TaxTMI Updates e-Newsletter
Jan 19,2021

Manufacturing services on physical inputs (goods) owned by others - Services by way of job work - Heading 9988 - distinction between manufacture and manufacturing services - Rule 3 of the General Rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (preference for the most specific description) - job work as defined in Section 2(68) of the CGST Act, 2017 - Circular No.126/45/2019-GST clarifying classification and rate applicability

Manufacturing services on physical inputs (goods) owned by others - Services by way of job work - distinction between manufacture and manufacturing services - Rule 3 of the General Rules for the interpretation of the First Schedule to the Customs Tariff Act, 1975 (preference for the most specific description) - Classification of electroplating surface coating and electroless nickel plating services under Entry No.26 - whether they fall under item (id) (job work) or item (iv) (manufacturing services) of Heading 9988 - HELD THAT: - The Authority analysed the terms and the notifications amending Entry No.26 of Heading 9988 and observed that 'manufacturing services' is conceptually distinct from 'manufacture' and denotes services related to or essential for the process of manufacture. Electroplating and electroless nickel plating alter chemical, physical and mechanical properties, and are often integral, terminal processes in rendering a finished product. Applying the interpretative Rule 3 preference for the most specific description, the Authority found that item (iv) (manufacturing services on physical inputs owned by others, other than specified exclusions) provides a more specific and appropriate description of the applicant's services than the general job-work entry at item (id). The Authority therefore classified the applicant's services under item (iv) of Entry No.26 of Notification No.11/2017-Central Tax (Rate) (as amended). [Paras 11, 12]

Services of electroplating surface coating and electroless nickel plating are classifiable under item (iv) of Entry No.26 (Heading 9988) rather than item (id).

Heading 9988 - Circular No.126/45/2019-GST clarifying classification and rate applicability - job work as defined in Section 2(68) of the CGST Act, 2017 - GST rate applicable on the classified services for specified periods - HELD THAT: - Having classified the services under item (iv), the Authority noted the historical and amended rates in Entry No.26 and the Board's clarification by Circular No.126/45/2019-GST. For the period up to 21.11.2019 the applicable rate under item (iv) (manufacturing services on physical inputs owned by others) was 18% (9% CGST + 9% SGST). The Board's Circular and the insertion of item (id) effective 01.10.2019 resulted in a re-demarcation of job work entries and, as clarified on 22.11.2019, reduced the rate applicable to job-work services supplied to registered persons. Consequently, for the applicant the GST incidence from 22.11.2019 onwards is 12% (6% CGST + 6% SGST) where the input is supplied by a registered person, and 18% (9% CGST + 9% SGST) where the input is supplied by an unregistered person. [Paras 13, 14]

GST at 18% (9% + 9%) up to 21.11.2019; from 22.11.2019 onwards, 12% (6% + 6%) where inputs are supplied by a registered person and 18% (9% + 9%) where inputs are supplied by an unregistered person.

Final Conclusion: The Authority ruled that the applicant's electroplating and electroless nickel plating services are classifiable under item (iv) of Entry No.26 (Heading 9988). GST at 18% applied up to 21.11.2019; from 22.11.2019 onwards the rate is 12% for services supplied where inputs are provided by registered persons and 18% where inputs are provided by unregistered persons.

Summary order. Notice issued returnable in eight weeks; respondent accepted service; counter-affidavits to be filed within six weeks.

Provisional attachment under the Central GST Act - objections under Rule 159(5) of the Central GST Rules - operation of bank account pending adjudication of objections - release of loan account as not liable to attachment - petition rendered infructuous

Provisional attachment under the Central GST Act - objections under Rule 159(5) of the Central GST Rules - operation of bank account pending adjudication of objections - release of loan account as not liable to attachment - Whether the writ petition seeking quashing of the provisional attachment order remained subsisting after the respondent released the loan account and adjudicated the objections. - HELD THAT: - The Court recorded that earlier it had directed the Commissioner to decide the objections within one week and permitted operation of the petitioner's bank account until the objections were decided. The respondents placed on record an order dated 05.01.2021 in which the Commissioner recorded that the account in State Bank of India was a loan/term loan account and ordered its release, while rejecting the objections to the extent recorded; the order also reserved the right to take further action if inadmissible ITC was later found. The petitioner has availed the remedy of filing a separate writ (CWP No.851 of 2021) against the order dated 05.01.2021. In these circumstances the present petition no longer requires judicial intervention as the reliefs sought have been overtaken by the respondents' action releasing the account and by the pendency of the challenge to that order.

The petition is disposed of as having been rendered infructuous in view of the respondents' order releasing the loan account and the petitioner's recourse to separate proceedings.

Final Conclusion: The writ petition challenging the provisional attachment is disposed of as infructuous because the Commissioner released the loan account and the petitioner has filed a separate writ against that decision.

Natural justice - service of notice - notice at wrong address - quashing for violation of audi alteram partem - remand for fresh hearing

Natural justice - service of notice - notice at wrong address - quashing for violation of audi alteram partem - remand for fresh hearing - Validity of the impugned order passed without hearing the petitioner due to service of notice at an incorrect address and the consequent remedial course. - HELD THAT: - The Court found that the impugned order was passed after recording the petitioner's absence at the hearing, but the petitioner demonstrated that the notice had been served on an incorrect address. The correct address appeared on the Registration Certificate maintained by the department. Issuance of notice to the wrong address resulted in denial of an opportunity to be heard, thereby violating the principles of natural justice. On that basis the impugned order, which inflicted adverse civil consequences without hearing the petitioner, could not stand. The appropriate remedial measure adopted was to quash the impugned order and remit the matter to the first respondent for fresh consideration so that the petitioner may be given a proper hearing and permitted to file objections to the show cause notice; the first respondent is directed to decide the matter afresh according to law.

Impugned order quashed and set aside; matter remitted for fresh hearing with liberty to the petitioner to appear, file objections, and for the first respondent to decide afresh.

Final Conclusion: Writ petition allowed; impugned order set aside for violation of natural justice owing to notice issued at wrong address, and the matter remitted to the first respondent for fresh hearing and decision according to law.

Summary order. Writ petition under Article 226 seeking extension of filing dates, waiver of late fees/penalty and opportunity to show cause rejected; writ application dismissed.

Writ of mandamus - Discretionary power under Section 119 of the Income Tax Act, 1961 - Judicial restraint in interfering with executive fiscal decisions - Filing deadlines and extensions in COVID-19 context - Penalty under Section 271B and exemption under Section 273B

Writ of mandamus - Discretionary power under Section 119 of the Income Tax Act, 1961 - Judicial restraint in interfering with executive fiscal decisions - Whether this Court should issue a writ of mandamus directing the CBDT to further extend the due dates for filing tax audit reports and income tax returns. - HELD THAT: - The Court considered whether petitioners had a clear legal right and whether the CBDT had failed to perform a non discretionary statutory duty such as to warrant mandamus. The judgment reiterates the settled principles governing mandamus: it is an extraordinary, discretionary remedy available only where a petitioner has a judicially enforceable right and there is either a peremptory statutory duty or demonstrable abuse, caprice or failure to exercise discretion. The Court observed that the CBDT is vested with discretionary power under Section 119 of the Act to extend due dates and, after being directed by this Court to consider representations, the Board deliberated and arrived at a decision not to grant any further extension. The CBDT's decision was founded on contemporaneous data showing substantial and improving compliance, earlier multiple extensions already granted in view of the pandemic, comparative international measures, and the public interest in timely tax collection. Given that the Board exercised its discretion after consideration of relevant factors and that petitioners did not establish a legal right to compel the particular relief sought, the Court concluded that mandamus was not appropriate. The Court further noted the potential adverse ramifications of judicially substituting its view for the executive's fiscal decision and left to the CBDT the administrative option of issuing a leniency circular under existing penalty provisions rather than granting a date extension by mandamus. [Paras 41, 46, 48, 50, 51]

Petitions seeking mandamus to direct further extension of due dates are rejected; court will not interfere with CBDT's considered exercise of discretion under Section 119.

Final Conclusion: The writ petitions seeking a judicially directed extension of due dates for filing tax audit reports and income tax returns are dismissed; the Court declines to issue mandamus because the CBDT has exercised its discretionary power under Section 119 after due consideration, and any administrative leniency as to penalties under Section 271B may be considered by the Board in its discretion.

Income from house property - notional rent - vacancy allowance - municipal ratable value - standard rent - binding precedent of the jurisdictional High Court - remand to the Assessing Officer for fresh examination

Income from house property - notional rent - vacancy allowance - municipal ratable value - binding precedent of the jurisdictional High Court - remand to the Assessing Officer for fresh examination - Remand of the question whether notional income under the provisions of Sec. 22/23 should be brought to tax in respect of the assessee's property and whether vacancy allowance or municipal ratable value/standard rent principles govern the determination of taxable rental value. - HELD THAT: - The Tribunal noted that the Assessing Officer had applied the provisions of Sec. 23(1) to compute a notional income from the Nariman Point premises for the year under appeal, while the assessee contested chargeability and contended entitlement to vacancy allowance and that standard rent/municipal ratable value constrained computation. The Coordinate Bench's earlier orders in the assessee's own case involved similar facts and directed consideration in light of the Jurisdictional High Court's decision in Tip Top Typography, which holds that municipal ratable value is a safe guide and cannot be discarded without cogent material, and that market rate may be resorted to only where the AO is convinced of suspicious or doubtful stated rent. Applying that precedent, the Tribunal found the present facts to be similar and, rather than deciding the matter on merits, remitted the issue to the Assessing Officer for limited purpose: to examine the matter in light of the Jurisdictional High Court's ruling (or the High Court decision in the assessee's own case, if available), to afford the assessee opportunity of being heard, and to determine chargeability and computation accordingly. The Tribunal therefore did not adjudicate the merits but directed fresh consideration by the AO following the legal tests laid down by the High Court. [Paras 6, 7]

Issue remitted to the file of the Assessing Officer for fresh examination in light of the Jurisdictional High Court precedent and with opportunity to the assessee to be heard; appeal allowed for statistical purposes.

Final Conclusion: The Tribunal restored the disputed house property notional income issue to the Assessing Officer for limited rehearing and reconsideration in accordance with the Jurisdictional High Court's guidance on reliance on municipal ratable value and vacancy allowance; the appeal was allowed for statistical purposes.

Under valuation of closing stock - valuation by survey under section 133A based on rough/eye estimate - acceptance of books of account where books are not rejected - notice under section 143(2) of the Income Tax Act - assessment completed by a different assessing officer without fresh notice

Under valuation of closing stock - valuation by survey under section 133A based on rough/eye estimate - acceptance of books of account where books are not rejected - Validity of addition made on account of alleged under-valuation of closing stock. - HELD THAT: - The survey under section 133A estimated closing stock by rough, eye-estimate methods without adequate measuring procedure, manpower or expertise, and the survey valuation of stock on the date of survey was extrapolated to the assessment date. The assessing officer relied exclusively on that survey estimation despite the assessee maintaining proper books of account which the AO had not identified as defective or rejected. Where books of account are maintained and not rejected, the AO cannot ignore book values in favour of an arbitrary survey estimate based on guesswork. Applying these principles to the facts, the Tribunal found the survey-based addition arbitrary and unsustainable and therefore deleted the addition. [Paras 11]

Addition on account of alleged under-valuation of closing stock deleted.

