TaxTMI Updates e-Newsletter
Jan 19,2019

Block assessment under Chapter XIV-B - estimation on best judgment - evidence found as a result of search - nexus between estimation and seized material - reliance on post-search material relatable to seized evidence - admissibility of bank-submitted balance-sheet as relevant material - decoding of entries in rough books/diaries

Block assessment under Chapter XIV-B - estimation on best judgment - nexus between estimation and seized material - Validity of making estimations for under invoicing of sales across the block period rather than confining additions to the year of search - HELD THAT: - The Court held that while Chapter XIV B prescribes a special procedure for assessment of undisclosed income detected by search, the Assessing Officer is not thereby divested of the power to estimate undisclosed income on the best of his judgment. Such estimations must have a direct correlation or nexus to materials, transactions and aspects detected in the search or to other information available to the AO relatable to those materials. The Court found that statements of the Director, employees and purchasers, the seized computer printouts and the uniform modus operandi across group concerns provided sufficient basis for estimating suppression of sales for the block period. The Tribunal's conclusion that additions could be confined only to the year in which search took place was set aside and the AO's estimation of under invoicing was restored. [Paras 15, 19, 21, 22, 23]

Estimation across the block period on the best of judgment was sustainable; additions for under invoicing confirmed in favour of Revenue.

Reliance on post-search material relatable to seized evidence - admissibility of bank-submitted balance-sheet as relevant material - Whether the balance sheet and profit & loss account submitted by the assessee to the Bank (not recovered in search) could be relied upon for determining unaccounted purchases and resultant undisclosed income - HELD THAT: - Section 158BB permits computation of undisclosed income on the basis of evidence found as a result of search or requisition of books or other documents and such other materials or information as are available with the AO and relatable to such evidence. The Court held that material obtained from Banks in post search enquiries, if relatable to the evidence discovered on search, can be relied upon. The assessee, having produced the balance sheet to obtain bank facilities and not having disproved its correctness, could not prevent the AO from treating those figures as relevant. The Tribunal and CIT(A)'s exclusion of the Bank balance sheet solely because it was not seized was reversed and the AO's addition based on the balance sheet was restored. [Paras 15, 24, 25]

Balance sheet submitted to the Bank was admissible as material relatable to the search and the addition for unaccounted purchases restored.

Estimation on best judgment - nexus between estimation and seized material - Appropriateness of the AO's year-wise estimation of unaccounted sales at a flat rate (Rs.5 lakhs per year) and proper measure of profit on unaccounted purchases - HELD THAT: - The Court found the AO's uniform per year addition of Rs.5 lakhs to be unreasonable. Given that unaccounted purchases would have been sold in the same assessment year, the correct approach is to add profit on such purchases rather than a flat per year sale estimate. The Court directed that gross profit at 10% be applied to the unaccounted purchases already added as undisclosed investment, resulting in an addition representing profit alone. [Paras 26]

AO's flat per year estimation set aside in part; directed addition of profit at 10% on unaccounted purchases (profit addition restored as directed).

Decoding of entries in rough books/diaries - evidence found as a result of search - Sustainability of undisclosed interest income assessed by decoding figures in a diary ('Essar Collection Book') recovered on search - HELD THAT: - The AO had converted two digit figures with decimals in a rough diary into lakhs and assessed substantial interest income. The Court found no basis for such decoding of the rough book entries into lakhs; the exercise was arbitrary and unsupported by material. Consequently, the Tribunal's and CIT(A)'s deletion of the interest income addition was upheld. [Paras 6, 27]

Deletion of the undisclosed interest income sustained in favour of the assessee.

Final Conclusion: The Revenue appeal is partly allowed: the Tribunal and CIT(A)'s deletions on under invoicing and unaccounted purchases are set aside in part and additions restored as directed (under invoicing confirmed; unaccounted purchases restored with profit computed at 10%); the deletion of interest income is upheld. The assessment is modified accordingly and the appeal is otherwise dismissed.

Exemption under section 54F - Completion of purchase within two-year period - Effect of agreement to sell and possession - Bona fide delay due to seller's death and pending legal proceedings - Claim of depreciation and business expenses-burden of proof

Exemption under section 54F - Completion of purchase within two-year period - Bona fide delay due to seller's death and pending legal proceedings - Effect of agreement to sell and possession - Whether the assessee was entitled to deduction under section 54F in respect of investment in a new residential house where the final sale deed was executed after the two-year period on account of the seller's death and attendant legal proceedings. - HELD THAT: - The Tribunal found that an agreement to sell dated 14-02-2013 existed and that the assessee had paid Rs.30 lakhs within the two-year period by two cheques dated 29-01-2013. The sale deed, however, was executed only on 16-09-2015 because the original seller died on 30-08-2014 and title had to be cleared through legal proceedings. Applying the principle in the Supreme Court decision in Sanjeevlal , where relief was granted where execution of the sale deed was prevented by court order and litigation, the Tribunal held that the delay here was due to unavoidable circumstances connected with clearance of title after the seller's death. The Tribunal accepted that the assessee had invested Rs.30 lakhs within the statutory period and, in view of the bona fide impediment to executing the final deed, restricted the section 54F deduction to the amount actually invested within the two-year period (Rs.30 lakhs) while denying relief for the balance which was paid after the statutory period. [Paras 6, 7]

Deduction under section 54F allowed but limited to the amount invested within the two-year period (Rs.30 lakhs); claim for the remaining amount disallowed.

Claim of depreciation and business expenses-burden of proof - Whether the assessee's claim for depreciation and business expenses could be allowed in the absence of supporting material. - HELD THAT: - The Tribunal agreed with the authorities below that the assessee failed to substantiate the claimed depreciation and business expenses for the year, producing no relevant supporting material to justify those deductions. On the material before it, the Tribunal found no error in the CIT(A)'s confirmation of the disallowances. [Paras 7]

The disallowance of the claimed depreciation and business expenses is upheld; the appeal on this issue is dismissed.

Final Conclusion: The appeal is partly allowed: the section 54F deduction is restricted to the amount actually invested within the two-year period (Rs.30 lakhs) due to bona fide delay in executing the final sale deed caused by the seller's death and related legal proceedings; the disallowance of depreciation and business expenses is affirmed.

Estimation of income - estimation of net profit - books of account rejected and income estimated - uniform rate of profit not to be mechanically applied - estimation at 3% of the cost of goods put to sale - allowability of partner remuneration and interest when income is estimated

Estimation of income - estimation at 3% of the cost of goods put to sale - uniform rate of profit not to be mechanically applied - Estimation of the assessee's income where books of account were not produced and the appropriate percentage to be applied to cost of goods put to sale. - HELD THAT: - The Tribunal found that the assessee had not produced books of account and that estimation of income was therefore justified. The only question was the rate to be applied. Following the Coordinate Bench decision in Sri Venkateswara Wines (reproduced in the order) and the principle that a uniform net profit rate cannot be mechanically adopted for every assessee carrying on similar business, the Tribunal held that the facts of the present case warranted estimation at 3% of the cost of goods put to sale rather than the 5% adopted by the AO. The Tribunal directed the AO to estimate net profit at 3% of the cost of goods put to sale and allowed the appeal to that extent. [Paras 3, 4]

The AO is directed to estimate the net profit at 3% of the cost of goods put to sale; the appeal is allowed on this issue.

Allowability of partner remuneration and interest when income is estimated - estimation of net profit - Whether remuneration and interest paid to partners are separately allowable deductions after income has been estimated. - HELD THAT: - The Tribunal observed that in cases where net income is estimated at a specified percentage of cost of goods put to sale, the estimation is intended to represent the net income from the business and therefore inherently takes into account ordinary business expenses. Consequently, the Tribunal held that separate deduction of remuneration and interest paid to partners could not be allowed in addition to the estimated net income, and found no reason to interfere with the CIT(A)'s conclusion on this point. [Paras 5]

Remuneration and interest paid to partners are not allowable as separate deductions where the net income has been estimated at 3% of the cost of goods put to sale.

Final Conclusion: The Tribunal partly allowed the assessee's appeal: it directed the AO to estimate net profit at 3% of the cost of goods put to sale for A.Y 2014-15 and held that partner remuneration and interest cannot be deducted separately once income is estimated.

Allowability of commission to foreign agents - appreciation of evidence and concurrent findings - genuineness of transaction and colourable device - valuation evidence and independent valuer - concurrent findings of fact and absence of perversity

Allowability of commission to foreign agents - appreciation of evidence and concurrent findings - concurrent findings of fact and absence of perversity - The Tribunal and CIT(A) rightly accepted the assessee's foreign commission payments as deductible on the basis of evidence that the foreign agents procured sales. - HELD THAT: - The assessing officer disallowed the commission payments for want of particulars about services rendered. The Tribunal examined documentary evidence placed on record - debit notes, acknowledgement letters and third party documents relating to payments to several foreign agents - and noted that these documents established that the agents had worked for the assessee in procuring sales. The Tribunal also recorded that similar payments had been accepted by the AO in earlier years. On this factual appraisal the Tribunal concluded that the AO's disallowance rested on surmise and suspicion and affirmed the CIT(A)'s acceptance of the commission. The High Court held that this was an evaluation of evidence and concurrent factual finding which did not raise any question of law. [Paras 2, 3]

Addition disallowing foreign commission payments set aside; payments held to be for procurement of sales and allowable.

Genuineness of transaction and colourable device - valuation evidence and independent valuer - concurrent findings of fact and absence of perversity - The Tribunal and CIT(A) correctly treated the sale of shares as genuine and allowed the claimed loss/set off, finding no colourable device. - HELD THAT: - The AO questioned the transaction because the purchase price was substantially higher than the sale consideration. The Tribunal relied on the fact that the assessee had obtained an independent valuation report which valued the shares at nil and that the company whose shares were sold was a sick undertaking before the BIFR. On these factual materials the Tribunal and CIT(A) found no evidence of a colourable device and upheld the genuineness of the sale and the consequential allowance of the loss. The High Court held that these were concurrent findings of fact and, absent perversity, did not give rise to a question of law. [Paras 4, 5]

Disallowance of loss on sale of shares rejected; transaction held genuine and loss/set off allowed.

Final Conclusion: The High Court dismissed the Revenue's appeal, holding both disputes to be concurrent factual findings supported by evidence and not raising any question of law.

Computation of book profits under Section 115JB - treatment of provision for wealth tax in book profit computation - application of Section 41(1) to gain on extinguishment of liability - requirement of prior allowance or deduction for Section 41(1) - allowability of expenditure alleged to be illegal commission-fact-based appreciation of evidence

Computation of book profits under Section 115JB - treatment of provision for wealth tax in book profit computation - Provision made for wealth tax is not to be added when computing book profits under Section 115JB. - HELD THAT: - Explanation 1 to Section 115JB specifies amounts to be added in computing book profits. Clause (a) refers expressly to income-tax paid or payable and the provision therefor; the legislature has not included wealth tax within clause (a). Clause (c) applies to amounts set aside as provisions for meeting liabilities other than ascertained liabilities, but the Revenue did not establish facts to bring the wealth tax provision within clause (c). The Tribunal correctly applied the statutory language and precedent in CIT v. Echaj Forging Pvt. Ltd., and there is no scope for treating wealth tax provision as within clause (a) by interpretation. [Paras 4]

Addition of provision for wealth tax was rightly deleted when computing book profits under Section 115JB.

Application of Section 41(1) to gain on extinguishment of liability - requirement of prior allowance or deduction for Section 41(1) - Gain on extinguishment of foreign currency bonds is not taxable under Section 41(1) because no prior allowance or deduction in respect of a loss, expenditure or trading liability had been claimed. - HELD THAT: - Section 41(1) applies only where an allowance or deduction was claimed and granted in respect of a loss, expenditure or trading liability and subsequently such liability ceases or is extinguished. The Revenue failed to establish that the assessee had claimed any such deduction in earlier years in relation to the issued bonds. The Tribunal's conclusion that the liability arising from issuance of the bonds was not a trading liability is supported by authority (Mahindra & Mahindra Ltd.) and by the requirement of a prior allowance as a sine qua non for Section 41(1) to apply. [Paras 6, 7]

Deletion of the addition treating the gain on extinguishment as income under Section 41(1) was correct.

Allowability of expenditure alleged to be illegal commission-fact-based appreciation of evidence - Payments claimed as commission/surcharge to SOMO were allowable as business expenditure because there was no evidence that the assessee made illegal payments; the conclusion is factual and was rightly upheld. - HELD THAT: - The Assessing Officer's disallowance rested on the Volcker Committee Report. The CIT(A) found no evidence that the assessee itself had paid illegal commission and noted that the report did not find the assessee guilty of making illegal payments; payments were made by an agent. The Tribunal confirmed the factual appreciation. The question involves evaluation of evidence and no substantial question of law arises for interference. [Paras 8]

Disallowance was reversed and the expenditure was allowable; the factual finding was rightly affirmed.

Final Conclusion: The High Court found no error in the Tribunal's conclusions on all issues and dismissed the Revenue's appeal.

Section 68 - unexplained cash credits - creditworthiness and genuineness of creditors - onus of proof on assessee where cash deposited and cheque issued on same date - opportunity to produce evidence and principles of natural justice

Section 68 - unexplained cash credits - creditworthiness and genuineness of creditors - opportunity to produce evidence and principles of natural justice - Validity of addition of Rs. 10,70,000 credited in assessee's books under Section 68 on grounds of failure to prove identity, creditworthiness and genuineness of the alleged creditor and whether the assessee was denied opportunity to produce evidence. - HELD THAT: - The High Court held that the addition was justified. The Assessing Officer and subsequent authorities recorded that the alleged creditor had no PAN, had not filed income-tax returns, could not remember transaction details, and produced no sale agreement or sale deed; the claimed property sale was not reflected in the assessee's books and the relevant entry appeared in the books of a different person. The Court found that the assessee did not request the AO to summon further documents from the creditor, did not seek to produce additional evidence in first or second appeal, and was given opportunity during assessment proceedings to explain the discrepancy. On these findings the authorities concluded that the explanation was not satisfactory and, applying Section 68, treated the credit as income from undisclosed sources. The court declined to interfere with the Tribunal's factual appreciation. [Paras 5, 6, 12, 15, 17]

Addition of Rs. 10,70,000 under Section 68 upheld; no violation of opportunity or natural justice established.

Section 68 - unexplained cash credits - onus of proof on assessee where cash deposited and cheque issued on same date - creditworthiness and genuineness of creditors - Validity of addition of Rs. 4,00,000 received as alleged unsecured loan from wife under Section 68 where cash deposit into wife's account and cheque issuance to assessee occurred on the same date, and whether creditworthiness was proved. - HELD THAT: - The Court concurred with the findings of the authorities that where cash was deposited into the wife's account and a cheque for the same amount was issued to the assessee on the same day, the onus to prove genuineness and creditworthiness lay on the assessee. The wife was not produced for recording statement despite being asked; her declared income was shown to be low and no additional evidence was placed on record. The Assessing Officer and appellate authorities found the explanation unsatisfactory and sustained the addition under Section 68. The High Court found no perversity in the Tribunal's factual conclusion and refused to interfere. [Paras 9, 10, 11, 15, 17]

Addition of Rs. 4,00,000 under Section 68 upheld; assessee failed to discharge onus to prove genuineness and creditworthiness.

Final Conclusion: Both additions under Section 68 (Rs. 10,70,000 and Rs. 4,00,000) were upheld on findings that identity, creditworthiness and genuineness were not satisfactorily proved and that the assessee was afforded opportunity; the appeal is dismissed.

