TaxTMI Updates e-Newsletter
Jan 22,2022

Summary order. The Special Leave Petition under Article 136 of the Constitution is dismissed; pending application, if any, disposed of.

Ultra vires - classification of goods - classification as animal feed supplement - exemption from GST - tariff heading 2309 - tariff heading 2303 - Circular No. 163/19/2021-GST para 8

Ultra vires - classification of goods - classification as animal feed supplement - exemption from GST - Circular No. 163/19/2021-GST para 8 - Challenge to para 8 of Circular No.163/19/2021-GST dated 06.10.2021 as ultra vires the GST Act and to the classification of DDGS/AFS as animal feed supplement under heading 2309 (exempt) rather than under heading 2303 (taxable). - HELD THAT: - The writ petition raises a substantive question whether the Executive, by issuing para 8 of the impugned circular, has exceeded its jurisdiction by directing classification of Dried Distillers Grain with Soluble (DDGS) as 'distillery dreg and waste' under heading 2303 instead of recognising DDGS/AFS as animal feed supplement under heading 2309 which the petitioner contends is exempt. The Court has not adjudicated the merits of that legal controversy in this order. Instead, procedural relief in the form of exemption of the pending miscellaneous applications was allowed, and notice was issued to the respondents to enable adjudication on the substantive challenge. The respondents have been permitted to file counter and reply affidavits within four weeks, with the petitioner allowed to file rejoinder before the next hearing. The matter is listed for further hearing on the specified date so that the court can consider the challenge to the vires of the circular and the correct tariff classification on merits after responses are filed.

Miscellaneous applications for exemption allowed; notice issued on the writ petition challenging para 8 of the circular and the classification of DDGS; respondents directed to file counter/reply affidavits; rejoinder permitted; matter listed for further hearing.

Final Conclusion: The Court allowed the exemption applications, issued notice on the petition challenging para 8 of Circular No.163/19/2021-GST and the contested classification of DDGS, directed the respondents to file their pleadings within four weeks and listed the matter for further hearing.

Regular bail under Section 439 CrPC - economic offences constitute a class apart - offence under Section 132(1) of the Goods and Services Tax Act, 2017 - compoundable offence under Section 138 of the Goods and Services Tax Act, 2017 - prima facie evidence and intention to commit economic crime - ongoing investigation and further custodial interrogation

Regular bail under Section 439 CrPC - economic offences constitute a class apart - prima facie evidence and intention to commit economic crime - ongoing investigation and further custodial interrogation - compoundable offence under Section 138 of the Goods and Services Tax Act, 2017 - Whether applicants accused of offences under Section 132(1) of the GST Act are entitled to regular bail - HELD THAT: - Applicants are accused of orchestrating a scheme of fictitious firms and generation of fake input tax credits causing alleged loss to the exchequer during financial years 2018-19, 2019-20 and 2020-21. Investigation materials and the complaint disclose seizure of identity documents in multiple names, bank account transactions without corresponding sales or purchases, and admissions recorded under Section 70 of the GST Act by some persons about generation of fake input tax credits. The criminality is found to be planned and deliberate rather than inadvertent business error. The Court applied the established principle that economic offences, which involve deep-rooted conspiracies and large losses to public funds, require a different approach in bail matters and that the court at the bail stage must be satisfied there are reasonable grounds for believing a genuine case exists against the accused. The prosecution also contends that investigation remains pending across different zonal units and that premature release would impede further inquiry. Although the offence is made compoundable under Section 138 of the GST Act subject to deposit, the Court held that compoundability and the period of custody do not outweigh the gravity of allegations, the material collected, and the ongoing multi-zone investigation. Mere incarceration since January 25, 2021 was held insufficient to merit bail where the prosecution's case discloses deliberate, premeditated economic crime and continued investigation.

Bail application rejected; applicants not enlarged on regular bail.

Final Conclusion: Bail petition dismissed: having regard to the nature and material on record showing planned generation of fictitious firms and large-scale input tax credit fraud across multiple financial years, the court declined to grant regular bail while investigation continues despite compoundability of the offence.

Provisional attachment of bank accounts - Blocking of Electronic Credit Ledger - One year limitation on provisional measures under Rule 86A(3) of the CGST Rules and Section 83(2) of the CGST Act - Right to operate bank account and electronic credit ledger upon lapse of provisional restriction - Liberty of revenue to proceed in accordance with law despite lapse of provisional measures

Blocking of Electronic Credit Ledger - One year limitation on provisional measures under Rule 86A(3) of the CGST Rules and Section 83(2) of the CGST Act - Provisional attachment of bank accounts - Right to operate bank account and electronic credit ledger upon lapse of provisional restriction - Whether the provisional blocking of the petitioner's Electronic Credit Ledger and provisional attachment of the petitioner's bank account continue to operate after expiry of one year and what relief, if any, is appropriate. - HELD THAT: - The Court recorded that under Rule 86A(3) of the CGST Rules the restriction imposed on the Electronic Credit Ledger ceases to operate after the expiry of one year from the date of imposition, and that under Section 83(2) the provisional attachment also lapses on the expiry of one year. Respondents' counsel admitted that attachments and blocking cease after one year and no fresh GST DRC 22 had been issued. The petitioner furnished an undertaking to cooperate with the investigating authorities and to supply documents; the Court accepted that undertaking and treated it as binding. In light of the admitted legal position regarding the one year limitation and the petitioner's undertaking of cooperation, the Court directed that the petitioner's bank account and Electronic Credit Ledger be de frozen and unblocked within three working days of uploading the order, while clarifying that respondents retain liberty to proceed further in accordance with law. [Paras 3, 4, 7, 8, 9]

Petitioner's Electronic Credit Ledger and specified bank account to be unblocked and de frozen within three working days; respondents retain liberty to proceed in accordance with law.

Final Conclusion: Writ petition disposed of by directing de freezing of the petitioner's bank account and unblocking of the Electronic Credit Ledger within three working days of uploading the order, respondent authorities remaining free to take further lawful action.

Transitional credit of the eligible duties - implementation of judicial directions - filing of declaration in FORM GST TRAN-1 and GST TRAN-2 - procedural nature of the due date under Rule 117 - portal opening versus alternative compliance by filing credit in GSTR-3B - role of GSTN and Nodal Officer in technical acceptance

Transitional credit of the eligible duties - filing of declaration in FORM GST TRAN-1 and GST TRAN-2 - implementation of judicial directions - Whether the directions contained in Paragraph-43 of the Court's earlier judgment (permitting filing of TRAN 1/TRAN 2 to claim transitional credit and treating the Rule 117 due date as procedural) have been given effect to in the present applications. - HELD THAT: - Paragraph-43 of the Court's earlier judgment directed respondents to permit filing of declarations in FORM GST TRAN-1 and GST TRAN-2 to enable claim of transitional credit and declared the due date under Rule 117 to be procedural. The present miscellaneous applications were filed because implementation of those directions was said to have been stalled. The respondents and the Nodal Officer explained operational and technical constraints, including the limited role of GSTN to accept TRAN-1 filings only upon appropriate authority direction and the pendency of proceedings in the Supreme Court in related matters. The Court noted alternative approaches adopted by other High Courts (including permitting claim of credit through monthly GSTR-3B) as potentially workable. On the subsequent hearing, the petitioner's counsel reported that the difficulty had been resolved and that the applicants had received the claimed credit. The Court recorded its satisfaction with the resolution and appreciation for the efforts of the Additional Solicitor General in securing compliance. No further adjudication was required. [Paras 4, 5]

The Court recorded that the applicants have received the transitional credit directed by Paragraph-43, expressed appreciation for the assistance in resolving the matter, and disposed of all applications as no further relief was required.

Final Conclusion: The Court disposed of the miscellaneous applications after recording that the directions in Paragraph-43 had been effectively implemented and the applicants had received the transitional credit; the matters stand closed with no further orders.

Summary order. Matter listed on 17.01.2022; respondent granted time to obtain instructions regarding sufficiency of the show cause notice and summary issued on the GSTN portal.

Confiscation and detention proceedings under the CGST Act - release of seized goods on payment of tax and penalty under Section 129 - initiation of adjudication under Section 130 for suspected tax evasion - judicial review under Article 226 in presence of disputed facts - fresh hearing and remand to statutory authority for appreciation of facts

Judicial review under Article 226 in presence of disputed facts - confiscation and detention proceedings under the CGST Act - Writ petition under Article 226 challenging detention under Section 129 and initiation of adjudication under Section 130 refused relief. - HELD THAT: - The Court found that the question whether the transport of gold ornaments was with intent to evade tax involves disputed questions of fact and documentary veracity which cannot be appropriately resolved in exercise of extraordinary writ jurisdiction. The respondent recorded reasons for initiating proceedings under Section 130 and the petitioner did not possess the statutory documents to establish the asserted purpose of carriage. In these circumstances the correctness of the reasons for initiating adjudication is to be determined by the statutory adjudicatory authority after appreciation of evidence and facts, and not by this Court under Article 226. Accordingly the writ petition does not merit interference. [Paras 7]

Writ petition dismissed insofar as it seeks to quash the detention/confiscation proceedings; interference under Article 226 declined.

Fresh hearing and remand to statutory authority for appreciation of facts - release of seized goods on payment of tax and penalty under Section 129 - Direction to statutory authority to afford fresh opportunity of hearing and decide the proceedings in accordance with law. - HELD THAT: - Although the Court declined to adjudicate disputed factual questions, it directed that the petitioner be afforded a fresh hearing to enable the statutory authority to consider the petitioner's representations and the materials on record. The petitioner was ordered to appear before the authority on the specified date and treat the judgment as notice; the authority was directed to pass appropriate orders in accordance with law after hearing the parties. [Paras 8]

Statutory authority directed to grant a fresh hearing to the petitioner and thereafter pass appropriate orders in accordance with law.

Final Conclusion: The writ petition challenging detention and initiation of adjudication under the CGST Act is dismissed; the Court declines to interfere under Article 226 because disputed factual questions require adjudication by the statutory authority, and directs that the petitioner be afforded a fresh hearing and that the authority decide the matter in accordance with law.

Classification under Heading 8471 - automatic data processing machine - unit of an automatic data processing system - machines incorporating or working in conjunction with an automatic data processing machine - Entry 847141

Classification under Heading 8471 - automatic data processing machine - Entry 847141 - Interactive flat panel with embedded Android processor is classifiable under heading 8471. - HELD THAT: - The Authority examined the features of the interactive flat panel: an embedded central processing unit (Quad Core ARM Cortex A73), memory and storage, an operating system (Android) capable of running programs, user input via a touch-sensitive display, and onscreen output. The Chapter 84 notes define an "automatic data processing machine" as a machine capable of storing programmes and data, being freely programmable by the user, performing arithmetical computations specified by the user, and executing processing programmes without human intervention. Entry 8471 covers automatic data processing machines and units thereof, and Entry 847141 specifically contemplates machines comprising in the same housing at least a central processing unit and input and output units. The interactive flat panel incorporates the central processing unit, input (touch) and output (display) in the same housing and meets the definitional criteria in the chapter notes. The Authority therefore applied the Chapter 84 notes and the relevant HSN entries and concluded that the device falls within heading 8471. [Paras 7, 8]

The interactive flat panel with Android is classifiable under heading 8471.

Final Conclusion: The Advance Ruling confirms that the described interactive flat panel with embedded Android processor satisfies the Chapter 84 definition of an automatic data processing machine and is classifiable under Heading 8471 (Entry 847141), and the applicant's question is answered in the affirmative.

Application of Section 68 (identity, genuineness and creditworthiness of investors) - Incriminating material requirement to disturb concluded assessments after search - Rejection of books of account under Section 145(3) - Disallowance of alleged bogus purchases by applying ad hoc percentage - Assessment of cash deposits during demonetization period as unexplained income - Standard for interference on appeal - substantial question of law and perversity

Application of Section 68 (identity, genuineness and creditworthiness of investors) - Incriminating material requirement to disturb concluded assessments after search - Whether additions under Section 68 on account of share capital/share premium could be sustained for the six assessment years, including whether statements and recovered documents constituted incriminating material to reopen concluded assessments. - HELD THAT: - The court upheld the Tribunal's factual conclusion that no incriminating material was found to justify disturbing assessments concluded under Section 143(3) for AYs 2012-13 to 2014-15. The statement recorded under Section 132(4) was held not to confess introduction of unaccounted income as share capital; the retraction and the content of the letter did not supply incriminating material. Photocopies of share transfer forms and other documents were not treated as primary or admissible secondary evidence, and revenue did not summon the alleged signatories. On merits, the Tribunal found documentary trail evidence showing that funds had been routed from the assessee to third parties and back to the assessee through banking channels, and that identity, creditworthiness and genuineness - the ingredients for satisfying explanation under Section 68 - were established in the facts. The court emphasised that motivation for routing one's own money through intermediaries is not a ground to attract Section 68 where the source is traceable and satisfactorily explained, and that revenue failed to carry out further probing to rebut the explanation. The court therefore found no basis to overturn the Tribunal's findings of fact. [Paras 11, 12, 14]

Additions under Section 68 in respect of share capital/share premium were not sustainable; concluded assessments could not be disturbed in the absence of incriminating material and the Tribunal's factual findings stood.

Disallowance of alleged bogus purchases by applying ad hoc percentage - Rejection of books of account under Section 145(3) - Whether the disallowance of 25% of purchases (as alleged bogus purchases) and related deletions/additions could be sustained, and whether the books of account could be legitimately rejected and profit reestimated. - HELD THAT: - The Tribunal's findings that the AO and CIT(A) failed to conduct consistent and adequate inquiry were affirmed as findings of fact. Remand material showed that about 50% of purchases from concerned parties were verified via notices under Section 133(6) with confirmations and no variation. The Tribunal found that purchases and corresponding sales were recorded in regular books, routed through banking channels, supported by vouchers and stock records, and that no incriminating documents on purchases were found during search. The court accepted the Tribunal's conclusion that the CIT(A) had not properly applied Section 145(3) - books could not be rejected without identifying patent or glaring defects and after examination of the books - and that the method adopted to quantify disallowance (applying varying gross profit ratios, ad hoc averaging) was inconsistent and unsustainable. Given these factual findings, the disallowances based on 25% arbitrary addition and the CIT(A)'s partial rejection/quantification were held to be unsupported. [Paras 15]

Disallowance of alleged bogus purchases and the quantification adopted by authorities were unsustainable; Tribunal's deletion/scale-down of additions on this ground was upheld.

