinary course of business. The supply of goods and installation services are provided as a single integrated package and the complete supply is effectuated only when all components are rendered/installed. On the facts and contractual terms, the Authority concluded that the second criterion (composite supply) specified for Entry 3(iv)(a) is fulfilled.

The supply qualifies as a composite supply.

Works contract - Immovable property - Transfer of property in goods - Whether the applicant's contract qualifies as a 'works contract' under Section 2(119) of the CGST Act (i.e., works for an immovable property with transfer of property in goods). - HELD THAT: - The Authority applied the established criteria for immovability (permanent attachment to earth, no intention to move without dismantling, dismantling causes substantial damage, etc.). The lighting system as installed along the highway is intended to be permanently affixed, cannot be shifted without dismantling and damage, and the contract provides for supply of goods and their installation. Contractual clauses (supply, installation, foundation/civil works, transfer/secured material advance, BOQ) demonstrate transfer of property in goods in execution of the contract. Accordingly, the contract satisfies the definition of 'works contract' insofar as it relates to an immovable installation and transfer of goods involved in execution.

The contract satisfies the tests of a 'works contract' under Section 2(119) (immovable nature of the installation and transfer of property in goods).

Final Conclusion: Although the supply is a composite works contract and the lighting installation qualifies as an immovable works contract involving transfer of goods, it is properly classifiable as electrical "Installation services" (SAC for electrical installation/illumination) and not as a "Construction service" of a road under Heading 9954; therefore the applicant is not entitled to the concessional 12% GST rate under Entry 3(iv)(a) of Notification No. 11/2017-C.T.(Rate).

Reopening of assessment under section 148/147 of the Income-tax Act - reason to believe - change of opinion - disallowance under section 14A - claim for keyman insurance premium - effect of amalgamation on notice - tangible material / live link between material and belief

Reopening of assessment under section 148/147 of the Income-tax Act - reason to believe - change of opinion - tangible material / live link between material and belief - Validity of notice dated 13.12.2017 issued under section 148 for reopening assessment of Assessment Year 2012-2013 - HELD THAT: - The Court examined whether the Assessing Officer had 'reason to believe' that income chargeable to tax had escaped assessment so as to justify reopening beyond four years. The Assessing Officer's reasons related to (a) alleged incorrect allowance of deduction for keyman insurance premium and (b) an alleged error in computation under section 14A. The record showed that both aspects had been placed before and considered by the Assessing Officer in the original assessment: the keyman premium appeared in the audited accounts and the computation and policy details were furnished prior to framing assessment, and a specific show cause notice and submissions on section 14A were made and an addition under section 14A was in fact made in the assessment under section 143(3). Having examined these materials, the Assessing Officer originally took a view (no disallowance for keyman premium; disallowance under section 14A). The Court found that the reasons now given for reopening merely represented a change of opinion on issues already considered and decided in the original assessment, lacking fresh tangible material that bears a live link to a belief of escapement of income. Applying the principle that reopening must be founded on tangible material and not on mere change of opinion (as explained in Kelvinator), the Court held the reopening notice to be not tenable. The fact that the notice was issued in the name of the amalgamating (now non existent) company was noted but the determinative reasoning rested on absence of fresh material and change of opinion where the matters had been previously examined.

Notice under section 148 dated 13.12.2017 insofar as it seeks to reopen assessment for AY 2012-2013 is quashed and set aside.

Effect of amalgamation on notice - claim for keyman insurance premium - Validity of issuing notice in the name of the amalgamating (now non-existent) company and whether that vitiates reopening - HELD THAT: - The petitioner promptly informed the Assessing Officer that Shahlon Industries Pvt. Ltd. had been amalgamated with Shahlon Silk Industries Pvt. Ltd. before issuance of the reopening notice and produced the original return, audited accounts and policy receipts showing the keyman premium. The Court observed that notices cannot be validly issued in the name of a non existent entity and noted the factual position that the claim and supporting documents were already on record before the original assessment. While the Court's principal ground for quashing the reopening was change of opinion and absence of fresh tangible material, the procedural irregularity of issuing notice in the name of the amalgamating/non existent entity was recorded in the factual matrix supporting the petitioner's position.

Issuance of notice in the name of the amalgamating (non existent) company and the consequent proceedings are quashed and set aside as part of the order quashing the reopening.

Final Conclusion: The notice under section 148 dated 13.12.2017 and the order disposing of objections are quashed and set aside; rule made absolute to that extent and no order as to costs.

Transfer under Section 127 of the Income Tax Act for centralised/co ordinated investigation - principles of natural justice in transfer proceedings - administrative/quasi administrative character of transfer orders - limited scope of judicial review of transfer orders - requirement of cogent material / financial nexus as factual threshold for transfer - recording and communication of reasons for transfer

Principles of natural justice in transfer proceedings - recording and communication of reasons for transfer - Whether the decision making process complied with the requirements of natural justice and Section 127 before effecting the transfer. - HELD THAT: - The Court found that the earlier order (quashed) had violated principles of natural justice, but the Impugned Order was passed after issuing a fresh show cause notice, allowing filing of replies, personal hearing of petitioner's advocates and consideration of objections. The reasons for transfer were communicated in the second notice and the Impugned Order and the petitioner was given opportunity to represent his case; accordingly the decision making process met the statutory and procedural requirements and was not vitiated for want of notice or non communication of reasons. [Paras 24, 25]

The transfer order satisfied the procedural preconditions and principles of natural justice and the court will not interfere on that ground.

Administrative/quasi administrative character of transfer orders - limited scope of judicial review of transfer orders - Whether the transfer order was susceptible to interference on merits given the administrative character of orders under Section 127 and the scope of judicial review. - HELD THAT: - The Court reviewed precedent establishing that orders under Section 127 are administrative/quasi administrative, that there is no absolute right to be assessed at a particular place and that judicial review is confined to examining the decision making process, arbitrariness, mala fides, lack of jurisdiction or wholly irrelevant reasons. Applying these principles, and having found that reasons were recorded and the process was proper, the Court held that it should not substitute its judgment for the executive decision to centralise investigation absent patent arbitrariness or mala fides. [Paras 13, 19, 29, 32]

The court declined to disturb the administrative transfer, recognising the limited scope of judicial interference in Section 127 matters.

Requirement of cogent material / financial nexus as factual threshold for transfer - transfer under Section 127 of the Income Tax Act for centralised/co ordinated investigation - Whether the material on record established a sufficient nexus or cogent material to justify centralisation and transfer of the petitioner's assessment. - HELD THAT: - The Court held that while a concrete financial nexus in exhaustive detail is not required at the transfer stage, there must be cogent material from which a reasonable inference of nexus can be drawn. Reviewing the materials set out in the second notice and Impugned Order - statements of involved persons, documents and chat entries referring to 'KN', alleged cash movement and subsequent accounting entries - the Court concluded these amounted to cogent material warranting centralised, coordinated investigation. The Court rejected the contention that absence of search/seizure of the petitioner or completion of assessments of other persons alone precluded transfer. [Paras 25, 26, 27, 28, 31]

The impugned transfer was founded on cogent material sufficient to justify centralised investigation and therefore sustained.

Final Conclusion: The writ petition challenging transfer of the petitioner's income tax assessment to New Delhi under Section 127 was dismissed: the authority afforded statutory opportunity, recorded and communicated reasons, and possessed cogent material and reasonable nexus to warrant centralisation; the court declined to interfere, directing completion of assessment in accordance with law.

Fees for Included Services / Article 12(4)(b) of the Indo US DTAA - Characterisation of advisory services versus technology transfer - Binding nature of AAR rulings under Section 245S - Reimbursement payments and arm's length principle - Permanent establishment and business profits under Article 7

Binding nature of AAR rulings under Section 245S - Whether the Authority for Advance Ruling's opinion operates so as to compel taxation of the foreign entity and displace the Tribunal's factual conclusion. - HELD THAT: - The Court accepted the Tribunal's factual conclusion that the services rendered were advisory and no technology was made available within the meaning of Article 12(4)(b). The Court noted the earlier High Court ruling which explained the limited scope of an AAR opinion - binding on the Indian applicant and the relevant Indian tax authorities in respect of the transaction and confined to the specific questions answered - and that the AAR's opinion is not binding on the foreign entity. Given the Tribunal's factual finding on the character of services, the contention based on the AAR was treated as academic and could not overturn the fact based conclusion of the Tribunal and CIT(A).

Affirmed the Tribunal's conclusion that the AAR ruling did not justify treating the receipts as taxable in the hands of the foreign assessee; substantial questions (a) and (b) answered against the revenue.

Fees for Included Services / Article 12(4)(b) of the Indo US DTAA - Characterisation of advisory services versus technology transfer - Permanent establishment and business profits under Article 7 - Whether the consideration received by the foreign assessee constituted 'fees for included services' under Article 12(4)(b) of the Indo US DTAA or was chargeable as business profits under Article 7. - HELD THAT: - On examination of the August 2, 2000 agreement (notably Section 1.2) and the factual matrix, the Tribunal and CIT(A) found that the services were advisory in nature and did not involve transfer or making available of technical plans, designs or technology to the Indian recipient. The Court endorsed that advisory services without making technology available do not fall within Article 12(4)(b). It further noted that the assessee did not have a permanent establishment in India and therefore income could not be taxed as business profits under Article 7. The MoU example relied upon (Example No.7) and the contractual terms (invoicing of costs without mark up) supported the factual characterisation as advisory services.

Held that the receipts were not taxable as 'fees for included services' and were not taxable as business profits in India; substantial question (c) answered against the revenue.

Reimbursement payments and arm's length principle - Whether reimbursements received relating to third party services constituted fees for technical services taxable in India. - HELD THAT: - The Tribunal and CIT(A) found and the Court accepted that the amounts represented actuals billed by third parties, paid by the foreign assessee in the USA and subsequently reimbursed by the Indian recipient; the assessee was not the ultimate beneficiary nor did it render those services to the Indian recipient. No material was placed to show that technical skill or knowledge was made available to the Indian recipient by the assessee. The Transfer Pricing Officer examined the international transaction under Section 92 and concluded that reimbursements involved no profit to the assessee and were at arm's length. On this factual and transfer pricing appraisal, there was no basis to treat the reimbursements as fees for technical services.

Reimbursements were held to be non taxable as fees for technical services in India and were at arm's length; substantial question (d) answered against the revenue.

Final Conclusion: The High Court dismissed the revenue's appeal; the Tribunal's order affirming the CIT(A)'s findings on the nature of services, the limited effect of the AAR, and the treatment of third party reimbursements was upheld and the application for stay was closed.

Rejection of books of account under Section 145(3) of the Income tax Act - Estimation of income after rejection of books of account - Reasonableness of notional net profit estimation in trading business - Concurrent findings of fact and limited scope of judicial interference

Rejection of books of account under Section 145(3) of the Income tax Act - Concurrent findings of fact and limited scope of judicial interference - Validity of the Assessing Officer's rejection of the assessee's books of account under Section 145(3) and the correctness of upholding that rejection by the CIT(A) and the Tribunal. - HELD THAT: - The authorities below found a wide mismatch between purchase and sale prices, multiple loss booking transactions at year end, lack of verifiable supporting documents and indications of intra group adjustments, which collectively constituted serious defects in the books of account. On the material placed before them the CIT(A) upheld invocation of Section 145(3), and the Tribunal agreed that once the books were found to be managed to book losses and certain expenses were not verifiable, reliance on those books for ascertaining true profitability was impermissible. These determinations are essentially factual, made after consideration of the record and reasons, and fall within the concurrent factual findings of the tax authorities. [Paras 5, 7]

The rejection of the books of account under Section 145(3) was rightly upheld by the CIT(A) and the Tribunal; there is no call for interference with these concurrent factual findings.