Notice under section 143(2) of the Income Tax Act - assessment completed by a different assessing officer without fresh notice - Validity of the assessment order where notice under section 143(2) was issued by one ITO but the assessment was completed by the ACIT of the same range without issuing a fresh notice. - HELD THAT: - The assessment record showed that the notice under section 143(2) was issued by ITO, Ward-24(2), Hooghly, whereas the assessment was ultimately completed by ACIT, Circle-24(1), Hooghly, who did not himself issue a fresh notice under section 143(2). The Tribunal, following earlier decisions of coordinate Benches on the same question, held that an assessment completed by a different assessing officer without issuance of the requisite notice is vitiated and bad in law. Consequently, the assessment order was held invalid. [Paras 12, 13]

Assessment order held invalid and bad in law for want of jurisdictional notice by the officer who completed the assessment.

Final Conclusion: The assessee's appeal is allowed: the addition for under-valuation of closing stock is deleted and the assessment order is held invalid for want of a proper notice by the assessing officer who completed the assessment.

Deduction under section 35(1)(iv) for expenditure on scientific research - Facilities for prosecution of scientific research - Marked-to-market (MTM) losses on derivatives - Deductibility under section 37(1) of unrealized exchange/derivative losses - Disallowance under section 14A read with Rule 8D - Remand for verification of exempt income

Deduction under section 35(1)(iv) for expenditure on scientific research - Facilities for prosecution of scientific research - Claim of 100% deduction under section 35(1)(iv) in respect of the Bolero van used by the assessee's R&D unit. - HELD THAT: - The Tribunal examined whether the Bolero MUV, used to transport R&D materials and personnel for an approved R&D unit, constituted a capital expenditure qualifying as a facility for the prosecution of scientific research. Relying on and following the reasoning in CIT v. Smith Kline & French (India) Ltd., the Tribunal accepted that capital expenditures which provide facilities for the prosecution of scientific research fall within section 35(1)(iv). The vehicle was held to be used exclusively for R&D purposes and thus eligible for the claim of 100% depreciation under section 35(1)(iv). [Paras 4]

Claim of 100% depreciation under section 35(1)(iv) in respect of the Bolero van is allowed.

Marked-to-market (MTM) losses on derivatives - Deductibility under section 37(1) of unrealized exchange/derivative losses - Allowability of loss on silver futures (MTM/notional losses) as deductible expenditure. - HELD THAT: - The Tribunal considered whether the assessee's claimed loss on silver futures (marked to market) was an allowable deduction. After reviewing authorities including the Supreme Court decisions in Woodward Governor India Pvt. Ltd. and Oil & Natural Gas Corporation Ltd., the Tribunal observed that losses arising from fluctuation in rates (including on derivatives/forex) as on the balance-sheet date can be revenue in nature and deductible under section 37(1) where they represent genuine losses for the accounting period. Distinguishing the authorities relied on by the AO/CIT(A) and having regard to the cited precedent, the Tribunal set aside the findings below and directed the Assessing Officer to allow the loss claimed by the assessee. [Paras 5]

Orders below set aside and Assessing Officer directed to allow the loss on silver futures as deductible under section 37(1).

Disallowance under section 14A read with Rule 8D - Remand for verification of exempt income - Validity of disallowance under section 14A r.w. Rule 8D and whether it should be deleted in absence of exempt income. - HELD THAT: - The Tribunal noted that the Assessing Officer made a disallowance under section 14A r.w. Rule 8D without recording any exempt income earned by the assessee in the relevant year, and that the assessee had not furnished details of exempt income. In view of the absence of findings or evidence of exempt income in the assessment record, the Tribunal directed the Assessing Officer to verify whether any exempt income was earned; if none is found, the addition under section 14A was to be deleted. The matter was remitted for verification in the light of relevant judicial decisions. [Paras 6]

Matter remitted to the Assessing Officer to verify existence of exempt income; if no exempt income is found, the disallowance under section 14A is to be deleted. Ground allowed for statistical purposes.

Final Conclusion: The appeal is partly allowed: the claim of 100% deduction under section 35(1)(iv) for the Bolero van is allowed; the disallowance of marked-to-market loss on silver futures is set aside and directed to be allowed under section 37(1); the section 14A disallowance is remanded to the Assessing Officer for verification of exempt income and to be deleted if no exempt income is found. The result is recorded as partly allowed for statistical purposes.

Deduction of employees' contribution to Provident Fund under section 36(1)(va) vis-a -vis timing of deposit - application of section 43B principles to employees' contribution deposited after prescribed due date - treatment of legal and consultancy fees incurred for amalgamation or merger as capital expenditure under section 35DD

Deduction of employees' contribution to Provident Fund under section 36(1)(va) vis-a -vis timing of deposit - application of section 43B principles to employees' contribution deposited after prescribed due date - Whether employees' contribution to EPF/ESIC deposited after the due date but before filing of the return is allowable as deduction under section 36(1)(va) / not hit by section 43B. - HELD THAT: - The Tribunal held that it is bound by the decisions of the jurisdictional High Court which have held that employees' contribution to EPF/ESIC deposited beyond the due date prescribed in the explanation to section 36(1)(va) is not eligible for deduction, even if deposited before the due date of filing the return. The Assessing Officer and the Commissioner (Appeals) applied that principle on facts where the contribution due on 15th January, 2015 was deposited on 22nd January, 2015. The assessee's reliance on other authorities holding that deposit before filing suffices was rejected because the jurisdictional High Court's contrary view is binding. Accordingly the claim was disallowed.

Assessee's claim for deduction was rejected and the addition confirmed.

Treatment of legal and consultancy fees incurred for amalgamation or merger as capital expenditure under section 35DD - Whether fees described in the assessee's ledger as relating to 'Preparation of Amalgamation' and 'Lawyer fees for Merger' are revenue in nature or attract disallowance under section 35DD. - HELD THAT: - The Tribunal affirmed the concurrent factual finding of the Assessing Officer and the CIT(A) that the ledger descriptions and the assessee's failure to produce corroborative evidence established that the expenses were incurred wholly and exclusively for the purpose of amalgamation/merger. Given that factual premise, invocation of section 35DD to disallow four-fifths of the expenditure (allowing one-fifth) was held to be justified. The assessee did not place any additional evidence before the Tribunal to rebut the characterization adopted by the Revenue, and merely reiterated prior submissions.

Disallowance under section 35DD upheld and the ground of appeal rejected.

Final Conclusion: Both grounds of appeal are dismissed: the disallowance of the delayed employees' contribution to provident fund is sustained in accordance with binding jurisdictional High Court precedent, and the disallowance of consultancy and legal fees under section 35DD for expenses shown to relate to amalgamation/merger is upheld.

Taxability of notional or estimated income - principle of real income as determinant of taxability - effect of mercantile system of accounting where no real income has accrued - burden of proof in unexplained cash credits under section 68 - remand for factual verification of classification of trading loss as business or speculation loss

Taxability of notional or estimated income - principle of real income as determinant of taxability - effect of mercantile system of accounting where no real income has accrued - Whether the addition of accrued interest estimated by the Assessing Officer on investments placed with a portfolio manager could be sustained where no interest or dividend was actually received and legal proceedings for recovery were pending. - HELD THAT: - The Tribunal found that no real income had accrued to the assessee: the assessee's accounts did not record any interest or dividend, and the assessee had initiated legal proceedings and filed a complaint for recovery. Relying on the principle that only real income is taxable, the Tribunal held that estimation of income on a hypothetical basis by applying the assured return was not tenable. The mercantile system of accounting does not convert a hypothetical or contingent claim into taxable income where there is no real accrual. Consequently the addition made by the AO and confirmed by the CIT(A) on notional interest was set aside and deleted. [Paras 4]

Addition of accrued interest is deleted; notional estimation of income is not taxable where no real income has accrued.

Burden of proof in unexplained cash credits under section 68 - Whether the addition under section 68 in respect of Rs. 50,000 as unexplained loan from Mr. R. Ramanlal could be sustained. - HELD THAT: - The Tribunal noted that the CIT(A) had granted partial relief on the basis of evidences produced on appeal and a remand report, but in respect of the disputed sum of Rs. 50,000 the assessee failed to substantiate the source before the Tribunal. The assessee did not place satisfactory evidence to discharge the burden of proof as to the nature and source of the cash credit. On that basis the Tribunal upheld the CIT(A)'s confirmation of the addition. [Paras 5]

Addition under section 68 of Rs. 50,000 is confirmed.

Remand for factual verification of classification of trading loss as business or speculation loss - Classification of the trading loss (whether business loss or speculation loss) and the validity of its disallowance. - HELD THAT: - The Tribunal observed that the question of whether the loss on commodity trading was a business loss or a speculation loss required further factual verification. The assessee sought an opportunity to place additional evidence. In view of the factual nature of the dispute, the Tribunal directed restoration of this issue to the file of the Assessing Officer for limited purpose verification and examination of the relevant facts. [Paras 6]

Issue restored to the Assessing Officer for verification; matter remanded for limited factual examination.

Final Conclusion: The appeal is partly allowed: the notional addition of accrued interest is deleted; the addition under section 68 of Rs. 50,000 is confirmed; the issue of trading loss versus speculation loss is remanded to the Assessing Officer for limited factual verification.

Penalty under section 271(1)(b) for failure to comply with notice - Effect of subsequent compliance during assessment proceedings - Assessment under section 143(3) as indicating cooperation (not under section 144) - Non-cooperation and default

Penalty under section 271(1)(b) for failure to comply with notice - Effect of subsequent compliance during assessment proceedings - Assessment under section 143(3) as indicating cooperation (not under section 144) - Whether penalty under section 271(1)(b) can be levied where the assessee failed to comply with a notice but subsequently attended hearings and furnished required particulars and the assessment was completed under section 143(3). - HELD THAT: - The Tribunal found on the record that although a notice dated 2.2.2016 issued under section 142(1) was not complied with initially, the assessee's representatives attended hearings before the AO during assessment proceedings and furnished the required details. The AO recorded these facts in the assessment order and completed assessment under section 143(3), not under the ex parte provision of section 144. Applying the principle evident in the precedents relied upon by the assessee, subsequent compliance during the assessment proceedings and framing of assessment under section 143(3) militates against treating the assessee as non-cooperative for the purpose of invoking section 271(1)(b). In these circumstances there was no sufficient basis to sustain the penalty, and the Tribunal deleted the penalty and set aside the orders imposing it.

Penalty under section 271(1)(b) deleted; orders imposing the penalty cancelled.

Final Conclusion: The assessee's appeal is allowed: penalty imposed under section 271(1)(b) is deleted because the assessee subsequently complied during assessment proceedings and assessment was completed under section 143(3), indicating absence of non-cooperation.