Assessment of cash deposits during demonetization period as unexplained income - Standard for interference on appeal - substantial question of law and perversity - Whether cash deposits made during the demonetization period (relevant to AY 2017-2018) represented unexplained/unaccounted income and were liable to be added under Section 68. - HELD THAT: - The Tribunal analysed year-on-year cash sales and cash deposit trends (FY 2014-15, 2015-16, 2016-17) and concluded that cash deposits corresponded with cash sales and that the increase in cash sales in the demonetization year was not anomalous when compared with prior years. The AO's contention about alleged excess deposits was examined and the Tribunal found no evidence of booking of non-existent sales, no allegation of backdating, and no persuasive material showing unexplained income. The supposed shortage of stock relied upon by AO was found erroneous because stock at the Sonipat godown had not been included in the AO's physical verification. The court agreed that on the material before it the Tribunal was justified in deleting the CIT(A)'s scaled-down addition and that there was no basis to treat the demonetization-period deposits as unexplained income. [Paras 16, 17]

Addition for cash deposits during demonetization period (AY 2017-2018) was not sustainable and was deleted by the Tribunal; no unexplained income established on the record.

Final Conclusion: The High Court found no substantial question of law deserving interference; the Tribunal's factual findings on Section 68 additions, disallowance for bogus purchases and demonetisation-period cash deposits were not perverse and the appeals by revenue were dismissed.

Adjustment of unabsorbed depreciation against current year's business income while computing deduction under section 80HHC - rectification under section 154 of the Income Tax Act, 1961 - error apparent on the face of the record - overriding effect of section 80AB over other provisions of Chapter VI-A - binding effect of a prior decision of the Hon'ble Supreme Court on assessment orders

Adjustment of unabsorbed depreciation against current year's business income while computing deduction under section 80HHC - overriding effect of section 80AB over other provisions of Chapter VI-A - Validity of rectification under section 154 to adjust brought forward unabsorbed depreciation against business income for computation of deduction under section 80HHC. - HELD THAT: - The Court upheld the assessing officer's exercise of rectification power under section 154 to amend the assessment so as to disallow an excessive deduction under section 80HHC by adjusting unabsorbed depreciation brought forward from earlier years. The Tribunal and the Commissioner(Appeals) had relied on the decision in IPCA Laboratories Ltd., which held that the overriding effect of section 80AB governs computation under Chapter VI-A and thereby affects the allowance of the deduction. The High Court noted that IPCA Laboratories Ltd. was rendered on 11.03.2004, which preceded the completion of the reassessment dated 28.03.2006; consequently the assessment as originally framed was contrary to law and suffered from an error apparent on the face of the record permitting rectification. The Court concluded that the rectification was therefore lawful and warranted no interference. [Paras 4, 6, 8, 9]

Rectification under section 154 to adjust brought forward unabsorbed depreciation for correct computation of section 80HHC deduction was valid and sustainable.

Rectification under section 154 of the Income Tax Act, 1961 - error apparent on the face of the record - binding effect of a prior decision of the Hon'ble Supreme Court on assessment orders - Whether the question was sufficiently debatable so as to preclude exercise of jurisdiction under section 154. - HELD THAT: - The Court rejected the contention that the matter was debatable at the time the assessing officer invoked section 154. It observed that the controlling Supreme Court decision in IPCA Laboratories Ltd. had been delivered well before the assessment/reassessment order and therefore the legal position was settled against the assessee. A conclusion contrary to a binding Supreme Court ruling constitutes an error apparent on the face of the record, and the assessing officer was entitled to rectify the assessment. The subsequent reference to a later Supreme Court decision in Commissioner of Income Tax v. Shirke Construction Equipment Ltd. did not render the earlier position debatable in the relevant period because IPCA had already overruled the contrary view. [Paras 7, 8, 9]

The issue was not a debatable question at the time; exercise of section 154 jurisdiction was justified as the original order contained an error apparent on the face of the record.

Final Conclusion: The appeal is dismissed; the rectification of the assessment under section 154 to adjust brought forward unabsorbed depreciation for correct computation of deduction under section 80HHC is upheld and the substantial questions of law are answered in favour of the Revenue.

Admissibility and evidentiary value of statement recorded under Section 132(4) - Presumption as to ownership under Section 132(4A) - Burden on deponent to rebut search statement by cogent evidence - Retraction of statement - requirement of contemporaneous and corroborative proof

Assessment not to be based solely on statement under Section 132(4) - Whether the assessment was made solely on the basis of the statement recorded under Section 132(4). - HELD THAT: - The court found on the facts that the assessing officer did not rely exclusively on the statement recorded under Section 132(4) but also on material seized during the search and other material available at assessment. The Tribunal's restoration of the assessing officer's additions was upheld because the assessment was founded on the statement together with corroborative seized material and not on the statement alone. [Paras 6]

Assessment was not made solely on the basis of the Section 132(4) statement and the Tribunal rightly restored the assessing officer's order.

Admissibility and evidentiary value of statement recorded under Section 132(4) - Burden on deponent to rebut search statement by cogent evidence - The legal status, admissibility and weight of a statement recorded under Section 132(4) and the burden on the person who seeks to retract it. - HELD THAT: - Having applied authoritative precedent, the court held that a voluntary statement under Section 132(4) is an important piece of evidence which the assessing officer may accept and act upon. Retraction of such a statement does not automatically negate its evidentiary value; the deponent bears the burden of proving the earlier statement was incorrect or recorded under compulsion, and such retraction must be supported by strong, cogent and corroborative evidence. Mere belated or self serving assertions are insufficient to displace the evidentiary weight of the search statement. [Paras 5, 7, 8]

Statement under Section 132(4) has strong evidentiary value; the appellant failed to discharge the burden to rebut it by cogent evidence, so the statement was held binding for assessment purposes.

Presumption as to ownership under Section 132(4A) - Application of the statutory presumption under Section 132(4A) to jewellery and other valuables found during search and the standard required to rebut that presumption. - HELD THAT: - On a conjoint reading of Sections 132(4) and 132(4A), the court observed that items found in the possession or control of a person during search are presumed to belong to that person, and the contents of documents found are presumed to be true. The Tribunal correctly held that in the absence of seized material or other corroborative evidence showing transfer or third party ownership, the presumption under Section 132(4A) stood against the appellant and could not be displaced by affidavits or belated assertions. [Paras 4, 5, 6]

Presumption under Section 132(4A) applies to articles found in the course of search; the appellant failed to rebut that presumption with admissible corroborative material.

Retraction of statement - requirement of contemporaneous and corroborative proof - Whether the affidavits and explanations subsequently filed by the appellant sufficed to retract the search statement. - HELD THAT: - The Tribunal found, and the court agreed, that the appellant's exculpatory affidavits (including that of a relative) and later explanations were self serving, belated and unsupported by independent corroborative evidence. The court emphasised that a retraction must be made at the earliest opportunity and supported by credible, corroborative material; mere assertions and interested affidavits do not suffice to overturn the statement recorded during search. [Paras 3, 8]

The retraction was unacceptable; the later affidavits and assertions did not constitute cogent evidence to displace the earlier search statement.

Final Conclusion: The court held that the Tribunal rightly restored the assessing officer's order: the Section 132(4) statement and corroborative seized material were properly relied upon, the statutory presumption under Section 132(4A) applied, the appellant failed to rebut the statements with cogent evidence, and no substantial question of law arose; the tax case appeal was dismissed.

Computation of undisclosed income under Chapter XIVB - scope of block assessment under Section 158BC - nexus between seized documents and undisclosed income - burden of proof under Section 158BB(3) - treatment of waived or unreceived consideration as bad debt or undisclosed income

Computation of undisclosed income under Chapter XIVB - nexus between seized documents and undisclosed income - burden of proof under Section 158BB(3) - treatment of waived or unreceived consideration as bad debt or undisclosed income - Addition of Rs. 34,25,000 as undisclosed income under the block assessment was valid and justified on the materials seized during search. - HELD THAT: - The court upheld the Tribunal's factual finding that entries in the seized ledger and the sworn statement of the partner established a direct nexus between the incriminating materials recovered on search and the impugned amounts. The ledgers seized (S22) showed the agreed sums credited by means of cheque/DD/pay order on dates prior to the film's release, and the partner's earlier sworn statements were inconsistent with the later plea of waiver. In the absence of supporting contemporaneous evidence to rebut the seized materials, the assessee failed to discharge the burden cast by Section 158BB(3) to prove that the amounts had been disclosed prior to search. The court applied the principle in A.R. Enterprises that disclosure in a pre-search return is the primary means to rebut an Assessing Officer's finding of undisclosed income and that payment of advance tax or post-search explanations without corroborative material are insufficient. Given the seized documents and the partner's statements, the Tribunal's conclusion that the amounts could not be treated as waived or as bad debts was held to be a permissible appreciation of evidence, and the addition under Chapter XIVB was sustained. [Paras 11, 12, 13]

The addition of Rs. 34,25,000 as undisclosed income under Section 158BC/Chapter XIVB is confirmed; the assessee's plea of waiver is rejected.

Final Conclusion: The Tax Case (Appeal) is dismissed; the Tribunal's confirmation of the addition of Rs. 34,25,000 as undisclosed income stands, the assessee having failed to rebut the seized materials and discharge the statutory burden of proof.

Jurisdiction to reopen an assessment - validity of notice under Section 148 issued to a deceased person - notice issued to a dead person is null and void - Section 159 inapplicable where proceedings were not pending during assessee's lifetime - no statutory obligation on legal heirs to intimate death of assessee - Section 292B/292BB inapplicable to notices issued to a deceased person or legal representative - alternative statutory remedy not a bar where proceedings are wholly without jurisdiction

Validity of notice under Section 148 issued to a deceased person - notice issued to a dead person is null and void - jurisdiction to reopen an assessment - Notice under Section 148 issued in the name of a person who was deceased at the time of issuance and the consequential proceedings including the assessment are void. - HELD THAT: - The Court held that issuance of a notice under Section 148 is the foundational act conferring jurisdiction to reopen an assessment; therefore such notice must be issued to the correct person. A notice issued to a deceased person does not satisfy this jurisdictional requirement and is a condition precedent to validity. Consequently a reopening notice issued in the name of a deceased assessee is null and void and all proceedings and orders founded thereon stand vitiated.

Impugned notice dated 30.03.2019 under Section 148 and all consequential proceedings and assessment orders are set aside as void.

Section 159 inapplicable where proceedings were not pending during assessee's lifetime - Section 159 does not apply where proceedings were not initiated or pending against the assessee when alive and legal representatives did not step into the shoes of the deceased. - HELD THAT: - The Court accepted that Section 159 applies only where proceedings have been initiated or are pending against the assessee during his lifetime and thereafter the legal representative steps into his shoes. Where no proceedings were pending at the time of the assessee's death, Section 159 cannot be invoked to validate notices issued posthumously.

Section 159 is not attracted to the facts of the case and cannot cure the defect of issuing notice to a deceased person.

No statutory obligation on legal heirs to intimate death of assessee - Legal heirs are under no statutory duty to inform the Income Tax Department of the death of an assessee. - HELD THAT: - The Court observed that absent any statutory provision imposing such a duty, it is inappropriate to cast an obligation on legal representatives to intimate death to the revenue. Whether PAN records are updated or whether the Department was notified by heirs is irrelevant to the jurisdictional defect of issuing a notice to a deceased person.

Failure of legal heirs to intimate the death does not cure the invalidity of a notice issued to a deceased assessee.

Section 292B/292BB inapplicable to notices issued to a deceased person or legal representative - Provisions relating to rectification or saving of errors (Section 292B/292BB) do not validate a notice issued to a dead person nor do they apply to legal representatives in that context. - HELD THAT: - The Court held that issuance of a notice upon a dead person and non-service does not fall within the ambit of mistake, defect or omission that Sections 292B/292BB might cure. Section 292BB has been held applicable to an assessee and not to a legal representative; accordingly these provisions cannot be used to rectify the jurisdictional defect of issuing notice to a deceased person.

Sections 292B/292BB do not operate to validate the impugned proceedings initiated by notices addressed to the deceased assessee.

Alternative statutory remedy not a bar where proceedings are wholly without jurisdiction - Availability of statutory appellate remedies does not preclude writ jurisdiction where the notice or proceedings are wholly without jurisdiction. - HELD THAT: - The Court reiterated that where jurisdiction to initiate proceedings is absent, the existence of alternate remedies such as appeals does not render a writ petition impermissible. If the assumption of jurisdiction is legally wrong, subsequent orders based on that assumption cannot cure the defect; thus challenge to jurisdiction by writ is maintainable.

The petitioner was entitled to challenge the jurisdictional validity of the notice by writ despite availability of statutory appeals.

Final Conclusion: The petition is allowed: the notice dated 30.03.2019 issued under Section 148 and all consequential proceedings, notices and assessment orders made thereon are quashed as void; no order as to costs.

Cancellation of registration under Section 12AA - adequacy of opportunity of hearing - show cause notice - anonymous donation within the meaning of Section 115BBC - excess of jurisdiction by adjudicating authority

Cancellation of registration under Section 12AA - show cause notice - adequacy of opportunity of hearing - excess of jurisdiction by adjudicating authority - anonymous donation within the meaning of Section 115BBC - Whether the Commissioner could validly cancel the trust's registration on grounds not specified in the show cause notice and whether the Tribunal correctly held that the Commissioner exceeded his jurisdiction. - HELD THAT: - The show cause notice dated 30.12.2008 alleged only that the trust had accepted an amount shown as box collection (treated as an anonymous donation) in the accounts for the relevant year, invoking the concept of anonymous donation under Section 115BBC, and called upon the trust to show cause why registration under Section 12AA should not be cancelled on the ground that activities were not in accordance with the objects. The assessee replied that the amount was credited as donation and that Section 115BBC was applicable only from assessment year 2007-08, asserting activities were in accordance with the trust deed. The Commissioner, in the order cancelling registration, took into account observations and grounds which were not the subject matter of the allegations in the show cause notice. The Tribunal noted these facts, held that the Commissioner had exceeded his jurisdiction by deciding on matters beyond the notice, and granted relief to the assessee. The High Court agreed with the Tribunal's factual and legal conclusion, finding no substantial question of law arising for determination by the Court.