Estimation of income after rejection of books of account - Reasonableness of notional net profit estimation in trading business - Concurrent findings of fact and limited scope of judicial interference - Whether the net profit rate of 0.5% fixed by the CIT(A) and sustained by the Tribunal (in place of the Assessing Officer's 7%) was justified. - HELD THAT: - After rejecting the books, the authorities examined available material, including the assessee's declared results and comparable profitability in the line of trading in metals. The CIT(A) concluded, and the Tribunal affirmed, that a 7% net profit ratio was implausible for such trading concerns where prevailing gross/net margins typically range from 0.5% to 1%, and that the Assessing Officer had not produced internal or external comparable data to justify the higher estimate. The Tribunal noted that the same books could not be relied upon to derive true profitability once rejected. These conclusions rest on evaluation of sectoral norms and the record before the authorities and amount to concurrent findings of fact and judgment as to a reasonable notional profit rate. [Paras 6, 7, 10]

The adoption of a 0.5% net profit rate by the CIT(A), upheld by the Tribunal, was reasonable on the facts and does not warrant interference by this Court.

Final Conclusion: The concurrent factual findings of rejection of books under Section 145(3) and the estimation of net profit at 0.5% by the CIT(A) and Tribunal are sustained; no substantial question of law is made out and the appeal is dismissed.

Liberty to file revision under Section 264 - direction not to reject on the ground of limitation - disposal without adjudication on merits; rights and contentions kept open

Liberty to file revision under Section 264 - direction not to reject on the ground of limitation - Writ petition disposed with liberty to file a revision under Section 264 of the Income Tax Act and a direction to the revisional authority not to reject the revision on limitation grounds if filed within three weeks of receipt of the order. - HELD THAT: - The High Court, noting that other directors of the same company had been permitted similar relief, disposed of the petition by granting the petitioner liberty to prefer a revision under Section 264. The Court directed that if the revision petition is filed within three weeks of receipt of the copy of this order, the revisional authority shall entertain and rule on the petition on merits and shall not reject it solely on the ground of limitation. The Court expressly refrained from examining the merits of the matter and accordingly kept the rights and contentions of the parties open. [Paras 5, 6]

Petition disposed; liberty to file revision under Section 264 granted and revisional authority directed not to reject on limitation ground if filed within three weeks; merits not adjudicated.

Final Conclusion: Writ petition disposed by granting liberty to file a revision under Section 264 within three weeks of receipt of the order; revisional authority directed to consider the petition and not reject it on limitation grounds; merits left open.

Trinity test for grant of stay of demand - discretionary order subject to writ review for perversity or arbitrariness - CBDT instruction on partial modification requiring 20% payment for stay - Section 220(6) of the Income Tax Act - disposal of stay application

Trinity test for grant of stay of demand - CBDT instruction on partial modification requiring 20% payment for stay - Section 220(6) of the Income Tax Act - disposal of stay application - Validity of the impugned order refusing stay solely because the petitioner had not paid 20% of the disputed demand without applying the trinity test. - HELD THAT: - The Court found that the order under Section 220(6) was cryptic and non-speaking, and had refused stay only on the ground that the petitioner had not paid the prescribed 20% as per the CBDT instruction. The High Court had earlier directed that the trinity principles laid down in the cited precedents (Queen Enterprises and Kannammal) be applied. The impugned order proceeded in gross disregard of that direction and failed to consider the trinity factors when exercising discretion to grant stay of demand. A discretionary decision which ignores an express judicial direction and omits application of the determinative legal test is arbitrary and perverse and cannot be sustained. Consequently the impugned order was set aside and the matter remitted for fresh disposal of the stay application in accordance with the trinity principles within six weeks, with interim protection from further proceedings until disposal.

Impugned order set aside; stay application to be decided afresh applying the trinity test within six weeks; meanwhile no further proceedings against the petitioner.

Discretionary order subject to writ review for perversity or arbitrariness - Whether interference under Article 226 is permissible against a discretionary order of the income-tax authorities. - HELD THAT: - The Court acknowledged that normally discretionary orders are not routinely interfered with under Article 226, but reiterated the settled principle that writ jurisdiction can be invoked where the discretionary order is shown to be perverse or arbitrary. Applying that principle, the Court found the impugned order vulnerable to writ review because it was made in gross disregard of the High Court's earlier direction and failed to apply the governing legal test, thereby rendering the exercise of discretion arbitrary.

Discretionary orders are amenable to writ jurisdiction where they are perverse or arbitrary; interference was warranted in the present case.

Final Conclusion: The writ petition succeeds: the order refusing stay solely for non-payment of 20% is set aside as arbitrary for ignoring the trinity test; the stay application is remitted for fresh disposal in accordance with the trinity principles within six weeks, and no further proceedings shall be taken against the petitioner until the stay application is decided.

Reassessment under section 148 read with section 148A - limitation for issuance of reassessment notice under section 149 - proviso to section 147 concerning failure to disclose fully and truly all material facts - deeming of pre-amendment section 148 notices as show cause notices under section 148A per Ashish Agarwal

Limitation for issuance of reassessment notice under section 149 - reassessment under section 148 read with section 148A - Whether the notice dated 30.06.2021 under section 148 (impugned notice) in respect of Assessment Year 2014-15 was barred by limitation under section 149. - HELD THAT: - The Court held that the applicable limitation for the relevant assessment year (ending 31.03.2015) is governed by section 149(1)(a) and thus a three-year period applied, which expired on 31.03.2018. Section 149(1)(b) was held inapplicable because the allegation of escapement was not founded on books of account or other documents in the possession of the Assessing Officer; the asserted escapement related to information already disclosed by the assessee and available to the AO at the time of original assessment. The Court further observed that the proviso to section 149(1)(b) prevents invocation of the extended period where the notice would have been time barred under the pre amendment regime. On these bases the proceedings initiated by the notice dated 30.06.2021 were held to be hopelessly time barred and liable to be quashed. [Paras 9, 11, 13, 14, 15]

The impugned reassessment proceedings pursuant to the notice dated 30.06.2021 in respect of AY 2014-15 are barred by limitation and set aside.

Proviso to section 147 concerning failure to disclose fully and truly all material facts - reassessment under section 148 read with section 148A - Whether the proviso to section 147 (reopening where assessee failed to disclose fully and truly material facts) justified reopening in the present case. - HELD THAT: - The Court applied earlier reasoning given in respect of the same assessee for a prior year and examined the record for AY 2014-15. It found that the assessee had disclosed the gift of listed shares, the face value and sufficient particulars in the return and had furnished demat account details during original assessment; the AO had, in the original assessment, declined to treat Section 56(2)(vii)(c) as applicable. The Court held that mere change of opinion by the AO after the expiry of the limitation period cannot justify reopening; absent demonstration that a material fact essential to assessment was not fully and truly disclosed, the proviso to section 147 does not apply. Consequently the reasons recorded for reopening were factually incorrect and insufficient, and the reopening was invalid. [Paras 17, 18, 21, 25, 26]

The reopening premised on alleged failure to disclose material facts was without jurisdiction in the facts of the case and the reasons for reopening are quashed.

Final Conclusion: Petition partly allowed; the impugned order dated 28.07.2022 and the impugned notice dated 28.07.2022 in respect of Assessment Year 2014-15 are quashed.

Adventure in the nature of trade - treatment of sale of agricultural land as capital asset versus business income - timing of transfer for taxation - agreement of sale vis-a -vis registered sale deed - prevention of double taxation through adjustment across assessment years

Adventure in the nature of trade - treatment of sale of agricultural land as capital asset versus business income - Whether the sale transaction is an adventure in the nature of trade and taxable in A.Y. 2014-15 rather than being exempt agricultural income or capital gain in a later year. - HELD THAT: - The Tribunal upheld the findings of the Assessing Officer and the Commissioner (Appeals) that the transaction constituted an adventure in the nature of trade. The conclusion was based on proximate and dispositive facts: the assessee purchased the agricultural land and within six days entered into an agreement to sell it at a profit; the sale consideration was funded by the ultimate purchaser; possession and the entire consideration were received; and the land was subsequently converted to non-agricultural use before registration. These facts evidenced an intention not to carry out agriculture but to effect a resale for profit, bringing the transaction within the character of trading activity rather than an exempt agricultural receipt or a capital asset realization in a later year. The Tribunal found no infirmity in the lower authorities' reasoning and declined to disturb their conclusion. [Paras 6]

Transaction held to be an adventure in the nature of trade and taxable in A.Y. 2014-15; appellant's grounds on this point rejected.

Timing of transfer for taxation - agreement of sale vis-a -vis registered sale deed - prevention of double taxation through adjustment across assessment years - Whether taxing the transaction in A.Y. 2014-15 results in impermissible double taxation given that the sale was registered in A.Y. 2016-17 and income was offered in that year. - HELD THAT: - The Tribunal noted that the Commissioner (Appeals) had directed deletion of the income offered by the assessee in A.Y. 2016-17 in respect of the same transaction. On the material before the Tribunal, the assessee had already received the sale consideration and the sale was treated as completed in the earlier year; accordingly, taxing it in A.Y. 2014-15 did not occasion double taxation because the subsequent year's disclosure was ordered to be deleted. The Tribunal accepted the lower authority's corrective direction and found no substance in the contention of double taxation. [Paras 5, 6]

No double taxation; income offered in A.Y. 2016-17 to be deleted as directed by the Commissioner (Appeals); confirmation of lower authorities on this point.

Final Conclusion: The appeal is dismissed. The Tribunal affirms that the transaction is an adventure in the nature of trade and taxable in A.Y. 2014-15, and it upholds the deletion of the same income in A.Y. 2016-17 as directed by the Commissioner (Appeals).

Allowability of interest to partners under Section 40(b)(iv) of the Income tax Act - calculation of interest on partners' capital - daily product basis versus closing balance method - character of capital on death of partner - conversion into loan and claimability of interest under Section 36(1)(iii) / Section 37 - remand for verification of legal heir and readjudication by Assessing Officer

Calculation of interest on partners' capital - daily product basis versus closing balance method - allowability of interest to partners under Section 40(b)(iv) of the Income tax Act - Deletion of addition of Rs. 3,27,465 made by AO by computing interest on closing capital balances instead of on the actual period of credit (daily product) claimed by the assessee. - HELD THAT: - The partnership deed provided for interest at 12% payable on amounts outstanding to the credit of partners and stated that such interest shall be calculated and credited at the close of the accounting year. The Tribunal held that this clause requires crediting of interest at year end but does not mandate computation solely on the closing balance. Interest must be computed with regard to the actual duration for which the credit remained in the capital account; computing interest only on the closing balance would produce unjust results where amounts were withdrawn or credited during the year. The assessee's method of calculating interest on a daily product basis was held to be proper and consistent with the deed and past practice; consequently the Assessing Officer's approach of applying the closing balance method was rejected. The CIT(A) had discussed the matter but had not given an explicit adjudicatory finding; notwithstanding that, the Tribunal found the assessee's method acceptable and deleted the disallowance. [Paras 7, 8, 9]

Addition of Rs. 3,27,465 on account of excess interest to partners is deleted; grounds 1 to 7 allowed.

Character of capital on death of partner - conversion into loan and claimability of interest under Section 36(1)(iii) / Section 37 - remand for verification of legal heir and readjudication by Assessing Officer - Whether interest paid to legal heir of deceased partner was admissible in the assessment year or required readjudication; matter remanded to AO for verification and recalculation. - HELD THAT: - The Assessing Officer had disallowed interest claimed to legal heirs on the ground that the deceased ceased to be a partner and the amount only became a loan when entries were passed on 31 03 2011. The CIT(A) analysed whether the amount, after death of the partner, had the character of borrowed funds and observed that mere timing of book entries (05 04 2010 or 31 03 2011) does not alter the substance where the funds continued to be used in the business and no assets were liquidated. The CIT(A) concluded that the payment may not fall under Section 40(b)(iv) but could be considered under provisions dealing with interest on borrowed capital; directed the AO to restrict the addition to interest calculated @12% on the capital balance and to verify whether the new partner was a legal heir so as to grant relief if appropriate. The Tribunal noted that the CIT(A) remanded the matter for factual verification and recalculation, and that readjudication by the AO in conformity with law was necessary. Consequently the Tribunal modified the CIT(A)'s order to the extent of remanding the issue to the AO for fresh adjudication. [Paras 13, 14]

Impugned disallowance qua interest to legal heirs is not finally sustained; matter remanded to the Assessing Officer for verification of legal heir status and recalculation/readjudication as per law.