Admission of additional evidence in appellate proceedings - natural justice and sufficient cause for non-production of evidence - assessment completed to the best of the assessing officer's judgment on account of non-cooperation - remand to assessing officer for fresh examination upon admission of evidence - imposition of costs for failure of representation causing inconvenience to revenue

Admission of additional evidence in appellate proceedings - natural justice and sufficient cause for non-production of evidence - assessment completed to the best of the assessing officer's judgment on account of non-cooperation - remand to assessing officer for fresh examination upon admission of evidence - Additional evidences furnished before the Commissioner (Appeals) were admissible and the matter was to be restored to the Assessing Officer for fresh examination. - HELD THAT: - The Assessing Officer had completed assessment to the best of his judgment in view of non-cooperation by the assessee's authorized representative, who did not appear before the AO on account of illness. The Tribunal found that this constituted sufficient cause for non-production of evidence before the AO and that, in the interest of natural justice, the Commissioner (Appeals) ought to have admitted the additional evidences. Having admitted the additional evidences, the Tribunal directed that the issues be set aside to the file of the AO for fresh consideration and decision after affording adequate opportunity of being heard, since the admitted materials require examination by the AO.

Additional evidences admitted; order of Commissioner (Appeals) set aside and matters restored to the Assessing Officer for fresh examination in accordance with law.

Imposition of costs for failure of representation causing inconvenience to revenue - Cost was imposed upon the assessee for failure to properly represent before the Assessing Officer. - HELD THAT: - The Tribunal held that, although the assessee's authorized representative failed to represent the assessee before the AO, causing the AO to complete assessment to the best of his judgment, the assessee should nonetheless bear a modest cost for the unwarranted inconvenience caused to the Department. The Tribunal specified that the cost shall be paid to the credit of the Income Tax Department within one month from receipt of the order.

Cost of Rs. 2,000/- imposed on the assessee to be paid to the credit of the Income Tax Department within one month.

Final Conclusion: The appeal is treated as allowed for statistical purposes: additional evidences are admitted and the matter is remanded to the Assessing Officer for fresh examination after affording opportunity of hearing; the assessee is directed to pay the specified cost to the Department within one month.

Penalty under section 271(1)(b) of the Income tax Act - non compliance with notice issued under section 142(1) - ex parte appellate order - opportunity of hearing / principles of natural justice - remand for fresh consideration by appellate authority

Penalty under section 271(1)(b) of the Income tax Act - non compliance with notice issued under section 142(1) - ex parte appellate order - opportunity of hearing / principles of natural justice - remand for fresh consideration by appellate authority - Whether the ex parte confirmation of penalty imposed for non compliance with the AO's notice should be set aside and the matter restored to the CIT(A) for fresh consideration after granting an opportunity of hearing. - HELD THAT: - The Tribunal noted that penalty proceedings under section 271(1)(b) were initiated by the AO for failure to comply with the notice under section 142(1) and that the CIT(A) confirmed the penalty by an ex parte order after issuing only one notice of hearing. Applying the principle that an appellant must be afforded a fair opportunity to be heard, the Tribunal found that, in the interest of justice, the matter ought not to be finally decided ex parte without affording the assessee one final opportunity to substantiate its case before the CIT(A). Accordingly, the Tribunal restored the issue to the file of the CIT(A) with a direction to grant one final opportunity to the assessee to appear and present its case; if the assessee fails to appear, the CIT(A) is at liberty to pass an appropriate order in accordance with law. The Tribunal therefore did not decide the merits of the penalty but remanded the matter for fresh consideration in light of the opportunity to be afforded. [Paras 8]

The ex parte confirmation of the penalty is set aside and the matter is restored to the CIT(A) with a direction to grant one final opportunity to the assessee to be heard and to decide the penalty afresh; if the assessee fails to appear, the CIT(A) may pass an appropriate order.

Final Conclusion: All appeals are allowed for statistical purposes by restoring the penalty issue to the CIT(A) for fresh adjudication after affording the assessee one final opportunity to be heard; no adjudication on the merits of the penalty was made by the Tribunal.

Right to be heard - ex parte order - restoration for fresh consideration - adjudication on merits - admission of additional evidence - long-term capital gains - compensation for acquisition of agricultural land - exemption under 10(37)

Right to be heard - ex parte order - admission of additional evidence - Whether the assessee was entitled to a further opportunity before the Ld. CIT(A) after an ex parte order was passed. - HELD THAT: - The Tribunal found that the Ld. CIT(A) had passed a common ex parte order because the assessee did not appear despite service of notices. Considering the totality of facts and in the interest of justice, the Tribunal directed that the appeals be restored to the file of the Ld. CIT(A) and that the assessee be granted one final opportunity to appear, substantiate his case and seek admission of additional evidence. The Tribunal also recorded that if the assessee fails to appear, the Ld. CIT(A) would be at liberty to pass an appropriate order in accordance with law. [Paras 8]

Appeals restored to the Ld. CIT(A) with direction to grant one final opportunity to the assessee to substantiate his case and consider additional evidence; if the assessee fails to appear, Ld. CIT(A) may pass appropriate order.

Restoration for fresh consideration - adjudication on merits - long-term capital gains - compensation for acquisition of agricultural land - exemption under 10(37) - Whether the additions made by the AO in respect of undisclosed long-term capital gains and enhanced compensation for acquisition of agricultural land should be adjudicated afresh. - HELD THAT: - The Tribunal did not decide the merits of the additions relating to undisclosed long-term capital gains and enhanced compensation or the applicability of the claimed exemption under 10(37). Instead, having restored the appeals for fresh consideration, the Tribunal directed the Ld. CIT(A) to decide the appeals on facts and law after giving the assessee the final opportunity to substantiate his case. Consequently, the substantive issues relating to the correctness of the additions and applicability of the exemption remain for adjudication by the Ld. CIT(A). [Paras 8]

Substantive issues concerning the additions and the claimed exemption under 10(37) are remanded to the Ld. CIT(A) for fresh adjudication after hearing the assessee.

Final Conclusion: Both appeals are restored to the file of the Ld. CIT(A) and allowed for statistical purposes; the Ld. CIT(A) is directed to grant one final opportunity to the assessee to substantiate the case and to decide the appeals on facts and law, failing which the Ld. CIT(A) may pass an appropriate order.

Computation of MAT credit under section 115JAA - Inclusion of surcharge and education cess in 'tax' for MAT credit - Return form ITR-6 Schedule MATC binding on revenue - Interest under section 234C to be charged on returned income

Computation of MAT credit under section 115JAA - Inclusion of surcharge and education cess in 'tax' for MAT credit - Return form ITR-6 Schedule MATC binding on revenue - Assessee's method of computing MAT credit under section 115JAA by treating 'tax' as inclusive of surcharge and education cess is correct and the Assessing Officer must accept the MAT credit as claimed in the return. - HELD THAT: - Section 115JAA(5) permits set off of brought forward MAT credit to the extent of the difference between the tax on total income and the tax which would have been payable under section 115JB. The term 'tax' has been judicially held to include surcharge (CIT v. K. Srinivasan), and education cess, though more recent, is likewise part of the tax component. Accordingly, the computation of the difference for purposes of MAT credit must take surcharge and education cess into account. Further, the assessee filed its return in the prescribed ITR-6 form where Schedule MATC and related schedules automatically populate the figures for tax under normal provisions and tax under section 115JB inclusive of surcharge and cess; the revenue is bound to follow the return form. Applying these principles, the tribunal held that the assessee's computation in the return was correct and directed the Assessing Officer to accept the working given by the assessee. [Paras 5, 6, 7, 8]

Allow MAT credit as computed by the assessee in the return (inclusive of surcharge and education cess) and direct the Assessing Officer to accept the assessee's working.

Interest under section 234C to be charged on returned income - Interest under section 234C charged by the Assessing Officer should be computed on returned income and not on assessed income. - HELD THAT: - The tribunal applied the settled principle that liability to interest under section 234C relates to instalment liabilities based on returned tax and not on any additional tax found upon assessment. On this basis, the ground raised by the assessee against the charge of interest under section 234C was allowed. [Paras 9]

Set aside the charge of interest under section 234C insofar as it was computed on assessed income; interest must be calculated on returned income.

Final Conclusion: Appeal allowed. The Assessing Officer is directed to accept the assessee's computation of MAT credit (inclusive of surcharge and education cess) as per the return and to recalculate or delete interest under section 234C consistent with the principle that such interest is to be charged on returned income.

Disallowance under section 14A - Rule 8D(2) proportionate interest disallowance - Presumption of application of interest-free own funds to investments - Rule 8D(2) indirect expenses disallowance limited to investments yielding exempt income - No estoppel against the statute

Rule 8D(2) proportionate interest disallowance - Presumption of application of interest-free own funds to investments - No estoppel against the statute - Deletion of proportionate interest disallowance under second limb of Rule 8D(2) where the assessee had sufficient interest-free own funds - HELD THAT: - The Tribunal accepted the finding of the ld. CIT(A) that the assessee's share capital and reserves and surplus at the beginning and close of the year exceeded the aggregate of current and non-current investments. Reliance was placed on the jurisdictional High Court decisions which hold that where sufficient interest-free funds are available, a presumption arises that investments were made out of such funds and not out of borrowed funds; accordingly there can be no disallowance of interest under the second limb of Rule 8D(2). The revenue did not controvert the factual finding regarding availability of own funds. The Tribunal therefore directed deletion of the proportionate interest disallowance computed by the AO (including the amount voluntarily disallowed by the assessee in the return). The Tribunal noted that revenue remains entitled to collect taxes according to law and that there is no estoppel against the statute, and accordingly declined to adjudicate the assessee's alternative submission on net interest as it became unnecessary. [Paras 6, 8]

Proportionate interest disallowance under second limb of Rule 8D(2) deleted; AO directed to delete the disallowance including the amount voluntarily made in the return.

Rule 8D(2) indirect expenses disallowance limited to investments yielding exempt income - Disallowance under section 14A - Recomputation of disallowance under third limb of Rule 8D(2) considering only investments which actually yielded exempt dividend income - HELD THAT: - The Tribunal directed the Assessing Officer to recompute the disallowance of indirect expenses under the third limb of Rule 8D(2) by taking into account only those investments which actually yielded exempt income, placing reliance on the Special Bench decision in Vireet Investments (165 ITD 27 (Del)(SB)). The AO was to reduce the disallowance already made by the assessee accordingly and recompute the liability consistent with that principle. [Paras 9]

Disallowance under the third limb to be recomputed by the AO considering only investments that actually yielded exempt income; recomputation to reduce the disallowance already made by the assessee.

Final Conclusion: The revenue's appeal is dismissed and the assessee's appeal is allowed: the proportionate interest disallowance under Rule 8D(2)(ii) is deleted on the factual finding of sufficient own interest-free funds, and the AO is directed to recompute the indirect expense disallowance under Rule 8D(2)(iii) only in respect of investments that actually yielded exempt income.