Genuineness of purchases - Accommodation entries / bogus purchases - Burden of proof on the assessee - Disallowance limited where sales are not doubted - Estimation of suppressed profit - Reduction of disallowance by declared gross profit

Genuineness of purchases - Accommodation entries / bogus purchases - Burden of proof on the assessee - Disallowance limited where sales are not doubted - Estimation of suppressed profit - Whether purchases treated as accommodation/bogus should be wholly disallowed where the assessee produced documentary evidence and sales were not doubted. - HELD THAT: - The Tribunal accepted that information from the Sales tax Department identified the suppliers as hawala/bogus dealers and that the assessee could not produce the suppliers for examination. However, documentary evidence of purchases was furnished and the assessee's sales were not disputed. Relying on the principle that 100% disallowance is not warranted where sales are not doubted (since sales presuppose corresponding purchases), the Tribunal found complete disallowance inappropriate. On the facts, including purchases from the grey market which generate tax leakage, the Tribunal, applying an estimation of suppressed profit, fixed the appropriate disallowance at 12.5% of the purchases held to be bogus. The Tribunal thus moderated the Assessing Officer's total disallowance, distinguishing the exceptional case law where full allowance was upheld under different facts (e.g., supplies to government agencies). [Paras 10]

Disallowance for bogus purchases restricted to 12.5% of the purchases held to be accommodation/bogus.

Reduction of disallowance by declared gross profit - Estimation of suppressed profit - Whether the disallowance quantified as estimated suppressed profit should be reduced by the gross profit already declared and offered to tax by the assessee in respect of those transactions. - HELD THAT: - The assessee contended that taxing the estimated profit element in full would result in double taxation because the assessee had already shown and offered a gross profit on the implicated transactions. The Tribunal found this submission cogent and, to avoid double jeopardy, directed that the 12.5% disallowance be reduced by the gross profit rate already declared by the assessee in relation to those transactions. The assessee's counsel accepted this mechanism for computation. [Paras 11]

The 12.5% disallowance to be reduced by the gross profit rate already declared by the assessee on the impugned purchases.

Final Conclusion: Appeal partly allowed: for A.Y. 2011-12 the disallowance on purchases held to be accommodation/bogus is restricted to 12.5% of such purchases, subject to reduction by the gross profit already declared by the assessee; the balance of the Assessing Officer's total disallowance is deleted.

Arm's Length Price - Transfer Pricing - comparability analysis - Comparable Uncontrolled Price (CUP) - Transactional Net Margin Method (TNMM) - segmental allocation of costs - Associated Enterprise - remand for fresh determination

Arm's Length Price - comparability analysis - Transactional Net Margin Method (TNMM) - Comparable Uncontrolled Price (CUP) - segmental allocation of costs - remand for fresh determination - Whether the assessment requires fresh consideration of comparables, method and calculation of ALP for distinct manufacturing and trading activities and consequent remand to the AO/TPO. - HELD THAT: - The Tribunal observed that the assessee undertakes two different activities-manufacture of compressors and sale of compressors/components-which call for distinct comparability and benchmarking exercises rather than a single consolidated set of comparables. The DRP had earlier directed the AO to examine the assessee's claim regarding separate activity accounting and, if correct, to consider segmental financial statements and allocate common expenses appropriately. Although the TPO subsequently determined ALP separately for purchase and sale transactions, the TPO applied the same set of comparables to both activities. On this basis the Tribunal held that the question of appropriate comparables, the choice and application of the most appropriate method (including CUP versus TNMM) and the correct computation of the profit level indicator and operating cost require fresh analysis. Consequently, the matter is remitted to the file of the AO/TPO for fresh determination of ALP in accordance with law, permitting the assessee to raise contentions on comparables and methodology. [Paras 2, 3, 4]

Remitted to the AO/TPO for fresh analysis and determination of ALP, allowing the assessee to raise contentions on comparables and the method to be adopted.

Final Conclusion: The appeal is allowed for statistical purposes and the assessment is remitted to the AO/TPO for fresh determination of Arm's Length Price, with liberty to the assessee to press its contentions on comparability, method and segmental cost allocation.

Characterisation of receipt as income or receipt as agent - interpretation of development agreement rights and obligations - treatment of developer's receipts and development fee - evidentiary significance of accounting entries and ledger treatment

Characterisation of receipt as income or receipt as agent - interpretation of development agreement rights and obligations - evidentiary significance of accounting entries and ledger treatment - Whether the sum of Rs. 90 lakhs received by the assessee in the year under consideration constituted the assessee's income or was received by the assessee for and on behalf of the society. - HELD THAT: - The Tribunal upheld the conclusion of the CIT(A) that the impugned amount of Rs. 90 lakhs was the balance sale consideration due to the society under the original registered banakhat agreement and was collected by the assessee in its capacity as developer/collecting agent pursuant to the registered development agreement. The CIT(A) examined the development agreement (including the rights to collect booking/sale amounts and the separate entitlement to a development fee @25%), the accounting treatment in the assessee's books (where sale proceeds were shown as advances from customers and credited to the society's account rather than being credited to profit and loss), and the historical treatment of earlier receipts (prior instalments of Rs.179 lakhs received in earlier years were not treated as the assessee's income). On that basis the CIT(A) found that the Rs. 90 lakhs was not a surplus or profit of the assessee but monies belonging to the society and merely collected by the assessee; the AO had not computed any net surplus of the overall project or shown that the specific receipt was the assessee's income. The Tribunal found no contrary material warranting interference with that factual and legal conclusion and accepted the reasoning that the developer's taxable income was the separately accounted development fee, not the sale proceeds collected for the society. [Paras 6, 7]

Addition of Rs. 90 lakhs deleted as the sum was received for and on behalf of the society and not taxable as the assessee's income.

Final Conclusion: The Revenue's appeal is dismissed; the Tribunal upholds the CIT(A)'s deletion of the addition made by the AO and confirms that the Rs. 90 lakhs was received for and on behalf of the society and not includible in the assessee's income for A.Y. 2013-14.

Reopening of assessment under section 147/148 - tangible material for reopening - unexplained cash credit under section 68 of the Income tax Act - claim of exemption under section 54F - proof of ownership and entitlement to capital gains - explanation for opening cash and burden of proof for cash deposits

Reopening of assessment under section 147/148 - tangible material for reopening - Validity of initiation of proceedings under section 148 and the adequacy of tangible material relied upon by the AO. - HELD THAT: - The Tribunal examined the approval recorded by the Pr. CIT and the material placed on record by the AO, including query letters, bank statements and sale deeds which revealed an AIR reporting error (an extra zero) and led the AO to drop proceedings against the assessee's daughter and proceed against the assessee. The AO's action followed examination of these documents and was not found to be a mere bald reliance on AIR information. The CIT(A)'s conclusion that the reopening was valid was accepted as there was tangible material justifying reassessment under section 147/148. [Paras 5]

The reopening under section 147/148 was valid and supported by tangible material; the ground challenging initiation is rejected.

Claim of exemption under section 54F - proof of ownership and entitlement to capital gains - Sustainability of addition of Rs. 4,05,893 as capital gain attributable to the assessee in view of ownership and applicability of section 54F exemption. - HELD THAT: - The Tribunal found from the sale and purchase documents and an affidavit that the plot was registered in the name of Ram Baksh (the father) and the sale deed was executed by Ram Baksh with the assessee named as a party but not shown as the owner. The father claimed the property belonged to the HUF and mutation was in the father and assessee's names. On these facts the Tribunal held that the purchase was by the father, not the assessee, and therefore the assessee could not claim exemption under section 54F. The CIT(A)'s direction to rework capital gains excluding the assessee's claimed entitlement was upheld. [Paras 5]

Addition of Rs. 4,05,893 as the assessee's share of capital gain is sustained; exemption under section 54F is not allowable to the assessee on the recorded facts.

Unexplained cash credit under section 68 of the Income tax Act - explanation for opening cash and burden of proof for cash deposits - Sustenance of addition of Rs. 1,00,000 on account of unexplained opening cash in the cash flow statement. - HELD THAT: - The cash flow statement showed opening cash in hand of Rs. 3,50,088 (noted as 3,55,088 elsewhere), of which the assessee could account for deposits of Rs. 1,60,000 but failed to satisfactorily explain the source of Rs. 1,00,000 of the opening balance. Given that the assessee is a pure agriculturist with no other admitted income, the Tribunal found the AO and CIT(A) were justified in treating the unexplained portion as liable to inclusion. The Tribunal rejected the assessee's pleadings and case law distinctions as not altering the factual shortfall of explanation. [Paras 5]

Addition of Rs. 1,00,000 on account of unexplained cash is sustained; other amounts in the cash flow statement were accepted or deleted as directed by the CIT(A).

Final Conclusion: All grounds of the assessee are rejected; the order of the CIT(A) is upheld and the appeal is dismissed.

Exemption under section 54EC - Investment within six months for claiming exemption - Cheque issuance versus bank clearance - date of investment - Delay attributable to banking channel - no adverse inference

Exemption under section 54EC - Investment within six months for claiming exemption - Cheque issuance versus bank clearance - date of investment - Delay attributable to banking channel - no adverse inference - Whether the claim of exemption under section 54EC is allowable where the assessee issued cheque within the six month period but the bank debited the account after the expiry of six months. - HELD THAT: - The assessee executed an agreement of sale on 04.09.2012 and the six month period for reinvestment expired on 03.03.2013. The assessee issued cheques for investment in REC bonds on 04.03.2013, but the cheques were debited by the bank on 08.03.2013. The Assessing Officer treated the date of bank debit as the date of investment and disallowed the section 54EC exemption. The Tribunal found that the cheques were issued within the statutory period and the subsequent four day delay in bank clearance was caused by the banking channel. A technical delay attributable to the bank cannot attract an adverse inference against the assessee where the act of investment (issuance of cheque) was completed within time. Applying this reasoning, the disallowance by the authorities below was not justified and the exemption claim must be allowed. [Paras 7]

Disallowance of exemption under section 54EC set aside and the claim allowed as the issuance of cheque within the prescribed period sufficed; the brief bank clearance delay of four days did not defeat the exemption.

Final Conclusion: Tribunal allows the appeal, setting aside the orders below and holding that the assessee is entitled to exemption under section 54EC since the cheques for investment were issued within the six month period and the subsequent four day delay in bank clearance, being attributable to the banking channel, does not disentitle the assessee to the exemption.

Revisional jurisdiction under section 263 - proviso to section 2(15) relating to activities in the nature of trade, commerce or business - third proviso to section 143(3) requiring the Assessing Officer to examine applicability of proviso to section 2(15) - dominant object test - principle of mutuality - application of mind by the Assessing Officer

Revisional jurisdiction under section 263 - application of mind by the Assessing Officer - Validity of the CIT(Exemption)'s exercise of jurisdiction under section 263 in setting aside the assessment framed u/s 143(3) dated 07.03.2013 - HELD THAT: - The Tribunal examined whether the Commissioner (Exemptions) was justified in holding that the assessment order was "erroneous and prejudicial to the interests of Revenue" and in invoking section 263. The Tribunal found that the Assessing Officer had issued specific queries (questionnaire dated 23-8-2011) seeking explanation and documentary proof on the nature of activities, the applicability of section 2(15) in light of amendments, business carried on and books of accounts; the assessee had replied and the AO examined records and, taking one possible view, accepted the return. The Tribunal held that seeking information, receiving replies and taking a view after considering them demonstrated application of mind by the AO and that the matter involved arguable questions of law and fact. In those circumstances, initiation of revision under section 263 was not justified. The Tribunal therefore followed its earlier decision in the assessee's own case and quashed the revision order. [Paras 6, 10, 11]

Order under section 263 set aside; AO's assessment restored.

Proviso to section 2(15) relating to activities in the nature of trade, commerce or business - third proviso to section 143(3) requiring the Assessing Officer to examine applicability of proviso to section 2(15) - dominant object test - principle of mutuality - Whether the proviso to section 2(15) (as applied to institutions notified u/s 10(23C)(iv)) applied to the assessee's hostel, catering and related receipts so as to deprive it of exemption - HELD THAT: - The Tribunal examined the nature and purpose of the assessee's activities, its Memorandum of Association and Rules, the scale and character of programmes open to the public, restrictions and conditions of membership, and the factual material on catering and hostel services. Applying the dominant object test, the Tribunal held that the assessee's primary purpose remained charitable - promotion and dissemination of culture and intellectual activity - and that incidental recovery of charges for hostel and catering to facilitate those programmes did not transform such activities into trade or commerce with a profit motive. The Tribunal observed that mere surplus (which in the assessee's case was largely from interest) does not establish commercial intention; the proviso to section 2(15) is aimed at entities whose dominant object is profit-making and was not intended to deny exemption to genuine charitable institutions carrying out ancillary fee based services to achieve their primary object. On these facts the proviso to section 2(15) was not attracted and the AO taking a view in favour of the assessee was a permissible conclusion. [Paras 6]

Proviso to section 2(15) not attracted on the facts; assessee's activities held to be predominantly charitable and incidental fee-based services did not strip exemption.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2010-11, set aside the CIT(Exemption)'s order passed under section 263, and restored the assessment dated 07.03.2013, holding that the AO had applied his mind and that the proviso to section 2(15) did not apply on the facts because the assessee's dominant object remained charitable.

Arm's length price - most appropriate method - Resale Price Method (RPM) - Transactional Net Margin Method (TNMM) - transfer pricing adjustment - rule of consistency - section 40(a)(ia) - section 194H

Arm's length price - most appropriate method - Resale Price Method (RPM) - Transactional Net Margin Method (TNMM) - transfer pricing adjustment - rule of consistency - ALP adjustment in respect of import of finished goods for resale and choice of MAM - HELD THAT: - The Tribunal found that the facts for AY 2010-11 are materially similar to the Tribunal's earlier decisions in the assessee's own cases for AY 2008-09 and 2009-10, where RPM was held to be the most appropriate method for benchmarking purchase-and-resale transactions where no value addition is made. Applying the rule of consistency and following its prior orders, the Tribunal declined to uphold the TPO/AO's application of TNMM which had led to the transfer pricing addition, and restored the matter to the file of the AO/TPO for fresh adjudication. The AO/TPO was directed to re-compute the ALP by objectively examining the assessee's RPM benchmarking (including comparables and gross profit data), to call for any relevant materials if necessary, and to afford the assessee adequate opportunity of hearing. The remand is for fresh determination of ALP under RPM in accordance with law and the directions given by the Tribunal. [Paras 9]

Issue restored to AO/TPO for recomputation of ALP adopting RPM; ground allowed for statistical purposes.

Section 40(a)(ia) - section 194H - Disallowance under section 40(a)(ia) for bank credit-card charges - HELD THAT: - The Tribunal, following its decision in the assessee's own case for AY 2009-10, held that payments to banks towards credit-card charges do not attract withholding under section 194H as such payments are not commissions in the relationship contemplated by that provision. On that basis the disallowance under section 40(a)(ia) in respect of bank credit-card charges was deleted. The Tribunal applied the rule of consistency in following its coordinate-bench precedent and the earlier adjudication in the assessee's cases. [Paras 10]

Addition in respect of bank credit-card charges deleted; ground allowed.

Section 40(a)(ia) - section 194H - Disallowance under section 40(a)(ia) for foreign-exchange conversion charges paid to Thomas Cook - scope of principal-agent relationship - HELD THAT: - The Tribunal observed that the issue whether the conversion charges paid to Thomas Cook attract withholding under section 194H depends on factual determination of whether a principal-agent relationship exists. Noting that the authorities below had not properly examined the agreements and factual materials already placed on record, the Tribunal set aside the matter to the AO for fresh consideration. The AO was directed to re-examine the nature of the relationship, afford the assessee adequate opportunity of hearing and decide the applicability of section 194H and consequent section 40(a)(ia) disallowance in accordance with law. [Paras 11]

Issue set aside to AO for fresh consideration after factual examination; ground allowed for statistical purposes.

Final Conclusion: The appeal is partly allowed: the transfer-pricing addition is remitted to the AO/TPO for fresh computation of ALP applying RPM (allowed for statistical purposes); the disallowance for bank credit-card charges is deleted; the disallowance for forex-conversion charges to Thomas Cook is remitted to the AO for fresh factual examination in accordance with law.