Final Conclusion: Appeal partly allowed: disallowance of Rs. 3,27,465 on account of alleged excess interest to partners deleted; claim of interest paid to legal heirs of deceased partner remanded to the Assessing Officer for verification and fresh adjudication in accordance with law.

Condonation of delay - Deduction under section 54B - Deduction under section 54F - Unexplained cash deposits as income under section 69 - Consideration stated in registered sale deed conclusive

Condonation of delay - Admission of the appeal despite delay in filing - HELD THAT: - The Tribunal considered the explanation furnished by the legal heir for a delay of 58 days in filing the appeal and noted absence of mala fide or deliberate intention. The Senior DR raised no serious objection. Applying judicial discretion, the Tribunal held the facts constituted a fit case for condonation of delay and admitted the appeal for adjudication. [Paras 2, 3, 4]

Delay of 58 days condoned and the appeal admitted.

Deduction under section 54B - Deduction under section 54F - Allowability of exemption under section 54B (and section 54F) for reinvestment in agricultural land and construction - HELD THAT: - The appellant sought deduction under section 54B relying on purchase of agricultural lands in the names of the son and daughter-in-law and also sought relief under section 54F for construction of residential property. The Tribunal noted no claim for these deductions was made in the original return. It applied binding judicial precedent of the jurisdictional High Court and this Tribunal to hold that deduction under section 54B is not allowable where the new agricultural lands were not purchased in the name of the assessee. The Tribunal rejected the appellant's contention that clubbing or deeming provisions could extend the benefit, observing deeming provisions cannot be stretched beyond their purpose. As to section 54F, the Tribunal found no supporting evidence of construction expenditure and that the alleged construction was carried out after filing the return without depositing unutilized capital gains in the prescribed capital gains scheme; consequently the claim lacked evidentiary foundation and was rejected. [Paras 11, 12, 14, 15, 16]

Claim for deduction under section 54B (and section 54F) refused; ground of appeal dismissed.

Unexplained cash deposits as income under section 69 - Consideration stated in registered sale deed conclusive - Whether cash deposits in the assessee's bank account were properly treated as unexplained and brought to tax under section 69 - HELD THAT: - The Assessing Officer noted cash deposits of Rs.47,50,000 and treated part as explained by the declared sale consideration and brought the balance to tax as unexplained. The appellant's explanation before the Assessing Officer was absent; before the CIT(A) and the Tribunal the appellant asserted deposits derived from past savings or from sale consideration in excess of the registered sale deed, but produced no documentary evidence. The Tribunal reiterated settled law that unexplained cash deposits may be taxed under section 69 and that the consideration stated in a registered sale deed is conclusive absent material showing payment over and above the stated amount. The Tribunal further observed there is no burden on the Revenue to trace a particular source before invoking sections 68/69. In absence of corroborative evidence, the Tribunal found the alternate explanations to be bald ipse dixit and upheld the additions. [Paras 18, 19, 21, 22, 23]

Addition of unexplained cash deposits upheld and brought to tax; ground of appeal dismissed.

Final Conclusion: The Tribunal condoned the delay and admitted the appeal but, on merits, dismissed the appeal - refusing the claimed deductions under sections 54B/54F and upholding the assessment of unexplained cash deposits as income under section 69; the assessments/orders of the lower authorities are sustained.

Condonation of delay in claim for refund under Section 119(2)(b) - claim for refund and time limit under Section 239 - power of Principal Commissioner/Commissioner to admit belated refund claims as per Board circular - requirement to approach appropriate authority before seeking belated relief - rectification under Section 154 and competence to entertain belated TDS credit

Condonation of delay in claim for refund under Section 119(2)(b) - power of Principal Commissioner/Commissioner to admit belated refund claims as per Board circular - requirement to approach appropriate authority before seeking belated relief - claim for refund and time limit under Section 239 - Whether the assessee was entitled to condonation of delay and allowance of TDS credit when the claim for refund was filed belatedly before the Assessing Officer instead of the appropriate authority empowered under Section 119(2)(b) and the Board's circular. - HELD THAT: - The Tribunal accepted the factual finding that the assessee did not approach the Principal Commissioner/Commissioner (the authorities vested by the Board under Section 119(2)(b) and Circular No.9/2015) for condonation of delay but instead filed the belated claim before the Assessing Officer and thereafter appealed to the CIT(A). The Tribunal distinguished the Madras High Court decision relied upon by the assessee on the ground that, in that case, the claimant had applied to the Board under the statutory power; by contrast, the present assessee never approached the appropriate authority empowered to admit belated refund claims. The Tribunal held that the failure to invoke the designated authority was a material defect which could not be cured by filing before the Assessing Officer or by subsequent appeal, and that the CIT(A) correctly dismissed the appeal. In view of these conclusions, there was no basis to interfere with the orders under consideration, including the order rejecting the application under rectification/Section 154. [Paras 7, 8]

Appeal dismissed; CIT(A)'s order upholding rejection of the belated refund/TDS credit claim was affirmed for want of approach to the appropriate authority empowered to condone delay.

Final Conclusion: The Tribunal dismissed the assessee's appeal for A.Y. 2010-11, affirming that a belated claim for refund/TDS credit cannot be entertained where the assessee did not approach the authority vested by the Board to condone delay and instead sought relief before the Assessing Officer and on appeal.

Estimation of net profit in business of liquor - addition on account of interest from sundry debtors - assessments under search and seizure proceedings and notice under section 153A read with section 153C - reliance on extra-record statement recorded under section 131 - additions based on surmises and presumptions

Estimation of net profit in business of liquor - assessments under search and seizure proceedings and notice under section 153A read with section 153C - Validity of estimating net profit at 5% of turnover for liquor business instead of 3% as claimed by the assessee; whether the Tribunal should reduce the rate when assessee had neither maintained nor produced books of account and had earlier sought adoption of 5%. - HELD THAT: - The Tribunal noted that the assessee did not maintain or produce books of account either during search, post-search enquiries or assessment proceedings. The Assessing Officer initially estimated profit at 8% of turnover in the absence of books; the assessee had during assessment and on appeal sought restriction of profit to 5% of turnover. The learned CIT(A) adopted 5% and the Tribunal found no infirmity in that approach. The Tribunal distinguished the cited decision where 3% was applied because in that case books were rejected for failure to substantiate claimed expenses and stock; those facts were not present here. Given the absence of accounts and the assessee's own request before the AO and CIT(A) to adopt 5%, the Tribunal held the assessee cannot now urge a reduction to 3% and upheld the 5% estimation. [Paras 12, 19]

Grounds challenging estimation at 5% are dismissed; profit rate of 5% of turnover upheld for the relevant assessment years.

Addition on account of interest from sundry debtors - reliance on extra-record statement recorded under section 131 - additions based on surmises and presumptions - Validity of addition made by computing interest @18% on sundry debtors on the basis of a statement recorded from a third person and absence of any incriminating material or evidence for the impugned assessment years. - HELD THAT: - The Assessing Officer computed interest @18% on sundry debtors because a member of the group in a statement recorded under section 131 stated that the group charges interest @18% p.a., and because the assessee had offered interest in a later year. The Tribunal observed that the statement was not recorded from the assessee, was recorded on a later date, and there was no incriminating material discovered during search for the impugned years nor any evidence that the debtors were questioned or admitted payment of interest for those years. The Tribunal held that making the addition on the basis of that third party statement and the later year's conduct amounted to acting on surmises and presumptions, which is not justified. [Paras 14, 15]

Addition of interest computed at 18% on sundry debtors set aside and grounds in respect of such additions allowed.

Final Conclusion: Appeals are partly allowed: the Tribunal upholds estimation of net profit at 5% of turnover for the liquor business for the years in dispute, but sets aside the additions made by computing interest at 18% on sundry debtors as being founded on surmises and inadmissible third party statement evidence.

Penalty under section 271(1)(c) - Unexplained cash credit under section 68 - Burden of proof in penalty proceedings - Requirement of independent finding for concealment or furnishing inaccurate particulars

Penalty under section 271(1)(c) - Unexplained cash credit under section 68 - Burden of proof in penalty proceedings - Requirement of independent finding for concealment or furnishing inaccurate particulars - Validity of levy of penalty under section 271(1)(c) where addition was made under section 68 in assessment but supporting documents were produced for the first time during penalty proceedings - HELD THAT: - The Tribunal held that an addition under section 68 in an assessment does not automatically establish concealment or furnishing of inaccurate particulars for the purpose of levy of penalty under section 271(1)(c). Penalty proceedings must be conducted afresh with a different burden of proof and require an independent finding that the assessee concealed income or furnished inaccurate particulars; a finding in assessment is only evidence and not conclusive. The assessee explained non-production of documents earlier by lack of cooperation of creditors and produced confirmations, bank statements and other documents during penalty proceedings. The AO did not undertake independent inquiry to establish that those explanations were false nor produced cogent material to show that the assessee consciously furnished inaccurate particulars; the AO's treatment was based on doubts and probabilities. The Tribunal relied on the principle in T Ashok Pai that findings in assessment cannot be automatically adopted in penalty proceedings, and on the ratio in CIT v. Reliance Petroproducts that mere disallowance or non-acceptance of a claim in assessment does not by itself attract penalty. Applying these principles to the facts, and noting the lack of independent, cogent material by the revenue to rebut the assessee's explanation, the Tribunal concluded that the requirements for imposing penalty under section 271(1)(c) were not satisfied and the penalty was liable to be deleted. [Paras 10, 11, 12]

Penalty imposed under section 271(1)(c) is deleted and the assessee's appeal is allowed.

Final Conclusion: The Tribunal set aside the order confirming penalty and directed deletion of the penalty under section 271(1)(c) for Assessment Year 2012-13, allowing the assessee's appeal.

Explanation 10 to section 43(1) - power of revision under section 263 - erroneous and prejudicial to the interests of the Revenue - plausible view / debatable question

Explanation 10 to section 43(1) - power of revision under section 263 - plausible view / debatable question - erroneous and prejudicial to the interests of the Revenue - Validity of assumption of jurisdiction under section 263 to revise the assessment for directing examination of applicability of Explanation 10 to section 43(1) in respect of subsidy received under the Package Scheme Incentives-2007. - HELD THAT: - Parliament confers power of revision under section 263 only where the assessment order is both erroneous and prejudicial to the revenue, and the error must be one which is not debatable or a plausible view. The Assessing Officer had called for details of the subsidy and the assessee had responded during assessment proceedings; thus the issue now sought to be revised was examined by the Assessing Officer and he took one of the plausible views. Silence of the assessment order on a point does not ipso facto mean absence of application of mind, since matters accepted by the Assessing Officer may not be reflected in the order. On the facts, all material was before the Assessing Officer and no further enquiry was necessary; therefore the defect relied upon by the Principal Commissioner (failure to consider Explanation 10) does not constitute an error of the kind warranting exercise of revisionary jurisdiction under section 263. Reliance is placed on the settled principle that revision cannot be invoked where the Assessing Officer has considered the issue and adopted a plausible view. [Paras 11, 12, 13]

Order of the Principal Commissioner under section 263 insofar as it directed re-examination of applicability of Explanation 10 to section 43(1) is set aside; the appeal is partly allowed for AY 2013-14 and the same conclusion applies to AY 2014-15 mutatis mutandis.

Final Conclusion: The Tribunal set aside the revision under section 263 in respect of the direction to examine applicability of Explanation 10 to section 43(1), holding that the Assessing Officer had considered the issue and taken a plausible view; both appeals for AY 2013-14 and AY 2014-15 are partly allowed.