Penalty under section 271(1)(c) - principle of natural justice - opportunity of being heard - remand for fresh adjudication

Penalty under section 271(1)(c) - principle of natural justice - opportunity of being heard - remand for fresh adjudication - Validity of the order of the Commissioner of Income Tax (Appeals) confirming penalty where the assessee was not given an opportunity of being heard. - HELD THAT: - The Tribunal found on appraisal of the CIT(A)'s order that the CIT(A) decided the penalty controversy in the absence of the assessee and without giving a hearing, which amounted to a breach of the principle of natural justice. Reliance was placed on authority recognising the requirement of hearing before adverse appellate action is taken. In view of this defect the Tribunal held that the CIT(A)'s findings could not be sustained and accordingly set aside those findings. The matter was restored to the CIT(A) with a direction to decide the penalty afresh after affording the assessee a proper and reasonable opportunity of being heard. The same direction was applied mutatis mutandis to the appeal relating to the other assessment year. [Paras 5, 7, 8]

CIT(A)'s order confirming penalty is set aside and the matter is remitted to the CIT(A) for fresh decision after giving the assessee an opportunity of being heard; same order applies to the other assessment year.

Final Conclusion: The Tribunal allowed the appeals, set aside the CIT(A)'s confirmation of penalty for the specified assessment years for failure to afford a hearing, and remitted the matters to the CIT(A) to decide afresh after providing the assessee a proper opportunity of being heard.

Bogus transaction - reliance on third-party statements recorded under section 133A - survey statement as weak evidence - cross-examination and opportunity to test statements - admissibility of electronic stock-exchange F&O transaction records - adverse inference drawn on suspicion - burden to prove genuineness of claimed losses

Bogus transaction - adverse inference drawn on suspicion - burden to prove genuineness of claimed losses - admissibility of electronic stock-exchange F&O transaction records - Addition of loss claimed by the assessee from Futures & Options transactions treated as bogus and disallowed. - HELD THAT: - The Tribunal found that the assessee produced contemporaneous corroborative documents showing F&O trades executed on recognized stock exchanges (BSE & NSE), with transactions carried out on electronic platforms, CTT paid and payments/receipts through banking channels. The AO and the first appellate authority discarded those primary documents without pointing to any infirmity in them and based the disallowance solely on suspicion arising from selective extracts of third party statements. There was no material establishing a nexus between the assessee and the 'jamakharchi' clients referred to in those statements, nor any evidence that the F&O transactions themselves were bogus. In absence of any other incriminating material and having regard to the supporting evidence produced by the assessee, the claimed loss was held to be genuine and allowable. [Paras 8, 9]

The addition disallowing the F&O loss was deleted and the claimed loss allowed.

Reliance on third-party statements recorded under section 133A - survey statement as weak evidence - cross-examination and opportunity to test statements - Whether statements of broker's director and accountant recorded during survey under section 133A could be relied upon as sole basis for adverse finding against the assessee. - HELD THAT: - The Tribunal held that the statements relied upon were recorded during a survey under section 133A and were not incriminating as regards the assessee's F&O transactions. The AO had not produced the complete statements to the assessee, had not summoned or questioned the declarants, and the assessee was not afforded an opportunity to test the statements by cross examination. Consistent with precedents recognising the limited evidentiary value of survey statements, such third party statements could not form the sole basis for drawing an adverse inference against the assessee in respect of its F&O loss claim. [Paras 8]

Survey statements of the broker's personnel could not be relied upon as sole or conclusive evidence to disallow the assessee's claimed loss; they were disregarded for that purpose.

Final Conclusion: The Tribunal allowed the appeal, directed deletion of the addition of the F&O loss, and held that survey statements of the broker's personnel-being non incriminating as to the assessee, recorded under section 133A and not tested by cross examination-could not support an adverse finding in absence of other material.

Arm's length price - Transfer pricing adjustment - Comparability analysis in transfer pricing - Transactional Net Margin Method - Functional comparability - Application of quantitative filters in comparables selection - Extra ordinary events and their effect on comparability - Reliance on Dispute Resolution Panel directions

Comparability analysis in transfer pricing - Functional comparability - Application of quantitative filters in comparables selection - Extra ordinary events and their effect on comparability - Whether the comparable companies selected/retained by the TPO/DRP are to be included or excluded for determination of the arm's length price of the assessee's international transactions - HELD THAT: - The Tribunal examined each challenged comparable against the assessee's functional profile and the comparable companies' annual reports rather than relying on precedents that excluded the same entities in other, factually different cases. Accentia Technologies Ltd. was held functionally similar to the assessee (both providing BPO services); its alleged extraordinary events and goodwill arose from prior amalgamation and did not demonstrate material impact on pricing or profits for the year under consideration, hence it was retained. Fortune Infotech Ltd. failed the declining sales filter applied by the TPO (its revenue had materially fallen), and therefore the Tribunal directed exclusion of this comparable. Igate Global Solutions Ltd., Infosys BPO Ltd., TCS E Serve International Ltd. and TCS E Serve Ltd. were each excluded because of manifest disproportionality in scale and turnover vis a vis the assessee (turnover multiples running into hundreds), rendering them functionally non comparable; in Igate's case an extraordinary amalgamation event and a disproportionately large turnover (509 times) reinforced exclusion. The Tribunal directed the TPO to exclude these comparables accordingly. The Tribunal declined to follow coordinate bench decisions that excluded particular comparables where the functional profiles in those cases were not shown to match the assessee's, holding that inclusion/exclusion must be determined on facts of the assessee and the specific comparable.

Accentia Technologies Ltd. retained; Fortune Infotech Ltd., Igate Global Solutions Ltd., Infosys BPO Ltd., TCS E Serve International Ltd. and TCS E Serve Ltd. excluded; TPO directed to give effect to these exclusions in the transfer pricing computation.

Transfer pricing adjustment - Arm's length price - Dispute Resolution Panel directions - Disposition of the remaining grounds challenging the assessment and related proceedings - HELD THAT: - Grounds challenging the assessment order generally (ground 1), the jurisdictional validity of the reference to the TPO (ground 2), the initiation of penalty proceedings (ground 4) and charging of interest (ground 5) were considered. The jurisdictional challenge was not pressed before the Tribunal; no substantive arguments were advanced on the other grounds. Accordingly, those grounds were not upheld. The Tribunal limited its intervention to the comparables issue where arguments were advanced and evidence was examined, and accepted the DRP/TPO orders to the extent they were consistent with the Tribunal's comparability findings while modifying the set of comparables as directed.

Other grounds dismissed (jurisdictional challenge not pressed; no arguments advanced on penalty and interest), appeal partly allowed only insofar as specified comparables are directed to be excluded.

Final Conclusion: Appeal partly allowed: the Tribunal affirmed inclusion of Accentia Technologies Ltd. but directed exclusion of Fortune Infotech Ltd., Igate Global Solutions Ltd., Infosys BPO Ltd., TCS E Serve International Ltd. and TCS E Serve Ltd. for the purpose of determining the arm's length price; other grounds were dismissed or not pressed.

Right to inspection of seized documents and samples - provision of seized-records and test reports to authorised representative - provisional release of seized goods - appealability of order under Section 110A of the Customs Act, 1962

Right to inspection of seized documents and samples - provision of seized-records and test reports to authorised representative - Respondents directed to supply the documents and samples enumerated in prayer (i) to the petitioner (through an authorised representative). - HELD THAT: - Petitioner's primary grievance was non-supply of Panchnama, Seizure Memo issued under Section 110 of the Customs Act, importer's copy of the Test Memo, importer's sample of the seized goods, computation chart for differential duty/IGST/penalties, and the results of the Test Reports in respect of the specified Bills of Entry. Learned counsel for the Respondents, on instructions, stated readiness and willingness to supply the said documents. The Court accepted that concession and accordingly directed that the petitioner may send an authorised representative to the concerned officer of the Respondents to collect the enumerated documents, thereby redressing the grievance limited to prayer (i). [Paras 3, 4]

Supply of the documents and samples as set out in prayer (i) shall be made to the petitioner through an authorised representative.

Provisional release of seized goods - appealability of order under Section 110A of the Customs Act, 1962 - Prayer (ii) for quashing the order dated 14.10.2020 and for provisional release of goods was not allowed by the Court; the order was noted to be appealable and the petitioner did not press the relief in this petition. - HELD THAT: - The Court observed that notice in these proceedings had been limited to prayer (i). The petitioner candidly admitted that the impugned order dated 14th October, 2020 passed under Section 110A of the Customs Act, 1962 is an appealable order and informed the Court of intention to file an appeal before the appropriate authority in accordance with law. Consequently, the Court did not grant the relief sought in prayer (ii) and did not adjudicate the merits of that request. [Paras 5]

Prayer (ii) cannot be allowed in these proceedings; the petitioner may pursue the remedy of appeal against the impugned order in accordance with law.

Final Conclusion: Writ petition disposed of: respondents directed to supply the documents and samples sought in prayer (i) to the petitioner through an authorised representative; the request for quashing the impugned order and for provisional release (prayer (ii)) was not granted, being an appealable matter which the petitioner will pursue by filing an appeal.

Writing off - disposed of - Actual User Condition - export obligation - confiscation under Section 111(o) - interpretation of exemption notification - burden of proof on the assessee

Writing off - disposed of - interpretation of exemption notification - export obligation - Actual User Condition - confiscation under Section 111(o) - Lawfulness of writing off duty free imported materials in the books and whether such writing off amounts to disposal in breach of the prohibition in clause (vii) of Notification No.30/1997-Cus, with consequences for actual user, export obligation compliance and confiscation under Section 111(o). - HELD THAT: - The tribunal found, on the facts, that the importer had fulfilled its export obligation and had been permitted to import a 2% excess to cover wastage and technical change. Some components remained unutilized because the relevant product division was closed and the components became obsolete. The court held that clause (vii) of the Notification must be read in context and not in isolation; the phrase "any manner" cannot be construed to encompass an accounting write off of goods which remained in the custody of the importer and were neither diverted nor sold. The court noted that writing off unused assets is permissible under the Income Tax law and that there was no material to show diversion or sale of the exempted materials. On these findings, the act of writing off did not constitute disposal in breach of the Notification, did not amount to non compliance with the actual user/export obligation in substance, and did not justify confiscation under Section 111(o). The tribunal's concurrent factual findings that export obligations were satisfied and materials were not diverted were accepted and the strict literal reading urged by Revenue was rejected in light of the contextual interpretation adopted by the court.

Writing off the unutilized duty free imported components in the books was permissible and did not amount to disposal in breach of clause (vii); there was no infringement of actual user/export obligation warranting duty demand or confiscation.

Final Conclusion: The substantial questions of law are answered against the Revenue and in favour of the importer; the appeal is dismissed.