Revisional jurisdiction under section 263 - Record for the purposes of section 263 - Erroneous and prejudicial to the interests of the revenue - Genuineness of purchases / accommodation entries / bogus purchases - Principles of natural justice (opportunity of hearing)

Record for the purposes of section 263 - Revisional jurisdiction under section 263 - Whether records and information available to the Commissioner at the time of examination, though coming into existence after the AO's assessment order, could form the basis for invoking jurisdiction under section 263. - HELD THAT: - The Tribunal held that the Commissioner may take into consideration all records relating to the proceeding that are available at the time of his examination; material which came into existence after the AO passed the assessment but was available to the Commissioner when examining the record can validly be the basis for invoking section 263. The Tribunal relied on and applied the ratio in CIT v. Shree Manjunathesware Packing Products & Camphor Works and subsequent authorities which construe 'record' to include materials available to the Commissioner at the time of examination and permit him to make or cause enquiries and consider such material in exercise of revisional powers. Applying that principle, information supplied by the Audit/DGIT to the Principal Commissioner and available at the time of examination could form the basis to trigger revisional jurisdiction under section 263. [Paras 4]

All records/information available to the Principal Commissioner at the time of examination could form the basis for invoking revisional jurisdiction under section 263.

Genuineness of purchases / accommodation entries / bogus purchases - Erroneous and prejudicial to the interests of the revenue - Principles of natural justice (opportunity of hearing) - Revisional jurisdiction under section 263 - Validity of the Pr. CIT's exercise of section 263 in relation to alleged bogus purchases from specified suppliers and whether principles of natural justice were violated in the revisional proceedings. - HELD THAT: - On facts, the Tribunal found that the Assessment Officer had framed assessment before receipt of the Audit/DGIT information; therefore the Principal Commissioner could legitimately direct a fresh inquiry under section 263 into alleged accommodation entries. With regard to purchases shown to have been from M/s Realstone Exports Ltd, the Tribunal noted that the audit information showed the purchases attributable to AY 2010-11 (not 2009-10), and consequently the Pr. CIT's direction to examine purchases from that supplier insofar as AY 2009-10 was not sustainable. In contrast, the revisional jurisdiction as to alleged bogus purchases from M/s Utkantha Trading Pvt. Ltd. was held valid: the AO had not discussed or carried out inquiries on the genuineness of those purchases in the assessment and no material showed adequate investigation by the AO, making the assessment vulnerable to revision. The Tribunal also rejected the contention of breach of natural justice: a show-cause notice was issued and the assessee replied and sought further details, and the process did not amount to denial of hearing. [Paras 4]

Revisional jurisdiction under section 263 upheld insofar as alleged bogus purchases from M/s Utkantha Trading Pvt. Ltd. (for the relevant years) but set aside insofar as the direction related to purchases from M/s Realstone Exports Ltd. for AY 2009-10; no denial of natural justice was found.

Final Conclusion: ITA No. 3503/Mum/2018 (AY 2009-10) partly allowed (s.263 sustained for purchases from Utkantha but not for Realstone); ITA No. 3504/Mum/2018 (AY 2010-11) dismissed (revisional jurisdiction in relation to Utkantha sustained).

Disallowance under section 14A read with Rule 8D - Interest on partners' capital - Partnership firm and partners - mutuality and tax treatment - Computation under Rule 8D(iii)

Disallowance under section 14A read with Rule 8D - Interest on partners' capital - Partnership firm and partners - mutuality and tax treatment - Whether interest paid to partners for use of partners' capital is exigible to disallowance under section 14A read with Rule 8D - HELD THAT: - The Tribunal, following the Coordinate Bench decision in Quality Industries, held that interest paid to partners pursuant to the partnership deed is not an expenditure subject to disallowance under section 14A read with Rule 8D(ii). The reasoning reflects that a partnership firm and its partners are to be viewed holistically for taxation of such payments: interest on partners' capital is governed by section 40(b) and is taxed in the hands of partners, producing a contra effect which does not result in revenue loss when considered conjointly. Consequently, interest attributable to partners used for making investments yielding exempt dividend income cannot be disallowed under section 14A/Rule 8D(ii). [Paras 6]

Disallowance of interest paid to partners under section 14A read with Rule 8D(ii) is not sustained.

Computation under Rule 8D(iii) - Disallowance under section 14A read with Rule 8D - Sustainability of the disallowance computed under Rule 8D(iii) - HELD THAT: - The Tribunal noted that the assessee did not advance any specific plea or ground contesting the disallowance made under Rule 8D(iii). In the absence of such challenge, the Tribunal confirmed the disallowance under Rule 8D(iii) as upheld by the lower authorities. [Paras 6]

Disallowance under Rule 8D(iii) is confirmed.

Final Conclusion: Appeal is partly allowed: disallowance of interest to partners under section 14A/Rule 8D(ii) set aside, while the disallowance under Rule 8D(iii) is confirmed.

Due diligence of Customs House Agent - obligations of Customs House Agent under Regulation 13(o) - scope of verification of IEC and client identity - liability of CHA for fraudulent exports - complicity requirement for imposing penalty under Section 114 of the Customs Act

Obligations of Customs House Agent under Regulation 13(o) - scope of verification of IEC and client identity - due diligence of Customs House Agent - Scope of the verification duty cast on a Customs House Agent by Regulation 13(o) and the extent of due diligence required in relation to exporters/importers. - HELD THAT: - The Court held that Regulation 13(o) must be read in the context of the CHA's role as an agent and not as a revenue investigator. The reasonable obligation of a CHA is to verify, by reliable and authentic sources, that the counterparty possesses an Importer Exporter Code and is reflected among authorised importers/exporters, and to confirm identity and declared address to the extent normally expected of an agent. The regulation does not impose on the CHA a duty to conduct independent, in-depth inquiries into the actual existence, business practices or shifting of exporters unless there are indicia that ought to have alerted the CHA to make further enquiries. Absent such triggers, the higher investigative responsibility contended for by the Revenue is not borne by the CHA. [Paras 7]

Regulation 13(o) requires only limited verification by a CHA of IEC and client identity; it does not cast an overarching investigatory duty to verify the substantive existence or business regularity of exporters in every case.

Liability of CHA for fraudulent exports - complicity requirement for imposing penalty under Section 114 of the Customs Act - Whether the Customs, Excise and Service Tax Appellate Tribunal was right in deleting the penalty imposed on the CHA under Section 114 in absence of proof of complicity or breach of the limited verification duty. - HELD THAT: - The Court endorsed the factual and legal conclusions recorded below that the CHA's defence - that the transactions were facilitated by an employee who procured clients - coupled with the absence of positive material showing the CHA's active involvement or knowledge, disentitled the Revenue from sustaining the penalty. The CESTAT's reliance on precedents was considered; facts of cases relied upon by the Revenue (where CHAs played an active role) were distinguishable. The High Court concluded that, on the facts and in law, the CHETAT was justified in setting aside the penalty because there was no established complicity or failure to discharge the limited verification obligation which would attract penal consequence under Section 114. [Paras 5, 10]

The CESTAT rightly deleted the penalty; in the absence of proven complicity or breach of the reasonably understood obligations under Regulation 13(o), the CHA cannot be held liable under Section 114.

Final Conclusion: The High Court dismissed the appeal, affirmed the CESTAT order deleting the penalty, and held that a CHA's duty under Regulation 13(o) entails limited verification of IEC and client identity as an agent; mere involvement of an employee or absence of deeper investigatory inquiries, without indicia of complicity, does not attract penal liability under Section 114.

Classification of goods - refund of customs duty - finality of appellate order - notification-based exemption - consequential relief

Classification of goods - finality of appellate order - refund of customs duty - notification-based exemption - The CESTAT's finding that the imported epoxy stator coils are classifiable under tariff item 8503 and not under 8544 is final and the authorities are bound to consider and decide the petitioner's refund claim accordingly. - HELD THAT: - The Tribunal, in its final order dated 2-3-2016, held that the goods imported under the Bills of Entry are epoxy stator coils solely designed for power generators and are classifiable under 8503, allowing the appeal with consequential relief and observing that the authorities below should settle the legitimate refund claim. No further appeal was filed by the Revenue and the Tribunal's order has become final. In light of that final appellate conclusion on classification and the petitioner's claim premised on Notification No. 172/89-Cus., dated 29-5-1989, there is no justification for keeping the refund claim pending. The court therefore requires the respondents to act on the refund claim by applying the Tribunal's classification finding and the relevant notification when passing their orders.

The respondents are directed to pass orders on the petitioner's refund claim, in accordance with the CESTAT order and Notification No. 172/89-Cus., dated 29-5-1989, within four weeks.

Final Conclusion: Writ petition disposed directing the respondents to decide the refund claim without further delay by passing orders within four weeks in accordance with the CESTAT order dated 2-3-2016 and the cited notification; no costs.

Confiscation of goods - redemption fine - penalty for mis-declaration under Customs Act - re-determination of customs value - expert technical opinion for classification or nature of imported goods - reliance on customs first-check examination report - end-use certificate as evidence of consumption in manufacture - mis-declaration with intent to evade duty

Confiscation of goods - redemption fine - penalty for mis-declaration under Customs Act - expert technical opinion for classification or nature of imported goods - end-use certificate as evidence of consumption in manufacture - reliance on customs first-check examination report - Liability of the imported goods to confiscation and validity of redemption fine and penalty imposed for alleged mis-declaration. - HELD THAT: - The Tribunal examined supplier's certificate and the End-use certificate produced by the appellant, both of which described the imported consignments as scrap items used for melting and subsequent manufacture. The adjudicating authorities relied on a first-check customs examination report which reported different articles on visual inspection; however, no technical expert opinion was sought or recorded to ascertain the true nature of the goods. The Tribunal applied its earlier view in the appellant's own matter that the nature of such material cannot be conclusively determined by eye estimate and requires expert assessment. In these circumstances the customs examination report alone, and the appellant's or its employee's apparent agreement with that report, cannot constitute conclusive proof of mis-declaration or intent to evade duty. On that basis the Tribunal found no merit in confirming the redemption fine and penalty imposed by the authorities below.

Redemption fine and penalty set aside; appeal allowed in favour of the appellant.

Final Conclusion: The Tribunal allowed the appeal, holding that in absence of expert technical opinion the customs first-check report and admissions were insufficient to sustain confiscation-related penalties; the redemption fine and penalty imposed by the authorities below were set aside.

Penalty for abetment under Section 112(b) of the Customs Act - confiscation of goods as consequence of fraudulent importation - actual user condition of advance licences - advance licence misuse - liability to penalty where confiscation is upheld

Penalty for abetment under Section 112(b) of the Customs Act - confiscation of goods as consequence of fraudulent importation - liability to penalty where confiscation is upheld - Imposition of penalty on the appellant under Section 112(b) was sustainable and the appeal against it is to be dismissed. - HELD THAT: - The adjudicating authority found on evidence and recorded statements that the appellant arranged finance, was the owner of the imported goods and knowingly participated in diversion of goods imported under advance licences in breach of the actual user condition. Those findings supported the conclusion that the goods were liable for confiscation and that the appellant abetted the fraud. The Tribunal, upon examination of the record and paragraph 112.17 of the impugned order, saw no reason to interfere with those findings. Prior decisions cited by the appellant were differentiated because in those cases there was no specific finding of confiscation; by contrast, in the present case the show cause notice sought both confiscation and penalty and the adjudicating authority passed a reasoned, speaking order confirming confiscation and imposing penalty under Section 112(b). On that basis the statutory provision for penalty was correctly invoked and applied. [Paras 112]

Findings of ownership, abetment and confiscation sustained; penalty under Section 112(b) upheld and appeal dismissed.

Final Conclusion: The Tribunal affirmed the adjudicating authority's reasoned finding that the appellant participated in diversion of imported goods, rendering them liable for confiscation, and upheld the imposition of penalty under Section 112(b); the appeal is dismissed.

Assessment of transaction value - contemporaneous imports as basis for valuation - self-assessment by importer - written consent for assessment at enhanced value - speaking order under Section 17(5) of the Act - power to raise doubt on declared value under Rule 12 of the Customs Valuation Rules, 2007

Written consent for assessment at enhanced value - speaking order under Section 17(5) of the Act - self-assessment by importer - Validity of enhancing declared transaction value where no written consent was given and no speaking order under Section 17(5) was passed - HELD THAT: - The Tribunal examined the assessment of the subject Bills of Entry which had been re-assessed on the basis of contemporaneous imports without accepting the respondent's explanations furnished pursuant to the departmental query memo. The record shows no written consent by the importer for assessment at an enhanced value, and the department did not comply with the requirement to pass a speaking order under Section 17(5) of the Act after reassessment. In these circumstances the assessing officer was under statutory obligation to issue a speaking order addressing the reassessment, and the failure to do so rendered the enhancement of the declared value unsustainable. The Tribunal therefore upheld the Commissioner (Appeals)'s setting aside of the enhanced assessment for non-compliance with the statutory mandate relating to reassessment and speaking orders (findings and reasoning appearing in paragraph 4). [Paras 4]

Enhancement of the declared value was set aside for want of the required written consent and for non-compliance with the obligation to pass a speaking order under Section 17(5).

Payment of enhanced duty without protest - speaking order under Section 17(5) of the Act - Whether voluntary payment of the enhanced duty by the importer without protest obviates the requirement of issuing a speaking order under Section 17(5) - HELD THAT: - Revenue's contention that the importer having paid the enhanced duty without protest before taking delivery cured any requirement for issuance of a speaking order was considered and rejected. The Tribunal held that payment of duty by the importer does not absolve the department of its statutory duty to comply with Section 17(5) when it has re-assessed declared value; absence of the mandated speaking order cannot be remedied merely by payment. Consequently the departmental enhancement was set aside notwithstanding payment (concluded in paragraph 4 and reflected in the operative dismissal at paragraph 5). [Paras 4, 5]

Voluntary payment of the enhanced duty did not cure the department's failure to issue the speaking order; the appeals of Revenue therefore lacked merit and were dismissed.

Final Conclusion: The Tribunal found no infirmity in the Commissioner (Appeals)'s order setting aside the enhanced valuation for non-compliance with the requirement of written consent and for failure to pass a speaking order under Section 17(5); Revenue's appeals are dismissed.

Assessable value of export goods (FOB price as assessable value) - Weight basis for duty assessment (Dry Weight versus Wet Weight) - Application of Tribunal precedents

Assessable value of export goods (FOB price as assessable value) - Application of Tribunal precedents - Assessable value of exported Iron Ore Fines for the period after 1-1-2009 is to be determined adopting the FOB price as the assessable value. - HELD THAT: - The Tribunal observed that the question of assessable value for Iron Ore Fines exported after 1-1-2009 had previously been decided in favour of the Revenue by its earlier orders (Order Nos. FO/A/71188-71218/2013, dated 12-12-2013, and followed by Order Nos. FO/A/75218-75246/2014, dated 30-4-2014). Applying the same conclusion, the Tribunal held that the FOB price is to be adopted as the assessable value rather than treating that price as cum-duty value. [Paras 5]

Issue decided in favour of the Revenue; FOB price to be adopted as assessable value for the period after 1-1-2009.

Weight basis for duty assessment (Dry Weight versus Wet Weight) - Application of Tribunal precedents - Whether duty on exported Iron Ore Fines for the period after 13-6-2008 is to be calculated on Dry Weight (transaction weight) or on Wet Weight as supplied. - HELD THAT: - Relying on its earlier decision (Order No. FO/A/75192-75217/2014, dated 30-4-2014), the Tribunal held that for exports after 13-6-2008 the duty is to be assessed on the 'Dry Weight' basis agreed between the assessee and the overseas purchasers. The Tribunal therefore accepted the assessee's contention that transaction value on Dry Weight governs the assessment rather than the Wet Weight under which supply was effected. [Paras 6]

Issue decided in favour of the assessee; duty to be calculated on Dry Weight for the period after 13-6-2008.

Final Conclusion: Revenue's appeals and the stay petition were disposed of by affirming that FOB price is the assessable value for exports after 1-1-2009 (in favour of Revenue) and that duty for exports after 13-6-2008 is to be computed on Dry Weight (in favour of the assessee).