International transaction - arm's length price - transfer pricing adjustment - most appropriate method - deemed international transaction - bright line test - remand to Assessing Officer/TPO - deduction under section 37(1)

Deemed international transaction - most appropriate method - arm's length price - remand to Assessing Officer/TPO - Benchmarking of international transaction of import of raw materials and validity of TP adjustment made by TPO/DRP. - HELD THAT: - The Tribunal found that the assessee's evidence - including certificates from third party suppliers and confirmations regarding pricing under the global sourcing arrangement, and the assertion that AE prices were lower than market - was not adverted to by the lower authorities. Consequently, the matter was remitted to the AO/TPO for fresh examination of the benchmarking analysis submitted by the assessee and for benchmarking the import transactions in accordance with law. The Tribunal further directed that, if the TPO's exercise results in a TP adjustment, such adjustment should be restricted to the corresponding sales arising from the imports held not to be at arm's length (i.e., the adjustment should correlate with the PLI adopted which was operating profit/sales). The Tribunal also permitted the AO/TPO, if the assessee's transactional analysis is not accepted, to examine the relevance of comparing gross profit (cost-plus/gross margin) of the assessee with comparables as an alternative basis for benchmarking. [Paras 18, 19]

Remitted to AO/TPO for fresh examination of benchmarking evidence on imports; permitted consideration of gross-margin (cost-plus) comparison if transactional analysis is rejected; any TP adjustment to be restricted to corresponding sales.

International transaction - transfer pricing adjustment - bright line test - deduction under section 37(1) - Whether A&M (advertising and marketing) expenditure can be treated as an international transaction and subjected to TP adjustment or alternatively disallowed under section 37(1). - HELD THAT: - Following the Tribunal's earlier decisions and consistent authorities of the Delhi High Court, the Tribunal held that an international transaction cannot be presumed merely by application of the bright line test (BLT) comparing the assessee's A&M spend with comparables; the Revenue must first prove existence of an international transaction (agreement/arrangement/understanding obliging the assessee to incur A&M for the AE). In absence of such a machinery provision or explicit arrangement, Chapter X cannot be invoked to make a TP adjustment on A&M by quantitative deduction. The Tribunal therefore allowed the assessee's ground on A&M expenditure. Further, relying on established principles, the Tribunal vacated the DRP's alternative direction to disallow the A&M expenditure under section 37(1), observing that expenditure incurred wholly and exclusively for the assessee's business cannot be disallowed merely because a third party also benefits. [Paras 24, 26]

A&M expenditure cannot be recharacterised as an international transaction merely by BLT comparison and TP adjustment on that basis is not sustainable; the DRP's alternate direction to disallow the A&M expense under section 37(1) is vacated and the assessee's challenge allowed.

Final Conclusion: Appeal allowed: (i) TP adjustment on import of raw materials remitted to AO/TPO for fresh examination of the assessee's benchmarking evidence, with permission to consider gross-margin comparison and with any adjustment confined to corresponding sales; (ii) TP adjustment and alternative disallowance in respect of A&M expenditure set aside and DRP's direction under section 37(1) vacated.

Abandonment of imported goods - ownership/title of imported goods - definition of importer under Section 2(26) - right to present bill of entry by owner - liability for detention/demurrage charges - payment of customs duty and interest

Ownership/title of imported goods - definition of importer under Section 2(26) - right to present bill of entry by owner - Whether the petitioner, having received the original documents and on facts amounting to abandonment by the original importer, could be recognized as owner and permitted to get the goods released and file a bill of entry. - HELD THAT: - The Court held that where the importer effectively abandoned the goods by not paying for or clearing them and the exporter/supplier (the petitioner) has received the original title documents, title can be recognised in favour of the petitioner. The definition of "importer" in Section 2(26) includes an owner or beneficial owner between importation and clearance, and the fiction that the initial importer is owner cannot be stretched to deprive the exporter/supplier of title where the importer abandons the goods. Applying the principle in Agrim Sampada and Sampat Raj Dugar, the petitioner, having obtained the original documents back from the bank, is within the definition and entitled to seek clearance on payment of appropriate customs duty and interest. [Paras 11, 12, 15]

Petitioner entitled to be recognised as owner for purposes of presentation of bill of entry and release of goods upon payment of assessed customs duty and interest.

Liability for detention/demurrage charges - abandonment of imported goods - Whether the petitioner is liable to pay detention/demurrage charges or whether such charges must be borne by the customs authorities. - HELD THAT: - The Court reviewed precedent establishing that demurrage may be recoverable even if customs are at fault, but that in exceptional circumstances courts have directed revenue or custodian to bear demurrage where the authority was at fault or gave undertakings. Here, the out-of-charge process had been undertaken by the importer in September 2022 and customs had no notice of any transfer of ownership until the petitioner received documents in December 2022. There was an unexplained lull between September and December during which goods remained uncleared. Given these facts and that customs proceeded in accordance with law, the petitioner cannot shift the entire burden of detention/demurrage to the customs authorities. Accordingly, equitable allocation was directed: petitioner to bear a portion of demurrage for the period up to the first representation and full demurrage thereafter. [Paras 21, 22, 24, 25, 26]

Petitioner liable to pay 50% of detention/demurrage charges up to 3rd December, 2022 and full demurrage for the period from 3rd December, 2022 until date; customs authority not directed to bear demurrage.

Payment of customs duty and interest - right to present bill of entry by owner - Reliefs and procedural directions for release: payment obligations, verification, and procedural steps permitted to quantify and preserve remedies. - HELD THAT: - The Court directed that the petitioner must pay the assessed customs duty and interest and be permitted to appear before the customs authority to quantify amounts. The petitioner was directed to appear on the specified date for quantification. The Court left open the remedies of the petitioner and customs authority against the original importer. The petitioner was also permitted to clear the goods by paying the demurrage charges under protest if it wished to preserve challenges to the order. [Paras 23, 27]

Petitioner to pay assessed customs duty and interest; permitted to appear before customs on the appointed date for quantification; remedies against importer left open; petitioner may clear goods under protest by paying directed demurrage.

Final Conclusion: Writ petition disposed. Petitioner recognised as entitled to seek release on payment of assessed customs duty and interest; petitioner ordered to pay 50% of detention/demurrage up to 3rd December, 2022 and full demurrage thereafter; petitioner to appear before customs for quantification and may clear goods under protest; remedies against the original importer remain open.

Quashing of remand report - closure of complaint for want of prosecution - independence of criminal prosecution from adjudication/penalty proceedings

Quashing of remand report - closure of complaint for want of prosecution - Remand Report No.27/2014 dated 24.09.2014 in respect of the petitioner is liable to be set aside as the complaint stood closed on 17.04.2021 and no proceedings are pending for adjudication. - HELD THAT: - The Court obtained and relied upon the official remarks of the learned Additional Chief Metropolitan Magistrate (Economic Offences-II), Egmore, Chennai, which record that the three accused were remanded and later released on bail, that the matter was repeatedly listed for filing of complaint by the complainant, and that on 17.04.2021 the Court passed an order closing the matter because no complaint was preferred and no steps were taken by the complainant to prosecute the case. In view of the magistrate's factual and judicial report that the complaint was closed, the Court held that there was nothing remaining for adjudication arising out of the remand report and that the remand report must be set aside. The Court noted the respondent's submission that criminal proceedings under the Customs Act may be independent of penalty proceedings, but found that independence immaterial where the magistrate had closed the complaint for non-prosecution and no complaint or charge sheet was pending before the court. [Paras 6, 7]

Remand Report No.27/2014 dated 24.09.2014 is set aside insofar as it relates to the petitioner, as the underlying complaint was closed on 17.04.2021 and no proceedings remain pending.

Final Conclusion: The Criminal Original Petition is allowed; the remand report is set aside because the complaint was closed for want of prosecution and no criminal proceedings remain pending against the petitioner.

Maintainability of appeal before Appellate Tribunal in passenger baggage confiscation cases - jurisdiction of the CESTAT - revisionary remedy before the Government of India - absolute confiscation and penalty in passenger baggage under Customs law

Maintainability of appeal before Appellate Tribunal in passenger baggage confiscation cases - jurisdiction of the CESTAT - revisionary remedy before the Government of India - Appeal before the Appellate Tribunal against orders of Commissioner (Appeals) in respect of confiscation and penalty in passenger baggage cases is not maintainable before the Tribunal. - HELD THAT: - The Tribunal considered rival authorities and confined its decision to the question of jurisdiction without adjudicating the merits of confiscation or penalties. Relying on the Madras High Court view in Payangadi Moidu Mohammed Ali that, in identical circumstances, an appeal does not lie before the Tribunal and the competent remedy is a revisionary application to the Government of India, the Tribunal held that it lacks jurisdiction to entertain these appeals arising from passenger baggage seizures. Having found the appeals to be without jurisdiction, the Tribunal dismissed them as infructuous and granted liberty to the appellants to approach the revisionary authority, i.e., the Government of India, for appropriate relief.

Appeals dismissed as infructuous for want of jurisdiction; appellants permitted to seek revision before the Government of India.

Final Conclusion: The Tribunal dismissed the appeals for lack of jurisdiction in passenger baggage confiscation and penalty matters, holding that the proper course is to move the revisionary authority, Government of India; merits were left undecided.

Restoration of company's name in the register - removal of name from register under strike-off procedure - failure to file financial statements and annual returns as ground for strike-off - company not in operation / cessation of business as justification for strike-off - no interference with appellate fact-finding by Tribunal

Restoration of company's name in the register - removal of name from register under strike-off procedure - failure to file financial statements and annual returns as ground for strike-off - company not in operation / cessation of business as justification for strike-off - Whether the Tribunal erred in dismissing the appeal for restoration of the appellant company's name from the register and whether the Registrar of Companies followed due procedure in striking off the company - HELD THAT: - The Appellate Tribunal examined the material placed before the National Company Law Tribunal and the Registrar of Companies' actions. The Tribunal found that the appellant failed to prove that it was carrying on business or in operation when its name was struck off and did not produce supporting information to establish a just and equitable ground for revival. The Registrar of Companies had issued statutory notices, published the requisite public notice and effected dissolution in accordance with the strike-off procedure. The appellant's subsequent contentions concerning entitlement to a refund and past filings did not satisfy the burden of proving continuity of operation or otherwise rebutting the ROC's reasonable belief. The Appellate Tribunal found no illegality in the Tribunal's conclusion and no basis to interfere with the factual and procedural findings recorded below. [Paras 8]

The Tribunal's order dismissing the appeal for restoration is affirmed and the appeal is dismissed.

Final Conclusion: The National Company Law Appellate Tribunal affirmed the Tribunal's finding that the appellant failed to prove it was in operation when struck off and that the Registrar of Companies had validly followed the strike-off procedure; the appeal for restoration of the company's name is dismissed.

Jurisdiction of the National Company Law Tribunal under Section 60(5) of the IBC - bar on civil courts under Section 231 of the IBC - moratorium under Section 14 of the IBC - custodia legis - money deposited in court - status of deposit under Order 41 Rule 5(3)(c) CPC - ownership/title of money deposited pending an appeal

Moratorium under Section 14 of the IBC - custodia legis - money deposited in court - status of deposit under Order 41 Rule 5(3)(c) CPC - ownership/title of money deposited pending an appeal - Whether the monies deposited by the appellant in the Trial Court pursuant to this Court's order of 10th December 2012 are affected by the moratorium under Section 14 of the IBC. - HELD THAT: - The Court analysed the legal status of deposits made by a judgment-debtor to obtain stay of execution under Order 41 Rule 5(3)(c) CPC and relevant precedents. The settled principle is that such deposits are placed beyond the reach of the parties (custodia legis) and the title in the deposited money does not automatically vest in the decree-holder pending the appeal; the deposit remains held in trust by the Court for the party eventually entitled. Applying these principles, the Court held that once the decretal sum was deposited in Court (well before the insolvency commencement date), it ceased to be an asset of the corporate debtor and was not part of the corporate insolvency estate. Accordingly, the moratorium under Section 14 - which operates in respect of the assets/proceedings against the corporate debtor - did not, on that basis, preclude the decree-holder from seeking withdrawal of the deposited monies. The Court distinguished cases where deposits were made after commencement of CIRP or where entitlement had not been adjudicated, and relied on authorities holding that deposits in Court are custodia legis and not assets of the judgment-debtor for purposes of insolvency moratorium. [Paras 30, 31, 32, 33, 34]

The monies deposited by appellant pursuant to the order dated 10th December 2012 are not assets of the appellant for the purposes of Section 14 of the IBC and therefore are not covered by the moratorium.