Classification of Liquid Crystal Devices - Rule 3(a) of the General Rules of Interpretation - preference for the most specific description - HSN Explanatory Notes - description by name more specific than description by class - exclusion of Chapter 90 from Section XVI (Section Note 1(m) to Section XVI) - application and limits of Section Note 2 (Note 2(a) of Section XVI) regarding parts - classification of parts that themselves constitute articles provided for specifically in another heading

Classification of Liquid Crystal Devices - Rule 3(a) of the General Rules of Interpretation - preference for the most specific description - HSN Explanatory Notes - description by name more specific than description by class - exclusion of Chapter 90 from Section XVI (Section Note 1(m) to Section XVI) - application and limits of Section Note 2 (Note 2(a) of Section XVI) regarding parts - LCD panels are classifiable under Tariff Item 9013 8010 and parts of LCD panels are classifiable under Tariff Item 9013 9010. - HELD THAT: - The Tribunal applied the rule of interpretation preferring the most specific description and the HSN Explanatory Notes which identify "Liquid Crystal Devices" by name under heading 9013. Section Note 1(m) excludes articles of Chapter 90 from Section XVI (Chapters 84 and 85), reinforcing that goods specifically identifiable as Liquid Crystal Devices fall in Chapter 90 rather than in the residuary parts entry of Chapter 85. Note 2(a) of Section XVI does not oust classification under 9013 where the parts or components themselves constitute articles specifically provided for in Chapter 90; the general rule to classify parts with the principal article gives way where a specific heading for the part exists. The Tribunal followed earlier coordinate decisions applying these principles and held that neither the use of the panels as parts in television manufacture nor prior classification practices by the importer displace the specific description in Tariff Item 9013 8010 and its parts entry 9013 9010. Consequently, the denial of benefit under the amended Notification was without legal foundation and is set aside. [Paras 8, 9, 10, 11, 13]

Classification of the impugned LCD panels and parts is under Tariff Items 9013 8010 and 9013 9010 respectively; the denial of exemption under the amendment Notification is set aside.

Final Conclusion: The appeals are allowed; the impugned orders are set aside and the goods are held classifiable under Tariff Item 9013 8010 (LCD panels) and Tariff Item 9013 9010 (parts of LCD panels), with consequential reliefs, if any.

Power to call or direct the calling of an annual general meeting - directions under Section 97(1) of the Companies Act, 2013 - one member present in person or by proxy deemed to constitute a meeting - appointment of a Chairman by the Tribunal to conduct an AGM

Power to call or direct the calling of an annual general meeting - directions under Section 97(1) of the Companies Act, 2013 - Tribunal's jurisdiction to direct calling and conduct of the Annual General Meeting for the financial years not held. - HELD THAT: - The Tribunal, invoking the statutory power set out in Section 97(1) of the Companies Act, 2013, may call or direct the calling of an annual general meeting where a company has defaulted in holding its AGM. The petition established that the Respondent Company had not held its AGM for the financial years 2018-2019 and 2019-2020 despite a specific written demand by the petitioner and other attempts at notice; having regard to that default and the statutory provision, the Tribunal was empowered to give such ancillary or consequential directions as it considered expedient to secure compliance with the statutory requirement to hold the AGMs. The Tribunal accordingly exercised this power to remedy the default and ensure that statutory formalities are observed. [Paras 11]

The Tribunal entertains and exercises its power under Section 97(1) to direct calling and conduct of the AGMs for the financial years 2018-2019 and 2019-2020.

Appointment of a Chairman by the Tribunal to conduct an AGM - Appointment of an independent Chairman by the Tribunal to conduct the AGMs of the respondent company. - HELD THAT: - Given the company's default in convening its AGMs and the absence of the respondents despite notice and publication, the Tribunal appointed Shri K. R. Jinan, a retired District & Sessions Judge and ex-Judicial Member of the NCLT, to perform the duties of Chairman to conduct the AGMs. The appointment was made to enable lawful conduct of the meetings in accordance with the Companies Act, 2013 and to ensure that the agenda items required by statute could be placed before the members and disposed of. [Paras 12, 13]

Shri K. R. Jinan is appointed as Chairman to conduct the AGMs of the respondent company.

One member present in person or by proxy deemed to constitute a meeting - Validation that an AGM convened pursuant to the Tribunal's direction may be constituted by one member present in person or by proxy. - HELD THAT: - The Tribunal relied on the proviso in Section 97(1) to direct that notice for the AGMs should make it clear that one member present in person or by proxy shall be deemed to constitute a meeting. This direction was given to meet the exigency created by the absence of a functioning board and the respondents' non-appearance, thereby ensuring that the meetings could be validly constituted and that statutory business could be transacted. [Paras 10, 13]

Notice for the AGMs shall state that one member present in person or by proxy shall be deemed to constitute a meeting.

Ancillary directions as to remuneration for Tribunal-appointed Chairman - Allocation of responsibility for payment of the Chairman's remuneration. - HELD THAT: - The Tribunal directed that the remuneration of the Chairman appointed to conduct the AGMs shall be borne by the petitioner. The Tribunal left fixation of the remuneration to agreement between the petitioner and the appointed Chairman, thereby providing a practical mechanism to secure the Chairman's services without burdening the company suffering from defaults. [Paras 13]

The petitioner shall bear the remuneration of the Chairman, to be fixed by the petitioner with the Chairman's consent.

Final Conclusion: The Tribunal, exercising its statutory power under Section 97(1) of the Companies Act, 2013, directed calling and conduct of the Annual General Meetings for the financial years 2018-2019 and 2019-2020, appointed a Chairman to conduct those meetings, authorised that one member present in person or by proxy shall be deemed to constitute the meeting, and directed that the Chairman's remuneration be borne by the petitioner; the company petition and the interlocutory application were disposed of accordingly.

Expulsion from membership - natural justice / opportunity to be heard - disciplinary enquiry and proof of misconduct - standard of proof - misconduct must be proved beyond doubt - private club internal procedure - secret ballot as discretionary power - restoration and rectification of register of members - publication/circulation evidence requirement

Disciplinary enquiry and proof of misconduct - publication/circulation evidence requirement - standard of proof - misconduct must be proved beyond doubt - Validity of the expulsion on merits in the absence of cogent evidence of publication or circulation that tarnished the Club's image. - HELD THAT: - The Tribunal examined the enquiry report and the material placed on record and found no newspaper publication or authenticated pamphlet evidencing the alleged public dissemination; only two messages exchanged inter se between members were established. Such internal communications, on their face, related to grievances about the Club's functioning and financial irregularities and were not shown to have been made public or to contain content derogatory to the Club's prestige. The Articles and bye laws invoked for termination and expulsion apply only where misconduct is proved beyond any doubt; the facts and documents before the Tribunal did not satisfy that standard. Consequently, the disciplinary finding of misconduct was not sustained on the available evidence. [Paras 17, 18, 19, 21, 24]

The expulsion was unjustified on merits for want of proof that the appellants published or circulated material that tarnished the Club's image; the disciplinary finding is set aside.

Expulsion from membership - natural justice / opportunity to be heard - private club internal procedure - secret ballot as discretionary power - restoration and rectification of register of members - Whether procedural aspects (including exercise of discretion regarding secret ballot, appointment or conduct of inquiry, and opportunity to be heard) warranted upholding the expulsion or its reversal. - HELD THAT: - The Tribunal noted contentions about the enquiry officer's appointment and the manner in which the enquiry was conducted, and observed that the appellants had filed detailed replies to show cause notices. The Court also accepted that secret ballot is a discretionary mechanism vested in the Hony. Secretary; however, the ultimate conclusion turned on the insufficiency of evidence of misconduct rather than on mere technicalities. Given the weakness of the substantive case against the appellants, their fundamental right as members not to be deprived of membership except on clear proof of misconduct prevailed. The remedy granted was to set aside the committee's order and to restore the appellants' membership and register entries. [Paras 7, 16, 20, 22, 25]

Procedural objections did not need independent remand because, coupled with the lack of substantive proof, the expulsion was set aside and the appellants' membership ordered restored with rectification of the register.

Final Conclusion: The managing committee's decision dated 04.12.2016 expelling the appellants is set aside; the appellants' membership is to be restored and the register rectified. The connected appeals are disposed of with no order as to costs.

Appointment of Resolution Professional - selection of Authorized Representative by the Committee of Creditors - compliance with Section 22 of the Insolvency and Bankruptcy Code, 2016 - Authorized Representative under Section 21(6-A) read with Regulation 16A - majority decision of the Committee of Creditors - remand for compliance with statutory procedure - protection of acts done in regular course

Appointment of Resolution Professional - majority decision of the Committee of Creditors - compliance with Section 22 of the Insolvency and Bankruptcy Code, 2016 - Validity of the Adjudicating Authority's appointment of Respondent No.1 as Resolution Professional and Respondent No.2 as Authorized Representative despite selections made by the Committee of Creditors. - HELD THAT: - The Tribunal held that Section 22 entrusts the Committee of Creditors with the power to either confirm the interim resolution professional or to replace him by a proposed resolution professional and prescribes the procedure to be followed where the COC resolves to replace the IRP. Where the COC proposes a replacement, the Adjudicating Authority is obliged to forward the proposed name to the Board for confirmation and to act in accordance with the Board's response under Section 22(4) and (5). The Adjudicating Authority in the present case did not follow the statutory route but instead inquired of and appointed the IRP himself as RP and imposed an Authorized Representative contrary to the COC's choice. That exercise of power was held to be impermissible and the impugned appointments were set aside to the extent they contravened the statutory procedure and the COC's majority decision. [Paras 10, 11, 12]

Impugned appointment of Respondent No.1 as Resolution Professional and Respondent No.2 as Authorized Representative set aside for non-compliance with statutory procedure and non-respect of the COC's majority decision.

Authorized Representative under Section 21(6-A) read with Regulation 16A - selection of Authorized Representative by the Committee of Creditors - protection of acts done in regular course - Treatment of the persons selected by the Committee of Creditors and consequential directions to the Adjudicating Authority. - HELD THAT: - The Tribunal directed that Mr. Hari T. Devadiga, having been selected by the class of home/shop buyers and whose selection was recognised in the COC minutes and by the IRP, shall be treated as the Authorized Representative under Section 21(6-A) read with Regulation 16A; any charge or materials held by the person appointed by the Adjudicating Authority must be handed over to him. The Tribunal further directed that the Adjudicating Authority shall forward the name of Mr. Konduru Prasanth Raju to the Board for confirmation and comply with Section 22(4) and (5). Meanwhile the interim resolution professional shall continue in charge as IRP until such compliance. The Tribunal also protected the legality of actions taken by Respondents 1 and 2 pursuant to the impugned order by declaring those steps and fees paid/payable pursuant thereto to be acts done in the regular course and not open to challenge under the present order. [Paras 12]

Matter remitted with directions: treat Hari T. Devadiga as Authorized Representative; forward Konduru Prasanth Raju's name to the Board for confirmation and comply with Section 22(4)-(5); IRP to continue in charge until compliance; actions taken pursuant to the impugned order protected.

Final Conclusion: The appeal is allowed in part: the Tribunal set aside the Adjudicating Authority's appointments insofar as they disregarded the COC's selections and statutory procedure, remitted the matter with directions to recognise the COC's Authorized Representative, to forward the proposed Resolution Professional to the Board for confirmation and to comply with Section 22, while maintaining the IRP in charge pending compliance and protecting steps already taken under the impugned order.