Fee payable on date of filing - prospective application of fee rules - ultra vires - Article 20 of the Constitution - Companies (Registration of Offices and Fees) Rules, 2014 - Companies Act, 1956 and Companies Act, 2013 transitional compliance

Fee payable on date of filing - prospective application of fee rules - Companies (Registration of Offices and Fees) Rules, 2014 - The fee payable for belated filing of form for increase of authorised share capital is to be determined by the fee-rules in force on the date of actual filing. - HELD THAT: - The Court examined the sequence of events: the increases in authorised share capital occurred under the Companies Act, 1956 but the e-Form was filed after 1 April 2014 when the Companies (Registration of Offices and Fees) Rules, 2014 were in force. The court accepted the respondents' position that the Rules plainly require the fee applicable at the time of actual filing to be paid. The petitioner's contention that fee liability must be fixed according to the law in force at the time of the corporate action was rejected because the statutory scheme contemplates assessment of fee as per the rules applicable when documents are presented for filing. The court found no legal basis to treat the new schedule of fees as inapplicable to documents filed after the Rules came into force and therefore required payment as per the 2014 Rules. [Paras 7]

Petitioner must pay the fee as per the Rules of 2014 applicable on the date of filing.

Ultra vires - Article 20 of the Constitution - Companies Act, 1956 and Companies Act, 2013 transitional compliance - The challenge to Para 2 of Table B of the Table of Fee issued under Rule 12 of the 2014 Rules as ultra vires and violative of Article 20 is without merit and is dismissed. - HELD THAT: - The petitioner sought quashing of the specified fee provision as unconstitutional and beyond the powers of the rule-making authority. The Court was not persuaded by the submissions and held that the facts showed the petitioner filed the requisite form only after the 2014 Rules came into effect. In that factual matrix the contention of unconstitutionality and excessive use of power was not established. The judgments relied upon by the petitioner were held not to be applicable to the present facts and did not support invalidation of the challenged fee provision. [Paras 8, 9]

Petition to quash Para 2 of Table B is dismissed for lack of merit.

Final Conclusion: The petition is dismissed; the petitioner is obliged to pay the fee as per the Companies (Registration of Offices and Fees) Rules, 2014 applicable on the date of filing and the challenge to the impugned fee provision is rejected.

Confirmation of sale by Official Liquidator - Sale in liquidation - Section 457(3) of the Companies Act, 1956 - Possession to auction purchaser upon payment of balance - Exemption from filing certified copies - Inter-se bidding - Reserve price and earnest money deposit (EMD)

Exemption from filing certified copies - Application for permission to place photostat copies of Annexures A-1 to A-5 in lieu of certified copies was allowed. - HELD THAT: - The Court considered the application seeking exemption from filing certified copies of Annexures A-1 to A-5 and permitted placement of photostat copies on record. The order records the application and grants the relief as prayed for without any recorded objection or requirement for certified originals.

Application for exemption to file certified copies allowed and photostat copies permitted to be placed on record.

Confirmation of sale by Official Liquidator - Section 457(3) of the Companies Act, 1956 - Sale in liquidation - Inter-se bidding - Reserve price and earnest money deposit (EMD) - Possession to auction purchaser upon payment of balance - Application under Section 457(3) for confirmation of sale of the company's movable and immovable property in liquidation was allowed and sale in favour of the highest bidder confirmed, subject to receipt of the balance sale proceeds and completion within a stipulated time. - HELD THAT: - The Official Liquidator sought the Court's permission to confirm the sale effected after public notices and subsequent bids, including an inter-se bidding process, where the highest bid exceeded the reserved price and requisite deposits including EMD were furnished. The secured creditors who were arrayed as respondents raised no objection and there was no allegation of mala fides in the bidding process. On these facts the Court held the sale process to be regular and in accordance with the terms published, and therefore fit for confirmation under the statutory power invoked. The Court directed that possession be handed over and requisite documents executed in favour of the successful bidder only after receipt of the balance sale consideration in accordance with the sale terms, and directed the Official Liquidator to complete the process within 15 days from receipt of the certified copy of the order, the purchaser having undertaken to pay the balance.

Sale in favour of the highest bidder confirmed; Official Liquidator permitted to deliver possession and execute documents after receipt of balance sale proceeds and to complete the process within 15 days of certified copy of the order.

Final Conclusion: The Court allowed the application for filing photostat annexures and, invoking Section 457(3) of the Companies Act, 1956, confirmed the sale of the company's assets to the highest bidder on the recorded facts and directed completion of payment and formal handover within 15 days of certified copy of the order.

Oppression and mismanagement - Illegal transmission of shares - Illegal appointment and removal of directors - Rectification of register of members - Validity of corporate appointments without board or general meeting - Limitation and laches in company petitions

Oppression and mismanagement - Findings of oppression and mismanagement against the respondents were upheld. - HELD THAT: - The Tribunal accepted the company petition's allegations that the answering respondents had run the company without following statutory requirements, excluded the petitioners from board participation, failed to serve notices for AGMs and diverted funds leading to liabilities recoverable by the bank. In the absence of satisfactory controversion or documentary explanation from those respondents, the conduct was held to constitute continuous violation of the petitioners' rights and mismanagement of the company's affairs, warranting remedial reliefs to protect shareholders' rights and corporate governance. [Paras 7, 8]

The NCLT's finding of oppression and mismanagement was affirmed and formed the basis for granting reliefs.

Illegal transmission of shares - Rectification of register of members - The transmission of shares of the deceased director to his widow without following proper succession procedure was set aside and the company directed to record all legal heirs equally. - HELD THAT: - The Tribunal observed that shares of the deceased were transmitted directly to his widow without production of heirship certificate or adoption of proper procedure; respondents failed to produce Board resolutions or necessary documentation to regularise the transmission. In consequence, the NCLT's direction to set aside the transmission in the widow's sole name and to enter the names of all legal heirs equally (including the widow) on the company's register was found to be justified. [Paras 3, 12, 14]

The NCLT order cancelling the sole transmission and directing rectification of the register in favour of all legal heirs was upheld.

Illegal transmission of shares - The transfers increasing the shareholding of the 2nd appellant at the expense of petitioner-shareholders were not shown to be an agreed, lawful arrangement and the NCLT's adverse finding on that point was sustained. - HELD THAT: - Although appellants contended that transfers were pursuant to an arrangement and purchases, they produced no evidence of any agreement, transfer forms or consideration paid. The Tribunal therefore accepted the NCLT's conclusion that the appellants failed to substantiate the lawful origin of the disputed transfers and there was no reason to interfere with the NCLT's finding. [Paras 9, 10, 11]

The NCLT's finding rejecting the appellants' defence regarding those transfers was affirmed.

Illegal appointment and removal of directors - Validity of corporate appointments without board or general meeting - Appointments of certain directors and the removal of others were declared illegal; the NCLT's directions restoring petitioners to directorship and removing improperly appointed directors were upheld, and the appointment of the 2nd appellant as Chairman/Managing Director was held not to be regularised. - HELD THAT: - The Tribunal examined Forms and affidavits and noted absence of supporting board minutes, notices of meetings or timely filings; evidence indicated filings were made retrospectively. The appellants could not produce Board resolutions or proof of legitimately convened meetings for the challenged appointments, and notices/minutes for a purported shareholder approval for the Managing Director were absent. The NCLT's conclusions that the contested appointments and removals were not in compliance with required procedures and that the 2nd appellant's elevation lacked mandated approvals were therefore sustained. [Paras 15, 16, 17, 19, 20]

The NCLT's orders cancelling the illegal appointments, restoring petitioners to the board, and finding no regularisation of the 2nd appellant's Chairmanship/Managing Directorship were affirmed.

Limitation and laches in company petitions - The plea that the company petition was barred by limitation was considered but rejected insofar as appellants failed to show that delay or laches vitiated the petitioner's claims. - HELD THAT: - Appellants argued transfers dated 2011 and petition filed in 2015 were beyond limitation. The Tribunal noted the allegation but found appellants did not prove lawful origin or arrangements for the transfers and did not establish that delay defeated the substantive entitlement of petitioners; accordingly the NCLT's adjudication on merits stood. [Paras 9, 11]

The NCLT's implicit rejection of the limitation defence and adjudication on the merits was maintained.

Final Conclusion: The Appellate Tribunal dismissed the appeal, upheld the impugned NCLT order dated 18.4.2017 in all material respects (including findings of oppression and mismanagement, directions to set aside improper share transmissions, rectification of the members' register, and cancellation of illegal appointments), and vacated any interim reliefs; no costs were awarded.

Scheme of arrangement - arrangement between the company and its members - reclassification of general reserves to profit and loss account - scope of 'arrangement' under the Companies Act - approval subject to compliance with stock exchange directions - tax implications subject to final decision of tax authorities

Scheme of arrangement - reclassification of general reserves to profit and loss account - approval subject to compliance with stock exchange directions - Sanction of the scheme of arrangement for transferring amounts standing to the credit of general reserve to the profit and loss account and payment to members. - HELD THAT: - The Tribunal held that the proposed transfer of amounts from the general reserve to the profit and loss account falls within the ambit of a scheme of arrangement between the company and its members and may be sanctioned. The amounts in question were accumulated pursuant to earlier statutory requirements but, under the Companies Act, 2013, transfer to general reserve is optional; that circumstance does not preclude reclassification by arrangement. The scheme had been approved by the requisite majority of shareholders and no objections were raised by public stakeholders. The Tribunal therefore found the arrangement approvable, subject to the petitioner complying with directions issued by the stock exchange (BSE) and other statutory requirements, and expressly clarified that approval does not constitute exemption from stamp duty, taxes or other charges and that compliance with any applicable permissions remains necessary. [Paras 31, 34, 36, 37]

The scheme of arrangement sanctioning reclassification of general reserves to the profit and loss account and subsequent payment to members is sanctioned, subject to compliance with BSE directions and other statutory requirements.

Scope of 'arrangement' under the Companies Act - arrangement between the company and its members - Whether the proposed transfer constitutes an 'arrangement' permissible for sanction under the Companies Act. - HELD THAT: - The Tribunal accepted the petitioner-company's submissions and authorities that the term 'arrangement' is of wide import and need not be confined to compromises or changes to rights; an arrangement may be adopted even in the absence of a dispute. The proposed reclassification and utilization of general reserves for writing off debit balance in the profit and loss account falls within the 'four corners' of an arrangement and is therefore amenable to sanction under the Companies Act framework applicable to schemes between a company and its members. [Paras 31, 32, 33, 34]

The proposed reclassification and transfer from general reserves to the profit and loss account is an 'arrangement' within the meaning of the Act and can be sanctioned.

Tax implications subject to final decision of tax authorities - Whether the Tribunal should determine the tax consequences of the proposed transfer of reserves. - HELD THAT: - The Tribunal declined to adjudicate on the tax character or consequences of the reclassification and transfer. Reports from the Income-tax Department raised the question whether the reserves had earlier suffered taxation; the Tribunal recorded that any tax implications arising from the scheme shall be subject to the final decision of the concerned tax authorities. Accordingly, the order does not grant any immunity or determination on taxation, leaving the matter to be decided by the appropriate tax authorities. [Paras 8, 19, 37]

Tax implications, if any, arising from the scheme are left to be finally decided by the concerned tax authorities and are binding upon the parties.

Final Conclusion: The Tribunal sanctioned the scheme of arrangement for reclassification and transfer of amounts from general reserves to the profit and loss account and their utilisation for payments to members, treating the proposal as an approvable 'arrangement' between the company and its members; the sanction is subject to compliance with stock exchange directions and other statutory requirements, and tax consequences are left for final determination by the concerned tax authorities.

Pre-existing dispute - operational creditor's claim under Section 9 of the Insolvency and Bankruptcy Code, 2016 - requirement of contractual pre-litigation negotiation/notice period - entire agreement/supersession clause

Pre-existing dispute - entire agreement/supersession clause - Existence of a pre-existing dispute between the parties prior to initiation of proceedings under Section 9 of the I&B Code. - HELD THAT: - The Tribunal found on the material on record that the Corporate Debtor had, by e-mail dated 27th June, 2016, raised specific objections to the guarantee provided by the Operational Creditor and requested non-dispatch and extension of time, thereby communicating a dispute well before the Section 9 application. The supply contract dated 23rd December, 2014 was later superseded by the supply contract of 9th November, 2015, which contained an entire-contract clause displacing prior representations; nevertheless the earlier communications and the enclosures evidencing the objection to the banker/guarantee were treated as constituting a pre-existing dispute. The Appellant did not demonstrate that it took corrective steps thereafter or that the dispute was waived or abandoned, and therefore the tribunal concluded that a bona fide dispute existed on the record since 2016. [Paras 8, 9, 11, 18]

There was a pre-existing dispute regarding acceptability of the bank guarantee and related issues, established by communications from June 2016, and the dispute precluded admission of the Section 9 application.

Operational creditor's claim under Section 9 of the Insolvency and Bankruptcy Code, 2016 - requirement of contractual pre-litigation negotiation/notice period - Whether the Section 9 application was maintainable when filed prior to expiry of the contractual 60-day period for amicable resolution invoked by parties' correspondence. - HELD THAT: - The Tribunal noted that after the earlier communications, the Operational Creditor issued a notice invoking Article 36 of the supply contract and allowed a 60-day period for attempts at amicable resolution by notice dated 5th May, 2017. The statutory demand under Section 8(1) had been issued on 7th February, 2017 and the Section 9 application was filed on 31st March, 2017, which was before the 60-day period granted by the subsequent notice expired. In view of the existence of the dispute and the fact that the Section 9 application was filed prior to the completion of the contractual negotiation period, the Tribunal held that the application was rightly rejected by the Adjudicating Authority. [Paras 16, 17, 19]

Filing of the Section 9 application prior to the expiry of the 60-day period for amicable settlement, in the backdrop of an existing dispute, rendered the Section 9 application not maintainable and the Adjudicating Authority's rejection was upheld.

Final Conclusion: The appeal is dismissed: the record discloses a pre-existing dispute communicated in June 2016 and the Section 9 application was filed before the contractual 60 day negotiation period lapsed; accordingly the Adjudicating Authority's order rejecting the Section 9 application is affirmed.

Settlement prior to admission - no default at the time of admission - petition under Section 7 of the Insolvency and Bankruptcy Code - inadmissibility of Section 7 petition where pre-existing settlement extinguishes claim - setting aside order of admission and consequent actions (appointment of Interim Resolution Professional, moratorium, freezing of accounts)

Settlement prior to admission - no default at the time of admission - petition under Section 7 of the Insolvency and Bankruptcy Code - Whether a settlement arrived at between the financial creditor and the corporate debtor prior to admission of the Section 7 petition precluded a finding of default and rendered the petition inadmissible. - HELD THAT: - The parties produced a Settlement Deed dated 1st November, 2018 and an e stamp evidencing purchase on 30th October, 2018, which establish that the parties reached a settlement before the Adjudicating Authority admitted the Section 7 petition on 13th November, 2018. The Tribunal recorded that, in view of the settlement, there was no default by the corporate debtor as on the date of admission. On this basis the admission of the application under Section 7 was held to be improper because the claim which formed the basis of the petition had been extinguished by the pre existing settlement.

Admission of the Section 7 petition was improper and the petition was dismissed.

Setting aside order of admission and consequent actions (appointment of Interim Resolution Professional, moratorium, freezing of accounts) - What are the consequences of setting aside the order of admission in relation to orders and actions taken pursuant to that admission? - HELD THAT: - Having set aside the admission order dated 13th November, 2018, the Tribunal declared illegal and set aside all consequential orders and actions passed by the Adjudicating Authority and undertaken by the Interim Resolution Professional, including the appointment of the IRP, declaration of moratorium, freezing of bank accounts and publication inviting claims. The Tribunal recorded that fees and insolvency costs had been paid and that there remained no further claim to be met. It directed the Adjudicating Authority to close the proceedings and released the corporate debtor from the rigours of the insolvency regime, permitting the company to function through its board immediately.

All orders and actions consequent to the impugned admission were set aside; the Section 7 application was dismissed and the corporate debtor was released to function independently; the Adjudicating Authority will close the proceedings.

Final Conclusion: The appeal is allowed: the admission order dated 13th November, 2018 is set aside as the parties had settled prior to admission, the Section 7 petition is dismissed, all consequential orders and actions are declared illegal and set aside, the proceedings before the Adjudicating Authority are to be closed and the corporate debtor is released to function through its board; no order as to costs.