Jurisdiction of the National Company Law Tribunal under Section 60(5) of the IBC - bar on civil courts under Section 231 of the IBC - Whether this High Court has jurisdiction to entertain and dispose of the Interim Application for withdrawal of the monies deposited in Court. - HELD THAT: - The Court examined the scope of Section 60(5) (NCLT's jurisdiction) and Section 231 (bar on civil courts) in light of the Supreme Court's rulings in Embassy Property and Gujarat Urja. Those authorities construe Section 60(5) narrowly: NCLT adjudicates matters that arise solely out of or relate to the insolvency process. If a dispute does not arise solely from insolvency, the ordinary forum retains jurisdiction. Applying that test, the Court found that the First Appeal challenges a civil decree concerning termination of employment and the Interim Application concerns monies deposited much before the insolvency commencement date; neither arises solely from the insolvency of the corporate debtor. Consequently, the NCLT is not the exclusive forum for these matters and Section 231 does not oust the High Court's jurisdiction. The Court therefore concluded that the High Court is the appropriate forum to determine the appeal and interlocutory application. [Paras 25, 26, 27, 28, 29]

This High Court has jurisdiction to entertain and dispose of the Interim Application; the matter is not one that arises solely from the appellant's insolvency and is therefore not exclusively within the jurisdiction of the NCLT.

Final Conclusion: The High Court holds that it has jurisdiction to decide the First Appeal and the Interim Application; and that the decretal sum deposited in Court prior to commencement of CIRP did not form part of the corporate debtor's assets and is not barred by the moratorium under Section 14 of the IBC, so the decree-holder may seek withdrawal subject to the Court's determination on the merits.

Initiation of liquidation - Effect of Explanation to Section 33(2) - Information Memorandum and timing of Invitation for Expression of Interest (Form G) - Adjudicating Authority's obligation under Section 33(2) - Judicial review of Committee of Creditors' decision - Committee of Creditors' commercial wisdom

Initiation of liquidation - Adjudicating Authority's obligation under Section 33(2) - Effect of Explanation to Section 33(2) - Judicial review of Committee of Creditors' decision - Whether the Adjudicating Authority was obliged to pass a liquidation order under Section 33(2) upon intimation of the CoC's decision to liquidate, and whether the CoC's decision was immune from judicial review. - HELD THAT: - The Explanation to Section 33(2) confers on the CoC the power to decide liquidation any time after its constitution and before confirmation of a resolution plan, including prior to preparation of the Information Memorandum; that legislative declaration must be given effect. However, the statutory obligation on the Adjudicating Authority to pass a liquidation order under Section 33(2) arises only when the decision of the CoC is in accordance with the Code. Judicial review of the CoC's decision is not precluded and the Adjudicating Authority may examine whether the decision conforms to the statutory scheme. Reliance on precedents shows that while CoC's commercial wisdom is entitled to weight, its decision may be interfered with if it is not shown to have been taken in accordance with the Code and relevant regulations. In the present case there was no material to demonstrate that the CoC had taken into account the statutory scheme (including the Explanation to Section 33(2) and the requirements relating to the Information Memorandum and Form G) before resolving for liquidation; accordingly the Adjudicating Authority acted within power in directing reconsideration rather than mechanically passing a liquidation order. [Paras 8, 13, 14]

The Adjudicating Authority did not err in refraining from passing a liquidation order under Section 33(2) and in subjecting the CoC's decision to scrutiny; the appeal challenging that refusal is dismissed.

Information Memorandum and timing of Invitation for Expression of Interest (Form G) - Committee of Creditors' commercial wisdom - Judicial review of Committee of Creditors' decision - Whether the CoC's decision to recommend liquidation before expiry of the EOI deadline and without evident consideration of the Explanation to Section 33(2) and the Information Memorandum regime warranted reconsideration by the CoC. - HELD THAT: - Regulation 36 requires preparation and circulation of the Information Memorandum to CoC members prior to issuance of Form G; the Explanation to Section 33(2) must be read with the regulatory scheme governing Information Memorandum and invitation for EOI. In this case, Form G was issued and the last date for EOI fixed, but the sole member of the CoC resolved for liquidation before the EOI period had elapsed and there is no material showing that the CoC considered the Explanation and statutory scheme before taking that decision. Given that judicial review is permissible where a CoC decision may not conform to the Code, the Adjudicating Authority rightly directed the CoC to reconsider its decision in the light of further facts and events and the statutory scheme. [Paras 6, 7, 8, 14]

The matter is left to the CoC to reconsider its liquidation decision taking into account the Explanation to Section 33(2), the Information Memorandum regime and the timing of Form G; the Adjudicating Authority's direction for reconsideration is sustained.

Final Conclusion: The appeal is dismissed. The National Company Law Tribunal did not err in directing the Committee of Creditors to reconsider its decision to liquidate in the absence of material showing that the CoC had acted in accordance with the Code and the rules governing the Information Memorandum and invitation for EOI; judicial review of a CoC decision is permissible where compliance with the statutory scheme is in doubt.

Service of notice - ex-parte proceedings - admission under Section 7 of the Insolvency and Bankruptcy Code - proof of debt and default - forgery of agreement - evidence of disbursement by bank transfer - Company Master Data

Service of notice - Company Master Data - ex-parte proceedings - Notices in the Section 7 proceeding were duly served on the Corporate Debtor and the adjudicating authority correctly proceeded ex parte after non appearance. - HELD THAT: - The Tribunal accepted the material showing that notices were sent to the email address recorded in the Company Master Data obtained on 26.10.2021 and that speed post at the registered office address was delivered on 27.11.2021. Although the Corporate Debtor subsequently changed its recorded email, that change could not invalidate service already effected. The notices were in fact received at the common registered address and were admitted to have been forwarded to the Appellant by a director of another company of which the Appellant is also a director; the Appellant offered no explanation for the delay in forwarding. The adjudicating authority's record that there was no representation on multiple dates and that ex parte proceedings were lawfully conducted was therefore upheld. [Paras 7, 8, 9, 10, 11]

Service was valid and the ex parte proceedings were properly conducted.

Forgery of agreement - evidence of disbursement by bank transfer - The claim that the loan agreement was forged and that the signatory was not a director at the relevant time was rejected on the materials before the Tribunal. - HELD THAT: - The Appellant relied on an RTI reply and argued that the named signatory became director only later, but the Appellant himself produced a letter from the signatory indicating that he had been made a director of companies in the group and often signed documents at the request of others. The RTI response obtained by the Appellant during the litigation could not override the contemporaneous evidence that funds were disbursed to the Corporate Debtor's bank account in pursuance of the agreement. There was no denial of receipt of the bank transfer and Form C financial information was also relied upon by the adjudicating authority. On this basis the allegation of forgery was held to be without weight. [Paras 11, 12, 13]

Allegation of forgery was rejected; the signature and loan transaction were sufficiently explained and supported by disbursement evidence.

Admission under Section 7 of the Insolvency and Bankruptcy Code - proof of debt and default - There were sufficient materials to establish debt and default and to admit the Section 7 application. - HELD THAT: - Having held that service was valid and that the loan agreement and disbursement were not satisfactorily contradicted, the Tribunal concluded that the adjudicating authority had sufficient material, including bank transfer evidence and Form C, to accept the existence of debt and default. No error was shown in the admission order and the adjudicating authority's exercise of jurisdiction to admit the petition was sustained. [Paras 14]

Section 7 application was rightly admitted; admission upheld.

Final Conclusion: The appeal is dismissed. The order admitting the Section 7 application is upheld and no costs are awarded.

Characterisation of transaction as financial debt versus capital advance - maintainability of a petition under Section 7 of the Insolvency and Bankruptcy Code based on existence of a financial debt - scope of the Adjudicating Authority's inquiry under Section 7 when the very nature of the debt is disputed - liability of a corporate guarantor where the underlying obligation is not a financial debt - evidentiary value of contemporaneous commercial documents and accounting classification in determining the nature of the claim

Characterisation of transaction as financial debt versus capital advance - evidentiary value of contemporaneous commercial documents and accounting classification in determining the nature of the claim - The amounts disbursed by IFIN (and later assigned to the appellant) were not financial debt within the meaning of Section 5(8) of the IBC but were advances/project payments characterized as capital advance. - HELD THAT: - The Tribunal accepted the Adjudicating Authority's conclusion that contemporaneous materials (including emails describing the mechanism by which funds were to be squared off against supplies), the balance confirmation describing the amount as 'project advance', and the assignee's own audited financial statements classifying the amounts as 'capital advance' demonstrate that the disbursements were arranged to effect payments for supplies and services rather than being disbursals for the time value of money. The Appellate Tribunal observed that where the very nature of the transaction is contested, the Adjudicating Authority was required to examine such contemporaneous commercial documents and accounting treatment to determine whether the transaction falls within the statutory definition of financial debt. The Tribunal rejected the appellant's contention that classification as 'capital advance' in earlier financial statements was an inadvertent error, noting the existence of contemporaneous records supporting the characterization as advances rather than loans. [Paras 16, 18]

The transaction does not qualify as a financial debt; it is to be regarded as a capital/project advance.

Maintainability of a petition under Section 7 of the Insolvency and Bankruptcy Code based on existence of a financial debt - liability of a corporate guarantor where the underlying obligation is not a financial debt - scope of the Adjudicating Authority's inquiry under Section 7 when the very nature of the debt is disputed - Because the disbursements do not constitute a financial debt, the Section 7 petition against the corporate guarantor was not maintainable and rightly rejected by the Adjudicating Authority. - HELD THAT: - Admission under Section 7 depends on the existence of a financial debt. The Tribunal held that where the corporate debtor challenges the nature of the obligation itself, the Adjudicating Authority is entitled and obliged to examine whether the claim falls within the statutory definition of financial debt. Having found on the materials that the amounts were advances for supplies/services and not financial debt, the Adjudicating Authority properly concluded that the applicant could not be regarded as a financial creditor and that the Section 7 petition (filed to initiate insolvency resolution and not as a mere recovery measure) was not maintainable against the guarantor. The Tribunal found no error in the Adjudicating Authority undertaking such enquiry and in dismissing the petition. [Paras 16, 18, 20]

Section 7 petition against the corporate guarantor was not maintainable and the petition was correctly rejected.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority correctly examined contemporaneous documents and accounting classification, concluded the disbursements were capital/project advances and not financial debt, and therefore rightly rejected the Section 7 petition against the corporate guarantor as not maintainable.

Admission of Section 7 application - Financial debt and default - Discretion under Section 7(5)(a) - One Time Settlement as acknowledgement of debt - Approbate and reprobate / estoppel by election - Maintainability / locus of 'aggrieved person' - Section 10A (moratorium/shadow period) inapplicability - Restoration/reinstatement of petition and inherent powers of Adjudicating Authority

Maintainability / locus of 'aggrieved person' - Whether the appellant (promoter/investor) is an 'aggrieved person' entitled to prefer the appeal. - HELD THAT: - The appellant is a promoter/investor and, on the facts of this case, cannot be treated as an aggrieved person entitled to assail the Adjudicating Authority's order admitting the Section 7 petition. Section 61(1) permits any 'person aggrieved' to appeal, but the Tribunal considered precedents and the nature of the appellant's relationship to the corporate debtor and held that the appellant lacks locus standi to maintain the instant appeal. Consequently, the appeal is not maintainable on that ground. [Paras 107, 108]

Appellant is not an aggrieved person; appeal not maintainable on locus standi ground.

Admission of Section 7 application - Financial debt and default - Discretion under Section 7(5)(a) - Whether the Adjudicating Authority rightly admitted the Section 7 application filed by the financial creditor. - HELD THAT: - The Tribunal held that the Adjudicating Authority must ascertain existence of debt and default from records or evidence, but need not decide contractual disputes as a civil court; where default and debt (exceeding statutory threshold) are established, admission under Section 7 is ordinarily proper. The Tribunal examined the record and found abundance of material demonstrating debt and default predating the pandemic; the Section 7 application was complete and the Adjudicating Authority acted within its judicial discretion in admitting the application and declaring moratorium. The Tribunal emphasised that while discretion under Section 7(5)(a) exists, it must be exercised legally and is not an equity jurisdiction to be exercised contrary to statutory scheme. [Paras 81, 84, 85, 108]

Adjudicating Authority properly admitted the Section 7 application; admission is free from legal infirmity.