Tribunal's finding that the Commissioner exceeded his jurisdiction by relying on matters not contained in the show cause notice is affirmed; the appeal is dismissed.

Final Conclusion: The High Court upheld the Tribunal's conclusion that the Commissioner could not cancel the trust's registration on grounds not specified in the show cause notice (relating only to an alleged anonymous box collection), found the Commissioner to have exceeded his jurisdiction, and dismissed the revenue's appeal.

Quashing of reassessment notice issued under Section 148 of the Income-tax Act, 1961 - Validity of Explanation A(a)(ii)/A(b) in Notification No. 20/2021 dated 31.03.2021 and Notification No. 38/2021 dated 27.04.2021 - Effect of prior Division Bench judgment on identical controversy - Liberty to Revenue to initiate further steps subject to availability of legal remedies

Quashing of reassessment notice issued under Section 148 of the Income-tax Act, 1961 - Effect of prior Division Bench judgment on identical controversy - The impugned notice dated 29.06.2021 issued under Section 148 for Assessment Year 2015-16 is quashed. - HELD THAT: - The Court found that the legal question raised by the petitioner is squarely covered by a Division Bench judgment of this Court in W.P.(C) 6176/2021, as conceded by the parties. Relying on that precedent, the Court held that the impugned notice could not be sustained and proceeded to quash the notice issued by Respondent No.1 under Section 148 for AY 2015-16. The decision rests on the application of the earlier Division Bench ruling to the facts of the present petition and not on fresh contrary adjudication. [Paras 5]

Impugned notice dated 29.06.2021 under Section 148 for AY 2015-16 quashed.

Validity of Explanation A(a)(ii)/A(b) in Notification No. 20/2021 dated 31.03.2021 and Notification No. 38/2021 dated 27.04.2021 - Effect of prior Division Bench judgment on identical controversy - Prayer (b) seeking to set aside the specified 'Explanations' in the notifications stands redressed in view of the Division Bench declaration that those Explanations are ultra vires. - HELD THAT: - The Court noted that the Division Bench in the cited judgment had declared Explanation A(a)(ii)/A(b) in the two Notifications as ultra vires. On that basis, the relief claimed in prayer (b) was considered to have been effectively granted by that earlier decision, and no separate or further order was required in the present petition. The Court therefore declined to make an independent determination on the validity of those Explanations, treating the earlier binding pronouncement as dispositive. [Paras 6]

Relief in prayer (b) stands redressed by the earlier Division Bench declaration; no further orders necessary.

Final Conclusion: Writ petition allowed: the reassessment notice dated 29.06.2021 for AY 2015-16 is quashed; the challenge to the specified Explanations in the Notifications is treated as redressed in view of the prior Division Bench declaration that those Explanations are ultra vires; the Revenue remains at liberty to take any steps permitted by law, subject to the petitioner's remedies.

Commission and brokerage attracting TDS under Section 194H - Disallowance under Section 40(a)(ia) - Second proviso to Section 40(a)(ia) - deemed deduction on recipient's return - Nature of Passenger Service Fee security component as fiduciary receipt - Disallowance under Section 14A read with Rule 8D - Mixed accounting system impermissibility; mercantile versus cash basis

Commission and brokerage attracting TDS under Section 194H - Disallowance under Section 40(a)(ia) - Nature of Passenger Service Fee security component as fiduciary receipt - Second proviso to Section 40(a)(ia) - deemed deduction on recipient's return - Whether the 2.5% retention by airlines on Passenger Service Fee invoices is commission attracting the operation of Section 194H and, consequently, whether the assessee can be held in default for disallowance under Section 40(a)(ia) or the matter requires remand for verification of tax having been paid by the recipient. - HELD THAT: - The Court examined the legal character of the 2.5% retention by the airlines and held that, in substance, the withheld amount partakes the character of commission as defined by the inclusive explanation to Section 194H. The appellant's contention that the PSF-(SC) net proceeds were held wholly in a fiduciary capacity for the Government and therefore not subject to TDS obligations was rejected in view of the precedent treating similar retentions as commission. The Tribunal's direction to restore the issue to the assessing officer for factual verification - namely, to ascertain whether the recipient had offered the withheld amount to tax and filed returns in time so that the assessee would not be an assessee in default under the second proviso to Section 40(a)(ia) - was held to be appropriate. Consequently, the correctness of restoring the issue to the assessing officer for fresh adjudication could not be faulted and the common substantial question was answered against the assessee. [Paras 14, 15, 16, 17, 20]

Tribunal's restoration to the assessing officer sustained; the 2.5% retention is commission in nature for the purpose of TDS and the matter is remanded for verification whether the recipient paid tax and filed return so as to invoke the second proviso to Section 40(a)(ia).

Disallowance under Section 14A read with Rule 8D - Whether Rule 8D read with Section 14A mandates disallowance of expenditure even in a year when the taxpayer has not earned any exempt income. - HELD THAT: - The Court followed the coordinate Bench decision in Commissioner of Income Tax v. M/s Quest Global Engineering Services Pvt. Ltd. and concluded that the Tribunal was correct in its approach. The substantial question was answered in favour of the assessee and against the Revenue, aligning with the reasoning that the application of Section 14A and Rule 8D in the facts and circumstances did not warrant the disallowance contended for by the Revenue in these appeals. [Paras 25]

Answered in favour of the assessee and against the Revenue; the Tribunal's approach on Section 14A/Rule 8D sustained.

Mixed accounting system impermissibility; mercantile versus cash basis - Whether the assessee could adopt a hybrid system by recognizing expenditure on mercantile basis while offering corresponding income on a receipt (cash) basis, specifically in relation to the income in dispute recognised by the assessing officer on accrual basis. - HELD THAT: - Relying on established principles distinguishing the mercantile and cash systems, the Court held that a hybrid or mixed accounting method in a single assessment year is not permissible. The assessing officer's treatment, requiring consistency by bringing income to tax on the mercantile/accrual basis where corresponding expenditure had been recognised on that basis, was upheld. The Court observed that Accounting Standard principles require matching of expenditure and income and that the Tribunal and lower authorities were in conformity with settled accounting and taxation principles. The Court, however, directed that tax offered on receipt basis for Assessment Year 2013-14 be excluded therefrom and given effect in proceedings for AY 2013-14. [Paras 26, 27, 28, 29, 31]

Hybrid accounting rejected; substantial question answered in favour of the Revenue and against the assessee, subject to exclusion of amounts already offered on receipt basis for AY 2013-14.

Final Conclusion: The appeals by the assessee are disposed of against it on the TDS/Section 40(a)(ia) issue while the Tribunal's remand to the assessing officer for factual verification of tax payment by recipients is sustained; the Section 14A/Rule 8D challenge is answered in favour of the assessee; and the Revenue's challenge to the assessee's adoption of a mixed accounting method is upheld, with adjustment directed in respect of amounts already offered on receipt basis for AY 2013-14.

Deduction of tax at source under Section 194C - Disallowance under Section 40(a)(ia) - Aggregation of payments for TDS threshold - Existence and nature of contract with truck operators/ drivers - Reopening/remand for fresh adjudication by Assessing Officer

Existence and nature of contract with truck operators/ drivers - Deduction of tax at source under Section 194C - Disallowance under Section 40(a)(ia) - Whether the question of applicability of Section 194C and consequent disallowance under Section 40(a)(ia) could be upheld without a specific finding on existence of contract between the assessee and the truck owners/operators. - HELD THAT: - The Court held that the question whether payments attract withholding under Section 194C depends on whether there was a contract between the assessee and the truck owner/operator (or driver) and that the record before the authorities did not establish this essential factual foundation. The action of denying the deduction under Section 40(a)(ia) merely on the basis of aggregate payments linked to truck registration numbers, without first determining whether a contract existed with the persons who supplied the service, was unsustainable. The court observed that contracts are with personnel/operators and not with truck registration numbers; therefore mere aggregation by vehicle number is not determinative of sub-contractor status under Section 194C absent enquiry into the contractual relationship. The Court also declined to apply the Apex Court decision relied upon by the revenue in the absence of a finding on the existence of a contract in the present record. [Paras 15]

Order of Tribunal and authorities set aside; matter restored to Assessing Officer to examine and record a finding on the existence and nature of any contract with truck owners/operators and to decide applicability of Section 194C and disallowance under Section 40(a)(ia) afresh.

Aggregation of payments for TDS threshold - Existence and nature of contract with truck operators/ drivers - Reopening/remand for fresh adjudication by Assessing Officer - Whether payments should be aggregated on the basis of truck registration numbers for determining the Rs.50,000 threshold under Section 194C(3) without further enquiry. - HELD THAT: - The Court held that the registration number of trucks is not by itself relevant for deciding applicability of Section 194C; what is relevant is the contractual relationship with the personnel/truck operator from whom services are hired. Consequently, the Court found that the Tribunal's reliance on aggregation by truck numbers, without examining the contractual relationships and the genuineness of payments to particular persons, was insufficient. In view of deficient factual examination, the Court directed a remand to the Assessing Officer for comprehensive consideration of whether payments to particular operators/personnel aggregate to the threshold under Section 194C, after affording the assessee an opportunity to produce material such as names and addresses of drivers/owners. [Paras 15]

Directed reassessment by Assessing Officer on the question of aggregation and applicability of Section 194C after fresh enquiry; aggregation by truck registration numbers rejected as a conclusive test without further investigation.

Final Conclusion: Appeal allowed by setting aside the orders of the Tribunal and lower authorities; the matter is remitted to the Assessing Officer to re-examine and record findings on the existence and nature of any contract with truck owners/operators and thereafter decide the applicability of Section 194C and the consequent allowability of expenditure under Section 40(a)(ia), with all parties' rights kept open and the substantial questions of law left unanswered.

Treatment of loan waiver as business income - application of Section 28(iv) and Section 41(1) where waiver relates to capital asset financing - relevance of Section 43B for add-back of unpaid interest - remand for verification of documentary evidence supporting prior disallowance under Section 43B

Relevance of Section 43B for add-back of unpaid interest - remand for verification of documentary evidence supporting prior disallowance under Section 43B - Whether interest remission credited in A.Y.2011-12 is taxable where the assessee claims the unpaid interest had been added back under Section 43B in earlier years - HELD THAT: - The assessee asserted that the unpaid interest relating to A.Y.2004-05 to A.Y.2008-09 had been disallowed in the respective years by virtue of add-back under Section 43B (specifically for A.Y.2007-08 and A.Y.2008-09). The Tribunal noted that the assessee must furnish year-wise details and documentary proof of such add-backs so the Assessing Officer can verify them. The Tribunal did not decide the factual question on the papers before it but directed that the assessee shall produce the details and the AO shall examine the same and, if found correct, refrain from making any addition in A.Y.2011-12 on account of interest remission. [Paras 8]

Assessee to furnish particulars of prior add-backs; matter remitted to AO for verification and consequential action; no addition to be made if verification establishes prior disallowance under Section 43B.

Treatment of loan waiver as business income - application of Section 28(iv) and Section 41(1) where waiver relates to capital asset financing - taxability when deduction not earlier claimed - Whether the principal remission credited in A.Y.2011-12 is taxable as business income under Section 28(iv) read with Section 41(1) where the loans were for purchase of fixed assets and no deduction was claimed earlier - HELD THAT: - The Tribunal examined the nature of the loans (taken from HFC and SBI for purchase of fixed assets as evidenced by documents in the paper book). Relying on the Supreme Court's reasoning in Mahindra & Mahindra, the Tribunal accepted that Section 28(iv) is inapplicable where the receipt is in the form of money and that Section 41(1) applies only where a deduction or allowance was earlier claimed in respect of the expenditure or trading liability which is subsequently remitted. In the present case the assessee had not claimed any deduction in respect of the relevant items in earlier years; accordingly the conditions for taxation under Section 41(1) were not satisfied and the remission did not constitute taxable income under Section 28(iv). The Tribunal therefore declined to interfere with the CIT(A)'s deletion of the addition relating to the principal remission. [Paras 10, 11]

Deletion of the addition of the principal remission in A.Y.2011-12 upheld; remission not taxable under Section 28(iv) or Section 41(1) on the stated facts.

Final Conclusion: Revenue's appeal partly allowed for statistical purposes: the deletion of the principal waiver/addition in A.Y.2011-12 is upheld, while the interest remission claim is remitted to the AO for verification of prior add backs under Section 43B (if verified, no addition to be made).

Section 54 exemption for long-term capital gains - interpretation of 'a residential house' - prospective operation of statutory amendment - capital gains reinvestment timeline

Section 54 exemption for long-term capital gains - interpretation of 'a residential house' - capital gains reinvestment timeline - Entitlement to deduction under Section 54 for investments in two residential properties acquired within the prescribed time for A.Y.2013-14 - HELD THAT: - The Tribunal recorded that the factual finding by the CIT(A) - that the assessee had completed purchase/constructive acquisition of the EMAAR MGF property within the time specified under Section 54 and had paid amounts within the prescribed period - has attained finality since the Revenue did not appeal (paragraph 15). The Tribunal examined authoritative precedent in which the Madras High Court held that, prior to the amendment effective 01.04.2015, the word 'a' in Section 54 could be interpreted to include more than one residential house and that plurality of newly purchased houses at different addresses does not alter entitlement so long as the purchases were made by the same assessee within the stipulated time (paragraphs 16-16[quotations at 20-22] and 17-19[quotations regarding explanatory note and prospectivity]). The Tribunal noted that the Finance Act amendment substituting 'one residential house' took effect prospectively from A.Y.2015-16 and that the explanatory note demonstrates the Legislature intended the restriction to operate only prospectively; therefore the amendment cannot be applied retrospectively to deny relief for A.Y.2013-14 (paragraphs 17-19). Applying that legal principle to the admitted facts and the CIT(A)'s findings, the Tribunal concluded that the assessee is entitled to claim deduction under Section 54 in respect of the investments made in more than one residential house for the assessment year in question. [Paras 15, 16, 17, 19]

Assessee entitled to deduction under Section 54 for investments in plural residential houses for A.Y.2013-14; the amendment restricting exemption to 'one residential house' is prospective and does not apply to the year under consideration.