Applicability of amendment to section 30(4) of the I&B Code to pending resolution plans - Approval of resolution plan by the Committee of Creditors and voting threshold - Effect of proviso relating to ineligibility under section 29A on previously submitted resolution plans

Applicability of amendment to section 30(4) of the I&B Code to pending resolution plans - Approval of resolution plan by the Committee of Creditors and voting threshold - Whether the amendment to sub-section (4) of Section 30, effective 6th June 2018, is applicable to resolution plans submitted before that date but not yet approved by the Committee of Creditors or the Adjudicating Authority. - HELD THAT: - The Court examined the amended text of sub-section (4) of Section 30 and its proviso and observed that the amendment, though effective from 6th June, 2018, applies to resolution plans which have not been approved by the Committee of Creditors or by the Adjudicating Authority. In the present matter the Resolution Plan had not received approval of the Adjudicating Authority; the Committee of Creditors had recorded assent exceeding the post-amendment voting threshold. There was no allegation that the sole Resolution Applicant was ineligible under Section 29A. On these facts the Adjudicating Authority's direction to have the Resolution Professional place the plan before the Committee of Creditors for consideration in terms of the amended sub-section was held to be correct. [Paras 11, 12, 13]

The amendment to sub-section (4) of Section 30 applies to unresolved resolution plans pending approval, and the Adjudicating Authority rightly directed the Resolution Professional to place the plan before the Committee of Creditors for consideration under the amended provision.

Effect of proviso relating to ineligibility under section 29A on previously submitted resolution plans - Whether any ineligibility under Section 29A was established so as to displace application of the amended provision or require a fresh invitation for resolution plans. - HELD THAT: - The Court noted the proviso to amended sub-section (4) which contemplates refusal to approve a plan where the resolution applicant is ineligible under Section 29A and the possibility of inviting a fresh plan. In the present case there was no allegation or material demonstrating that the sole Resolution Applicant was ineligible under Section 29A. Consequently, the proviso did not operate to displace the application of the amended sub-section to the pending plan. [Paras 12]

No ineligibility under Section 29A having been shown, the proviso did not preclude consideration of the pending resolution plan under the amended sub-section (4).

Committee of Creditors' reconsideration and onward reference to Adjudicating Authority under section 31 - Direction to the Committee of Creditors to reconsider the Resolution Plan and the subsequent procedural step required of the Resolution Professional. - HELD THAT: - Having held that the amended provision applied and no Section 29A ineligibility existed, the Court directed that the Committee of Creditors should consider the Resolution Plan in accordance with the amended sub-section. The Resolution Professional was directed to place the matter thereafter before the Adjudicating Authority for orders under Section 31 at the earliest opportunity. This constitutes an instruction for fresh consideration by the Committee of Creditors and an administrative sequencing for final approval by the Adjudicating Authority. [Paras 15]

The Committee of Creditors is directed to consider the Resolution Plan under the amended provision; thereafter the Resolution Professional shall place the matter before the Adjudicating Authority for orders under Section 31.

Final Conclusion: The appeal is dismissed. The amended sub-section (4) of Section 30, effective 6th June 2018, applies to resolution plans not yet approved; no Section 29A ineligibility was shown, and the Committee of Creditors is directed to reconsider the plan in accordance with the amended provision, after which the Resolution Professional shall seek final orders from the Adjudicating Authority under Section 31.

Applicability of the Limitation Act to proceedings under the I&B Code - Article 137 of the Limitation Act - three year limitation for other applications - Accrual of right to apply for initiation of corporate insolvency under Section 9 from commencement of the I&B Code - Role of the Interim Resolution Professional/Resolution Professional in adjudicating claims - Continuous cause of action

Applicability of the Limitation Act to proceedings under the I&B Code - Article 137 of the Limitation Act - three year limitation for other applications - Accrual of right to apply for initiation of corporate insolvency under Section 9 from commencement of the I&B Code - Whether the application under Section 9 of the I&B Code was barred by limitation - HELD THAT: - The Tribunal held that the Limitation Act applies to proceedings under the I&B Code in terms of Section 238A. Article 137 of Part II of the Limitation Act prescribes a three-year limitation where no period is provided elsewhere. The right to apply for initiation of corporate insolvency under Section 9 accrued upon the I&B Code coming into force; therefore the right to apply in the present matter accrued on 1 December 2016. Applying Article 137, the Tribunal concluded that the Section 9 application filed thereafter was within the prescribed period and not time-barred. The Tribunal also noted the existence of a continuous cause of action given earlier proceedings and dismissal for defects, which supported the view that the application could be entertained.

The Section 9 application is not barred by limitation; the right to apply accrued on 1 December 2016 and the application is within time.

Role of the Interim Resolution Professional/Resolution Professional in adjudicating claims - Continuous cause of action - Who is to determine the validity and time bar status of the respondent's claim - HELD THAT: - The Tribunal observed that determination of the claim, including whether it is time barred, falls within the competence of the Interim Resolution Professional/Resolution Professional who must examine and admit or reject claims. Such determinations may be corrected by the Adjudicating Authority if required. In the facts of this case the appellant has not disputed the existence of debt payable in law, and the claim had earlier been filed in 2014 with intervening proceedings; the Tribunal noted continuous cause of action and left the assessment of time bar and admission of the claim to the IRP/RP subject to the supervisory jurisdiction of the Adjudicating Authority.

Adjudication of the respondent's claim, including its time bar status, is for the Interim Resolution Professional/Resolution Professional to decide and, if necessary, for the Adjudicating Authority to correct.

Final Conclusion: The appeal is dismissed: the Section 9 application was held within time (accrual from 1 December 2016) and the validity/time bar of the claim is to be determined by the Interim Resolution Professional/Resolution Professional, subject to correction by the Adjudicating Authority.

Limitation - corporate insolvency resolution process - section 9 of the Insolvency and Bankruptcy Code, 2016 - default - compliance with section 9(3)(b) and (c) - moratorium under section 14 - appointment of interim resolution professional

Limitation - corporate insolvency resolution process - The section 9 application is not barred by limitation. - HELD THAT: - The Adjudicating Authority considered the temporal effect of the I&B Code and related authorities and noted that the application was filed on February 26, 2018, within three years reckoning from December 1, 2016 when the I&B Code came into force. The amendment making the Limitation Act applicable to the I&B Code was brought into force on June 6, 2018 and operates prospectively. Reliance was placed on precedent recognizing that the right to apply under section 7/9/10 accrues from December 1, 2016, and that the earlier amendment operates prospectively. In view of these facts and the continuous prosecution of the claim by the operational creditor (including earlier proceedings before the High Court and transfer to this Authority), the plea of delay, laches and time-bar was rejected. [Paras 9, 11, 12]

Application under section 9 is not time-barred; limitation plea rejected.

Compliance with section 9(3)(b) and (c) - default - moratorium under section 14 - appointment of interim resolution professional - The operational creditor complied with statutory pre-conditions and the corporate debtor committed default, warranting admission of the petition, commencement of CIRP, declaration of moratorium and appointment of an IRP. - HELD THAT: - The operational creditor filed the requisite affidavit evidencing that the corporate debtor's reply did not disclose a dispute touching the unpaid operational debt, and produced banking certification. The Bench found that all legal requirements for admission under section 9 were satisfied and that the corporate debtor had defaulted in payment of the claimed debt. Consequential reliefs were ordered in accordance with the Code: commencement of the corporate insolvency resolution process to run ordinarily for 180 days, imposition of the moratorium in terms of section 14 (prohibiting suits, transfer/alienation of assets, enforcement of security and recovery of leased property), and appointment of an interim resolution professional from the IBBI panel with directions to cause public announcement and manage statutory duties. [Paras 13, 14, 15, 17]

C. P. No. 250/(IB)/CB/2018 admitted; CIRP ordered; moratorium declared; Mr. N. Sivakumar appointed as IRP.

Final Conclusion: The Tribunal held that the section 9 petition was not barred by limitation, that the operational creditor met the statutory requirements and established default, and therefore admitted the petition, commenced the corporate insolvency resolution process, declared the moratorium and appointed an interim resolution professional.

Provisional attachment under PMLA - adjudication under Section 8 PMLA - bona fide purchaser without knowledge - reason to believe and show cause compliance - failure to consider relevant materials / non application of mind - requirement of a judicial member on the Adjudicating Authority - deposit of security in lieu of attached property

Provisional attachment under PMLA - reason to believe and show cause compliance - Validity of the provisional attachment and its confirmation by the Adjudicating Authority qua the appellants - HELD THAT: - The Tribunal examined the material forming the 'reason to believe', the show cause proceedings under the adjudicatory provisions and the Adjudicating Authority's order. It found that the Adjudicating Authority failed to discuss and consider the appellants' documentary replies and evidence showing sources of funds; much of the impugned order merely reproduced pleadings and recorded the decisive findings only in the concluding paras, evidencing non application of mind. In those circumstances the confirmation of the provisional attachment could not be sustained as against the appellants who had produced bank statements, auditor and bank certificates and other materials to explain the payments. The Tribunal therefore set aside the impugned confirmation order insofar as it affected the appellants. [Paras 37, 38, 49]

Impugned confirmation of provisional attachment set aside as against the appellants for want of proper consideration of materials and non application of mind.

Bona fide purchaser without knowledge - adjudication under Section 8 PMLA - Whether the appellants were bona fide purchasers without knowledge of proceeds of crime and thus entitled to release of the attached property - HELD THAT: - Applying the principles that an innocent bona fide purchaser who neither directly nor indirectly participated in or had knowledge of proceeds of crime may seek relief under the adjudicatory scheme, the Tribunal held that the appellants had satisfactorily demonstrated their legitimate source of funds through bank records, loan certificates, auditor certificates and comparative market evidence. The Enforcement Directorate had not established any nexus or material showing the appellants' knowledge or participation in laundering nor had it shown that the sale proceeds in the hands of prior vendors were themselves tainted as against the appellants. Consequently, the property could not be treated as involved in money laundering in respect of these appellants. [Paras 43, 44, 48, 51]

Appellants held to be bona fide purchasers without knowledge; attached property not liable to remain attached as proceeds of crime in their hands.

Failure to consider relevant materials / non application of mind - requirement of a judicial member on the Adjudicating Authority - Whether the Adjudicating Authority's decision suffered from procedural and institutional defects - HELD THAT: - The Tribunal noted that the Adjudicating Authority's order evidenced mechanical treatment: voluminous reproduction of pleadings, absence of considered discussion of the appellants' evidentiary material and decisive findings compressed into few concluding paragraphs. It also recorded concerns about the absence of a judicial member on the bench deciding a complex matter and referred to authorities underscoring the need for judicial expertise in specialist tribunals. These factors contributed to the conclusion that the impugned order could not stand. [Paras 37, 38, 39, 40]

Adjudicating Authority's order found procedurally and institutionally defective for non application of mind and lack of judicial participation in deciding complex issues.

Deposit of security in lieu of attached property - Relief and final directions for release of property subject to security - HELD THAT: - Balancing the parties' contentions and in view of the findings that appellants were bona fide purchasers and that the confirmation was unsustainable, the Tribunal directed the appellants to deposit with the respondent, as security and without prejudice, the value assessed by the ED in the reason to believe (as accepted for these proceedings). Upon deposit within the stipulated period the property was to be released forthwith, with the reciprocal consequence that the security would be retained if final orders adverse to the appellants were passed or returned with interest if not. [Paras 54, 55, 56]

Appellants directed to deposit the assessed value as security within six weeks; upon deposit the attached property to be released; deposit to be dealt with according to final outcome of proceedings.

Final Conclusion: The appeals are allowed: the Adjudicating Authority's confirmation of provisional attachment is set aside as against the appellants who were held to be bona fide purchasers; the Adjudicating Authority's order was found to suffer from non application of mind and institutional defects; the appellants were directed to deposit the assessed value as security within the time directed, and on such deposit the attached property shall be released forthwith.

Provisional attachment - confirmation of attachment - release of attached property subject to conditions - use and accommodation charges for restoration of possession - deposit for release of movable assets

Release of attached immovable property subject to conditions - use and accommodation charges for restoration of possession - undertaking against disposal pending appeal - Restoration of possession of the immovable residential property occupied by the appellant subject to conditions. - HELD THAT: - The Tribunal found from affidavits, official inspection and documentary evidence (Aadhaar, school certificate, gas and electricity bills, photographs) that the appellant Smt. Rajanti Devi and her family were residing in the attached house at the time of seizure and that the family faced hardship if the house remained vacant. Although serious allegations are made against the husband, the appellants contend the property was not purchased from proceeds of crime and undertook not to dispose of it until final disposal of the appeals. Accepting the undertaking and balancing hardship against enforcement interest, the Tribunal ordered restoration of the immovable residential property to the appellant on conditions. The appellant is directed to pay monthly use and accommodation charges and to make arrears good for the period from the impugned order. [Paras 7, 8, 9, 13, 14]

The immovable residential property is released to Smt. Rajanti Devi on her undertaking not to dispose of it and subject to monthly payment of Rs. 3,000 as use and accommodation charges (payable on the 7th of each calendar month) and payment of arrears for July-December 2018 within eight weeks.

Release of attached movable assets on deposit - valuation of movable property for conditional release - Release of specified movable assets subject to deposit of amounts proposed by appellants. - HELD THAT: - The Tribunal observed that the Investigating Officer and respondent were unable to satisfactorily justify valuations of certain movable properties. The appellants offered reasonable values for those movable items and undertook deposits. On that basis the Tribunal allowed the proposal for release of particular movable properties, directing deposit of the amounts suggested by the respective appellants with the respondent within eight weeks. [Paras 11, 12, 14]

Specified movable properties are released forthwith subject to deposit of the amounts proposed by the appellants with the respondent within eight weeks.

Final Conclusion: The Tribunal allowed the appellants' stay applications in part by releasing the specified attached immovable and movable properties forthwith subject to (a) the immovable residential property being restored on acceptance of an undertaking and payment of monthly use and accommodation charges (with arrears payable within eight weeks), and (b) the movable assets being released upon deposit of the amounts proposed by the appellants within eight weeks.

Priority of secured creditors over conflicting non-obstante provisions - effect of amended priority provisions in SARFAESI and RDDBFI Acts - provisional attachment under PMLA vis-a -vis mortgagee's rights - innocent/mortgagee party relief from provisional attachment - continuance of Corporate Insolvency Resolution Process during criminal proceedings

Effect of amended priority provisions in SARFAESI and RDDBFI Acts - priority of secured creditors over conflicting non-obstante provisions - Whether a secured creditor holding a registered security interest has priority over provisional attachment under PMLA by reason of the amended provisions conferring priority to secured creditors. - HELD THAT: - The Tribunal examined the amended statutory scheme - namely the inserted provisions conferring priority to secured creditors - and applied the settled principle that where two non-obstante clauses conflict the later enactment prevails. The Tribunal relied on precedents of the Supreme Court and High Courts which uphold that a later non-obstante provision operates over earlier conflicting non-obstante clauses. Having regard to the amended Section 26E of the SARFAESI Act and Section 31B of the RDDBFI Act (which came into force w.e.f. 16.08.2016), and to earlier decisions of this Tribunal and other courts accepting that a bona fide mortgagee who acquired rights prior to attachment is an innocent party, the Tribunal held prima facie that the secured creditor is entitled to priority to realize secured debts and that there was no force in the contention that the attached mortgaged properties could not be dealt with to recover the loan amount. [Paras 23, 26, 27, 28, 30]

Prima facie the appellant, being a secured creditor with registered security interest, has priority and the mortgaged properties may be dealt with for recovery notwithstanding the PMLA attachment, in view of the amended priority provisions and applicable precedents.

Provisional attachment under PMLA vis-a -vis mortgagee's rights - innocent/mortgagee party relief from provisional attachment - Whether the Adjudicating Authority erred in not releasing mortgaged properties belonging to an innocent secured creditor from provisional attachment under PMLA. - HELD THAT: - The Tribunal reviewed its own and other judgments holding that where a mortgagee is an innocent party, the Adjudicating Authority ought to consider material establishing bona fide acquisition and may relieve such property from provisional attachment. Observing that the Appellant and other banks were bona fide mortgagees and that the properties had been equitably mortgaged in their favour prior to attachment, the Tribunal found that the Adjudicating Authority had not properly dealt with the mortgagee rights. The Tribunal also noted the public interest in enabling banks to recover dues where borrowers have absconded and investigations may be prolonged, and rejected the ED's contention that mortgage properties must be held until trial concludes. [Paras 25, 26, 29, 33, 38]

The Adjudicating Authority should have given due weight to the mortgagee's innocent status; prima facie the mortgaged properties ought to be released from attachment so as to enable realization by the secured creditor.