Section 10A (moratorium/shadow period) inapplicability - Whether the initiation of CIRP was barred by Section 10A as the default fell in the 'shadow period'. - HELD THAT: - The Tribunal held Section 10A was intended to bar applications for defaults occurring on or after 25.03.2020; here the date of default (account classified NPA) was 31.03.2017 and the Section 7 petition was filed in October 2018. Therefore Section 10A is inapplicable and cannot be invoked to set aside the admission. The Adjudicating Authority's reliance on pre 2020 default was held correct. [Paras 98, 99]

Section 10A does not apply; initiation of CIRP was not barred by the 'shadow period'.

Restoration/reinstatement of petition and inherent powers of Adjudicating Authority - Whether the Adjudicating Authority's order restoring/reinstating the earlier dismissed petition (IA/827/2020 / order dated 05.11.2020) was vitiated as ex parte or violative of natural justice. - HELD THAT: - The Tribunal observed that the Adjudicating Authority had earlier dismissed the petition with liberty to reinstate if the OTS failed. The financial creditor filed a memo and IA to revive the petition upon alleged failure to honour the OTS; the Adjudicating Authority exercised its Rule 11 inherent powers to prevent abuse of process and to meet ends of justice. On the material before it, the Tribunal found the restoration order to be legally sustainable and not a breach of natural justice. [Paras 96, 97]

Restoration/reinstatement order is sustainable; not vitiated as ex parte or violative of natural justice.

One Time Settlement as acknowledgement of debt - Approbate and reprobate / estoppel by election - Whether the One Time Settlement (OTS) payments and communications precluded the financial creditor from initiating CIRP and whether the corporate debtor/promoters can repudiate the OTS after accepting benefits. - HELD THAT: - The Tribunal held that the OTS constitutes an acknowledgement of debt for the purposes of limitation law and evidences admission of liability. Payments said to be made pursuant to OTS did not, on the record, extinguish the debt; part payments or failure to complete OTS are themselves an admission of default. Further, the principles of approbate and reprobate / estoppel by election preclude a party from accepting benefits under an instrument and later denying its validity; having accepted benefits of the financing arrangements and security, the corporate debtor/promoters cannot disavow the obligations. The Tribunal also noted the payments accepted by the bank were subject to the loan/security arrangements and were not treated as unconditional appropriation that would prevent proceeding under Section 7. [Paras 102, 103, 104, 105, 106]

OTS operates as acknowledgement of debt; appellants/promoters cannot approbate and reprobate to defeat the Section 7 proceedings.

Appropriation of payments and rights of debtor/creditor - Whether payments made by the OTS consortium entitled the debtor to direct appropriation or barred the bank from initiating insolvency proceedings. - HELD THAT: - The Tribunal found that the amounts said to be paid in furtherance of OTS were not appropriated in a manner that prevented the lender from asserting its rights under the loan and security agreements; several payments were placed in a no lien account or were otherwise not distributed/appropriated by lenders. The contractual security structure and loan agreements governed appropriation; therefore part payments did not bar the financial creditor from proceeding under Section 7 where default persisted. [Paras 100, 103, 104]

Payments under OTS did not preclude invocation of Section 7; creditor entitled to proceed where default continued and security arrangements governed appropriation.

Final Conclusion: On the record and legal principles considered, the Appellate Tribunal found no legal infirmity in the Adjudicating Authority's admission of the Section 7 petition: there was debt and default predating COVID 19, the restoration of the petition was permissible, the OTS constituted an acknowledgement but did not extinguish the debt or bar initiation of CIRP, and the appellant (promoter/investor) lacked locus as an 'aggrieved person'. The appeal is dismissed; interim orders vacated and pending IAs closed.

Jurisdiction under Section 60(5) of the Code - duties of interim resolution professional under Section 18(1)(f) of the Code - taking control and custody of assets owned by the corporate debtor - possession and implementation of an approved resolution plan - Committee of Creditors' authority to decide on assets and issue directions through the RP - time bound nature of the corporate insolvency resolution process (CIRP)

Jurisdiction under Section 60(5) of the Code - duties of interim resolution professional under Section 18(1)(f) of the Code - taking control and custody of assets owned by the corporate debtor - Adjudicating Authority had jurisdiction to entertain the application under Section 60(5) seeking direction to deliver possession of premises owned by the corporate debtor. - HELD THAT: - The Court held that Section 18(1)(f) empowers the interim resolution professional/resolution professional to take control and custody of assets over which the corporate debtor has ownership rights, including assets that may not be in the corporate debtor's physical possession. For effectuating duties under Sections 18 and 25, recourse to the Adjudicating Authority under Section 60(5) is permissible. In the present case there was no dispute as to ownership of the premises by the corporate debtor and no determination of title pending before any forum; therefore the Adjudicating Authority was competent to entertain the RP's application for possession to enable implementation of the approved resolution plan. The Court distinguished precedents where the relief sought involved public law or rights outside the IBC's scope, noting those do not permit bypassing appropriate fora, but observed that where the corporate debtor is the owner, NCLT/NCLAT can decide claims to such property in furtherance of CIRP duties. [Paras 12, 13, 14, 17]

Adjudicating Authority had jurisdiction to entertain and dispose of the RP's application for possession under Section 60(5).

Possession and implementation of an approved resolution plan - time bound nature of the corporate insolvency resolution process (CIRP) - Resolution Professional was not restricted to instituting eviction proceedings under the MP Accommodation Control Act, 1961 when the lease had expired and the asset was owned by the corporate debtor; filing a separate suit was not the only remedy. - HELD THAT: - The Court concluded that insisting the RP must resort only to state tenancy/eviction fora would unduly prolong the time bound CIRP and frustrate implementation of an approved resolution plan. Given the corporate debtor's ownership of the premises and the RP's statutory duty to preserve assets and take custody thereof, seeking directions from the Adjudicating Authority under Section 60(5) to obtain possession was appropriate. The Court rejected the contention that MP Accommodation Control Act proceedings were the exclusive remedy where the lease had expired and the RP had already acted pursuant to CoC decisions and the renewed lease terms. [Paras 14, 20]

RP was not limited to eviction proceedings under the state accommodation law; seeking possession via the Adjudicating Authority under the Code was permissible to prevent delay in CIRP.

Committee of Creditors' authority to decide on assets and issue directions through the RP - duties of resolution professional under Section 25 of the Code - The Committee of Creditors had authority to decide renewal and to direct issuance of a legal notice for vacation of the premises, and the RP acted pursuant to that decision. - HELD THAT: - The Court noted the lease for a short renewal period was executed by the RP with the CoC's approval; the CoC subsequently resolved to terminate the lease and to send notice for vacation. The resolution professional cannot create enduring rights in favour of a third party over corporate assets without CoC approval; conversely, CoC decisions regulating use and possession of corporate assets can be implemented through the RP. The lease contained a clause permitting vacation on 15 days' notice. In the circumstances the CoC's decision to seek vacation and the RP's issuance of a legal notice were within the statutory governance of the CIRP and were effective bases for seeking the Adjudicating Authority's direction to obtain possession for implementation of the resolution plan. [Paras 10, 11, 14]

CoC had the competence to direct vacation of the premises and the RP validly acted on that decision to seek possession.

Final Conclusion: The Adjudicating Authority rightly allowed the RP's application under Section 60(5) to direct the lessee to vacate premises owned by the corporate debtor so that the approved resolution plan could be implemented; the RP was not confined to pursuing state eviction proceedings and the CoC's decision to seek vacation was within its authority. The appeal is dismissed.

Limitation - acknowledgement of debt - negotiated settlement revocation restores original liability - Section 7 application under Insolvency and Bankruptcy Code, 2016 - genuine financial debt / bona fides of claim - exorbitant and unconscionable claim - object of the trust and powers of Stressed Assets Stabilization Fund

Limitation - Section 7 application under Insolvency and Bankruptcy Code, 2016 - Whether the Section 7 application was barred by limitation. - HELD THAT: - The Court held that when the negotiated settlement was revoked by letter dated 11 July 2014 the original liability was restored and the amount therefore became due with effect from that date. The Section 7 petition was filed on 5 April 2019, more than three years after the revocation. Absent any intervening acknowledgement extending limitation, the right to initiate proceedings accrued on revocation and the Section 7 application was thus time barred. The appellate Court proceeded to examine the documents relied upon by the financial creditor and concluded that none operated to extend the limitation period for filing the Section 7 application. [Paras 11]

Section 7 application filed on 05.04.2019 was barred by limitation as the debt became due on revocation of the negotiated settlement on 11.07.2014 and there was no effective acknowledgement extending limitation.

Acknowledgement of debt - negotiated settlement revocation restores original liability - Whether the letters of the corporate debtor (dated 02.07.2015 and 03.10.2017) and the notes in its balance sheets constituted acknowledgement extending limitation or admission of the amounts now claimed. - HELD THAT: - The Court examined the 02.07.2015 letter and the 03.10.2017 proposal and found both referred only to defaults under the negotiated settlement-specifically the allotment/buyback of 10 lakh shares-and did not acknowledge liability for the loan recall amount or for the larger sum claimed in the Section 7 application. The balance sheet notes (note 30(c) and similar entries) merely recorded the existence of the negotiated settlement, its revocation as per the creditor's letter, and related proceedings; they did not acknowledge the quantum of debt as per the recall notice or the up to date claim made in the petition. On that basis the Court held there was no written acknowledgement sufficient to extend limitation. [Paras 14, 15, 16, 18, 19]

Neither the corporate debtor's letters nor the balance sheet entries constituted acknowledgement of the debt claimed in the Section 7 application or extended the period of limitation.

Genuine financial debt / bona fides of claim - exorbitant and unconscionable claim - object of the trust and powers of Stressed Assets Stabilization Fund - Whether the Adjudicating Authority rightly exercised its discretion in rejecting the Section 7 application on the ground that the claim was not genuine and was exorbitant and unconscionable. - HELD THAT: - The appellate Court endorsed the Adjudicating Authority's findings that, on the admitted facts, the cash component of the negotiated settlement had been paid and the remaining dispute related to the allotment and buyback of shares (effectively a claim confined to the share related obligation). The petition, however, sought a vastly larger amount based on compounded interest and other heads, which the Adjudicating Authority described as inflated, unconscionable and not a genuine debt for purposes of initiating CIRP under Section 7. Considering the objects of the Trust (SASF) - to effect realizations, negotiated settlements and enforce securities and not to annihilate the corporate debtor - the Court found no reason to interfere with the Adjudicating Authority's conclusion that the petition was not a fit case for admission. [Paras 20, 21]

The Adjudicating Authority rightly rejected the Section 7 petition on the additional ground that the claim was exorbitant, unconscionable and not a genuine financial debt capable of forming the foundation for CIRP; the appellate Court upheld that conclusion.

Final Conclusion: The appeal is dismissed. The order of the Adjudicating Authority rejecting the Section 7 application is upheld on grounds of limitation, absence of any acknowledgement extending limitation, and because the claim was found to be exorbitant, unconscionable and not a genuine financial debt fit for initiation of CIRP.

Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - extension of limitation under Section 14 of the Limitation Act, 1963 - pleading and evidentiary burden to invoke suspension or exclusion of limitation - genuineness of financial debt and documentary evidence

Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - extension of limitation under Section 14 of the Limitation Act, 1963 - pleading and evidentiary burden to invoke suspension or exclusion of limitation - Section 7 application was barred by limitation and no benefit under Section 14 of the Limitation Act, 1963 could be claimed by the Financial Creditor. - HELD THAT: - The Tribunal held that the date of default was pleaded as 12.09.2014 and the Section 7 application was filed on 12.02.2018, beyond the three year period. The Financial Creditor did not disclose or place on record in the Section 7 application the winding up proceedings or other material necessary to invoke exclusion under Section 14; the requisite foundational facts and evidence to seek extension or exclusion of limitation were not pleaded or adduced. Reliance on authority permitting exclusion where earlier proceedings were prosecuted in a forum lacking jurisdiction (Sesh Nath Singh) was inapposite because no defect of jurisdiction or like cause was shown in relation to the winding up petition. The Tribunal applied the principle from the Supreme Court (Babulal Vardharji Gurjar) that a party seeking extension or exclusion of limitation must plead and prove relevant facts and could not first raise such a case at the hearing without supporting material. For these reasons the claim for benefit of Section 14 could not be entertained and the Section 7 application was time-barred. [Paras 8, 9, 12, 13, 14]

Application under Section 7 is barred by limitation; no exclusion under Section 14 of the Limitation Act is available on the record before the Adjudicating Authority.