Final Conclusion: Appeal allowed on the sole issue: for A.Y.2013-14 the assessee is entitled to deduction under Section 54 in respect of investments in more than one residential house made within the statutory time limits; the amendment limiting exemption to 'one residential house' is prospective and inapplicable to the assessment year before the Tribunal.

Deduction under section 54 - residential house for capital gains exemption - character of property (industrial vs residential) - deduction under section 54F - valuation report as evidence of property nature - inadequacy of subsequent oral or documentary address evidence to alter registered deed

Deduction under section 54 - residential house for capital gains exemption - character of property (industrial vs residential) - valuation report as evidence of property nature - inadequacy of subsequent oral or documentary address evidence to alter registered deed - Whether the asset transferred was a 'residential house' entitling the assessee to deduction under section 54. - HELD THAT: - The Tribunal accepted the factual finding that the registered sale deed describes the asset as an industrial plot No. C-10 along with construction thereon and records the assessee as absolute owner and in possession. A contemporaneous valuation report prepared shortly before sale likewise identifies the property as located in an industrial area with a large built-up area comprising parking, office and a so called residential/recreational area, and does not demonstrate attributes of an exclusively residential house (such as clearly defined bedrooms and kitchen facilities). The Court observed that the statute contemplates a transfer of a property that is necessarily and solely used as a residential house to attract the section 54 exemption; a mixed-use construction on an industrial plot does not satisfy that requirement. Consequently, the Tribunal upheld the view that subsequent statements, affidavit and address details in Aadhaar and bank records cannot, by themselves, convert the character of the property recorded in the registered deed and valuation report into a residential house. The Tribunal also noted absence of any evidence of formal change in land use. In view of these findings the assessee was not entitled to deduction under section 54, though deduction under section 54F was applied by the Assessing Officer. [Paras 7, 8, 9]

The asset was an industrial plot with mixed construction and not a residential house; deduction under section 54 is not allowable and the appellate authority's conclusion is affirmed.

Final Conclusion: The appeal is dismissed; the Tribunal affirms the denial of deduction under section 54 for the assessment year 2015-16 while the Assessing Officer's treatment (including allowance under section 54F) stands upheld.

Revision under section 263 - reference to Valuation Officer under section 50C(2) - assessment erroneous and prejudicial to the interest of the Revenue - show-cause and verification in assessment proceedings - difference between consideration and market value less than 10% treated as ignorable

Revision under section 263 - assessment erroneous and prejudicial to the interest of the Revenue - show-cause and verification in assessment proceedings - difference between consideration and market value less than 10% treated as ignorable - Validity of the revision order passed under section 263 on the ground that the assessment was erroneous and prejudicial to the interest of the Revenue - HELD THAT: - The Tribunal found that the Assessing Officer conducted detailed scrutiny: notices under section 143(2) and 142(1) were issued, a show-cause notice was served, and the assessee furnished a written explanation including a request for reference to the Valuation Officer. The assessment under section 143(3) was completed after due verification and consideration of the submissions. The Assessing Officer took the view that where the difference between the consideration and market value is less than 10% it is ignorable and does not warrant taxation. On these materials the Tribunal held that the assessment order was neither erroneous nor prejudicial to the interest of the Revenue and therefore exercise of revisionary power under section 263 was not justified. [Paras 6]

Revision order under section 263 quashed; assessment upheld as not erroneous or prejudicial to Revenue

Reference to Valuation Officer under section 50C(2) - difference between consideration and market value less than 10% treated as ignorable - Whether the Assessing Officer was obliged to refer the matter to the Valuation Officer as requested by the assessee - HELD THAT: - Though the assessee sought a reference to the Valuation Officer, the Assessing Officer considered that the gap between the registered consideration and the market value was within an ignorable margin (less than 10%) and completed the assessment after examining the written explanation and material on record. The Tribunal viewed that since the AO had properly evaluated the submissions and applied the stated approach, there was no failure to exercise jurisdiction or omission warranting a reference mandating revision under section 263. [Paras 2, 6]

No obligation to refer to the Valuation Officer in the circumstances; assessee's alternate request did not render the assessment erroneous

Final Conclusion: The Tribunal allowed the assessee's appeal, quashed the revision order passed under section 263 and upheld the assessment for AY 2015-16 as having been made after due verification and not being erroneous or prejudicial to the interest of the Revenue.

Penalty under section 271B - Delay in filing audit report under section 44AB - Reasonable cause for delay - Search and seizure under section 132 - Willful or wanton conduct

Penalty under section 271B - Delay in filing audit report under section 44AB - Reasonable cause for delay - Search and seizure under section 132 - Willful or wanton conduct - Validity of levy of penalty under section 271B for belated filing of audit report for assessment year 2013-14 - HELD THAT: - The Tribunal examined the assessee's explanation that the belated filing of the audit report was caused by search proceedings under section 132 which resulted in seizure and departmental custody of books of account of the assessee and numerous firms in which he was a partner, and that search-related assessments were completed only on 28.03.2013. The authorities below imposed and confirmed penalty under section 271B for a delay of about fifteen months in filing the audit report required by section 44AB. The Tribunal found that the delay arose from circumstances beyond the control of the assessee - namely search and seizure of records - and was neither willful nor wanton. The Tribunal also noted that the explanation given by the assessee was not controverted by the lower authorities and that there was a reasonable cause for the delay. On these determinative findings the Tribunal concluded that imposition of penalty under section 271B was unwarranted and not reasonable, and that the assessing and appellate authorities had failed to give due weight to the assessee's explanation. [Paras 6]

Penalty levied under section 271B for belated filing of the audit report is cancelled and the appeal is allowed.

Final Conclusion: The Tribunal set aside the penalty confirmed by the Commissioner (Appeals) and cancelled the levy under section 271B for assessment year 2013-14, holding that delay in filing the audit report was caused by search and seizure and constituted a reasonable cause rather than willful or wanton default.

Deduction under section 11 - registration under section 12A/12AA - intimation under section 143(1) and its proviso requiring intimation and time to respond - opportunity of hearing / principles of natural justice - taxability where income is below taxable limit for AOP

Intimation under section 143(1) and its proviso requiring intimation and time to respond - deduction under section 11 - registration under section 12A/12AA - opportunity of hearing / principles of natural justice - taxability where income is below taxable limit for AOP - Validity of adjustments made in the intimation under section 143(1) denying the assessee's claim of exemption/deduction under section 11 on the ground that registration under section 12A was not disclosed in the return, and related failure to consider the assessee's alternative plea that taxable income was below the threshold for AOPs. - HELD THAT: - The proviso to section 143(1) requires that no adjustments be made unless intimation of such adjustments is given to the assessee in writing or electronically and the assessee is afforded an opportunity to respond within thirty days, and any response received must be considered before making adjustments. In the present case the intimation processed the return by denying the claimed deduction under section 11 on the basis that the return contained a negative entry as to registration under section 12A/12AA; the record does not disclose that the statutory opportunity under the proviso to section 143(1) was given to the assessee. The assessee produced before the first appellate authority evidence of registration under section 12A and also advanced an alternative contention that even after denial of the claimed deductions its income fell below the taxable limit for an AOP. The Tribunal found the CIT(A) erred in treating the return entry mechanistically and in taking a hyper technical view by upholding the adjustment without having afforded or considered the opportunity and submissions mandated by the proviso to section 143(1), and in failing to address the assessee's alternative plea on taxability. In those circumstances the matter required fresh consideration by the CIT(A) after granting due opportunity of hearing to the assessee and after considering the evidence of registration and the alternative contention on taxable limit. [Paras 6]

The issue is remanded to the CIT(A) for fresh adjudication after affording the assessee the statutory opportunity to respond; the CIT(A) is directed to consider the registration evidence and the alternative contention regarding taxable limit before deciding the appeal.

Final Conclusion: The appeal is allowed for statistical purposes and the matter is restored to the CIT(A) with directions to decide the dispute after granting due opportunity of hearing and considering the assessee's evidence of registration under section 12A and its alternative contention on taxability.

Merchandise Exports from India Scheme (MEIS) - ineligible categories under MEIS (Paragraph 3.06 of FTP 2015-20) - supplies from Domestic Tariff Area (DTA) units to FTWZ units - exports made by units in FTWZ - definition of "export" under the Foreign Trade (Development & Regulation) Act and interplay with SEZ Act - requirement of shipping bills and Bank Realisation Certificate as proof of export and realisation - overriding effect of the SEZ Act for matters relating to SEZ/FTWZ - burden of proof in writ petitions to place documentary evidence supporting factual claims

Ineligible categories under MEIS (Paragraph 3.06 of FTP 2015-20) - supplies from Domestic Tariff Area (DTA) units to FTWZ units - exports made by units in FTWZ - requirement of shipping bills and Bank Realisation Certificate as proof of export and realisation - Validity of the order dated 03.06.2020 rejecting the petitioner's MEIS applications - HELD THAT: - The Court examined the FTP-2015-20, particularly Paragraph 3.06 which lists categories ineligible for MEIS, including supplies made from DTA units to SEZ/FTWZ units and exports made by FTWZ units. The competent authority's conclusion that the supplies were from the petitioner (a DTA unit) to an FTWZ unit and that the shipping documents and shipping bills record the FTWZ unit as exporter was sustained by the record. The petitioner relied on pleadings and a compilation of documents but did not produce the documentary evidence required to establish that the principal transaction was with the overseas buyer and that the FTWZ merely held the goods in trust. The Court referred to the established requirement that, where factual propositions are determinative, documentary evidence (such as bills of export, export invoices, authorizations, shipping bills, and BRCs evidencing foreign exchange realization) must be placed on record in a writ petition. In the absence of the specified documents and given discrepancies in the identity of the alleged overseas buyer in the material before the Court, the petitioner failed to discharge the burden of proof to take the transaction outside the ineligible categories of Paragraph 3.06. [Paras 11, 12]

Impugned order of 03.06.2020 rejecting the MEIS applications is upheld and the writ petition is dismissed on merits for lack of requisite documentary proof.

Burden of proof in writ petitions to place documentary evidence supporting factual claims - requirement of shipping bills and Bank Realisation Certificate as proof of export and realisation - Merchandise Exports from India Scheme (MEIS) - Whether the petitioner should be afforded further opportunity to seek MEIS benefit after furnishing documentary evidence - HELD THAT: - Although the petition is dismissed for want of documentary proof, the Court recognised the petitioner's specific contention that foreign exchange was realised and that exports were effected on instructions of the overseas buyer. In view of this pleaded contention and the statutory scheme which bases MEIS entitlement on demonstrated export and realisation, the Court granted a final opportunity. The petitioner was directed to file a fresh application within a specified time with the full set of documentary evidence listed (bills of receipt, bills of export, export invoices, authorisation/transaction with the overseas buyer to deliver to the FTWZ unit, BRCs evidencing receipt of foreign exchange, confirmation from the FTWZ unit that it has not claimed/been granted MEIS benefit, shipping bills, purchase orders and tax invoices). The Competent Authority was directed to consider any such application strictly in accordance with law, provide personal hearing and pass a speaking order. [Paras 12]

Petitioner granted one final opportunity to submit specified documentary evidence in a fresh application; Competent Authority to consider it in accordance with law, grant personal hearing and pass a speaking order.

Final Conclusion: Writ petition dismissed on merits for failure to furnish requisite documentary evidence to demonstrate that the petitioner's deliveries to the FTWZ unit were exports by the petitioner to its overseas buyer and not supplies to an FTWZ exporter; petitioner given one final opportunity to file a fresh application with specified documents, which the Competent Authority must consider lawfully and decide by a speaking order after personal hearing.

Seizure and provisional release of imported goods - validity of laboratory test report where testing facility is not available - redraw of samples and testing by Government Laboratory or FSSAI - release on provisional duty bond subject to final assessment

Seizure and provisional release of imported goods - validity of laboratory test report where testing facility is not available - Impugned Seizure Memo is set aside and goods are to be released subject to conditions. - HELD THAT: - The Court found that the DYCC laboratory had no facility to test goods under the relevant chapters, as admitted by the parties and reflected in public notices, and that the earlier DYCC test report formed the basis for the Seizure Memo. In these circumstances the Court declined to quash the Seizure Memo unconditionally because respondents had already passed an Order for provisional release and rival contentions remained on other aspects, but directed conditional relief: the goods are to be released on the petitioner furnishing a provisional duty bond, with the release being subject to a fresh test report and final assessment. The Court expressly refrained from deciding whether the earlier Authority for Advance Ruling applies to the goods in question, leaving that issue open for determination after fresh testing and final assessment. [Paras 26, 27, 28]

Seizure Memo set aside subject to final assessment; goods to be released upon submission of a P.D. bond, release contingent on fresh Government Laboratory/FSSAI test report and final assessment.

Redraw of samples and testing by Government Laboratory or FSSAI - Samples are to be redrawn and sent to a Government Laboratory or FSSAI for fresh testing. - HELD THAT: - Because it is an admitted position that DYCC could not properly carry out the testing, the Court directed respondents to draw fresh samples of the imported goods subject to these petitions and to send them to a Government Laboratory or FSSAI within one week. The Court indicated that the results of such testing would inform final assessment and the applicability of prior rulings or other contentions, which were kept open. [Paras 26]

Respondents directed to redraw samples and forward them to a Government Laboratory or FSSAI within one week for testing; further proceedings and final assessment to follow on the basis of that report.