Continuance of Corporate Insolvency Resolution Process during criminal proceedings - Whether the CIRP under the Insolvency and Bankruptcy Code initiated by the NCLT in respect of the corporate debtor should be stayed or suspended because of PMLA proceedings. - HELD THAT: - The Tribunal noted that the NCLT has initiated CIRP and that the process is time-bound. Having considered the submissions, the Tribunal rejected the ED's argument that the CIRP must be halted because PMLA is a criminal law with overriding effect over IBC. The Tribunal held that the insolvency process may continue and that the property/mortgagee rights can be dealt with in the insolvency resolution framework, subject to the priority considerations addressed. [Paras 31, 32, 41]

CIRP shall continue; the insolvency process is not to be stopped by the PMLA proceedings.

Provisional attachment under PMLA vis-a -vis mortgagee's rights - Interim relief granted with respect to the impugned order and attachment status. - HELD THAT: - Balancing competing interests and having regard to the prima facie findings on priority and mortgagee innocence, the Tribunal directed interim measures. The operation of the impugned order insofar as mortgaged properties is concerned is stayed until the next date of hearing, while the provisional attachment order itself is to remain in force. Status quo was directed as to other properties. The CIRP was ordered to continue. These directions were treated as interlocutory measures pending further hearing. [Paras 40, 41]

Operation of the impugned order with regard to the mortgaged properties is stayed till the next date of hearing; the Provisional Attachment Order dated 29.05.2018 continues; status quo to be maintained for other properties; CIRP to continue.

Final Conclusion: The Tribunal observed prima facie that the appellant banks are innocent secured creditors entitled to priority under the amended priority provisions of SARFAESI and RDDBFI Acts, upheld the view that CIRP may continue, and granted interim relief by staying operation of the impugned order in respect of mortgaged properties while keeping the provisional attachment in force and maintaining status quo on other properties pending further hearing.

Reverse charge mechanism - utilisation of CENVAT credit to discharge tax liability - limitation and extended period - availability of CENVAT credit for input services related to manufacture - self-service between DTA and EOU - no penalty for bona fide interpretation disputes

Reverse charge mechanism - utilisation of CENVAT credit to discharge tax liability - limitation and extended period - Service tax liability in respect of Goods Transport Agency (GTA) services and the permissibility of discharging that liability by debiting CENVAT credit for periods before and after 18.04.2006, and whether demands post 18.04.2006 are barred by limitation. - HELD THAT: - The Tribunal found that up to 18.04.2006 an assessee could discharge service tax liability on GTA services by utilising available CENVAT credit and that this was settled law. The appellant had accepted the liability and had debited CENVAT credit in its returns, thereby informing the department of the discharge of tax. Consequently, demands for the pre-18.04.2006 period are unsustainable on merits. For the post-18.04.2006 period, although the statutory clarity required payment through PLA/cash was introduced by explanation on 18.04.2006, the factual position that the appellant had reflected the liability in returns and debited CENVAT credit meant there was no suppression or evasion; accordingly the demand post-18.04.2006 is hit by limitation. [Paras 9]

Demands in respect of GTA services up to 18.04.2006 set aside on merits; demands post 18.04.2006 held barred by limitation in view of appellant's disclosure in returns.

Reverse charge mechanism - availability of CENVAT credit for input services related to manufacture - no penalty for bona fide interpretation disputes - limitation and extended period - Service tax liability on Management Consultancy Services and Export Sales Commission received from abroad under reverse charge: effect of 18.04.2006 and entitlement to CENVAT credit; limitation and penalty consequences. - HELD THAT: - The Tribunal held that prior to 18.04.2006 no reverse charge liability arose on the Indian recipient because Section 66A was brought into effect w.e.f. 18.04.2006; demands for the pre-18.04.2006 period are therefore unsustainable. For the period after 18.04.2006, the services in question were rendered to a manufacturer in relation to manufacture and clearance of goods; accordingly the appellant was entitled to avail CENVAT credit of service tax paid even when tax was exigible under reverse charge. Given that the appellant could avail credit and there was no intention to evade tax, demands post-18.04.2006 are hit by limitation except insofar as tax may be leviable within the period of limitation counted from issuance of the show cause notice; such tax, if due within limitation, is payable with interest. Because the dispute arose from interpretation, no penalty was leviable. [Paras 10]

Demands for periods prior to 18.04.2006 set aside; post-18.04.2006 demands held time-barred except for any liability within the period of limitation from the show cause notice which must be discharged with interest; no penalty.

Self-service between DTA and EOU - Whether transactions between the DTA unit and the EOU unit of the same corporate entity constitute taxable services to a distinct person or are self-services not exigible to service tax. - HELD THAT: - The records showed that the DTA and EOU operated within the same premises under the single name/style and the transactions of DTA and EOU were reflected in one balance sheet. The Tribunal agreed with the adjudicating authority that activities between the DTA and EOU units amounted to self-service and not services rendered to an outsider. On that basis the demands raised by Revenue were correctly dropped. [Paras 11]

Revenue's appeal against the dropping of demands in respect of DTA-EOU transactions dismissed; demands rightly dropped as self-service.

Final Conclusion: Assessee's appeal partly allowed as indicated: demands in respect of GTA services up to 18.04.2006 and Management Consultancy/Export Sales Commission prior to 18.04.2006 set aside; post-18.04.2006 reverse-charge liabilities are time barred except for any liability within the period of limitation from the show cause notice (payable with interest), and no penalty is leviable; Revenue's appeal is rejected.

Service Tax liability on supply of tangible goods - Collected but not deposited of service tax (misappropriation) - Extended period of limitation - Penalty for failure to deposit collected tax - Confirmation of demand with interest

Service Tax liability on supply of tangible goods - Collected but not deposited of service tax (misappropriation) - Appellant's liability for service tax on supply of tangible goods and admission that service tax was collected but not deposited - HELD THAT: - The Tribunal recorded that the appellant did not dispute that the services rendered during the period constituted taxable supply of tangible goods and that the invoices produced with the appeal showed collection of service tax from customers. The appellant's sole explanation for non-deposit was financial difficulty, but there was a continuous failure to discharge the collected tax from October-2010 to March-2014. Given these admitted facts, the adjudicating authority correctly treated the amounts as liable for recovery. [Paras 5]

Liability for service tax and the fact of collection but non-deposit are affirmed.

Extended period of limitation - Confirmation of demand with interest - Applicability of extended period of limitation to the recovery of service tax and confirmation of demand with interest - HELD THAT: - The Tribunal accepted the Revenue's submission that there was no dispute on the appellant having provided taxable services and having collected service tax which was not deposited. On this factual foundation the adjudicating authority invoked the extended period of limitation and confirmed the demand with interest. The court found no merit in the appellant's contention that the extended period was inapplicable given the admitted collection and non-deposit. [Paras 5]

Extended period of limitation was properly invoked and the demand with interest was rightly confirmed.

Penalty for failure to deposit collected tax - Imposability of penalty for failure to deposit service tax collected from customers - HELD THAT: - The Tribunal observed that the appellant had collected service tax from customers and failed to remit it to the exchequer over a sustained period, offering only financial difficulty as explanation. In these circumstances the Tribunal found that there was no basis to interfere with the adjudicating authority's imposition of penalty, and rejected the plea that penalty was not imposable. [Paras 5]

Penalty for failure to deposit the collected service tax is upheld.

Final Conclusion: The impugned order is upheld; the appeal is dismissed and the demand for service tax for the period October-2010 to March-2014, with interest and penalty, is sustained.

Cenvat credit admissibility - centralized billing and accounting - utilisation of input services for taxable output services - registration of branch offices not determinative of credit - remand for verification of records

Cenvat credit admissibility - centralized billing and accounting - utilisation of input services for taxable output services - registration of branch offices not determinative of credit - remand for verification of records - Entitlement to Cenvat credit of service tax paid on input services received at branch offices (Vikroli, Ghatkopar & Delhi) when billing, accounting and payment were centralized at the Head Office (Kanjurmarg). - HELD THAT: - The Tribunal found on the material placed that the appellant maintained a centralized billing and accounting system at the Kanjurmarg Head Office and that invoices and payments for services rendered from branch offices were processed through that office. On a sample basis the appellant was able to co-relate service tax invoices raised from the Head Office with services rendered at the branch offices by reference to project/job codes and the general ledger, thereby prima facie indicating that the input services availed at the Head Office were utilised in providing taxable output services from the branch offices. The Tribunal accepted the legal proposition, supported by precedent, that mere non-registration of branch offices does not automatically disentitle an assessee to Cenvat credit where the centralized billing/accounting and payment arrangements demonstrate utilisation of inputs for taxable services. However, because detailed verification of records was necessary to establish the claim for the entire quantum of credit, the matter was remanded to the adjudicating authority for verification of correctness of the credit availed and correlation with services rendered from the branch offices. All other issues were kept open. [Paras 4, 5]

Impugned order set aside and appeal allowed by remand to the adjudicating authority for detailed verification of the appellant's claim of Cenvat credit; all issues kept open.

Final Conclusion: Appeal allowed by way of remand for verification of records; the Tribunal held that centralized billing and accounting may permit Cenvat credit even if branch offices were not registered, subject to verification.

Service tax liability on receipt of consideration - renting of immovable property service - Point of Taxation Rules - remand for fresh fact-finding

Service tax liability on receipt of consideration - renting of immovable property service - Point of Taxation Rules - remand for fresh fact-finding - Whether service tax demand can be sustained where the assessee contends that consideration for letting out immovable property was not received but deposited with court/registrar - HELD THAT: - The authorities treated the activity as renting of immovable property service and issued demand for the period 2007-08 to 2011-12. Rule 6 of the Service Tax Rules, 1994 and the Point of Taxation Rules, 2011 fix liability on receipt of consideration. The appellant asserted that the disputed rent amounts were not received but were deposited by the tenant with the Small Causes Court and subsequently with the Registrar of the High Court. On that basis, the Tribunal held that service tax cannot be fastened on the appellant without establishing receipt of the consideration. However, since the adjudicating and appellate authorities recorded contrary findings on receipt of rent, the factual controversy remains unresolved. For effective determination of tax liability the matter is remitted to the original authority for fresh fact-finding on whether the assessee actually received the rent amounts, with a direction that the appellant cooperate in the adjudication process.

Appeal allowed by way of remand to the original authority for fresh fact-finding on receipt of rent; appellant to cooperate.

Final Conclusion: The service tax demand could not be sustained without verification of whether the assessee actually received the disputed rent; the appeal is allowed by remitting the matter to the original authority for fresh fact-finding in respect of the period 2007-08 to 2011-12.

Condonation of delay - sufficient explanation for delay - restructuring of department on introduction of GST regime - State/public authority not entitled to automatic extension of limitation - precedential weight of prior decisions when assessing delay

Condonation of delay - sufficient explanation for delay - restructuring of department on introduction of GST regime - Condonation of 203 days' delay in filing the appeal was granted. - HELD THAT: - The Court considered the affidavit explaining that although approval to challenge the Tribunal's order dated 17th March, 2017 was obtained on 21st June, 2017, filing could not occur before reorganisation effected by introduction of the GST regime on 1st July, 2017. Papers were located only after files were reassigned and searched following departmental restructuring. The Court noted authoritative precedent that a State is not entitled to automatic extension of limitation and that unexplained or inordinate delays may not be condoned, but found the facts of departmental reorganisation and the chronology of approval and file transfer a satisfactory and justificatory explanation for the 203-day delay. On that basis the delay was condoned and the Motion allowed in the terms sought. [Paras 6, 7]

Delay of 203 days in filing the appeal is condoned and Notice of Motion is allowed in terms of prayer clause (a).

Final Conclusion: The application for condonation of delay is allowed: the Court accepted departmental restructuring on introduction of GST as a sufficient explanation and condoned the 203-day delay, permitting the appeal to proceed.

Onus of proof - Cenvat credit - wrongful availment - remand for fresh investigation - chemical test by drawing representative samples - principle of natural justice - penalty for irregular availment - appellate tribunal's power to set aside demand

Onus of proof - Cenvat credit - wrongful availment - chemical test by drawing representative samples - Whether the Department discharged the onus to prove wrongful availment of Cenvat credit on LAB in absence of chemical tests after remand - HELD THAT: - The Court noted that the matter had earlier been remanded with specific directions that the Department must prove diversion/non use of LAB in the final product and, if necessary, draw representative samples for chemical testing. The adjudicating authority, however, did not obtain any chemical test after remand and confirmed the demand and penalty notwithstanding the absence of the directed scientific verification. The appellate authority (Commissioner (Appeals)) had held that the Department must produce documentary or chemical evidence to establish that LAB was not used as an input, and that certain earlier statements relied upon by the original authority were restricted or unreliable. In the absence of any post remand chemical examination or other conclusive proof establishing non use of LAB, the Department failed to discharge the burden required to deny Cenvat credit, and the adjudicating authority was therefore not justified in sustaining the demand.

The demand for alleged wrongful availment of Cenvat credit on LAB was unsustainable for want of proof by the Department and was set aside.

Remand for fresh investigation - penalty for irregular availment - appellate tribunal's power to set aside demand - Whether the Tribunal was justified in setting aside the demand and penalty imposed on the Company and its Director - HELD THAT: - The Court observed that the Tribunal (CESTAT) examined that the remand required further investigation and chemical testing which did not take place, and that the onus to prove diversion or non use of LAB lay on the Department. Given the Department's failure to carry out the directed steps and to produce requisite evidence, the Tribunal rightly set aside both the demand and the penalty. The High Court agreed with the Tribunal's conclusion that no substantial question of law arose from the Tribunal's order.

The CESTAT's orders setting aside the demand and penalty were upheld and the appeals dismissed.

Final Conclusion: The appeals are dismissed; the High Court affirms the Tribunal's setting aside of the demand and penalty because the Department failed to prove wrongful availment of Cenvat credit on LAB, particularly in light of the remand directions to obtain representative chemical tests which were not complied with.

Classification of goods - requirement of sample testing and test report for composition-based classification - declarations under Rule 6 of Chewing Tobacco Rules - benefit of doubt in absence of evidence - review of classification consequent to change in duty notification

Classification of goods - requirement of sample testing and test report for composition-based classification - declarations under Rule 6 of Chewing Tobacco Rules - benefit of doubt in absence of evidence - Classification of the appellant's product as Branded Chewing Tobacco (BCT) under heading 24039910 rather than Jarda Scented Tobacco (JST). - HELD THAT: - The Tribunal found that no sample was drawn and no test report was placed on record at any stage to establish the composition of the product. The appellant had earlier filed a declaration under Rule 6 purporting to treat the product as JST, but the adjudicating authority on 4.3.2015 had held the product to be BCT and that order was accepted by the appellant who paid duty as BCT from 1.3.2015 to 30.4.2015. The subsequent review and reversal by the Commissioner (Appeals) occurred only after Notification No.25/15-CE dt.30.4.2015 enhanced duty on JST. In the absence of objective evidence (samples and test report) and given prior acceptance by the Revenue of the BCT classification for the relevant interregnum, the Tribunal held that both sides' classifications rested on assumptions and that the benefit of doubt must therefore be given to the appellant. On that basis the Tribunal set aside the Commissioner (Appeals) order and held the correct classification to be BCT under heading 24039910. [Paras 9]

The product is classified as BCT under heading 24039910; the Commissioner (Appeals) order classifying it as JST is set aside.