Genuineness of financial debt and documentary evidence - pleading and evidentiary burden to prove regular transactions and disclosure in accounts - Adjudicating Authority's doubts as to the authenticity of the loan document and the genuineness of the debt were justified on the material on record. - HELD THAT: - The Tribunal agreed with the Adjudicating Authority that the materials filed by the Financial Creditor did not establish the genuineness of the loan transaction. The loan agreement dated 09.04.2011 was not reflected in the corporate debtor's balance sheets for the relevant years, the resolution post-dated the alleged agreement, and no ledger or bank records demonstrating regular repayments or acknowledgment were produced. In the absence of such documentary evidence and given the apparent concealment of earlier company petitions, the finding that a shadow of doubt existed over the authenticity of the claimed debt was sustainable. [Paras 5, 14, 15]

The Adjudicating Authority's conclusion that the loan transaction's authenticity was doubtful is upheld and supports rejection of the Section 7 application.

Final Conclusion: The appeal is dismissed. The Tribunal upholds the Adjudicating Authority's rejection of the Section 7 application as time barred and finds no basis on the record to extend limitation under Section 14; contemporaneous documentary evidence was also insufficient to establish the genuineness of the claimed financial debt.

Resolution Plan - Corporate Insolvency Resolution Process (CIRP) - overriding effect of insolvency law - operational creditor's claim under the Insolvency and Bankruptcy Code - contravention of law by resolution plan - effect of sectoral electricity supply regulations on resolution plan - applicability of non-IBC precedents to insolvency proceedings

Resolution Plan - overriding effect of insolvency law - contravention of law by resolution plan - operational creditor's claim under the Insolvency and Bankruptcy Code - effect of sectoral electricity supply regulations on resolution plan - applicability of non-IBC precedents to insolvency proceedings - Whether the Adjudicating Authority erred in approving a Resolution Plan which provided for waiver/settlement of electricity dues and whether the Electricity Supply Code or the Supreme Court decision in Srigdhaa Beverages prevented such approval. - HELD THAT: - The Tribunal held that the Resolution Plan approved in CIRP could validly deal with pre-CIRP electricity dues and that sectoral Regulations (such as the Electricity Supply Code) cannot be enforced so as to override the Code where they conflict with the insolvency regime. The judgment relied on prior Appellate Tribunal decisions which explained that Section 238 gives the insolvency law overriding effect over inconsistent provisions of other laws and that an electricity supplier is an operational creditor entitled to submit its claim in IBC proceedings. The Tribunal further noted that the Supreme Court decision relied upon by the appellant concerned auction sale under the SARFAESI regime and not CIRP under the Code, and therefore was not determinative in the present IBC context. Applying these principles, the Adjudicating Authority was not obliged to disallow a Resolution Plan on the ground of inconsistency with the Electricity Supply Code where the Code and the approved Resolution Plan operate under the statutory primacy of the IBC; consequently there was no jurisdictional error or legal misapplication warranting interference with the approval of the Plan. [Paras 3, 4, 5, 6]

The Adjudicating Authority did not err in approving the Resolution Plan; the objections based on the Electricity Supply Code and the Srigdhaa Beverages decision do not invalidate the Plan.

Final Conclusion: The Appeal is dismissed; there is no merit in disturbing the Adjudicating Authority's order dated 14.02.2020 approving the Resolution Plan.

Person aggrieved - appeal to Appellate Tribunal - Section 26 of the Prevention of Money Laundering Act, 2002 - stay of eviction pending appellate adjudication - Rule 5(3) of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 - Rule 5(5) of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013

Person aggrieved - appeal to Appellate Tribunal - Section 26 of the Prevention of Money Laundering Act, 2002 - Petitioner, being a co-owner affected by the attachment, is a 'person aggrieved' entitled to approach the PMLA Appellate Tribunal under Section 26. - HELD THAT: - The Court examined the scope of Section 26 and concluded that orders of attachment by the Adjudicating Authority are appealable by 'any person aggrieved'. Given that the petitioner is a co-owner whose share and occupancy are directly affected by the confirmed attachment order, he falls within the class of persons entitled to prefer an appeal to the Appellate Tribunal. The petitioner was therefore held entitled to seek appellate remedy against the final attachment order or to seek relief in the pending appeal filed by the other co-owner. [Paras 9]

Petitioner is a 'person aggrieved' under Section 26 and may approach the Appellate Tribunal to challenge the attachment and/or the eviction notices.

Rule 5(3) of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 - Rule 5(5) of the Prevention of Money Laundering (Taking Possession of Attached or Frozen Properties Confirmed by the Adjudicating Authority) Rules, 2013 - stay of eviction pending appellate adjudication - Appellate Tribunal to consider the petitioner's submissions under Rule 5(3) and Rule 5(5) and eviction of occupants is stayed until the Tribunal decides the matter. - HELD THAT: - The Court noted that some premises are occupied by the petitioner's family and others are tenanted, making the provisions of Rule 5(3) (direction to tenants to pay rent to the Directorate) and Rule 5(5) (acceptance of fixed deposit equivalent to the concerned person's share) directly relevant. Rather than resolving these questions on merits, the Court directed that the Appellate Tribunal should hear the petitioner and pass appropriate orders in accordance with law, expressly considering submissions under Rules 5(3) and 5(5). Pending the Tribunal's consideration of the impugned notices or the appeal, the Court granted an interim protective direction that the petitioner's family and other occupants shall not be dispossessed or evicted. [Paras 11, 12]

Matter remitted to the Appellate Tribunal for consideration of Rule 5(3) and Rule 5(5); eviction of occupants is stayed until the Tribunal decides the application or appeal.

Appeal to Appellate Tribunal - procedural relief to prosecute appeal - Petitioner granted time-limited procedural relief to approach the Appellate Tribunal either by filing a fresh appeal or by seeking to be impleaded in the pending appeal. - HELD THAT: - In view of the pendency of the co-owner's appeal and the petitioner's interest, the Court permitted two alternative procedural routes: (i) the petitioner may file an independent appeal against the final attachment order within one week; or (ii) alternatively, the petitioner may seek relief by filing an application in the pending appeal filed by the co-owner. These directions were issued to ensure the petitioner's substantive rights are placed before the Tribunal for adjudication without delay. [Paras 12]

Petitioner permitted to file an appeal within one week or to apply in the pending appeal; the Appellate Tribunal to hear and pass appropriate orders.

Final Conclusion: The petition is disposed of by directing that the petitioner, as a co-owner and 'person aggrieved', may approach the PMLA Appellate Tribunal (by filing an appeal within one week or by seeking relief in the pending appeal), the Tribunal shall consider the petitioner's submissions including under Rules 5(3) and 5(5) of the 2013 Rules, and meanwhile the occupants shall not be evicted until the Tribunal decides the matter.

Taxability under the definition of Advertising Agency Service in Section 65(105)(e) of the Finance Act, 1994 - distinction between merely canvassing/ intermediary commission activity and rendering Advertising Agency Services - classification as Business Auxiliary Service for commission-based canvassing - CBE&C Circular No. 96/7/2007- ST dated 23.08.2007 - Service Tax liability of sub-agents and principal intermediaries

Taxability under the definition of Advertising Agency Service in Section 65(105)(e) of the Finance Act, 1994 - distinction between merely canvassing/ intermediary commission activity and rendering Advertising Agency Services - classification as Business Auxiliary Service for commission-based canvassing - CBE&C Circular No. 96/7/2007- ST dated 23.08.2007 - Whether the appellant's activity of procuring space/time from media and retaining commission amounted to taxable Advertising Agency Service or was limited to canvassing/intermediary activity not classifiable as Advertising Agency Service. - HELD THAT: - The Tribunal found no evidence that the appellant conceived, designed, prepared, displayed or exhibited advertisements for clients; its role was limited to purchasing time and space from media on behalf of the sub-agent and retaining a commission. The CBEC clarification (Circular No. 96/7/2007- ST) characterises mere canvassing of advertisements for publishing on a commission basis as not classifiable under Advertising Agency Service and instead liable, if at all, as Business Auxiliary Service. The Tribunal applied its earlier reasoning in H.K. Associates (as relied upon by the parties and upheld by the Apex Court) to hold that commission receipts and intermediary conduct, without proof of advertising agency functions, do not convert the receipts into advertising agency service charges. On the material before it, the demand raised under the head of Advertising Agency Services was not supported by evidence that the appellant rendered advertising agency functions; consequently the demand could not be sustained.

Demand under Advertising Agency Service set aside; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the appellant acted as an intermediary canvassing for space/time on commission and, absent evidence of advertising agency functions, the demand framed as Advertising Agency Service could not be sustained.

Classification of goods - Essential character test under General Rules of Interpretation (Rule 2(a) and Rule 3) - Distinction between prefabricated buildings and machinery - Effect of transition to eight digit HSN on existing six digit classification - Preference of specific heading over residuary entry - Extended period of limitation and penalty for suppression - Self assessment and duty liability - Binding effect of earlier departmental/appellate views and res judicata/judicial discipline

Classification of goods - Essential character test under General Rules of Interpretation (Rule 2(a) and Rule 3) - Distinction between prefabricated buildings and machinery - Preference of specific heading over residuary entry - Effect of transition to eight digit HSN on existing six digit classification - Whether the goods cleared by the appellant are classifiable as 'Silos' under Chapter sub heading 94060099 (prefabricated buildings) or under Chapter sub heading 84379090 (parts/other machinery) - HELD THAT: - The Tribunal examined the nature and form of the goods as cleared and the appellants' brochure and purchase orders. It held that classification must be based on the goods as presented at the time of clearance. The impugned goods were found to have been manufactured and cleared in completely knocked down/knocked down condition but to possess the essential character of a prefabricated structure with walls and roof and an independent storage function. The eight digit tariff introduced specific sub headings for silos (94060093/94060099); the Chapter Note definition of 'prefabricated buildings' was restrictive and applicable. The Tribunal also noted that earlier six digit decisions (including the appellant's prior CESTAT decision) pertained to a different factual/product profile and pre dated the specific eight digit entries; a change in tariff coding to provide a specific heading for silos did not alter the correct classificatory description where the product now falls squarely under the specific heading. On the facts, the Tribunal found the revenue's classification under 94060099 unsustainable and concluded the impugned demand based on that classification could not be sustained. [Paras 4]

The classification of the goods as liable to Central Excise under CETH 94060099 (prefabricated buildings / other silos) could not be sustained on the facts; the appeals are allowed on this ground.

Extended period of limitation and penalty for suppression - Self assessment and duty liability - Interest as consequential on unsustainable demand - Binding effect of earlier departmental/appellate views and res judicata/judicial discipline - Whether the extended period, interest and penalties imposed by the adjudicating authorities are sustainable once the primary demand is held unsustainable - HELD THAT: - The Tribunal held that because the demand of duty based on classification under Chapter 94 could not be sustained, the consequential demands of interest and the imposition of penalty could not stand. The Tribunal further observed that where the classification issue had been considered earlier and facts were in revenue's knowledge (including departmental correspondence and earlier assessments), the revenue could not justify invoking extended limitation and penalties where the foundational classification demand fails. In consequence, the orders imposing interest and penalties that depend on the confirmed demand were found unsupportable. [Paras 4, 5]

Extended period invocation, interest and penalty based on the impugned demand are not sustainable and are set aside along with the demand.

Final Conclusion: Appeals allowed. The Tribunal set aside the demands premised on classification under CETH 94060099 and, consequentially, the interest and penalties confirmed by the adjudicating authorities for the tax periods Oct 10-Mar 15, Apr 15-Dec 15 and Jan 16-June 17.