Exclusion of time from CIRP period - extension of CIRP beyond 330 days in exceptional cases - proviso to Section 12(2) and (3) - exclusion/extension of CIRP period - directing consideration of pending resolution plan by the Committee of Creditors and Resolution Professional - protection of home-buyers' and plot-holders' rights in CIRP

Exclusion of time from CIRP period - proviso to Section 12(2) and (3) - exclusion/extension of CIRP period - extension of CIRP beyond 330 days in exceptional cases - Certain periods of delay during the CIRP were to be excluded from counting the total CIRP period. - HELD THAT: - The Tribunal found that a period of 172 days was wasted on account of pendency of the application for appointment of an authorised representative for Financial Creditors which prevented constitution of the requisite quorum and holding of CoC meetings; that thereafter a period occasioned by the COVID-19 lockdown also prevented progress of the CIRP; and that, having regard to the proviso to Section 12(2) and (3) and the principle in Arcelormittal India v. Satish Kumar Gupta, delay attributable to factors beyond the fault of stakeholders or occasioned by the Adjudicating Authority may be excluded and, in exceptional cases, time may be extended beyond 330 days. Applying these considerations, the Tribunal held that the period of 172 days and a further period (treated as 210 days in the order) are to be excluded from counting the CIRP period so as to avoid prejudicial consequences to stakeholders and to permit resolution where feasible. [Paras 14, 15, 16]

The Tribunal excluded the identified periods from the CIRP computation and accepted that time may be treated as excluded/extended in the circumstances of the case.

Directing consideration of pending resolution plan by the Committee of Creditors and Resolution Professional - protection of home-buyers' and plot-holders' rights in CIRP - The RP and the CoC were directed to consider the pending resolution plan and related grievances instead of proceeding to liquidation at that stage. - HELD THAT: - The Tribunal observed that the RP's application for liquidation had not been supported by a final account (Form-H) or by a confirmed CoC resolution and that liquidation at that stage would risk prejudicing the rights of numerous home buyers and plot holders. Given that a resolution plan by M/s Alkon Projects had been received and in view of the statutory object of preferring resolution over liquidation, the Tribunal exercised its discretion to require the RP and CoC to consider the pending plan and to address grievances raised by the Union Bank of India, other creditors and home buyers/plot owners. The exercise was ordered to be completed within a fixed short period to balance the need for finality with protection of stakeholders. [Paras 13, 15, 17]

The Tribunal directed the RP and CoC to consider the pending resolution plan and related grievances and ordered that this exercise be completed within 60 days; both applications were disposed of accordingly.

Final Conclusion: Both applications were allowed: specified periods of delay were excluded from the CIRP timeline and the RP and CoC were directed to consider the pending resolution plan and stakeholders' grievances within 60 days, with the matter posted for further hearing.

Financial Debt - Inter Corporate Deposit - debt disbursed against consideration of time value of money - Operational Creditor - statutory demand notice under Section 8 - Limitation Act applicability in insolvency - acknowledgement and part payment extending limitation - enforcement of money secured by mortgage

Financial Debt - Inter Corporate Deposit - debt disbursed against consideration of time value of money - Classification of the ICD advanced by Tata Global Beverages Limited to Kerala Ayurveda Limited as a Financial Debt. - HELD THAT: - The Bench examined the nature of the transaction evidentiary material and found that the amount advanced was an Inter Corporate Deposit repaid with interest and thus amounted to a debt disbursed against consideration of time value of money. Applying clause (a) of sub section (8) of Section 5 of the Code, the transaction falls within the statutory definition of Financial Debt. The adjudicatory finding therefore treats the claim as a Financial Creditor's claim rather than an operational claim. [Paras 13, 14]

The ICD is a Financial Debt and the respondent is a Financial Creditor.

Operational Creditor - statutory demand notice under Section 8 - Whether the absence of a demand notice under Section 8 barred the Section 7 application because the claimant was an Operational Creditor. - HELD THAT: - The Tribunal rejected the contention that a Section 8 demand notice was a prerequisite in the present case by reason of the claimant being an Operational Creditor. Having held that the transaction is a Financial Debt, the statutory regime applicable to operational claims (including the Section 8 demand notice requirement) does not govern the present claim. The Bench therefore held that the alleged lack of a Section 8 notice does not defeat maintainability. [Paras 6, 13]

Absence of a Section 8 notice does not render the application non maintainable because the claim is a Financial Debt.

Limitation Act applicability in insolvency - acknowledgement and part payment extending limitation - enforcement of money secured by mortgage - Whether the claim in IBA/46/KOB/2019 is time barred under the Limitation Act, having regard to payments, acknowledgements and security. - HELD THAT: - Relying on the records, including the true extract of account statements produced by the Financial Creditor, the Bench found that payments (including interest) were made by the Corporate Debtor up to April 2017 and that the Financial Creditor's own pleadings identified the period of default as commencing April 2017. The Tribunal applied the principle that limitation is a mixed question of law and fact and must be examined in light of pleaded facts and evidence. Given the account entries and admissions in the record showing payments and acknowledgement, the claim was held to be within limitation. The Tribunal also noted the existence of security (mortgage) and the effect of part payments and acknowledgements in extending limitation where applicable, as supported by the documents on record. [Paras 15, 17, 18, 19]

The claim is not time barred; the Section 7 application is within the period of limitation.

Final Conclusion: The Interlocutory Application challenging maintainability on the grounds of classification, absence of a Section 8 demand notice and limitation is dismissed; the transaction is held to be a Financial Debt, the demand notice objection is inapplicable, and the petition is within limitation, accordingly IA/80/KOB/2019 is dismissed.

Conversion of operational debt into financial debt - novation of contract - preferential transaction - avoidance of preferential transactions under Section 43 - remedial orders under Section 44 - two years/one year look back period for preference - distinction between financial creditor and operational creditor - principles laid down in Anuj Jain on preference

Conversion of operational debt into financial debt - novation of contract - distinction between financial creditor and operational creditor - Whether the loan agreement dated 15.04.2019 converted the earlier MOU obligation into a financial debt and whether the claim of the applicant ought to be classified as that of a financial creditor. - HELD THAT: - The Bench found that the parties executed an MOU on 07.03.2017 for advance payment for future supply of gold, and subsequently executed a loan agreement on 15.04.2019 which substituted the earlier arrangement and prescribed repayment with interest. The tribunal treated the 15.04.2019 instrument as a novation creating new terms of repayment and thereby elevating the prior operational arrangement into an agreement whose character was that of a financial debt on its face. However, having held that the substitution was effected with the design and effect of preferring the creditor (see findings on timing and surrounding events), the bench upheld the Resolution Professional's classification exercise and dismissal of the claim as a financial creditor in the insolvency context. The decision rests on the factual conclusion that the contractual substitution altered the nature of the original arrangement but, in the circumstances, could not be permitted to operate as a valid financial creditor claim in view of the preference issue identified and analysed under the Code and Anuj Jain principles. [Paras 17, 18, 19, 22, 23]

The loan agreement of 15.04.2019 was a novation creating a financial debt character on its terms, but the Resolution Professional's rejection of the applicant's claim as a financial creditor was upheld in light of the preferential nature of that conversion and the application is dismissed.

Preferential transaction - avoidance of preferential transactions under Section 43 - two years/one year look back period for preference - principles laid down in Anuj Jain on preference - remedial orders under Section 44 - Whether the substitution of the MOU by the loan agreement dated 15.04.2019 constituted a preferential transaction within the meaning of Section 43 and whether it falls within the statutory look back period. - HELD THAT: - Applying the indicia extracted from Anuj Jain, the Bench examined (i) benefit to a creditor; (ii) relation to antecedent operational/financial debt; (iii) whether the effect put the creditor in a better position than under distribution in accordance with Section 53; and (iv) timing within the relevant look back period. The tribunal concluded that the loan agreement dated 15.04.2019, executed seven months before the insolvency commencement date of 13.11.2019, was designed to prefer the applicant and thereby placed the applicant in a beneficial position vis a vis other creditors. The Bench held that the arrangement was not an excluded transfer made in the ordinary course of business and therefore fell within Section 43(2)(a). Although the Resolution Professional had not filed an application under Section 43, the Bench, on the facts and gravity of the transaction, suo motu treated the 15.04.2019 agreement as a preferential transaction capable of avoidance under Section 44 remedies. [Paras 21, 22]

The substitution effected on 15.04.2019 is a preferential transaction within Section 43, falls within the look back period, and is subject to avoidance remedies under Section 44; accordingly the RP's rejection of the financial creditor claim is sustained and the application is dismissed.

Final Conclusion: The Tribunal dismissed the application; it held that although the 15.04.2019 loan agreement novated the earlier MOU, the conversion amounted to a preferential transaction falling within Section 43 and within the statutory look back period, and therefore the Resolution Professional was justified in rejecting classification of the applicant as a financial creditor.

Approval of resolution plan under Section 31 - Compliance with requirements of Section 30(2) - Scrutiny limited to matters specified in Section 30(2) - Commercial viability tested by comparison with liquidation value - Implementation and supervision of resolution plan - Constitution of Monitoring Committee - No waiver of statutory liabilities without competent authority - Obligation to obtain statutory approvals post-approval

Approval of resolution plan under Section 31 - Compliance with requirements of Section 30(2) - Scrutiny limited to matters specified in Section 30(2) - Whether the Resolution Plan of M/s Kamini Metalliks Pvt. Ltd. approved by the CoC meets the statutory requirements and can be approved by the Adjudicating Authority under Section 31 of the I&B Code, 2016. - HELD THAT: - The Adjudicating Authority examined the Plan to satisfy itself that the Plan, as approved by the Committee of Creditors, conforms to the matters enumerated in Section 30(2) of the Code. The record shows that the Plan provides for payment of CIRP costs, repayment of operational creditors as required, arrangements for post-approval management of the corporate debtor, implementation and supervision mechanisms, does not contravene existing laws, and otherwise conforms to Board-specified requirements. The RP's compliance certificate (Form-H) and affidavit under Section 30(1) confirming non ineligibility under Section 29A were placed on record. The authority applied the principle that its discretion is circumscribed and limited to scrutiny under Section 30(2), as explained by the Supreme Court in K. Sashidhar, and found no ground under Section 30(2) to reject the Plan. [Paras 14, 15, 16, 18, 19]

The Resolution Plan is satisfied to meet the requirements of Section 30(2) and Regulations, and is approved under Section 31 of the Code.

Commercial viability tested by comparison with liquidation value - Compliance with valuation under CIRP Regulations - Whether the Resolution Plan's financial offer is acceptable in light of fair value and liquidation value determinations. - HELD THAT: - The authority noted valuation conducted by registered valuers under Regulation 27, recording fair value and liquidation value. The total Resolution Plan value (Rs. 98.15 Crores) exceeds the liquidation value (Rs. 96.92 Crores), indicating that the Plan offers value superior to liquidation. This consideration formed part of the statutory scrutiny under Section 30(2) and CIRP Regulations, supporting approval. [Paras 10, 19]

The Plan's consideration vis-a -vis liquidation value is satisfactory and supports approval.

Implementation and supervision of resolution plan - Constitution of Monitoring Committee - Whether a Monitoring Committee should be constituted and the RP appointed to monitor implementation and supervision of the approved Resolution Plan. - HELD THAT: - The Plan provided for implementation and supervision mechanisms and specifically proposed a monitoring committee including the RP and nominees of the financial creditors and the Resolution Applicant. Having approved the Plan, the Adjudicating Authority ordered constitution of a Monitoring Committee consisting of the RP, representatives nominated by the financial creditors and the Resolution Applicant to supervise implementation, and directed the RP to file periodic status reports before the Authority. [Paras 9, 22]

A Monitoring Committee is constituted and the RP is directed to monitor implementation and file status reports.