Classification of goods - review of classification consequent to change in duty notification - benefit of doubt in absence of evidence - Sustainability of the duty demand and penalty premised on classification as JST. - HELD THAT: - Since the Tribunal upheld the classification as BCT in the absence of any sample-based test report and having regard to the appellant's prior acceptance of the adjudicating authority's order and payment of duty as BCT for the period prior to the notification increasing JST duty, the demand of duty and penalty predicated on the classification as JST could not be sustained. The demand arose after a review effected following the notification enhancing duty on JST; given the lack of evidentiary basis for reclassification, the demand was set aside. [Paras 10, 11]

The duty demand and penalty based on classification as JST are not sustainable and are set aside; appeals allowed with consequential relief.

Final Conclusion: On the facts and for want of any sample/test report, the Tribunal gives the benefit of doubt to the appellant, upholds classification as BCT under heading 24039910, sets aside the Commissioner (Appeals) order and the consequential demand and penalty, and allows the appeals with consequential relief.

Refund of CENVAT credit - interest on delayed refund under section 11BB - discharge of excise liability through CENVAT credit versus payment of duty - restoration of reversed CENVAT credit requiring sanction under section 11B procedure

Refund of CENVAT credit - interest on delayed refund under section 11BB - discharge of excise liability through CENVAT credit versus payment of duty - Whether interest under section 11BB of the Central Excise Act, 1944 is payable on sanction of refund corresponding to amounts debited from the CENVAT credit account under rule 6 of the CENVAT Credit Rules, 2004. - HELD THAT: - The Tribunal held that the CENVAT credit mechanism is a non-monetary pool created by special rules to neutralize tax cascading, and credits so accumulated are not equivalent to payment of duty through account current. Restoration of reversed CENVAT credit requires sanction under the procedure incorporated in section 11B, but a mere reference to refund provisions does not transform debited credit entries into 'duty'. Section 11BB expressly provides for interest on refund of duty paid; it therefore applies only to refunds of duty paid through account current. The proviso in section 11B relied upon by the appellant does not convert CENVAT debits into duty for the purpose of attracting section 11BB. A circular or explanatory communication cannot override the statutory limitation. The Tribunal further observed that the decision relied upon by the appellant did not address the distinction whether liability was discharged via CENVAT credit or account current, and therefore is not determinative here. On these grounds the claim for interest on restoration of CENVAT credit ordered beyond three months was rejected. [Paras 5, 6, 7, 8]

Interest under section 11BB is not payable on refund of amounts debited from the CENVAT credit account under rule 6; appeal dismissed.

Final Conclusion: The Tribunal dismissed the appeal, holding that restoration of reversed CENVAT credit does not amount to refund of 'duty' within the meaning of section 11BB and therefore interest under section 11BB is not payable on such refunds.

Rectification of mistake - valuation for duty liability - computation of interest - binding effect of Central Board of Excise & Customs circulars

Rectification of mistake - binding effect of Central Board of Excise & Customs circulars - valuation for duty liability - computation of interest - Application for rectification of the final order contending omission of reference to the CBEC circular and that adjustments should precede computation of interest. - HELD THAT: - The Tribunal observed that computation of duty requires the valuation as prescribed by law and that computation of interest must likewise be determined in accordance with law. These are legal obligations binding on subordinate authorities. The original disposal did not need to restate the obvious legal position or reproduce the circular in the appellate order. There was no demonstrable clerical or arithmetical mistake in the final order necessitating rectification; the omission of an express reference to the circular and the plea regarding sequencing of adjustments and interest did not amount to an error capable of correction under the rectification remedy.

Application for rectification rejected; no intervention warranted as the lower authorities are required to follow statutory valuation and interest provisions and the appellate order did not contain a rectifiable mistake.

Final Conclusion: The rectification application was dismissed. The Tribunal held that valuation and interest computations are governed by law and by applicable CBEC guidance binding on authorities, and that the appellate order contained no correctible omission or mistake requiring rectification.

Assessment under Section 4A of the Central Excise Act, 1944 - valuation under Section 4 of the Central Excise Act, 1944 - applicability of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (SWMR) - brand name or trade name of another person disentitling exemption under notification - denial of cross-examination and breach of principles of natural justice - extended period of limitation under proviso to Section 11A(1) - penalty under Section 11AC and its linkage with invocation of extended period

Assessment under Section 4A of the Central Excise Act, 1944 - valuation under Section 4 of the Central Excise Act, 1944 - applicability of the Standards of Weights and Measures (Packaged Commodities) Rules, 1977 (SWMR) - Relays manufactured and cleared by the appellants are liable to be assessed under Section 4A and not under Section 4. - HELD THAT: - The Tribunal held that the relays in issue, although claimed by appellants to be for industrial use, were found to have been sold in retail numbers through dealer/retailer networks and their packages attracted the SWMR requirements including declaration of MRP. The Tribunal relied upon existing precedents (including the Tribunal's prior decision in Schneider Electrical India and the Bombay High Court decision in Larsen & Toubro) holding that goods sold in retail packages and covered by SWMR must be valued under Section 4A. The factual findings that the goods reached retail trade, the legal-metrology clarification, and the notified classification of the relays led to the conclusion that assessment under Section 4A is required. [Paras 5]

Assessment under Section 4A upheld; not assessable under Section 4.

Brand name or trade name of another person disentitling exemption under notification - Benefit of exemption under Notification No. 9/2002-CE and 8/2003-CE was correctly denied to the appellants. - HELD THAT: - The Tribunal accepted the Commissioner's finding that the relays bore the brand name "PLA RELAYS" which belonged to another person and not to the appellants. Relying on the statutory text of the exemption notifications and binding decisions of the Supreme Court (including Kohinoor Elastics, Parle Bisleri, Grasim, and Ace Auto Comp), the Tribunal held that use of a brand/trade name of another person disentitles the manufacturer to exemption. The Tribunal noted that depositions under Section 14 admitting ownership of the brand by another person had evidential value and sustained the denial of exemption. [Paras 5]

Exemption under the cited notifications denied.

Denial of cross-examination and breach of principles of natural justice - The Commissioner erred in refusing the appellants an opportunity to cross-examine certain persons whose depositions were relied upon; the matter is remitted for fresh consideration of that request. - HELD THAT: - The Tribunal held that paragraph 76 of the Commissioner's order reflected a misapprehension of the purpose of cross-examination. Cross-examination is a procedural right to test evidence relied upon by the prosecution/revenue and to ensure fairness; acceptance of depositions by the authority is not a ground to deny cross-examination. For this reason the Tribunal allowed the appellants' appeal(s) in part by remanding the matter to the Commissioner to consider the request for cross-examination afresh and to pass a reasoned order addressing availability of witnesses or steps to be taken if witnesses cannot be produced. [Paras 5]

Request for cross-examination to be reconsidered by the Commissioner; appeals remanded for that purpose.

Extended period of limitation under proviso to Section 11A(1) - penalty under Section 11AC and its linkage with invocation of extended period - The question of invoking the extended period under the proviso to Section 11A(1) and the consequential imposition of penalty under Section 11AC was not adjudicated by the original authorities and is remanded for fresh decision. - HELD THAT: - The Tribunal observed that the adjudicating authority had dropped the show-cause on merits and therefore did not consider the applicability of the extended period; Commissioner (Appeal) set aside that order but also failed to decide limitation. Because the extended period under Section 11A(1) is a pre-condition for attracting Section 11AC, and given the jurisprudence that links the two provisions, the Tribunal remanded the matters in question to the adjudicating authority to determine (i) whether the extended period is invokable and (ii) whether penalty under Section 11AC is exigible, directing that these issues be decided on merits by the original authority. [Paras 5]

Issues of extended limitation and penalty remanded to adjudicating authority for fresh adjudication.

Final Conclusion: The appeals were disposed as follows: the appeal holding assessment under Section 4A (and denial of exemption) was dismissed; the appeals raising denial of cross-examination were allowed by way of remand to the Commissioner to reconsider the request for cross-examination; the appeals concerning invocation of the extended period under the proviso to Section 11A(1) and imposition of penalty under Section 11AC were remanded to the adjudicating authority for fresh adjudication on those issues.

Excisable goods - manufacture - marketability - movability - structures fabricated at site - Chapter Heading 73.08 - entry 7308.50 - goods fabricated at site for use in construction at site

Structures fabricated at site - manufacture - marketability - movability - entry 7308.50 - goods fabricated at site for use in construction at site - Whether steel plates, angles, channels and beams fabricated into structures at the thermal power station site are excisable goods liable to duty under Chapter Heading 73.08. - HELD THAT: - The Tribunal accepted the finding that the structures were fabricated at the site of erection and thereafter embedded to the earth as integral parts of the thermal power plant, lacking separate existence or the ability to be removed and used elsewhere. The adjudicating authority applied the twin tests of movability and marketability required to establish 'manufacture' resulting in excisable goods and found both tests unsatisfied. The Tribunal noted that Revenue did not prove that the fabricated structures were movable or marketable, and that entry 7308.50 specifically covers goods fabricated at the site for use in construction at such site (nil rate). Applying these principles, charging duty on the site-fabricated structurals was held unsustainable because they became immovable and failed the marketability/movability criteria necessary to constitute excisable goods under Chapter Heading 73.08.

Structures fabricated at the work-site and embedded into the thermal power plant are not excisable as they fail the tests of movability and marketability; entry 7308.50 applies and duty cannot be charged.

Final Conclusion: The appellate order upholding the adjudicating authority's finding that site-fabricated structurals used in erection of the thermal power plant are not excisable is affirmed; Revenue's appeals are dismissed.

Cenvat Credit - definition of "input" - repair and maintenance versus structural support and foundation - generation of electricity for captive use - extended period of limitation - remand for fresh fact-finding

Cenvat Credit - definition of "input" - repair and maintenance versus structural support and foundation - Whether the disputed goods (M.S. Angles, Bars, Sheets, Beams) were used as 'inputs' for repair and maintenance of capital goods as opposed to being used for laying foundation or making structural support to capital goods. - HELD THAT: - The appellant contended that the goods were used for periodic repairs and maintenance of factory machinery and not for laying foundation or making structural supports, and that relevant submissions were recorded by the adjudicating authority in paragraph 6 of the adjudication order. The Commissioner (Appeals) reached a contrary conclusion but, on review, the Tribunal found that the Commissioner (Appeals) had discussed the matter in a different manner despite the appellant's categorical denial of use for foundations/structural support. Given the factual dispute on the nature of use, the Tribunal held that proper fact-finding is required by the original adjudicating authority and directed remand for fresh examination of evidence and documents relating to actual use of the disputed goods. [Paras 6]

Remanded to the original adjudicating authority for fresh fact-finding on whether the disputed goods were used for repair and maintenance (and thus qualify as 'inputs') or were used for laying foundation/structural support.

Generation of electricity for captive use - definition of "input" - Whether M.S. Beams used as poles for electrical transmission were part of generation of electricity for captive use and thus eligible as 'inputs'. - HELD THAT: - The appellant asserted that the definition of 'input' includes goods used for generation (including transmission/distribution) of electricity that is captively used, whereas the Commissioner (Appeals) held the beams were used for transmission and not generation. The Tribunal observed the factual dispute on the precise nature and use of the beams and concluded that the original adjudicating authority must determine, on evidence, whether those beams were used in a manner that brings them within the definition of 'input' for captive electricity generation. [Paras 6]

Remanded to the original adjudicating authority for fresh fact-finding on whether the M.S. Beams were used in generation of electricity for captive use and thereby qualify as 'inputs'.

Extended period of limitation - Whether the extended period of limitation is invocable for confirmation of the adjudged demand. - HELD THAT: - The Tribunal directed that while deciding the factual questions on remand, the original adjudicating authority should also record specific findings on the applicability of extended limitation provisions under the circumstances of the case. This question was not decided on merits by the Tribunal but was specifically left for determination by the original authority after fresh fact-finding. [Paras 6]

Remanded to the original adjudicating authority to consider and record findings on the applicability of the extended period of limitation in the facts of the case.

Final Conclusion: The appeal is allowed to the extent that the matter is remanded to the original adjudicating authority for fresh fact-finding on (i) whether the disputed goods were used for repair and maintenance or for foundation/structural support, (ii) whether M.S. Beams were used in generation of electricity for captive use, and (iii) whether the extended period of limitation applies; the appellant is directed to produce relevant documents before the original authority.

CENVAT credit on input services - penalty under Section 11A(6) of the Central Excise Act, 1944 - definition of "input service" under Rule 2(1) of the CENVAT Credit Rules - environment and pollution control service as input service - tour operator service not eligible as input service - architect/design engineering service as input service

Penalty under Section 11A(6) of the Central Excise Act, 1944 - CENVAT credit on input services - Validity of imposition of equal amount of penalty in adjudication where the assessee had earlier reversed part of CENVAT credit and paid penalty under Section 11A(6). - HELD THAT: - The Tribunal found it was an admitted fact that the appellant had reversed a portion of the CENVAT credit and paid penalty @1% as mandated by sub section (6) of Section 11A. Once penalty required by that statutory provision was paid, there was no requirement for issuance of a separate show cause notice or for imposition of an equal amount of penalty in the adjudication. The impugned order insofar as it imposed an equal amount of penalty on the reversed CENVAT amount is unsustainable. [Paras 8]

Equal amount of penalty imposed in the impugned order is set aside.

Environment and pollution control service as input service - definition of "input service" under Rule 2(1) of the CENVAT Credit Rules - Whether service tax paid on environment and pollution control services utilised in the factory is eligible for CENVAT credit. - HELD THAT: - Relying on the Tribunal's earlier view in ESAB India Ltd., the Tribunal held that prevention of pollution within factory premises is a statutory requirement for a manufacturer and, therefore, service tax paid on environment and pollution control services used in the manufacturing unit is eligible as CENVAT credit. The impugned order's confirmation of demand and penalty in respect of such services was set aside. [Paras 9]

CENVAT credit of service tax paid on environment and pollution control service is available to the appellant; impugned order set aside on this aspect.

Tour operator service not eligible as input service - definition of "input service" under Rule 2(1) of the CENVAT Credit Rules - Whether tour operator service, availed for sending dealers abroad on pleasure trips, is an input service eligible for CENVAT credit. - HELD THAT: - The Tribunal noted that the tour operator service in question was used to send dealers on pleasure trips and does not fall within the scope of 'input service' as defined under Rule 2(1). The denial of CENVAT credit by the authorities below was held to be proper and justified. The impugned order's confirmation of demand in respect of Tour Operator Service was sustained, while penalty on this service is to be computed by the department according to statutory provisions. [Paras 10, 12]

CENVAT demand on Tour Operator Service is sustained; penalty in respect of that service shall be computed by the department as per law.

Architect/design engineering service as input service - definition of "input service" under Rule 2(1) of the CENVAT Credit Rules - Whether service tax paid on architect/design engineering services utilised for construction of factory building is eligible for CENVAT credit. - HELD THAT: - The Tribunal observed that architect service is a distinct service under the Finance Act and is not included in the exclusion clause to the definition of 'input service' (which excludes works contract/construction services). Accordingly, denial of CENVAT credit for architect/design engineering service used for factory construction was not legal or proper. The impugned order confirming demand and penalty in respect of these services was set aside. [Paras 11, 12]

Impugned order set aside insofar as it confirmed CENVAT demand and imposed penalty on architect/design engineering service; such service qualifies for CENVAT credit.

Final Conclusion: The appeal is partly allowed: the equal penalty imposed on the amount already reversed and penalised under Section 11A(6) is set aside; CENVAT credit and consequent demand/penalty in respect of environment and pollution control services and architect/design engineering services are set aside; the demand in respect of Tour Operator Service is sustained and penalty on that service shall be computed by the department in accordance with statutory provisions.

Refund of excess input tax credit - mandamus to consider pending tax refund applications - adjudication on merits and in accordance with law - direction to dispose within a fixed time - no expression on entitlement to refund

Mandamus to consider pending tax refund applications - direction to dispose within a fixed time - adjudication on merits and in accordance with law - refund of excess input tax credit - no expression on entitlement to refund - Pending refund applications filed on 10.04.2018 in respect of claimed excess input tax credit for the assessment years listed were directed to be considered and disposed by the first respondent within eight weeks; the Court did not adjudicate entitlement on merits. - HELD THAT: - The writ petitions sought mandamus directing the first respondent to pass orders for refund of excess input tax credits claimed by the petitioner for the specified assessment years. The Court observed that the petitioner had filed applications on 10.04.2018 which remained unconsidered. Rather than pronouncing on the merits of the refund claims, the Court limited its relief to issuing a direction that the first respondent shall consider the pending applications and pass orders thereon on merits and in accordance with law within eight weeks from receipt of the order. The Court expressly refrained from expressing any view on the petitioner's entitlement to the refund and clarified that the direction is not to be construed as a positive order for refund. The petitioner was directed to cooperate and produce any documents required for disposal of the applications.