Doctrine of mutuality - Definition of sale as including supplies by clubs to members - Applicability of Article 366(29-A)(f) after the 46th Constitutional Amendment - Liability to tax supplies of food and drink to members of a club - Incorporated members' club and agency/transfer element in supply

Doctrine of mutuality - Definition of sale as including supplies by clubs to members - Applicability of Article 366(29-A)(f) after the 46th Constitutional Amendment - Liability to tax supplies of food and drink to members of a club - Whether supplies of food and drink by an incorporated members' club to its members constitute a 'sale' liable to trade tax after the 46th Constitutional Amendment. - HELD THAT: - The Court examined the post amendment position in light of the Apex Court's decision in State of West Bengal v. Calcutta Club Limited, which affirmed that the doctrine of mutuality continues to apply to both incorporated and unincorporated members' clubs and that Young Men's Indian Association continues to hold the field. The Apex Court held that Sub clause (f) of Article 366(29 A) does not apply to members' clubs. Applying that ratio, the Court found that where a club (though a distinct legal entity) supplies food and drink to its members as part of mutual dealings, there is no transfer of property in the sense required for a 'sale' because the element of transfer is absent and the club acts in the nature of an agent for its members. Consequently, such supplies are not encompassed by the definition of 'sale' relied upon by the assessing authority and Tribunal; the Tribunal's conclusion upholding taxation of those supplies was therefore inconsistent with the binding precedent.

The Tribunal's order upholding the assessment treating supplies of food and drink to members as 'sale' is unsustainable and is set aside; revision allowed.

Final Conclusion: The revision is allowed: applying the Apex Court's ruling in Calcutta Club Limited, the doctrine of mutuality excludes supplies of food and drink by a members' club to its members from the definition of 'sale' for purposes of taxation, and the Tribunal's order of 28.08.2008 is set aside.

Input Tax Credit - Reversal of ITC under Section 19(5)(a) - Exemption notifications under Section 30(1)(c) - Distinction between exempted goods and exempted transactions/events - Rectification under Section 84 (error apparent on record) - Restoration/adjustment of ITC in light of refunds

Reversal of ITC under Section 19(5)(a) - Exemption notifications under Section 30(1)(c) - Distinction between exempted goods and exempted transactions/events - Reversal of input tax credit under Section 19(5)(a) is not applicable to transactions exempted by notifications issued under Section 30(1)(c). - HELD THAT: - The Court accepted the petitioner's submission that Section 30 allows three distinct categories of exemption-(a) as to specified goods, (b) as to specified classes of persons, and (c) as to specified classes of goods when sold to specified classes of dealers (events). The Notifications granting exemption for sale of furnace oil to specified purchasers (oil companies/HT consumers) fall under Section 30(1)(c) and operate as exemptions in respect of an event (concurrent satisfaction of goods and purchaser). Section 19(5)(a), which mandates reversal of ITC in respect of 'exempted goods' as defined, applies to goods exempted generally (Fourth Schedule or notifications of that character) and does not extend to exemptions granted solely by reference to specified events or assessees. Relying on the distinction endorsed by the Supreme Court in M.K.Kandaswami and in Commercial Taxes Officer v. A Infrastructure Limited, the Court concluded that denying ITC to the selling dealer where the exemption is by reference to specified transactions would distort the chain of taxation and impose an inequitable burden on subsequent limbs of the transaction. The language and annexed forms to the impugned Notifications (Certificates I-IV) demonstrate that the Notifications regulate refund and obligations of the purchasing dealers and do not expressly provide for denial or reversal of ITC in the hands of the selling dealers; this supports the conclusion that Section 19(5)(a) is not attracted to the Notifications in question. [Paras 83, 84, 85, 86, 87]

Orders reversing ITC under Section 19(5)(a) in respect of transactions covered by the Section 30(1)(c) Notifications quashed; Section 19(5)(a) held not applicable to those Notifications.

Rectification under Section 84 (error apparent on record) - Input Tax Credit - Proceedings initiated under Section 84 to reverse ITC were not sustainable because the question involved substantial controversy and interpretation, not an 'error apparent on the face of the record'. - HELD THAT: - Section 84 permits correction of errors apparent on the record but not issues requiring discussion, debate or the resolution of competing legal constructions. The question whether ITC could be reversed in respect of exemptions under Section 30(1)(c) involved interpretation of the Act and assessment of the Notifications' scope-matters beyond the narrow scope of Section 84. Since the Notifications do not expressly deal with ITC and the legal issue presented is arguable, the use of Section 84 for reversal was inappropriate. Consequently, the rectification proceedings that culminated in ITC reversal could not be sustained on the basis of an error apparent on the record. [Paras 88, 89, 90, 91, 92]

Proceedings and orders predicated on rectification under Section 84 to reverse ITC set aside as not being an appropriate exercise of Section 84.

Restoration/adjustment of ITC in light of refunds - Input Tax Credit - Where the petitioner had restored refunds to certain purchasing dealers, proportionate ITC attributable to those dealers must be restored to the petitioner; the Assessing Authority was directed to give effect to the quantification already agreed. - HELD THAT: - The Court noted that the petitioner had restored tax amounts to purchasing dealers in certain instances and that no dispute was raised by the Revenue as to the petitioner's quantified allocation of ITC attributable to particular purchasers. The Court therefore directed the Assessing Authority to restore proportionate ITC to the petitioner in respect of amounts repaid to purchasing dealers, within six weeks of receipt of the order, and required the Sales Tax Appellate Tribunal to dispose of the pending appeal in A.P.No.172 of 2016 in line with the observations and conclusions of the order. The Court recorded the specific quantification provided in the typeset and required administrative action to implement restoration. [Paras 22, 23, 24, 25, 92]

Assessing Authority directed to restore proportionate ITC to the petitioner within six weeks; pending appellate proceedings to be disposed in conformity with this order.

Final Conclusion: Writ petitions allowed. Orders reversing ITC under Section 19(5)(a) in respect of exemptions granted by Notifications under Section 30(1)(c) quashed; rectification proceedings under Section 84 were not a permissible route to reverse ITC on the present facts; the Assessing Authority is directed to restore proportionate ITC as quantified and the Sales Tax Appellate Tribunal shall dispose of the pending appeal in accordance with these conclusions.

Refund of tax deposited after successful challenge - precondition deposit for hearing of appeal - right to refund upon setting aside of demand - interest under Section 29(2) of the U.P. Trade Tax Act, 1948 - Article 265 of the Constitution-prohibition on levy and collection except by law - official liability for illegal retention of public funds

Refund of tax deposited after successful challenge - precondition deposit for hearing of appeal - right to refund upon setting aside of demand - Article 265 of the Constitution-prohibition on levy and collection except by law - Whether the petitioner is entitled to refund of the amount deposited as a precondition for hearing of appeal after the Tribunal set aside the demand and the departmental revision was dismissed. - HELD THAT: - The Court accepted the State's concession that once the Tribunal quashed the demand raised against the petitioner, the petitioner became entitled to refund of the amount deposited as a precondition for hearing the appeal. The retention of the deposited amount after the demand was set aside and the departmental attempt to challenge the Tribunal's order (which was dismissed for inordinate delay) amounted to impermissible retention of funds by the State. Such retention, in the circumstances of this case, violated Article 265 of the Constitution because the State had no authority to retain the amount after the demand was set aside and the revision was dismissed. The petitioner's unchallenged averment that the Tribunal's order attained finality was not satisfactorily controverted in the counter-affidavit and the Department's delay in seeking revision further underlined the absence of justification for withholding the refund. [Paras 7, 10, 12]

Refund of the amount deposited as a precondition for hearing of appeal was directed to be paid to the petitioner, the retention being held unlawful under Article 265.

Interest under Section 29(2) of the U.P. Trade Tax Act, 1948 - official liability for illegal retention of public funds - Whether interest is payable on the refund and whether recovery of interest from concerned officers is permissible. - HELD THAT: - The Court directed payment of interest in terms of Section 29(2) of the U.P. Trade Tax Act, 1948, to be calculated from January, 2018 onwards at the rates specified in that provision. Given the Court's finding that the delay in granting the refund was patently illegal, the State was granted liberty to recover the interest amount paid to the petitioner from the officer(s) concerned so that the public exchequer is not burdened by the illegal actions of departmental officials. [Paras 13, 14]

Interest in terms of Section 29(2) was awarded from January, 2018 and the State permitted to recover the interest paid from the concerned officer(s).

Costs - Whether costs should be awarded to the petitioner. - HELD THAT: - In view of the unlawful retention and delay in refunding the deposited amount, the Court awarded costs to the petitioner. The award of costs is part of the relief granted to compensate for the litigation necessitated by the Department's conduct. [Paras 15]

Writ petition allowed with costs of Rs. 10,000/- to be paid along with the refund.

Final Conclusion: The writ petition was allowed: the respondents were directed to refund the amount deposited by the petitioner (which had been retained despite the demand being set aside) within four weeks, with interest under Section 29(2) of the U.P. Trade Tax Act, 1948 from January, 2018; the State was permitted to recover the interest from the officer(s) concerned; and costs were awarded to the petitioner.

Maintaining prosecution under Section 138 read with Section 141 of the Negotiable Instruments Act - Requirement to arraign the company as an accused before invoking vicarious liability - Vicarious liability of directors for dishonour of company cheque - Legally enforceable debt at the time of cheque presentation - Effect of part/full payment made before presentation on Section 138 liability - Abuse of process for non-compliance with statutory prerequisites

Requirement to arraign the company as an accused before invoking vicarious liability - Maintaining prosecution under Section 138 read with Section 141 of the Negotiable Instruments Act - Abuse of process for non-compliance with statutory prerequisites - Complaint under Section 138 cannot be maintained against the directors without arraigning the company and issuing notice to it as required for invoking Section 141. - HELD THAT: - The court found that the cheque was drawn in the name of Durga Krishna Store Pvt. Ltd., but the company was not made a party to the complaint and no legal notice was issued to it. Relying on the principle that arraignment of the company is imperative before persons falling in the other categories can be made vicariously liable, the court held that prosecution of the petitioners without invoking Section 141 and without making the company an accused amounted to non compliance with statutory preconditions. The omission rendered the complaint unsustainable and an abuse of the process of court, justifying quashing of the cognizance order. [Paras 12, 13, 15, 23]

Complaint quashed because the company was not arraigned and no notice was issued to it, making prosecution under Section 138/141 impermissible.

Legally enforceable debt at the time of cheque presentation - Effect of part/full payment made before presentation on Section 138 liability - The dishonoured cheque did not represent a legally enforceable debt at the time of presentation because part payments had been made prior to presentation and demand. - HELD THAT: - The record showed payments to the complainant by NEFT on 29.05.2019 and 03.06.2019 covering the amounts the complainant now claimed. Applying the settled principle that an offence under Section 138 arises only when the cheque represents a legally enforceable debt on the date of presentation, the court concluded that part/payments made before encashment meant the cheque amount was not the legally enforceable debt at maturity. Consequently, the essential ingredient of Section 138 was absent and the complaint could not be sustained. [Paras 20, 21, 22, 23]

Dishonour of the cheque did not attract Section 138 as the cheque did not represent a legally enforceable debt at the time of presentation.

Vicarious liability of directors for dishonour of company cheque - Maintaining prosecution under Section 138 read with Section 141 of the Negotiable Instruments Act - Complaint failed to plead specific averments showing that the petitioners were in charge of and responsible for conduct of the company's business at the relevant time, as required to fasten vicarious liability. - HELD THAT: - The court observed that mere allegation of directorship or being a signatory is insufficient to attract vicarious criminal liability. The complaint did not specify how petitioner No.1 and petitioner No.2 were in charge of or responsible for the conduct of the company's business when the offence allegedly occurred. Reliance on precedents establishing that liability under Section 141 depends on specific averments about responsibility and conduct led the court to hold that the complaint did not disclose the necessary facts to make the directors vicariously liable. [Paras 11, 16, 17, 19, 22]

Directors could not be fastened with vicarious liability because the complaint lacked required specific averments about their responsibility for the company's business.

Final Conclusion: The petition is allowed. The order taking cognizance dated 16.03.2020 and subsequent orders in N.I. Case No.39 of 2020 are quashed as a clear abuse of process for failure to satisfy statutory prerequisites; earlier stay, if any, is vacated and parties shall bear their own costs.