Release on provisional duty bond subject to final assessment - The petitioner's request for release of goods during pendency of proceedings is granted on furnishing a provisional duty bond within the time stipulated by the Court. - HELD THAT: - The petitioner undertook to furnish a provisional duty bond, and the Court accepted that undertaking. The Court ordered that upon submission of the P.D. bond within three days, respondents shall release the goods at the earliest and in any event within one week of receipt of the bond. The Court limited the release by making it subject to the fresh Government Laboratory/FSSAI test report and to the outcome of final assessment. [Paras 28, 29]

Upon submission of the P.D. bond within three days, respondents to release the goods within one week; release to remain subject to the fresh test report and final assessment.

Final Conclusion: Writ petitions allowed in part: impugned Seizure Memo set aside subject to final assessment; respondents directed to redraw samples and send them to a Government Laboratory or FSSAI within one week; petitioner to furnish a provisional duty bond within three days and, upon its submission, respondents to release the goods within one week, release being conditional on the fresh test report and final assessment; other contentions left open.

Provisional release of seized goods under Section 110A of the Customs Act, 1962 - minimum import price / import prohibition framed by DGFT notification - security for provisional release: bond in lieu of bank guarantee - continuation of adjudication and independent investigation notwithstanding provisional release - waiver of demurrage and container detention charges left to competent authorities

Provisional release of seized goods under Section 110A of the Customs Act, 1962 - minimum import price / import prohibition framed by DGFT notification - Petition for provisional release of the seized consignment of black pepper on conditions was allowed following the precedent in Al Qahir International. - HELD THAT: - The Court found the factual matrix identical to prior decisions where provisional release of black pepper consignments was directed. Taking note of the apprehension that invoices may have been overvalued to circumvent the DGFT minimum import price condition, the Court nonetheless followed the Division Bench's ratio in Al Qahir International and directed provisional release on stipulated conditions. The respondent was directed to quantify duty and bond amounts and release the goods upon remittance/execution of the bond, while the notificational prohibition and valuation inquiry remain matters for adjudication.

Directed quantification of duty/bond and provisional release of the consignment within one week of remittance/execution of bond.

Security for provisional release: bond in lieu of bank guarantee - Security for provisional release may be provided by execution of a bond as modified by the Division Bench in Al Qahir International, rather than insisting on a bank guarantee. - HELD THAT: - Having examined the Single Judge's condition requiring a bank guarantee and the Division Bench's modification to allow a bond to the same value, the Court adopted the Division Bench's modification. The Court required the petitioner to execute a bond and remit quantified duty/amounts, thereby protecting revenue interests while permitting provisional release.

Permitted execution of a bond (in lieu of bank guarantee) as the security condition for provisional release.

Continuation of adjudication and independent investigation notwithstanding provisional release - The adjudication and any independent investigation may continue to their logical conclusion uninfluenced by the order directing provisional release. - HELD THAT: - The Court expressly clarified that its order directing provisional release does not express any view on the merits of allegations and does not impede the authorities from proceeding with show-cause notices, investigations or adjudication. The determination of whether the goods are prohibited or any penalty/charges remains open to be decided by the competent authorities on the basis of the material gathered in the investigation.

Adjudication and investigation may proceed unaffected by the grant of provisional release.

Waiver of demurrage and container detention charges left to competent authorities - Remanded for consideration by the relevant authorities the question of waiver of demurrage and container detention charges. - HELD THAT: - The Court declined to decide the claim for waiver of demurrage and container detention charges, leaving that issue open for the petitioner to pursue before the authorities in accordance with applicable rules and regulations.

Issue of waiver of demurrage and container detention charges is left open to be decided by the authorities.

Final Conclusion: The writ petition is allowed by directing quantification of duty and bond and provisional release of the seized black pepper consignment on execution of the bond and remittance as quantified; the order of provisional release does not prejudice ongoing investigation or adjudication; the question of waiver of demurrage/container detention charges is left to the competent authorities.

Customs Cargo Service Provider - Handling of Cargo in Customs Areas Regulations, 2009 - prohibition on charging rent or demurrage for goods seized, detained or confiscated (Regulation 6(1)(l)) - certificate from proper officer certifying period of seizure or detention (Public Notice No.26/2010) - control of officers of customs over goods in customs area

Customs Cargo Service Provider - prohibition on charging rent or demurrage for goods seized, detained or confiscated (Regulation 6(1)(l)) - certificate from proper officer certifying period of seizure or detention (Public Notice No.26/2010) - Whether a customs cargo service provider is legally entitled to charge rent or demurrage on goods seized, detained or confiscated by customs officers. - HELD THAT: - The court followed the decision of the Bombay High Court in Sahaj Impex v. Balmer Lawrie & Co. Ltd. which construed the combined effect of section 141 and section 157 of the Customs Act and the statutory Regulations framed thereunder. Regulation 2(1)(b) defines a Customs Cargo Service Provider and Regulation 6(1)(l) imposes the responsibility that such provider "shall not charge any rent or demurrage on the goods seized or detained or confiscated" by the designated customs authorities. The Commissioner of Customs (Export) in Public Notice No.26/2010 further clarified that cargo service providers must allow release on production of a certificate from the proper officer certifying the period of seizure or detention without charging rent or demurrage for that certified period. Applying these authorities and regulatory provisions to the facts, the court held that respondent No.3, being a customs cargo service provider, was under a legal obligation not to charge demurrage for the period certified as detention and that continuing to retain goods beyond the certified detention period disentitled respondent No.3 from claiming demurrage for the extended period. The court also rejected the contention that the dispute was purely contractual requiring relegation to civil forum, noting that a government enterprise acting as a regulated cargo service provider is subject to customs control and must comply with the Regulations and lawful directions of customs authorities. The court observed that contractual remedies remain open for recovery of other dues, but they do not permit charging demurrage contrary to Regulation 6(1)(l) and the public notice. [Paras 5, 6, 7, 9]

Respondent No.3 is not entitled to charge rent or demurrage on goods detained or seized by customs; the demurrage recovered shall be refunded.

Final Conclusion: Writ petition allowed; respondent No.3 directed to refund the demurrage recovered from the petitioner within four weeks from receipt of the writ of this order; respondent No.3 may pursue contractual remedies for other dues before the appropriate forum.

Anti-Dumping Duty - non-cooperative exporter - principles of natural justice - representation and opportunity of hearing - interim deposit pending adjudication - bank guarantee for differential duty

Amendment of writ petition - rights and contentions of parties - Amendment to the writ petition as per the draft at Annexure E permitted. - HELD THAT: - The Court allowed the applicant to amend the writ petition subject to the rights and contentions of the respondents. The amendment was to be carried out within one week. The order grants procedural relief to permit inclusion of additional grounds and material while preserving the respondents' rights to meet those contentions. [Paras 9]

Draft amendment granted subject to rights and contentions of respondents; amendment to be carried out within one week.

Interim deposit pending adjudication - bank guarantee for differential duty - Anti-Dumping Duty - Interim arrangement permitting clearance of subject products on payment of a specified provisional duty and furnishing of a bank guarantee for the differential amount. - HELD THAT: - Pending hearing and final disposal of the writ petition, the Court permitted the applicant to clear consignments by paying the lower duty rate that had been imposed on similarly situated producers and to furnish a bank guarantee for the difference with the higher duty contested by the applicant. This interim measure balances the applicant's commercial prejudice arising from a significantly higher duty classification while preserving the State's revenue by securing the differential amount. [Paras 9]

Applicant may clear products on payment of USD 110 per metric tonne and by furnishing a bank guarantee for the differential amount.

Representation and opportunity of hearing - principles of natural justice - Anti-Dumping Duty - Applicant to make representation with supporting documents and respondent-authorities to consider same and decide afresh on the duty applicable to the applicant's products, with the decision to be placed before the Court. - HELD THAT: - The Court directed the applicant to submit a representation accompanied by all supporting documents and to supply any additional information as may be called for. The respondent-authorities were directed to take a decision in relation to the Anti-Dumping Duty applicable to the applicant's products after considering the representation and to place that decision for the Court's consideration. This directs fresh consideration by the authorities and ensures the applicant an opportunity of hearing, addressing the applicant's contention of being treated as non-cooperative and concerns regarding compliance with principles of natural justice. [Paras 9]

Applicant to make representation and supply information; respondent-authorities to decide on duty for applicant's products and place decision before the Court.

Final Conclusion: The Civil Application for amendment and interim relief was allowed: amendment permitted; applicant may clear consignments on payment of the lower provisional duty and by furnishing a bank guarantee for the differential; the applicant must make a representation and the authorities are directed to reconsider and place their decision before the Court. The order is without prejudice to the parties' rights.

Preventive detention - live link / proximity between past conduct and necessity of detention - subjective satisfaction of detaining authority - scope of judicial review - consideration and disclosure of relevant material before detaining authority - supply of relied-upon documents and right to effective representation under Article 22(5) - reliance on statements under Section 108 of the Customs Act in preventive detention proceedings - severability of grounds for detention

Preventive detention - live link / proximity between past conduct and necessity of detention - Validity of the detention in light of alleged absence of a live and proximate link between past incidents relied upon and the date of the detention order. - HELD THAT: - The Court examined the chronology of events relied upon by the detaining authority - including intercepted consignments and multiple statements recorded under Section 108, the ongoing investigation into fraudulent IGST refunds and the concluded adjudication and seizure in the black pepper smuggling matter - and held that these antecedent activities furnished a rational and proximate basis for a reasonable prognosis of the detenue's future conduct. The Court rejected the contention that the matters relied upon were stale, noting that one of the investigations remained pending and that the detenue's repeated involvement in similar activities (and admissions in later statements) preserved the live link required for preventive detention. The Court distinguished authorities relied upon by the petitioner on their facts and emphasised that proximity is a contextual enquiry not to be mechanically measured solely by months elapsed.

The ground of challenge based on absence of live link is rejected and the detaining authority's satisfaction on necessity of detention is upheld.

Subjective satisfaction of detaining authority - scope of judicial review - Whether the detaining authority's subjective satisfaction under Section 3(1) of the COFEPOSA Act was vitiated for want of materials or was otherwise susceptible to judicial interference. - HELD THAT: - Applying established principles, the Court held that subjective satisfaction is primarily for the executive and judicial review is limited to whether the authority considered relevant materials and reached a tenable conclusion. On the record the detaining authority relied on confessional and other statements under Section 108, seized documents, and the sequence of investigative findings to form its satisfaction. The Court found no evidence of malafide or of an attempt to obscure material facts and refused to substitute its view for the executive's subjective satisfaction. Decisions cited by the petitioner were held distinguishable on their facts.

The detaining authority's subjective satisfaction is not vitiated and does not warrant quashal of the detention order.

Consideration and disclosure of relevant material before detaining authority - reliance on statements under Section 108 of the Customs Act in preventive detention proceedings - Whether relevant documents and alleged retraction petitions were not placed before or considered by the detaining authority, thereby vitiating the detention. - HELD THAT: - The Court scrutinised the record of the lower court and the DRI file and concluded there was no proof that any retraction petition, if purportedly filed, had been taken on record or served on the investigating agency. The detenue failed to demonstrate that retractions were before the detaining authority. Moreover, subsequent statements by the detenue (including a 2019 statement reiterating earlier admissions) and unwithdrawn statements of co-accused corroborated the materials relied upon. The Court observed that detention proceedings do not require evidence admissible at trial and that confession-statements under Section 108 may be considered, with weight being a matter for the detaining authority. On these facts the Court found relevant materials were placed and considered.

Contention of non-disclosure/non-consideration of vital material (including alleged retractions) is rejected and does not invalidate the detention order.

Supply of relied-upon documents and right to effective representation under Article 22(5) - Whether denial of legible copies, non supply of certain documents or cryptic replies to representations resulted in prejudice to the detenue's right to make effective representation. - HELD THAT: - The Court applied the principle that only documents relied upon by the detaining authority to form its satisfaction must be furnished and that non supply only vitiates detention if it prejudices effective representation. The detenue's requests (including demands for Section 65B certification and summons copies) were held largely irrelevant to the basis of detention; seized shipping bills and documents that formed part of the relied-upon compilation were supplied. The Court noted the detenue's delayed representations, absence of specificity about which copies were illegible, and candid engagement with the Advisory Board filings, concluding the pleas of illegibility and non-supply were afterthoughts intended to delay proceedings. Replies by authorities, though not elaborate, evidenced application of mind and timely consideration.

The complaints regarding non supply/illegibility of documents and mechanistic treatment of representations are rejected as not prejudicial to effective representation.

Final Conclusion: Writ petition dismissed; the order of detention dated 15.01.2021 under Section 3(1) of the COFEPOSA Act is affirmed as the Court found a live link between antecedent smuggling related activities and the necessity for preventive detention, the detaining authority's subjective satisfaction was properly formed on relevant material (including Section 108 statements), and the detenue was not prejudiced by non supply or consideration of documents.

Forfeiture of security deposit and imposition of penalty under Regulation 18 of the Customs Broker Licensing Regulations, 2018 - liability of a customs broker for alleged mis-declaration in bills of entry - scope and duties of a Customs House Agent under the Customs Broker Licensing Regulations, 2018 - entitlement to duty exemption for diplomatic imports under Notification No. 03/57-Cus. dated 08.01.1957 - seizure and confiscation of imported goods and penal consequences under the Customs Act, 1962 - relevance of Ministry of External Affairs' certification/endorsement in assessing entitlement to exemption

Liability of a customs broker for alleged mis-declaration - role and duties of CHA in filing bill of entry - application of Customs Broker Licensing Regulations, 2018 for penal action against broker - The appellant Customs Broker is not liable to forfeiture of security deposit or penalty under the CBLR, 2018 on the facts of this case. - HELD THAT: - The Tribunal accepted the findings recorded by the Commissioner (Appeals) that the broker filed the bill of entry on the basis of documents provided by the importer (the Embassy officer), correctly declared the item as per the invoice (GUDANG GARAM) and attached the exemption certificate and other papers submitted by the importer. The Commissioner (Appeals) found that the broker had no means to know that the MEA-attested exemption certificate did not cover cigarettes until MEA so informed the Department, and that the assessing officer was responsible for requiring any NOC from AQCS/ADC. Reliance was placed on the principle that a CHA's function is to file bills of entry and make declarations according to information provided by the importer, and that technical regulatory compliance (licences/NOCs) is not ordinarily within the CHA's expertise so as to attract penal consequences. In view of those findings, the Tribunal concluded that the departmental case under Regulation 10(d)/(e)/(f) and the consequent order forfeiting the security and imposing penalty under Regulation 18 did not survive.