No waiver of statutory liabilities without competent authority - Obligation to obtain statutory approvals post-approval - Whether approval of the Resolution Plan extinguishes or waives statutory obligations and whether the Resolution Applicant must obtain statutory approvals. - HELD THAT: - The Adjudicating Authority clarified that approval of the Resolution Plan does not constitute a waiver of statutory obligations or liabilities; any waiver sought under the Plan would be subject to approval by the concerned authorities. Further, the Resolution Applicant is directed to obtain all necessary approvals required under any law within the prescribed periods of such laws. This preserves statutory rights of governments and authorities and places onus on the Resolution Applicant to secure permissions. [Paras 20, 21]

Approval does not waive statutory liabilities; the Resolution Applicant must obtain requisite statutory approvals and any waiver requires competent authority's sanction.

Obligation to furnish records to the Board - Whether the Resolution Professional must forward CIRP records and the approved Resolution Plan to the Insolvency and Bankruptcy Board of India and circulate the order to participants. - HELD THAT: - The Authority directed the Resolution Professional to forward all records relating to the conduct of the CIRP and the approved Resolution Plan to the IBBI for database recording and to send copies of the Order to the participants and the Resolution Applicant, thereby ensuring statutory and regulatory recording and communication. [Paras 25, 26]

The RP is directed to forward records to the IBBI and to send copies of this Order to participants and the Resolution Applicant.

Final Conclusion: The Resolution Plan of M/s Kamini Metalliks Pvt. Ltd., as approved by the Committee of Creditors, meets the statutory requirements under Section 30(2) and applicable Regulations and is approved under Section 31; a Monitoring Committee is constituted with the RP to supervise implementation, the Plan does not waive statutory liabilities and requires the Resolution Applicant to obtain necessary approvals, and the RP is directed to forward CIRP records to the IBBI and circulate the Order. IA No.173/2019 is disposed of as allowed.

Interim orders - substitution of orders - continuation of interim order till pendency - contempt jurisdiction - liberty to seek relief before original forum

Interim orders - substitution of orders - continuation of interim order till pendency - Effect and continuance of this Tribunal's interim order dated 27th August, 2019 and substitution of the NCLT interim order dated 23rd August, 2019. - HELD THAT: - The Tribunal recorded that the interim order passed by this Appellate Tribunal on 27th August, 2019 substituted the impugned interim order dated 23rd August, 2019 of the NCLT and that the Tribunal's interim order shall continue till the pendency of the petition under Sections 241-242 of the Companies Act, 2013. The Tribunal relied upon its earlier pronouncement (recorded at para 42 of the disposed appeal) substituting the NCLT order by the Appellate Tribunal's interim order and maintaining its continuance during pendency before the NCLT. The Tribunal therefore confirmed that the operative regime applicable to the parties is governed by the Appellate Tribunal's interim directions until the NCLT disposes of the petition. [Paras 4, 6]

The Appellate Tribunal's interim order dated 27th August, 2019 substitutes the NCLT interim order dated 23rd August, 2019 and shall continue until the petition under Sections 241-242 is pending.

Contempt jurisdiction - liberty to seek relief before original forum - Whether the Appellate Tribunal will entertain the contempt petition alleging breach of its interim directions. - HELD THAT: - The Tribunal declined to entertain the contempt petition. It expressly avoided adjudicating the merits of the alleged violations and observed that, as the substituted interim order remains in force and the matter is pending before the NCLT, the appropriate course for the applicant is to approach the learned NCLT for any reliefs legally available, including contempt proceedings if maintainable. The Tribunal therefore disposed of the contempt application without entering into substantive merits, granting liberty to the applicant to move the NCLT. [Paras 6, 7, 9]

Contempt petition not entertained; disposed with liberty to the applicant to seek appropriate relief before the NCLT.

Final Conclusion: The Appellate Tribunal held that its interim order of 27th August, 2019 substitutes the NCLT's interim order of 23rd August, 2019 and continues during the pendency of the petition; the contempt application was declined without deciding merits, and the applicant was granted liberty to approach the NCLT for appropriate relief.

Supply of order on pronouncement and prompt service to enable remedies - Right to statutory appeal under Section 26(3) PMLA - Taking possession after confirmation under Section 8(4) PMLA - Ten days' eviction notice under Rule 5(2) of the 2013 Rules - Delivery of copy on date of pronouncement under Regulation 27 of the Adjudicating Authority (Procedure) Regulations, 2013 - Judicial discretion to grant interim protection pending exercise of appellate remedy

Supply of order on pronouncement and prompt service to enable remedies - Delivery of copy on date of pronouncement under Regulation 27 of the Adjudicating Authority (Procedure) Regulations, 2013 - Availability and timely supply of the Adjudicating Authority's order to the affected party - HELD THAT: - The Court held that orders passed by the Adjudicating Authority must be made readily available to the parties within a reasonable time so that they can avail of statutory remedies. Where an order is pronounced in open court, Regulation 27 requires that a copy, if ready, be delivered forthwith to the parties or their representatives present; failure to do so is not permissible. The Court noted that in the present case the order dated 1st January 2021 was only supplied to the petitioner belatedly and observed that such practice is to be avoided. To ensure fairness and non-arbitrariness, the Court directed systemic compliance by requiring the Adjudicating Authority to fix specific dates for pronouncement in open court and to ensure timely service of orders. [Paras 6, 8, 9, 14]

Orders must be made available promptly; compliance with Regulation 27 is required and the Adjudicating Authority was directed to fix pronouncement dates and ensure timely service.

Right to statutory appeal under Section 26(3) PMLA - Taking possession after confirmation under Section 8(4) PMLA - Ten days' eviction notice under Rule 5(2) of the 2013 Rules - Judicial discretion to grant interim protection pending exercise of appellate remedy - Whether physical possession may be taken immediately or should be deferred to permit the petitioner to avail of appellate remedy - HELD THAT: - The Court considered authorities holding that parties should have the time available for filing an appeal before physical dispossession is effected. Having regard to the facts, the stage of service of the order and the competing contentions about the ten day eviction notice under the Rules, the Court exercised its discretion to grant the petitioner an interim protective period to enable pursuit of appellate remedies. The question of law as to the precise interplay of the limitation period for appeal and the time for eviction under the Rules was left open and not finally determined. [Paras 11, 12, 13]

Physical possession shall not be taken for 20 days from the date of the order to enable the petitioner to avail appellate remedies; the legal question on the precise entitlement of time was left open.

Delivery of copy on date of pronouncement under Regulation 27 of the Adjudicating Authority (Procedure) Regulations, 2013 - Supply of orders by upload on website to prevent future disputes - Measures to prevent recurrence of delayed supply of Adjudicating Authority orders - HELD THAT: - To avoid future disputes and ensure transparency, the Court directed that all orders passed by the Adjudicating Authority, besides being served in accordance with applicable provisions, shall be uploaded on the Adjudicating Authority's website within 48 hours from pronouncement. The Registrar of the Adjudicating Authority was specifically directed to implement this and to fix dates for pronouncement in open court so that Regulation 27 can be effectively complied with. [Paras 14]

Adjudicating Authority to upload orders on its website within 48 hours of pronouncement and to fix pronouncement dates for compliance with Regulation 27.

Final Conclusion: The petition was disposed of by directing that physical possession of the immovable property shall not be taken for 20 days to permit the petitioner to pursue appellate remedies; the Court ordered measures to ensure prompt supply of Adjudicating Authority orders, including fixation of pronouncement dates and uploading of orders within 48 hours, and left the broader legal question regarding the interplay of appeal period and eviction notice open.

Writ jurisdiction under Article 226 - Statutory alternative remedy by way of appeal under Section 86 of the Finance Act, 1994 - Relegation to alternative remedy - Appellate authority's jurisdiction to consider comparative decisions and claims of discrimination - Uniformity and non-discrimination under Article 14 - Consideration of limitation in light of prior writ proceedings

Writ jurisdiction under Article 226 - Statutory alternative remedy by way of appeal under Section 86 of the Finance Act, 1994 - Relegation to alternative remedy - The writ application cannot be entertained because an efficacious statutory remedy by way of appeal is available. - HELD THAT: - The Court held that the impugned order-in-original of the Commissioner, CGST & Central Excise, is an appealable order and the writ applicant has the statutory remedy of filing an appeal under Section 86 of the Finance Act, 1994 before the Customs, Excise and Service Tax Appellate Tribunal. The contention that the High Court should exercise writ jurisdiction despite the availability of the statutory appeal was rejected. The matter was disposed of by relegating the writ applicant to avail the statutory remedy without expressing any opinion on the merits. [Paras 6, 8]

Writ application dismissed and applicant relegated to file the statutory appeal before the Appellate Authority.

Appellate authority's jurisdiction to consider comparative decisions and claims of discrimination - Uniformity and non-discrimination under Article 14 - The Appellate Authority is competent and obliged to consider the grievance that a decision in a similarly situated case and alleged discriminatory treatment violate Article 14. - HELD THAT: - The Court recorded that the Appellate Authority is well within its jurisdiction to examine the ground raised in paragraph 14J of the writ petition, which complains that the adjudicating authority disregarded a Commissioner (Appeals) order in an identical case and thereby acted discriminatorily. The Tribunal is also obliged to consider the order of the Commissioner (Appeals), Bhopal, referred to by the petitioner in support of the claim. [Paras 7]

Appellate Authority to consider the said ground and the Commissioner (Appeals), Bhopal order when adjudicating the appeal.

Consideration of limitation in light of prior writ proceedings - The question of limitation in the appeal is to be considered by the Appellate Authority in view of the fact that the petitioner first approached the High Court. - HELD THAT: - While relegating the petitioner to the statutory appeal, the Court directed that if the issue of limitation arises, the Appellate Authority should consider it keeping in mind the petitioner's choice to first approach the High Court. The Court did not decide the limitation point on merits but left its appreciation to the Appellate Authority in that contextual light. [Paras 8]

Limitation, if urged, to be considered by the Appellate Authority with regard to the petitioner's prior recourse to the High Court.

Final Conclusion: The writ petition is dismissed without expression of opinion on merits and the petitioner is relegated to file the statutory appeal under Section 86 of the Finance Act, 1994 before the Customs, Excise and Service Tax Appellate Tribunal, which is directed to entertain and decide the grounds (including the claim of discrimination and the Commissioner (Appeals), Bhopal order) and to consider any plea as to limitation in the light of the petitioner having first approached this Court.