Writ petitions disposed by directing the first respondent to consider and decide the refund applications filed on 10.04.2018 on merits and in accordance with law within eight weeks; no adjudication on entitlement to refund.

Final Conclusion: The petitions were disposed by issuing a mandamus directing the first respondent to consider and decide the pending refund applications relating to the stated assessment years on merits and in accordance with law within eight weeks; the Court did not express any view on the merits or entitlement to the claimed refunds.

Opportunity of personal hearing - non-compliance with earlier judicial direction - remand for fresh consideration - verification of SEZ certificates and entitlement to zero-rating - re-evaluation of assessment after hearing

Opportunity of personal hearing - non-compliance with earlier judicial direction - Assessing Officer failed to afford the petitioner the personal hearing directed by this Court when remitting the assessment. - HELD THAT: - The Court noted that in WP.No.34128 of 2015 it had set aside the earlier assessment order and specifically directed the Assessing Officer to consider the certificates produced by the petitioner and to decide the matter afresh after giving an opportunity of personal hearing. The impugned revised assessment was passed without affording the petitioner that personal hearing, which amounted to non-compliance with the clear direction of this Court. The omission was therefore contrary to the Court's earlier order and vitiates the impugned assessment. [Paras 4]

The impugned revised order is set aside for failure to comply with the earlier direction to grant a personal hearing.

Remand for fresh consideration - verification of SEZ certificates and entitlement to zero-rating - re-evaluation of assessment after hearing - Whether the matter should be remitted to the Assessing Officer for re-doing the assessment after giving the petitioner an opportunity to be heard and to file additional objections. - HELD THAT: - Having found non-compliance with the earlier order, the Court directed that the assessment proceedings be reopened and redone by the Assessing Officer. The Assessing Officer is required to give the petitioner a personal hearing, consider the SEZ certificates already verified as in order, and re-decide the entitlement to zero-rating or any reversal of input tax credit. The petitioner is granted liberty to file additional objections before the Assessing Officer. The Court imposed a four-week timeline for completion of this exercise from receipt of the order. [Paras 5]

Matter remitted to the Assessing Officer to re-do the assessment after affording personal hearing and permitting additional objections; to be completed within four weeks.

Final Conclusion: Writ petition allowed; impugned revised assessment order quashed for non-compliance with this Court's earlier direction and remitted to the Assessing Officer for fresh consideration after affording personal hearing and allowing additional objections, to be completed within four weeks.

Refund of pre-deposit - pre-deposit as condition for hearing - pre-deposit not constituting tax - remission for fresh assessment - refund with interest under the Delhi VAT Act - application of Suvidhe and Nelco principles

Refund of pre-deposit - pre-deposit as condition for hearing - pre-deposit not constituting tax - application of Suvidhe and Nelco principles - Petition for refund of amount deposited as a pre-condition for hearing of appeal, where the appeal was allowed and the assessment remitted for fresh assessment. - HELD THAT: - The Court recorded that the amounts deposited by the petitioner were made as a pre-deposit to secure hearing of the appeal on merits and that the appeal was allowed with the assessment periods remitted for reconsideration. The respondents did not deny that the deposits were pre-deposits for hearing. Applying the legal principles in Suvidhe and Nelco, as applied by this Court in MRF Ltd., the deposits made as a condition for hearing do not qualify as tax and therefore cannot be retained where the appeal succeeds and matters are remitted. The respondents were directed to ascertain and calculate the amounts due to the petitioner together with interest as applicable under the Delhi VAT Act from the date of the OHA/FAA decision and refund the same within eight weeks.

Writ petition allowed; respondents directed to calculate and refund the pre-deposit with applicable interest within eight weeks.

Final Conclusion: The petition succeeds: the pre-deposit made as a condition for hearing must be refunded with interest because it does not constitute tax where the appeal was allowed and the assessment remitted; respondents to compute and refund the amounts within eight weeks.

Penalty for concealment of wealth - valuation of immovable property - reliance on valuer's report - disclosure in return - inaccurate particulars

Penalty for concealment of wealth - reliance on valuer's report - disclosure in return - Whether penalty for concealment could be sustained where the assessee disclosed immovable properties in the wealth tax return and valued them on the basis of a registered valuer's report - HELD THAT: - The Court agreed with the Tribunal that the assessee had declared the immovable properties and furnished valuations based on a registered valuer's estimate as on 1-4-1981, adjusted for indexation. The Wealth Tax Officer's differing valuation and subsequent reassessment did not, by itself, establish concealment or furnishing of inaccurate particulars. The Tribunal relied on precedents where courts held that disclosure of property and valuation by a valuer or a bona fide alternative method, even if differing from the revenue's valuation or followed by later higher sale, did not attract the penalty for concealment. Having considered the documents and the authorities cited, the Court found no reason to disturb the Tribunal's conclusion deleting the penalty. [Paras 4, 5, 6, 7, 8]

Penalty for concealment was not sustainable and was correctly deleted by the Tribunal.

Final Conclusion: Revenue's appeals are dismissed; the Tribunal's deletion of the penalty is upheld.

Moratorium under the Insolvency and Bankruptcy Code - Interim order analogous to moratorium - Proceedings beneficial to the corporate debtor - Section 9 proceedings under the Arbitration and Conciliation Act restraining invocation of bank guarantee

Interim order analogous to moratorium - Section 9 proceedings under the Arbitration and Conciliation Act restraining invocation of bank guarantee - Interim order dated 15.10.2018 passed by the Appellate Tribunal does not operate so as to require sine die adjournment of the petitioner's Section 9 proceedings. - HELD THAT: - The Appellate Tribunal's interim order, though framed under Sections 241 and 242 of the Companies Act, was fashioned on the analogy of a moratorium and directed suspension of actions adverse to IL&FS and its group companies. The court treated the Appellate Tribunal order as not being a declaration under Section 14 of the Code but observed that the principle that a moratorium does not bar proceedings which are beneficial to the corporate debtor is applicable. The present Section 9 petition seeks to restrain invocation of a performance bank guarantee and is not a recovery proceeding adverse to the respondent; however, a sine die adjournment of the proceedings would amount to an indefinite continuation of restraint without adjudication on merits and would operate to the financial prejudice of the respondent. For these reasons the interim order was held not to be applicable so as to justify sine die adjournment of the Section 9 proceedings, and the application for adjournment was dismissed. [Paras 9, 13, 14, 15, 16]

Application for sine die adjournment dismissed; interim order of Appellate Tribunal held not to require indefinite stay of the Section 9 proceedings.

Moratorium under the Insolvency and Bankruptcy Code - Proceedings beneficial to the corporate debtor - The legal principle that a moratorium is not intended to prohibit proceedings which are beneficial to the corporate debtor applies to the Appellate Tribunal's interim directions. - HELD THAT: - Having examined the aim and object of the Code and the language of the interim order, the court agreed with the view that moratorium provisions are designed to protect the corporate debtor from actions that would diminish its assets but do not extend to stays of proceedings that are beneficial to the corporate debtor. The Appellate Tribunal itself recorded that its interim directions were passed in the larger public and national economic interest and for protecting IL&FS; nonetheless, the court emphasised that directions identical to a moratorium must not be applied so as to cause prejudice to the corporate debtor by preventing proceedings which would advance its interests. [Paras 11, 12, 13, 15]

Principle affirmed that moratorium-type orders do not bar proceedings which are beneficial to the corporate debtor; such principle informed the rejection of the request for sine die adjournment.

Final Conclusion: The application for sine die adjournment was dismissed: the Appellate Tribunal's interim order, though analogous to a moratorium, does not mandate indefinite suspension of the Section 9 arbitration proceedings where such suspension would prejudice the respondent; proceedings beneficial to the corporate debtor remain unaffected and claims in the main petition are to be decided on merits.

Repeal simpliciter - contrary intention in the statement of objects and reasons - application of Section 6 of the General Clauses Act - survival of pre-repeal show cause notices - savings clause in repeal legislation

Repeal simpliciter - contrary intention in the statement of objects and reasons - application of Section 6 of the General Clauses Act - Whether the repeal of the Gold (Control) Act, 1968 without an express saving clause nevertheless attracts Section 6 of the General Clauses Act or is rendered inapplicable by a contrary intention manifested in the repeal Act's statement of objects and reasons. - HELD THAT: - The Court examined the statement of objects and reasons to the Gold (Control) Repeal Act, 1990 and found that Parliament expressly recorded that the Act had failed to achieve its objectives over 22 years, had proved regressive and had caused hardship and dissatisfaction. The Court held that this expression of Parliament's intention constitutes a contrary intention which displaces the general rule contained in Section 6 of the General Clauses Act. Reliance on precedent dealing with simpliciter repeal and contrary intention was noted to support the proposition that where Parliament's intention is clearly contrary, the normal saving operation is negated. [Paras 6, 7, 8]

The repeal simpliciter does not attract Section 6 of the General Clauses Act in this case because a contrary intention is clearly expressed in the repeal Act's statement of objects and reasons.

Survival of pre-repeal show cause notices - savings clause in repeal legislation - Whether the show cause notice dated 1-6-1971 (issued under Defence of India Rules and seeking confiscation/enhancement) survives the repeal of the Gold (Control) Act, 1968. - HELD THAT: - The Court observed the legislative history showing that earlier amendments or repeals of the Defence of India Rules and related instruments had contained inbuilt savings provisions, and noted that the 1990 repeal expressed a contrary legislative intention. Applying the conclusion that Section 6 does not operate here, the Court held that the specific show cause notice which was the subject matter of the proceedings cannot survive the repeal of the Gold (Control) Act and therefore must be treated as having ceased to exist. [Paras 9, 10]

The show cause notice dated 1-6-1971 no longer survives consequent to the repeal of the Gold (Control) Act, 1968.

Liberty to amend reference questions - expeditious adjudication of pending writ petitions - Treatment of the Wealth Tax Reference and pending writ petitions in view of the repeal and the Court's stay order. - HELD THAT: - Having held that the show cause proceedings have disappeared, the Court recorded that parties are permitted to add, amend or delete questions in the Wealth Tax Reference within eight weeks. Thereafter the writ petitions, some dating from 2005, are to be taken up and decided on their merits by the High Court, which the Court requested to hear the matters expeditiously. [Paras 11, 12]

Parties granted eight weeks' liberty to amend the Wealth Tax Reference questions; the writ petitions will be taken up and decided on merits by the High Court expeditiously.

Final Conclusion: Appeals allowed; the Court held that the repeal of the Gold (Control) Act, 1968 manifests a contrary legislative intention negating the operation of Section 6 of the General Clauses Act in this case, the show cause notice of 1-6-1971 does not survive the repeal, and parties are permitted a limited period to amend the Wealth Tax Reference before the High Court proceeds to decide the pending writ petitions.

Admissibility of confession of co-accused - Statements recorded under Section 67 of the NDPS Act - Definition of "police officer" for purposes of exclusion under Section 25 of the Evidence Act - Confession of co-accused usable only to "lend assurance" to other evidence - Abetment under Section 29 of the NDPS Act

Admissibility of confession of co-accused - Statements recorded under Section 67 of the NDPS Act - Confession of co-accused usable only to "lend assurance" to other evidence - Whether the conviction of the appellant can be sustained solely on the basis of confessional statements of co-accused recorded under Section 67 of the NDPS Act - HELD THAT: - The Court proceeded on the premise that the co-accused statements were recorded under Section 67 of the NDPS Act and acknowledged that the question whether such statements amount to confession and their admissibility vis-a -vis Section 25 of the Evidence Act has been referred to a Larger Bench. Even assuming such statements may amount to confession, settled law requires that a confession of a co-accused cannot, by itself, be the foundation of conviction against another accused. The prevailing principle, as explained in Kashmira Singh and approved in subsequent decisions, is that a co-accused's confession is a weak form of evidence and may be used only to lend assurance to other independent evidence against the accused. The trial and High Court convictions of the appellant rested solely upon the statements of the co-accused; there was no independent material on record linking the appellant to the offence. In the absence of other substantive evidence which, if believed, could support conviction, the confessional statements could not be invoked as the sole basis for conviction. Applying this test, the Court found that reliance only on co-accused statements was inadequate and therefore the conviction could not be sustained. [Paras 10, 11, 12, 13, 14]

Conviction set aside and appellant acquitted; appellant to be released forthwith unless wanted in connection with another offence.

Final Conclusion: The appeal is allowed. In view of the absence of any independent evidence linking the appellant to the offence and the rule that a co-accused's confession can only lend assurance to other evidence, the conviction and sentence are set aside and the appellant is acquitted and ordered to be released unless detained for other offences.

Availability of remedy under Section 17 without loss of possession - Constructive possession under Rule 8(1) and 8(2) versus physical possession under Rule 8(3) - Interpretation and interplay of measures under Section 13(4) and remedy under Section 17 of the 2002 Act - Obligation of Debts Recovery Tribunal to examine compliance with provisions of the Act and Rules - Remand for fresh adjudication in accordance with binding precedent

Availability of remedy under Section 17 without loss of possession - Interpretation and interplay of measures under Section 13(4) and remedy under Section 17 of the 2002 Act - Remedy under Section 17(1) of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 is available to a borrower or aggrieved person upon issuance of notice under Section 13(4) without first losing symbolic or physical possession of the secured asset. - HELD THAT: - The Court examined the scheme of the 2002 Act, Section 13(4) (measures for enforcement of security interest) and Section 17 (application against measures to recover secured debts), and the Security Interest (Enforcement) Rules, 2002. Having regard to the Supreme Court's decision in M/s Hindon Forge Pvt. Limited (Civil Appeal No.10873 of 2018) which construed Appendix IV-A and Rules 8(1), 8(2) and 8(3), the Court accepted that Rules 8(1) and 8(2) relate to constructive possession (possession notice/constructive measures) while Rule 8(3) contemplates physical possession. The Supreme Court held that a borrower may approach the DRT under Section 17 at the stage of the possession notice referred to in Rules 8(1) and 8(2). Applying that authoritative ratio, the High Court held that Section 17(1) remedy is not confined to cases where actual physical possession has been taken and is available on issuance of notice under Section 13(4). The Court therefore found the Full Bench view (to the contrary) to be erroneous and binding Supreme Court precedent to the contrary to be determinative. [Paras 7, 16, 17, 18]

Section 17(1) can be invoked on issuance of notice under Section 13(4) without loss of symbolic or physical possession; the borrower need not wait for physical dispossession before filing a Section 17 application.

Remand for fresh adjudication in accordance with binding precedent - Obligation of Debts Recovery Tribunal to examine compliance with provisions of the Act and Rules - Orders of the DRT dismissing Section 17 applications as premature on the ground that physical possession had not been lost were set aside and the matters remitted to the DRT for fresh adjudication on merits in accordance with the law laid down by the Supreme Court. - HELD THAT: - Applying the binding pronouncement that a Section 17 remedy lies at the stage of the possession notice under Rules 8(1) and 8(2), the Court held that the DRT's dismissal of the petition(s) as premature (for want of physical dispossession) was contrary to law. Consequently, the Court set aside the impugned DRT orders and remitted the matters to the DRT to decide the applications under Section 17 afresh on merits, with directions to consider whether the measures taken by the secured creditor conform to the Act and the Rules. [Paras 17, 18, 19]

Impugned DRT orders are set aside and the matters are remitted to the DRT to decide the Section 17 applications afresh on merits in accordance with the Supreme Court's ruling and applicable provisions of the Act and Rules.

Final Conclusion: Writ petitions allowed; the DRT orders dismissing Section 17 applications as premature are set aside and the matters are remitted to the DRT for fresh consideration on merits in accordance with the law as laid down by the Supreme Court (permitting invocation of Section 17 on issuance of the possession notice under Rules 8(1) and 8(2)).