Impugned forfeiture and penalty set aside; appeal allowed.

Final Conclusion: The Tribunal set aside the order-in-original that forfeited the broker's security deposit and imposed penalty, accepting the Commissioner (Appeals) finding that the customs broker acted on documents supplied by the importer and was not liable for the alleged mis-declaration; the appeal is allowed with consequential relief.

Transaction value as assessable value - rejection of declared value under Rule 12 of the Customs Valuation Rules, 2007 - re-determination of value under Rule 9 of the Customs Valuation Rules, 2007 - admissibility of expert/valuer report and right to cross-examination - confiscation and consequential penalties under the Customs Act

Rejection of declared value under Rule 12 of the Customs Valuation Rules, 2007 - re-determination of value under Rule 9 of the Customs Valuation Rules, 2007 - transaction value as assessable value - Whether the declared CIF/transaction value of the imported barge could be rejected and re-determined on the basis of the revised Chartered Engineer report. - HELD THAT: - The Tribunal reviewed the Commissioner's finding that the declared CIF value was liable to rejection because certain on-board equipments were not included and freight was mis-declared. The Commissioner relied upon the Chartered Engineer's revised report (dated 12.10.2011) to redetermine value under Rule 9. The Tribunal found that the appellant had produced invoice, MOU, bill of sale and the initial Chartered Engineer certificate which stated a FOB price of USD 6,000,000 and that there was no allegation that any additional consideration had been paid to the seller. In the absence of admissible material properly tested in the proceedings (see analysis on cross examination below), the Tribunal held that the declared transaction value should have been accepted as the assessable value and that reliance on the revised report to enhance value could not be sustained. Consequently the re-determination under Rule 9 based on the second report was set aside and the declared value accepted. [Paras 24, 25, 41, 43]

Declared CIF/transaction value accepted; Commissioner's rejection and re-determination of value set aside.

Admissibility of expert/valuer report and right to cross-examination - expert evidence in quasi-judicial customs proceedings - Whether the departmental denial of opportunity to record the Chartered Engineer's statement and to permit cross-examination rendered the second valuation report inadmissible. - HELD THAT: - The Tribunal examined the circumstances in which the same Chartered Engineer executed a second, revised valuation after re-inspection at the instance of the Department and on the importer's request. The appellant had specifically sought recording of the valuer's statement and leave to cross-examine him on the change in valuation. The Commissioner refused that request on the ground that the re-inspection was at the instance of the importer. The Tribunal held that refusal to examine the valuer and to permit cross-examination violated principles of natural justice and made reliance on the second report impermissible. The Tribunal relied on the principle that if an authority intends to rely upon a statement or report, the author must be made available for examination; absence of such opportunity precludes proper reliance on the document in quasi-judicial proceedings. [Paras 36, 37, 38, 39, 40]

Denial of recording the Chartered Engineer's statement and of cross-examination was unjust; the second valuation report could not be relied upon.

Confiscation and consequential penalties under the Customs Act - effect of invalid valuation on confiscation, duty demand and penalties - Consequences of setting aside the enhanced valuation on confiscation, duty demand and penalties imposed by the Commissioner. - HELD THAT: - Having held that the second valuation report was not admissible and that the declared transaction value must be accepted, the Tribunal concluded that the foundational basis for the Commissioner's order - including re-determination of assessable value, confirmation of enhanced duty, confiscation and imposition of penalties - could not be sustained. The Tribunal observed that, in those circumstances, it was unnecessary to decide other contentions raised by the appellant and accordingly set aside the impugned order in its entirety, accepting the declared value in the Bill of Entry. [Paras 41, 42, 43]

Impugned order including re-determination of value, confirmed duty demand, confiscation and penalties set aside; declared value accepted and appeals allowed.

Final Conclusion: The impugned order dated 24.02.2014 is set aside. The declared CIF/transaction value in the Bill of Entry dated 25.08.2011 is accepted; the Commissioner's re-determination of value, consequent demand, confiscation and penalties cannot be sustained because the revised valuation report was relied upon without recording the valuer's statement or permitting cross-examination.

Ineligibility under Section 29A(h) of the Insolvency and Bankruptcy Code - invocation of personal guarantee as disqualifying event - proceeding in rem and parity of creditors in CIRP - date of reckoning for Section 29A disqualification and applicability of subsequent amendments - purposive interpretation of the IBC to protect integrity of the resolution process - balance between legality of eligibility and protection of ongoing resolution/public interest

Ineligibility under Section 29A(h) of the Insolvency and Bankruptcy Code - invocation of personal guarantee as disqualifying event - proceeding in rem and parity of creditors in CIRP - Scope and effect of Section 29A(h): whether execution and invocation of a personal guarantee disqualifies a person from being a resolution applicant in respect of that corporate debtor. - HELD THAT: - Section 29A(h) disqualifies a person who has executed a guarantee in favour of a creditor in respect of a corporate debtor where the guarantee has been invoked by a creditor and remains unpaid in full or in part. Once an insolvency application by a creditor is admitted, the proceeding is in rem and similarly placed creditors stand pari passu; therefore invocation of a personal guarantee by any creditor in respect of the corporate debtor attracts the disqualification under Section 29A(h) for participation in that corporate debtor's resolution process. The manner of invocation need not be litigated as part of eligibility; existence of invocation and unpaid liability suffice to engage the bar. Applying these principles, the Court held that the guarantees executed by Respondent No.3 which had been invoked prior to initiation of CIRP attracted Section 29A(h) and rendered the plan submitted by him not maintainable. [Paras 52, 53, 54, 55, 58]

A resolution applicant who has an invoked and unpaid personal guarantee in respect of the corporate debtor is ineligible under Section 29A(h); on the facts the plan by Respondent No.3 ought not to have been entertained.

Date of reckoning for Section 29A disqualification and applicability of subsequent amendments - purposive interpretation of the IBC to protect integrity of the resolution process - Whether eligibility under Section 29A(h) is to be reckoned at the time of submission of the resolution plan or can be governed by a subsequent amendment enacted before approval. - HELD THAT: - A purposive construction of Section 29A, consistent with the Code's object, permits application of an improved procedural provision enacted subsequent to filing where the change affects eligibility to participate in the resolution process. A mere filing of a plan does not create vested rights in a facilitator; if a person was eligible when filing but becomes ineligible thereafter by operation of law (including valid amendment), the subsequent provision governs whether the process can continue. Consequently, post-filing developments bearing on eligibility can be considered in assessing maintainability of the plan. [Paras 56, 61]

Subsequent amendments affecting eligibility can govern the question of maintainability; eligibility is not frozen by mere filing of a resolution plan.

Res judicata and issue estoppel in appellate and adjudicatory proceedings - Whether the adjudicating authority's earlier order and the appellate tribunal's treatment barred the appellant from raising eligibility of the resolution applicant before this Court on grounds of res judicata or issue estoppel. - HELD THAT: - The adjudicating authority's initial order on eligibility was not challenged on the merits by the present appellant and the appellate tribunal did not decide the matter on merits (the question of law was left open). An application for impleadment by the appellant had not yielded a hearing before the adjudicating authority. Under these circumstances principles of res judicata and issue estoppel do not operate to preclude the appellant from raising the eligibility contention. The courts below erred to the extent they treated earlier withdrawal/decisions as foreclosing fresh consideration by this appellant. [Paras 59]

Res judicata/issue estoppel did not bar the appellant from contesting eligibility before the Court on the facts of this case.

Balance between legality of eligibility and protection of ongoing resolution/ public interest - Whether the resolution plan, though found impermissible due to Section 29A(h) ineligibility, should be set aside given substantial implementation and public interest considerations. - HELD THAT: - Although the resolution plan submitted by Respondent No.3 was not maintainable because of Section 29A(h) ineligibility, the Court recognised that substantial steps had been taken: the plan had the requisite voting, approval, had been implemented since 18.04.2018, significant funds had been infused, shareholders approved further funding, employees and numerous stakeholders were affected, and important projects were ongoing. Weighing the Code's primary object of revival and the adverse consequences of upsetting an implemented plan, and noting that dissenting creditors' interests would be protected by the resolution plan's provisions (including liquidation value), the Court exercised discretion to leave the approved and implemented resolution plan undisturbed on the peculiar facts of this case. [Paras 61, 62, 63, 64]

Despite the plan's infirmity on eligibility grounds, the Court declined to disturb the approved and implemented resolution plan in view of substantial implementation and the public/ stakeholder interest.

Final Conclusion: The Court interpreted Section 29A(h) to disqualify a person whose personal guarantee in respect of the corporate debtor has been invoked and remains unpaid; subsequent amendments affecting eligibility can govern the maintainability of a plan; res judicata did not bar the appellant from raising eligibility. Notwithstanding the ineligibility of the specific resolution applicant, the Court declined to disturb the approved and implemented resolution plan on the peculiar facts given its substantial execution and the public and stakeholder interest, and disposed of the appeal accordingly.

Maintainability of writ petition in presence of an alternative appellate remedy - appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 - residuary appeal provision under Section 421(1) of the Companies Act, 2013 - alleged non-compliance of Rule 44 of the National Company Law Tribunal Rules, 2016 - scope of review for error apparent on the face of the record

Maintainability of writ petition in presence of an alternative appellate remedy - appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 - residuary appeal provision under Section 421(1) of the Companies Act, 2013 - Whether the writ petition was maintainable in view of available appeals before the Appellate Tribunal or under the Code. - HELD THAT: - The Court recorded that the writ petition was dismissed as not maintainable with liberty to approach the appropriate appellate forum (paras 2, 11). It observed that Section 61 of the Code provides an appeal in respect of orders under Part II of the Code, while Section 421(1) of the 2013 Act operates as a residuary provision for appeals against NCLT orders not otherwise appealable (paras 4-5, 10-11). The petition did not clearly plead that the impugned orders arose under Part II of the Code; moreover, the impugned orders comprised two dismissals for non prosecution and one order on merits arising from absence of the petitioner before the NCLT (paras 6-9, 14). Given that appeals under either Section 61 or Section 421(1) would be more efficacious and exhaustive remedies, and that the writ sought resolution of factual events that are best addressed by the NCLT itself, the High Court declined to exercise writ jurisdiction (paras 15-17, 19). [Paras 11, 14, 15, 17, 19]

Writ petition not maintainable in view of available appellate remedies; petitioner granted liberty to approach the appropriate appellate forum.

Residuary appeal provision under Section 421(1) of the Companies Act, 2013 - appeal under Section 61 of the Insolvency and Bankruptcy Code, 2016 - Whether the earlier order erred in referring to Section 421(1) of the Companies Act instead of Section 61 of the Code and whether such error warranted review. - HELD THAT: - The Court noted an observation in the order under review referring to Section 421(1) as providing for appeals from NCLT orders, but emphasised that the writ was dismissed with liberty to approach the appropriate appellate forum without specifying which provision would apply (paras 3, 11-12). The Court held that Section 421(1) is residuary and applies where no other appeal lies, but a review could not be premised solely on the order's reference to Section 421(1) since the outcome for the petitioner would have been the same if Section 61 had been cited (paras 10-13). Consequently, the mere mention of Section 421(1) did not constitute a reviewable error affecting the result. [Paras 3, 10, 11, 12, 13]

No scope for review merely because the earlier order referred to Section 421(1) rather than Section 61; such reference did not alter the petitioner's remedy.

Alleged non-compliance of Rule 44 of the National Company Law Tribunal Rules, 2016 - maintainability of writ petition in presence of an alternative appellate remedy - Whether allegations of non-compliance of Rule 44 of the NCLT Rules justified exercise of writ jurisdiction by the High Court. - HELD THAT: - The Court emphasised that factual allegations about what transpired before the NCLT ought to be raised before the same forum or the same Presiding Officer who heard the matter, since that forum is best placed to assess veracity (paras 14-16). The petitioner's complaints largely concerned absence of representation and factual events leading to orders of dismissal for non prosecution; such factual disputes limit the utility of High Court writ jurisdiction and are more appropriately ventilated via appeal or before the NCLT itself (paras 14, 16-19). The Court found that mere allegation of Rule 44 violation did not justify invoking writ jurisdiction in the circumstances. [Paras 14, 15, 16, 19]

Alleged non compliance of Rule 44 did not justify exercise of writ jurisdiction; petitioner must pursue appellate remedies or raise the matter before the NCLT.

Scope of review for error apparent on the face of the record - Whether the review application disclosed an error apparent on the face of the record warranting review of the earlier order. - HELD THAT: - The Court held that a review succeeds only on demonstration of an apparent error of record that can be corrected at first blush without deeper consideration of materials (para 20). The grounds advanced in the review application did not disclose any such apparent error; they required examination of the materials and connected NCLT records and, in any event, would not have altered the outcome of WPO No.11 of 2021 as recorded in the impugned order (paras 20-21). Accordingly, the review petition lacked merit. [Paras 20, 21]

Review dismissed for lack of any error apparent on the face of the record; no relief granted.

Final Conclusion: Review petition dismissed; earlier order dismissing the writ as not maintainable (with liberty to approach the appropriate appellate forum) stands, and the petitioner must pursue the available appellate remedy or raise factual irregularities before the NCLT.

Appealability of rejection of declaration under the Voluntary Compliance Encouragement Scheme (VCES) - construction of the VCES as part of Chapter V of the Finance Act, 2013 - appeal under Section 85 of the Finance Act, 1994 - remand for fresh disposal on merits by the appellate authority

Appealability of rejection of declaration under the Voluntary Compliance Encouragement Scheme (VCES) - appeal under Section 85 of the Finance Act, 1994 - Order rejecting an assessee's declaration under the VCES is appealable to the Commissioner (Appeals) under Section 85 of the Finance Act, 1994. - HELD THAT: - The Tribunal examined the jurisdictional pronouncement of the Madras High Court in M/s. Narasimha Mills Pvt. Ltd. v. Commr. of C.Ex. (Appeals), which held that the Service Tax VCES, introduced by exercise of powers under Section 114 of the Finance Act, 2013 and made operative by notification, is to be construed as part of Chapter V of the Finance Act, 1994. Consequently, all provisions of the Act, except those specifically excluded, apply to proceedings under the scheme. The High Court reasoned that where the scheme is part of the Act, orders passed under the scheme (including rejection of eligibility) are amenable to the statutory appellate remedy provided by Section 85. The Tribunal adopted this ruling and held that the Commissioner (Appeals) was therefore competent to entertain an appeal against the order rejecting the declaration under the VCES. [Paras 3, 4]

Accepted that the order rejecting benefit under the VCES is appealable under Section 85 of the Finance Act, 1994.