Pre-deposit for entertaining statutory appeal - rejection of statutory appeal for non-deposit - power to quash and remit for fresh consideration - entertaining appeal on merits upon compliance with pre-deposit requirement - Section 35F of the Finance Act, 1994

Rejection of statutory appeal for non-deposit - pre-deposit for entertaining statutory appeal - Section 35F of the Finance Act, 1994 - Validity of the appellate authority's rejection of the petitioner's statutory appeal solely on the ground of non-deposit required under Section 35F of the Finance Act, 1994. - HELD THAT: - The Court examined the position that the appeal was a statutory remedy which had been rejected only because the pre-deposit prescribed by Section 35F had not been made. Having regard to the nature of the defect - non-compliance with the pre-deposit requirement - and the fact that the petitioner expressed willingness to make the deposit, the Court concluded that the rejection was amenable to being set aside to afford the petitioner an opportunity to comply and have the appeal decided on merits. The Court relied on parity with an earlier decision of this Court in a similar factual matrix and found it appropriate to intervene by quashing the impugned order of rejection rather than leaving the petitioner remediless. [Paras 6, 7]

The impugned order rejecting the appeal for want of pre-deposit is quashed and set aside.

Entertaining appeal on merits upon compliance with pre-deposit requirement - power to quash and remit for fresh consideration - pre-deposit for entertaining statutory appeal - Whether the petitioner should be permitted to make the statutory pre-deposit and whether the appellate authority should be directed to consider the appeal afresh upon such deposit. - HELD THAT: - The Court directed that the petitioner be permitted to deposit the amount envisaged by Section 35F within one month. Upon such deposit, the appellate authority is mandated to admit and decide the statutory appeal afresh in accordance with law. The order effectively remits the matter to the appellate authority for fresh adjudication on merits, conditioned on compliance with the pre-deposit requirement within the stipulated time; this remedy preserves the statutory requirement while ensuring that the substantive appeal may be adjudicated. [Paras 6, 7]

Petitioner permitted to make the pre-deposit within one month; on deposit the appellate authority shall consider and decide the appeal afresh in accordance with law.

Final Conclusion: Writ petition allowed in part: the order rejecting the statutory appeal for non-deposit is quashed; petitioner is permitted one month to make the pre-deposit required by Section 35F of the Finance Act, 1994, and on compliance the appellate authority is directed to admit and decide the appeal afresh.

Power of Appellate Court to order payment pending appeal under Section 148 of the Negotiable Instruments Act - Minimum deposit requirement for stay of execution in appeals under Section 148 - Modification of conditional deposit directed by Appellate Court in exercise of judicial discretion - Right of appeal and protection against thwarting by discretionary pre-conditions - Exercise of inherent powers under Section 482 of the Code of Criminal Procedure to set aside consequent orders and secure ends of justice - Remand for fresh consideration after quashing of an earlier conditional order

Power of Appellate Court to order payment pending appeal under Section 148 of the Negotiable Instruments Act - Minimum deposit requirement for stay of execution in appeals under Section 148 - Modification of conditional deposit directed by Appellate Court in exercise of judicial discretion - Right of appeal and protection against thwarting by discretionary pre-conditions - Direction by the Appellate Court that the appellant pay 50% of the compensation as a pre-condition for hearing the application under Section 5 of the Limitation Act and the appeal. - HELD THAT: - The Court examined Section 148 of the Negotiable Instruments Act, noting that the provision authorises the Appellate Court to order deposit of a sum which shall be a minimum of twenty per cent of the fine or compensation awarded by the trial Court. The judgment observes that fixing 50% as a pre-condition was not compelled by Section 148 and that the right of appeal is too precious to be thwarted by discretionary technical embargoes. On the facts, including the appellant's financial difficulty and contextual factors such as the pandemic and systemic delays, the Court held that the 50% requirement ought to be suitably modified. Balancing the statutory minimum and the circumstances of the case, the Court directed deposit of 25% of the compensation amount in terms of Section 148 so as to permit the appeal and application to be heard afresh. [Paras 9, 11, 13]

The direction to pay 50% was excessive and is modified to an order that the appellant deposit 25% of the compensation in terms of Section 148.

Remand for fresh consideration after quashing of an earlier conditional order - Consequential setting aside of subsequent orders if the foundational order is set aside - Validity of subsequent orders passed by the Appellate Court (including dismissal of the condonation application and appeal) which followed from the original direction to deposit 50%, and the appropriate remedy. - HELD THAT: - The Court reiterated the settled principle that if an earlier order of a Court is set aside by a superior Court, consequential orders subsequently passed by the earlier Court pursuant to that order must also be set aside. Applying this principle, the Court found it appropriate to set aside the impugned order dated 08.09.2015 and the subsequent orders (including the order dated 25.11.2020), restore the application for condonation of delay and the appeal to their original file and number, and remand the matter to the Learned Appellate Court for fresh disposal in accordance with law and the modification directed regarding deposit. [Paras 14, 17]

Impugned order dated 08.09.2015 and subsequent consequential orders are set aside; the application for condonation of delay and the appeal are restored and remanded for fresh consideration.

Exercise of inherent powers under Section 482 of the Code of Criminal Procedure to set aside consequent orders and secure ends of justice - Whether this Court could invoke inherent jurisdiction under Section 482 CrPC to set aside the Appellate Court's orders and grant appropriate relief. - HELD THAT: - Relying on the established doctrine that inherent powers under Section 482 may be exercised ex debito justitiae to do substantial justice and to prevent abuse of the process of any Court, the High Court held that the present case warranted invocation of those powers. The Court concluded that exercising inherent jurisdiction was necessary to give effect to its setting aside of the original conditional order and to secure a fair opportunity for the appellant to prosecute the appeal; accordingly the inherent powers were exercised to set aside the consequential orders and to remand the matter. [Paras 15, 16, 17]

Inherent powers under Section 482 CrPC were exercised to set aside the Appellate Court's orders consequential to the impugned direction and to remand the matter for fresh hearing.

Final Conclusion: The High Court set aside the Appellate Court's direction to deposit 50% and consequential orders, modified the pre-condition to a deposit of 25% of the compensation in terms of Section 148 of the Negotiable Instruments Act, restored the condonation application and appeal to their original file and remanded the matter to the Learned Appellate Court for fresh disposal; inherent jurisdiction under Section 482 CrPC was invoked to effect this relief.

Rebuttable presumption under Section 139 of the Negotiable Instruments Act - Effect of material alteration under Section 87 of the Negotiable Instruments Act - Presumption of legally recoverable debt under Section 138 of the Negotiable Instruments Act - Maintainability where cheque is issued on behalf of a society and non impleading of the society

Rebuttable presumption under Section 139 of the Negotiable Instruments Act - Presumption of legally recoverable debt under Section 138 of the Negotiable Instruments Act - Respondent/accused No.1 has rebutted the presumption cast under Section 139 of the Negotiable Instruments Act. - HELD THAT: - The Court found that while section 139 creates a presumption in favour of the holder, it is rebuttable. The respondent (DW.1) denied signing or issuing the cheque Ex. P.1, disputed the existence of any debt or liability, and produced evidence and testimony pointing to material alterations on Ex. P.1 and lack of her endorsement to such alterations. The complainant's sole reliance on Ex. P.1 and on Ex. P.9 (an undated reply allegedly from accused No.2) was insufficient; PW.1's own admissions in cross examination undermined the complainant's case (she did not know who gave the cheque, admitted alterations, and was unclear about deposit particulars). On these materials the Court held the presumption under section 139 had been satisfactorily rebutted and the burden shifted back to the complainant, which the complainant failed to discharge. [Paras 28]

The presumption under Section 139 is rebutted by respondent/accused No.1.

Effect of material alteration under Section 87 of the Negotiable Instruments Act - Maintainability where cheque is issued on behalf of a society and non impleading of the society - The trial Court's acquittal is sustainable and does not warrant interference. - HELD THAT: - The Court examined the material alterations on Ex. P.1 (alteration below the date and change of account number) and the absence of the respondent's endorsement consenting to those alterations. Section 87 renders an instrument with such material alterations void as against a party who did not consent. The undated nature and doubtful provenance of Ex. P.9, the discharge of accused No.2 (whose role and possible collusion were material) with that dismissal attaining finality, and the complainant's failure to place further credible evidence led the Court to conclude that the trial Court correctly found collusion and material defects in the instrument. The Court also noted the broader factual feature that the claim related to a society and that the society was not impleaded, but the decisive grounds for upholding acquittal were the successful rebuttal of section 139 presumption and the instrument being tainted by unendorsed material alteration under section 87. Considering these determinative aspects, the appellate Court found no reason to set aside the acquittal. [Paras 31, 32]

The acquittal by the trial Court is confirmed; no interference is warranted.

Final Conclusion: The appeal is dismissed. The High Court affirms that the accused rebutted the statutory presumption under Section 139, material alterations on the cheque without the accused's consent rendered the instrument void under Section 87, and the trial Court's judgment of acquittal is therefore confirmed.

Presumption under Section 139 of Negotiable Instruments Act - Dishonour of cheque and legally enforceable debt under Section 138 of the Negotiable Instruments Act - Burden shifting on rebuttal of presumption - Service of statutory notice under Section 138

Presumption under Section 139 of Negotiable Instruments Act - Burden shifting on rebuttal of presumption - Respondent has rebutted the presumption in favour of the complainant under Section 139 of the Negotiable Instruments Act. - HELD THAT: - The court accepted that while the cheque and signature were admitted by the respondent, the statutory presumption arising under Section 139 initially favours the complainant. However, PW1's cross-examination admitted that the legally recoverable debt of the respondent was only a specified lesser sum and that a portion of the cheque amount related to liability of a third person, Mallikarjun Sangannavar. There was no document or admissible evidence placed by the complainant to prove that the respondent had agreed to discharge the third party's debt. The respondent also testified that particulars other than his signature were manipulated. Having regard to these admissions and omissions, the court found that the respondent had succeeded in rebutting the presumption, thereby shifting the burden back on the complainant to prove that the cheque was issued towards a legally enforceable debt of the full amount claimed. The complainant failed to discharge that burden by producing evidence of any agreement or liability of the respondent to pay the third party's debt, and thus the presumption did not operate to secure conviction. [Paras 21, 22, 24, 25, 26]

Presumption under Section 139 was rebutted and the onus shifted to the complainant, who failed to prove that the cheque discharged a legally enforceable debt of the full amount.

Dishonour of cheque and legally enforceable debt under Section 138 of the Negotiable Instruments Act - Service of statutory notice under Section 138 - The judgment of acquittal by the trial court does not warrant interference and is upheld. - HELD THAT: - The court examined the statutory requirements of Section 138 and its provisos, including presentation, service of notice and existence of a legally enforceable debt. It found service of the statutory notice proved by acknowledgment. On the central question of legally enforceable debt corresponding to the cheque amount, the complainant's own witness admitted a lesser debt due from the respondent and attributed part of the claimed amount to a third party. Because the complainant failed to produce evidence to bridge that gap or to prove an agreement by the respondent to pay the third party's liability, the trial court's detailed evaluation that the offence under Section 138 was not established was held to be lawful and reasoned. Reliance placed by the complainant on authorities dealing with unrebuffed presumption was found inapplicable on the facts. In these circumstances, appellate interference with the acquittal was unwarranted. [Paras 15, 16, 23, 26, 28]

Appeal is dismissed and the trial court's acquittal under Section 138 is upheld.

Final Conclusion: The High Court dismissed the appeal; the acquittal of the respondent by the trial court in the prosecution under Section 138 of the Negotiable Instruments Act is affirmed.