Remand for fresh disposal on merits by the appellate authority - jurisdiction and duty of Commissioner (Appeals) to adjudicate appeals under the Act - Whether the Commissioner (Appeals) was correct in rejecting the appeal for lack of appellate provision under the VCES and what relief should follow. - HELD THAT: - Having held the rejection order to be appealable, the Tribunal found the Commissioner (Appeals)'s refusal to admit the appeal unsustainable. The impugned communication rejecting the appeal was set aside. The Tribunal directed the Commissioner (Appeals) to take up the appellant's appeal and decide it on merits and in accordance with law, after affording reasonable opportunity to the appellant. The Tribunal thus remitted the matter for adjudication on merits rather than deciding substantive eligibility under the scheme itself. [Paras 5, 6]

Impugned communication set aside; appeal remitted to Commissioner (Appeals) for disposal on merits in accordance with law.

Final Conclusion: The Tribunal allowed the appeal by holding that rejection of a declaration under the VCES is appealable under Section 85 of the Finance Act, 1994, set aside the Commissioner (Appeals)'s communication rejecting the appeal, and remitted the matter to the Commissioner (Appeals) to be decided on merits after affording the appellant a reasonable opportunity.

Extended period of limitation - intention to evade payment of duty - penalty under section 11AC - assessable value - inclusion of amortised cost of patterns - interpretational divergence as bar to penalty

Assessable value - inclusion of amortised cost of patterns - extended period of limitation - Whether differential duty on amortised cost of patterns for the period from April 1994 to October 1998 could be sustained and recovery upheld under the extended period of limitation. - HELD THAT: - The Tribunal found as a fact that the mandate for inclusion of amortised cost had not been complied with and that computations were substantially revised during de novo proceedings, reflecting uncertainty in the revenue's case. The impugned appellate finding recorded that the department had not produced clinching documentary evidence of an intention to evade duty, noting only the failure to file price declarations under erstwhile Rule 173C which by itself did not establish willful suppression. The Tribunal further noted that guidelines on proportionate allocation were issued only by a Board circular dated 23rd January 1996, whereas the demand related also to an earlier period, and that divergent views existed on the issue. Applying these findings, the Tribunal concluded that the ingredients necessary to invoke the extended limitation could not be established and that the demand confirmed under the extended period therefore could not be sustained. The Tribunal accordingly set aside the demand. [Paras 9, 10]

Demand confirmed under the extended period of limitation set aside; appeal allowed.

Penalty under section 11AC - intention to evade payment of duty - interpretational divergence as bar to penalty - Whether the quashing of penalty under section 11AC on the ground of absence of intent to evade payment impacts the invoking of extended limitation for recovery of duty. - HELD THAT: - The Tribunal accepted the view that the legal ingredients for invoking the extended period of limitation are identical to those required for imposing penalty under section 11AC, namely the existence of fraud, collusion, wilful mis-statement or suppression of facts with intent to evade payment. The appellate authority had quashed penalties after recording that there was no evidence of intention to evade and that divergent views and interpretational doubts existed. The Tribunal held that where penalty could not be sustained for lack of requisite intent and the matter involved interpretational divergence, the same conclusion applies to the question of invoking the extended period of limitation; one cannot be sustained without the other. Consequently, the absence of intent precluded invocation of the extended limitation and supported setting aside the demand. [Paras 9, 10]

Quashing of penalty confirms absence of ingredients to invoke extended limitation; therefore extended-period recovery cannot be sustained.

Final Conclusion: The Tribunal set aside the differential duty confirmed under the extended period of limitation and allowed the appeal, holding that the absence of established intention to evade and the presence of interpretational divergence precluded invocation of the extended limitation for recovery.

Interest on pre-deposit refund - entitlement to refund of pre-deposit - rate of interest at 12% per annum - application of Sandvik Asia Ltd. precedent

Interest on pre-deposit refund - rate of interest at 12% per annum - application of Sandvik Asia Ltd. precedent - Refund of pre-deposit carried with interest and the rate of such interest - HELD THAT: - The Tribunal held that the appellant was entitled to interest on the refunded pre-deposit from the date of deposit until the date of realisation. The Tribunal followed the Division Bench decision in Parle Agro, which applied the Supreme Court ruling in Sandvik Asia Ltd., and accordingly enhanced the rate of interest applicable to pre-deposit refunds to 12% per annum. The impugned order denying interest was set aside and the Adjudicating Authority was directed to grant interest @ 12% per annum from the date of deposit until the date of refund, to be paid within two months of receipt of the Tribunal's order. [Paras 7]

The appeal is allowed; the Adjudicating Authority directed to grant interest at 12% per annum on the refunded pre-deposit from date of deposit to date of refund within two months.

Final Conclusion: The Tribunal allowed the appeal, set aside the order denying interest, and directed payment of interest at 12% per annum on the pre-deposit refund from the date of deposit until date of refund, payable within two months.

Input Tax Credit mismatch reconciliation - reconciliation of Input Tax Credit on government portal evidence - speaking order - remand for compliance with departmental circular - alternative remedy before Appellate Commissioner

Input Tax Credit mismatch reconciliation - reconciliation of Input Tax Credit on government portal evidence - speaking order - remand for compliance with departmental circular - Validity of the assessment order where the assessing authority did not follow the procedure laid down in Circular No.05 of 2021 for reconciling Input Tax Credit information obtained from the Government web portal. - HELD THAT: - The Court observed that the Principal Secretary/Commissioner of Commercial Taxes had issued Circular No.05 of 2021 prescribing the manner in which mismatches in Input Tax Credit drawn from the Government web portal are to be addressed and reconciled. The impugned assessment order was passed without following the procedure prescribed in that circular. In view of the non-compliance with the prescribed guidelines, the Court exercised supervisory jurisdiction to quash the assessment order and remit the matter to the assessing authority with a direction to pass a speaking order in accordance with the circular and its guidelines. The Court thereby required the authority to undertake the reconciliation process and record reasons and findings as mandated by the departmental instructions before arriving at any conclusion adverse to the petitioner. [Paras 9, 10]

Impugned Assessment Order quashed and the matter remitted to the respondent to pass a speaking order in terms of Circular No.05 of 2021, after reconciling the Input Tax Credit information obtained from the Government portal.

Speaking order - remand for compliance with departmental circular - alternative remedy before Appellate Commissioner - Procedural directions on furnishing details and timelines upon remand and the availability of alternate remedies. - HELD THAT: - The Court directed the assessing authority to furnish to the petitioner the details of the invoices allegedly issued by the petitioner, which were the basis for the purchasing dealers' availing Input Tax Credit. The respondent was ordered to supply such information within thirty days of receipt of the order; the petitioner was permitted thirty days thereafter to file a fresh reply; and the entire exercise was to be completed within ninety days from receipt of the Court's order. The respondent had contended that the petitioner had an alternate remedy before the Appellate Commissioner under the statute, but the Court did not deny that remedy and instead provided the procedural route on remand to be followed before the authority, leaving statutory appellate remedies intact. [Paras 11]

Respondent directed to furnish invoice details to the petitioner within 30 days; petitioner to file fresh reply within 30 days; entire exercise to be completed within 90 days; statutory appellate remedies remain available.

Final Conclusion: The assessment order for Assessment Year 2015-2016 is quashed and the matter is remitted to the assessing authority to follow Circular No.05 of 2021 by reconciling Input Tax Credit information, passing a speaking order after furnishing invoice details to the petitioner and permitting a fresh reply within the timelines prescribed; writ petition disposed of with no costs.

Correction of date of birth in service records - Limitation and accrual of cause of action - Applicability of Fundamental Rule 56 (rectification of date of birth) - Damages for harassment, mental agony and delay

Correction of date of birth in service records - Bonafide/clerical error in official records - The Trial Court rightly declared the correct date of birth of the plaintiff as 02.10.1962 and directed rectification of the service record. - HELD THAT: - The High Court accepted the Trial Court's finding that the plaintiff had produced primary documentary evidence (matriculation/CBSE certificate, attestation form, passport and other service documents) showing the date of birth as 02.10.1962 and that the appellant/defendant failed to explain why inconsistent entries (including the Service Book showing 02.10.1960) existed in its records. The Trial Court posed and found unanswered two material questions: why the matriculation date was not reflected in the service record and why other documents issued by the employer showed the incorrect date. In the absence of any satisfactory explanation and in view of the contemporaneous documentary evidence, the Trial Court concluded the erroneous recording was by inadvertence/clerical error and accepted 02.10.1962 as the conclusive date of birth, a conclusion the High Court found neither perverse nor illegal. [Paras 37, 42, 43]

Declaration granted that the plaintiff's date of birth is 02.10.1962 and the employer directed to correct the service record.

Limitation and accrual of cause of action - Applicability of Fundamental Rule 56 (rectification of date of birth) - The suit was within limitation; the cause of action accrued on rejection of the plaintiff's representation on 03.11.2014, and F.R.56 did not bar the relief in the facts of this case. - HELD THAT: - The Court concurred with the Trial Court's finding that the plaintiff first became aware of the incorrect entry upon receipt of the payslip in July 2013, lodged a representation on 31.07.2013 which was rejected on 03.11.2014, and filed suit within three years of that rejection. The Trial Court distinguished authorities relied upon by the appellant where notice of the defect had occurred earlier or relief was sought at the fag end of service. The High Court held that because the plaintiff lacked prior knowledge of the incorrect entry, the cause of action accrued only on the rejection letter; further, F.R.56 (and the five year note) did not preclude correction where a bonafide error was shown and the employer could not explain the discrepancy in its own records. [Paras 38, 39, 40, 41]

Limitation plea and reliance on F.R.56 rejected; suit held timely and maintainable.

Damages for harassment, mental agony and delay - Compensatory relief for employer's conduct - The Trial Court's award of damages to the plaintiff for harassment and delay was justified and is upheld. - HELD THAT: - The Trial Court awarded damages after finding that the employer unduly delayed considering the plaintiff's representation (460 days), delayed filing the written statement, and withheld copies of the Service Book, causing harassment. The High Court agreed that these facts-together with the appellant's failure to explain discrepancies in its records despite the plaintiff having furnished supporting documents at joining-constituted sufficient grounds for compensation. The Tribunal's approach and quantum (as an award for mental agony and harassment) were treated as justified on the facts and by comparison to precedents awarding compensation for similar employer conduct. [Paras 46, 47, 48, 49, 52]

Damages of Rs.1,00,000 with interest and costs affirmed; deposited amount to be released to the plaintiff with accrued interest.

Final Conclusion: The appeal is dismissed. The High Court affirms the Trial Court's declaration that the plaintiff's date of birth is 02.10.1962, directs correction of the service record, upholds the award of damages for harassment and delay, and orders release of the deposited amount in favour of the plaintiff with accrued interest.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttable presumption of legally enforceable debt - authority of power of attorney holder to prosecute - statutory notice need not disclose full particulars of transaction - materiality of differences in ink/handwriting on cheque - burden shifting where presumption is rebutted - appellate interference with acquittal - exceptional circumstances

Authority of power of attorney holder to prosecute - Validity of challenge to the authority of the Power of Attorney holder (Ext. P8) to prosecute the complaint. - HELD THAT: - The trial court's finding that Ext. P8 was not a proper power of attorney and that PW1 lacked knowledge of transactions was not sustained on the record. PW1 denied suggestions that he had no direct knowledge and asserted personal knowledge in his affidavit. Further, during examination under Section 313 Cr.P.C. the accused admitted the power of attorney. On these facts the challenge to PW1's authority to file the complaint is legally unsustainable. [Paras 8]

Challenge to the authority of the Power of Attorney holder is rejected; Ext. P8 and PW1's authority to prosecute stand.

Statutory notice need not disclose full particulars of transaction - Whether the statutory notice was invalid for not disclosing full details of the transaction. - HELD THAT: - The learned Magistrate's reliance on the alleged insufficiency of particulars in the statutory notice was held to be legally unsustainable in view of binding precedent of this Court, which recognises that full details of the transaction need not be disclosed in a statutory notice under the Negotiable Instruments Act. The court therefore rejected the ground of dismissal based on insufficiency of the notice. [Paras 9]

The defect alleged in the statutory notice does not vitiate the complaint; the notice was not required to disclose full transaction particulars.

Materiality of differences in ink/handwriting on cheque - presumption under Section 139 of the Negotiable Instruments Act - Whether differences in ink/handwriting and entries on the cheque negatived execution by the accused. - HELD THAT: - Relying on the legal principles laid down by the Supreme Court, the court observed that once the drawer's signature on the cheque is admitted, differences in handwriting or ink for other entries do not, by themselves, negate execution. A signed cheque handed to the payee attracts the presumption under Section 139; if the accused admits the signature, the mere fact of subsequent filling in by another is not fatal absent cogent evidence to rebut the presumption. [Paras 10]

Differences in ink/handwriting on the cheque are not material where the signature is admitted; the presumption under Section 139 applies.

Rebuttable presumption of legally enforceable debt - burden shifting where presumption is rebutted - appellate interference with acquittal - exceptional circumstances - Whether the prosecution proved existence of a legally enforceable debt corresponding to the cheque amount or whether the presumption under Section 139 was rebutted. - HELD THAT: - Although admission of the cheque engages the presumption under Section 139, that presumption is rebuttable. Discrepancies in the ledger extracts (Exts. P6 and P7) - notably divergent totals and an unexplained addition of interest at 24% (appearing in Ext. P6 but unsupported by any agreement or documentation) - created a reasonable doubt about the actual legally recoverable amount. The appellant, having sought to include interest at 24%, bore the responsibility to produce evidence of an agreement to that effect. The inconsistency shifted the burden back to the complainant to establish the precise enforceable debt. Given this, the trial court's conclusion of lack of proof of a legally enforceable debt was not shown to be perverse, and the High Court declined to overturn an acquittal save in exceptional circumstances. [Paras 11, 12, 13, 14]

Presumption under Section 139 was rebutted as to the exact enforceable amount due; the burden shifted to the complainant who failed to establish the precise legally enforceable debt, rendering the acquittal sustainable.

Final Conclusion: No exceptional circumstances exist to justify interference with the trial court's order of acquittal; the criminal appeal is dismissed and the acquittal of the 1st respondent under Section 138 of the Negotiable Instruments Act is upheld.

Proof of execution of negotiable instrument - onus under Section 118 of the Negotiable Instruments Act - comparison of disputed signatures - fabrication and forgery of promissory note - relevance of attesting witness evidence - circumstantial doubt and suspicious circumstances - Section 73 of the Indian Evidence Act - need for chemical or expert examination

Proof of execution of negotiable instrument - relevance of attesting witness evidence - The plaintiff proved the execution of the promissory note Ex.A1 by oral evidence corroborated by an attesting witness. - HELD THAT: - The plaintiff (P.W.1) narrated the time, manner and circumstances of the loan and execution of the pro-note, and P.W.2, an attestor, corroborated that evidence. The trial Court's and the appellate Court's findings that such oral testimony sufficiently established execution were accepted. The Court held that this evidence, considered together, was sufficient to prove execution of Ex.A1. [Paras 9, 10, 14]

Execution of Ex.A1 was proved in favour of the plaintiff.

Onus under Section 118 of the Negotiable Instruments Act - fabrication and forgery of promissory note - The defendant's plea that the promissory note was fabricated/forged and lacked consideration was rejected. - HELD THAT: - Once execution was established by the plaintiff, the burden shifted under Section 118 to the defendant to prove want of consideration or forgery. The defendant denied borrowing and alleged fabrication, but did not produce contemporaneous documents or satisfactory evidence to rebut the presumption. The Court noted the defendant's own admissions and inconsistencies and found that the defendant failed to discharge the burden of proving fabrication or absence of consideration. [Paras 9, 10, 11, 14]

Defendant failed to prove that Ex.A1 was fabricated or unsupported by consideration; the plea was rejected.

Comparison of disputed signatures - Section 73 of the Indian Evidence Act - need for chemical or expert examination - The defendant was held to have failed to place contemporaneous signature specimens for comparison; no mandatory chemical/expert examination was required in the circumstances. - HELD THAT: - The Court observed that the defendant did not produce contemporaneous documents signed by him for comparison and had relied on non-contemporary documents (such as written statement and vakalat) which the defendant himself admitted bore signatures different from Ex.A1. The Court further held that, in view of the nature of the disputed documents, it was not necessary for the plaintiff to have sent documents for chemical examination under Section 73, and the absence of comparative material from the defendant undermined his challenge to the signature. [Paras 11, 12, 13, 14]

No comparison evidence from the defendant was produced; expert/chemical examination was not required and the defendant's challenge to the signature failed.

Circumstantial doubt and suspicious circumstances - relevance of attesting witness evidence - Allegations of suspicious circumstances surrounding Ex.A1 were not held to vitiate the plaintiff's proof. - HELD THAT: - Although the defendant contended that Ex.A1 was fabricated and suspicious circumstances existed, the Court found that the attesting witness evidence and plaintiff's testimony were coherent and that the defendant's admissions and inconsistencies negated the claim of a contrived suit. The Court accepted the concurrent findings of the Courts below that suspicious circumstances did not render the pro-note invalid. [Paras 10, 11, 14]

Suspicion alleged by the defendant did not displace the plaintiff's proof; Ex.A1 was not rendered invalid by suspicious circumstances.

Section 67 of the Indian Evidence Act - The judgments below were not found to be vitiated by application of Section 67 of the Indian Evidence Act. - HELD THAT: - The Court considered the question whether the findings were hit by Section 67 (relating to proof of handwriting) but concluded that the evidence on record - oral testimony of the plaintiff and the attesting witness and the defendant's own inconsistent admissions regarding signatures - justified the concurrent findings. There was no merit in displacing the factual conclusions on this ground. [Paras 9, 10, 11, 14]

Findings of the Courts below are not vitiated by Section 67; concurrent conclusions were upheld.

Limitation - The suit was not held to be barred by limitation. - HELD THAT: - Although limitation was earlier framed as a substantial question, the Court in view of the acceptance of the plaintiff's evidence and the rejection of the defendant's defenses answered the question against the defendant. The judgment treats limitation as not impeding the plaintiff's claim given the findings on execution and proof. [Paras 14]

The contention that the suit is barred by limitation is negatived.

Final Conclusion: The High Court dismissed the second appeal and affirmed the concurrent findings of the Courts below that the promissory note Ex.A1 was executed by the defendant, the defendant failed to prove fabrication, forgery, lack of consideration or suspicious circumstances sufficient to defeat the plaintiff's claim, and no remand or further examination was directed.

Applicability of Section 37 NDPS Act - Treatment of controlled substances under Section 9A - Concept of commercial quantity vis-a -vis controlled substances - Bail entitlement of foreign nationals - Grant of bail subject to conditions and reporting obligations

Applicability of Section 37 NDPS Act - Treatment of controlled substances under Section 9A - Concept of commercial quantity vis-a -vis controlled substances - Whether the rigours of Section 37 of the NDPS Act apply to offences under Section 9A read with Section 25A where the seized substance is a 'controlled substance' (pseudo-ephedrine). - HELD THAT: - The Court held that offences under Section 9A read with Section 25A relate to a 'controlled substance' as defined under Section 2(viid) and notified under the exercise of powers under Section 9A, and that the statutory scheme does not categorise controlled substances into 'small' or 'commercial' quantities. The concept of commercial quantity, and therefore the bar under Section 37, applies to narcotic drugs and psychotropic substances but not to controlled substances such as pseudo-ephedrine. Consequently, the bar in Section 37 is not attracted in the present prosecution for alleged offences under Section 9A/25A where pseudo-ephedrine was recovered. [Paras 9, 10, 11, 12]

Section 37 NDPS Act does not apply to the offences under Section 9A/25A in respect of the controlled substance (pseudo-ephedrine); the bar of Section 37 is not attracted.

Bail entitlement of foreign nationals - Grant of bail subject to judicial discretion - Whether a foreign national accused is precluded from being granted regular bail, and whether the petitioner (a foreign national) can be released on bail in the facts of this case. - HELD THAT: - The Court observed that being a foreign national does not ipso facto bar the grant of bail. Relying on precedents emphasising the constitutional value of personal liberty and earlier decisions holding that foreign origin alone cannot justify continued incarceration, the Court noted that the petitioner's matrimonial ties to an Indian national and family circumstances have been verified. Considering that the offences for controlled substance and the small quantity of cocaine do not invoke Section 37, and that trial may be protracted, the Court exercised its discretion in favour of bail while imposing conditions to secure attendance and public interest. [Paras 13, 14, 15, 16, 18]

A foreign national is not automatically barred from bail; on the facts and verifications in this case the petitioner is entitled to bail subject to conditions.

Grant of bail subject to conditions and reporting obligations - On what terms bail is to be granted to the petitioner. - HELD THAT: - The Court admitted the petitioner to regular bail on execution of a personal bond and two solvent sureties, and imposed specific supervisory and territorial conditions. The petitioner was directed to furnish a personal bond in the specified amount with two solvent sureties to the satisfaction of the trial court, to inform the investigating officer of the bail residence and any change therein within prescribed time, to report fortnightly to the IO at the Crime Branch, and not to leave the limits of NCT of Delhi without prior permission of the trial court. These measures were applied to balance the liberty interest with investigational and public interest concerns. [Paras 18]

Petitioner admitted to bail on specified personal bond, sureties and attendant reporting and territorial conditions.

Final Conclusion: Bail granted to the petitioner, a foreign national, on furnishing the prescribed bond and sureties and subject to reporting, address-notification and territorial conditions; Section 37 NDPS Act held inapplicable to the charged offences under Section 9A/25A in respect of the controlled substance pseudo-ephedrine. Nothing expressed is an opinion on merits.

Moratorium under the Insolvency and Bankruptcy Code - corporate insolvency resolution process - criminal liability under Chapter XVII of the Negotiable Instruments Act - liability of directors and officers despite corporate moratorium - quashing of criminal proceedings against a corporate debtor during moratorium - exercise of jurisdiction under Section 482 CrPC

Moratorium under the Insolvency and Bankruptcy Code - quashing of criminal proceedings against a corporate debtor during moratorium - Criminal proceedings under Sections 138 and 141 of the Negotiable Instruments Act against the corporate debtor are to be quashed on account of the moratorium declared under the Insolvency and Bankruptcy Code. - HELD THAT: - The Court applied the principle laid down by the Hon'ble Supreme Court in P. Mohanraj that the moratorium under Section 14 of the IBC interdicts continuation or initiation of proceedings under Sections 138/141 of the Negotiable Instruments Act against the corporate debtor for the period of moratorium. The NCLT had declared the insolvency process and moratorium in respect of the 1st petitioner on 10.07.2017; accordingly, prosecution of the company was barred and the proceedings against the 1st petitioner were quashed. The Court relied on the categorical finding that the statutory bar operates in favor of the corporate debtor and makes it impossible for such proceedings to continue or be instituted against it during the moratorium period. [Paras 9, 10, 11, 13]

Proceedings against the 1st petitioner (the corporate debtor) are quashed in view of the moratorium declared by the NCLT.

Criminal liability under Chapter XVII of the Negotiable Instruments Act - liability of directors and officers despite corporate moratorium - Criminal proceedings against the natural persons (directors/management) named in Section 141 of the Negotiable Instruments Act are not barred by the moratorium and therefore cannot be quashed on that ground. - HELD THAT: - The Court followed the Supreme Court's conclusion that the moratorium under the IBC applies only to the corporate debtor and does not extinguish or suspend the statutory criminal liability of natural persons under Chapter XVII of the Negotiable Instruments Act. Applying that principle to the facts, the Court held that petitioners 2 and 3, as natural persons, remain statutorily liable and the question of their criminal liability is a triable issue requiring appreciation of evidence by the trial court. The Court declined to quash the proceedings against them on the present petition. [Paras 9, 10, 11, 12]

Proceedings against petitioners 2 and 3 are not quashed; they remain liable to be tried and the trial court shall proceed to try the cases.

Exercise of jurisdiction under Section 482 CrPC - Whether this Court should exercise its inherent jurisdiction under Section 482 CrPC to pre-emptively quash proceedings against the directors (petitioners 2 and 3). - HELD THAT: - The Court considered the scope of its Section 482 CrPC jurisdiction and concluded that the question of the directors' liability involves triable issues of fact and evidence which cannot be finally determined in writ proceedings. Accordingly, the Court declined to exercise its inherent jurisdiction to quash the criminal proceedings against petitioners 2 and 3 and left them to raise their defences before the trial court, which was directed to dispose of the cases expeditiously. [Paras 12, 13]

The Court refused to quash the proceedings against petitioners 2 and 3 under Section 482 CrPC and directed continuation of trial on merits.

Final Conclusion: The petitions are allowed insofar as the 1st petitioner (the corporate debtor) is concerned and the criminal proceedings against it are quashed in view of the moratorium declared by the NCLT; however, the petitions are dismissed with respect to petitioners 2 and 3 (natural persons), whose criminal liability survives and must be tried by the trial court, which is directed to proceed expeditiously, with the limited directions regarding appearance given by this Court.

Maintainability of complaint under Section 138 of the Negotiable Instruments Act - legally enforceable debt or other liability - determination ipso facto of hire-purchase agreement on repossession - instrument without consideration - suppression of material facts vitiating cognizance

Determination ipso facto of hire-purchase agreement on repossession - instrument without consideration - legally enforceable debt or other liability - maintainability of complaint under Section 138 of the Negotiable Instruments Act - suppression of material facts vitiating cognizance - Whether complaint under Section 138 N.I. Act was maintainable where the financier repossessed and sold the vehicle prior to or after presentation of the cheque and did not disclose repossession to the Magistrate. - HELD THAT: - The Court held that Section 138 attracts penal liability only where the cheque is issued for discharge of a legally enforceable debt or other liability subsisting on the date of drawal. Reliance on Indus Airways and on High Court precedents dealing with hire-purchase repossession (including Rajkumar Sharma and Sudha Beevi) led to the conclusion that repossession of the vehicle by the financier determines the hire-purchase agreement ipso facto. Once the financier repossessed and sold the vehicle and adjusted the sale proceeds towards the loan, the post-dated cheques taken as security or advance become instruments for which the consideration has failed and therefore create no legally enforceable obligation within the meaning of Section 138. In the present case the cheque dated 13.12.2018 was dishonoured, but the vehicle was repossessed on 28.12.2018 and later sold; these acts terminated the underlying agreement so that the cheque could not be said to have been drawn in discharge of an existing legally enforceable debt. Further, the petitioner pointed out non-disclosure of the repossession in the complaint: by suppressing that material fact before the Magistrate the complainant misled the Court and obtained cognizance which would not have been taken had the repossession and sale been disclosed. The complainant's failure to place the hire-purchase agreement for inspection reinforced that the complaint did not establish a subsisting legally enforceable liability necessary for Section 138 prosecution. Applying these principles, the Court found the complaint not maintainable and the proceedings liable to be quashed. [Paras 8, 9, 10]

Complaint under Section 138 of the N.I. Act was not maintainable as the hire-purchase agreement stood determined on repossession and sale of the vehicle, rendering the cheque an instrument without consideration; summons and consequential proceedings were quashed.

Final Conclusion: The petition under Section 482 Cr.P.C. is allowed: Criminal Case No.7214/2019 (summons dated 22.02.2019) and all consequential proceedings against the present petitioner are quashed and set aside.