TaxTMI Updates e-Newsletter
Feb 01,2022

Vires of refund provisions (Section 54) under GST - judicial precedent binding on vires question - refund claim adjudication and consideration of reply - remand for fresh decision by assessing authority - extension of limitation by COVID notifications

Vires of refund provisions (Section 54) under GST - judicial precedent binding on vires question - Challenge to the constitutionality of Section 54 of the CGST Act, 2017 and the corresponding provision in the Rajasthan GST Act - HELD THAT: - The petitioners' challenge to the vires of the statutory refund provisions could not be entertained in view of the Supreme Court's decision in Union of India v. VKC Footsteps India Pvt. Ltd., 2021 SCC Online SC 706, which upheld the vires of the provisions under consideration. Given that binding precedent, the constitutional challenge to Section 54 and the corresponding State provision was brought to an end by the court.

The challenge to the vires of the refund provisions is rejected in view of the Supreme Court precedent.

Refund claim adjudication and consideration of reply - remand for fresh decision by assessing authority - Final adjudication of the petitioners' refund claims by the Assistant Commissioner - HELD THAT: - The Assistant Commissioner had issued a show cause notice and had not yet passed final orders on the refund claims. The High Court directed that the Assistant Commissioner shall decide the refund claims afresh taking into account the petitioners' existing reply (annexure A/4) and any further grounds which the petitioners may file. The petitioners were permitted to file additional grounds in support of the refund claim by filing a further reply within one week from the date of the order, and the authority was directed to consider any such further reply while deciding the claims.

The matter is remanded to the Assistant Commissioner for fresh decision on the refund claims, with directions to consider the petitioner's reply and any additional reply filed within one week.

Extension of limitation by COVID notifications - Consideration of COVID-related extension of limitation for refund claims - HELD THAT: - Counsel for the petitioners sought consideration of COVID-related extensions applying to statutory time limits for refund. The court noted that there was no pleading or specific prayer seeking a declaration to that effect in the writ petitions. In the absence of such a pleading and corresponding relief, the court declined to address the question of applicability of COVID-related extensions in the present petitions.

The court refused to decide the applicability of COVID-related limitation extensions in these petitions for want of pleading and a corresponding prayer.

Final Conclusion: Petitions disposed. The constitutional challenge to the refund provisions is foreclosed by the Supreme Court precedent; the refund claims are remanded to the Assistant Commissioner for fresh adjudication, taking into account the petitioner's reply and any additional reply filed within one week; the court declined to adjudicate the applicability of COVID-related extension of limitation for want of pleading.

Attraction of Section 74 for transitional input tax credit - liability for interest and penalty where transitional credit was not utilized - requirements of a valid show cause notice under Section 74(9) - distinction between wrongful availment and wrongful utilization of input tax credit - imposition of token penalty where attempt to transition credit was not bona fide

Distinction between wrongful availment and wrongful utilization of input tax credit - liability for interest and penalty where transitional credit was not utilized - Whether interest and penalty under Sections 50/73/74 of the TNGST Act are attracted where transitional credit was claimed in TRAN-1 but was not utilized and was subsequently reversed - HELD THAT: - The court found that although the petitioner had attempted to transition credit in TRAN-1, the credit was never utilized and was reversed in the returns. Relying on the legislative scheme and reproducing reasoning from higher authority, the court held that mere reflection of transitional credit in the electronic ledger or its wrongful attempt to be transitioned, without utilization to discharge tax liability, does not suffice to invoke the penal consequences under Section 74. The court distinguished decisions where credit was both taken and utilized and observed that invocation of Section 74 requires the ingredients of wrongful utilization to be established. Consequently, interest and penalty under Section 74 could not be sustained on the facts where there was no utilisation and the credit was reversed within the relevant period. [Paras 13, 14, 15, 16, 19]

Interest and penalty under Section 74 are not attracted on the facts because the transitional credit was not utilized and was reversed; large penalty and interest accordingly cannot be sustained.

Requirements of a valid show cause notice under Section 74(9) - attraction of Section 74 for transitional input tax credit - Whether the Show Cause Notice complied with the specific invocation and requirements of Section 74(9) of the TNGST Act - HELD THAT: - The court examined the Show Cause Notice dated 09.05.2019 (and subsequent notice 31.12.2019) and held that if construed as a notice under Section 74, it failed to specify the ingredients of Section 74(1). The notice merely stated that assessment under Section 74 was being proceeded with due to unavailability of documents, and did not meet the statutory requirements of Section 74(9). For that reason, the proceedings did not properly invoke Section 74 against the petitioner. [Paras 16, 17]

The Show Cause Notice did not meet the requirements of Section 74(9) and therefore could not properly sustain proceedings under Section 74.

Imposition of token penalty where attempt to transition credit was not bona fide - proportionality in penalty imposition - What penalty, if any, is appropriate where there was an improper attempt to transition credit but no utilization and subsequent reversal - HELD THAT: - The court recognized that the petitioner had attempted to transition credit with a non bona fide intention to use it in future, admitted the mistake, and reversed the credit after receipt of the Show Cause Notice. While declining to uphold the penalty and interest under Section 74 in full, the court held that a token penal consequence was warranted for the gravity of the attempt. Applying discretionary reasoning on proportionality, the court imposed a token penalty as a remedial and deterrent measure. [Paras 14, 15, 20]

A token penalty is imposed on the petitioner; the impugned order is partly quashed while a penalty of a limited amount is sustained.

Final Conclusion: Writ petition partly allowed: the court held that transitional credit which was not utilized and was reversed could not sustain full interest and penalty under Section 74; the show cause notice was deficient for invoking Section 74; nevertheless a token penalty was imposed and the impugned order was partly quashed.

Substitution of statutory provisions - applicability of law in force on date of issuance of notice - procedure for reopening assessments - prior approval and show-cause procedure under Section 148A - time limit for issuance of notice (limitation) after substitution - ultra vires exercise of delegated legislative power

Substitution of statutory provisions - applicability of law in force on date of issuance of notice - procedure for reopening assessments - prior approval and show-cause procedure under Section 148A - time limit for issuance of notice (limitation) after substitution - Notices under Section 148 issued after 01.04.2021 for assessment years prior to that date must comply with the reassessment regime substituted by the Finance Act, 2021 including the procedures and limitation periods introduced thereby. - HELD THAT: - The Finance Act, 2021 substituted Sections 147-151 and introduced Section 148A with materially different safeguards, time limits and a pre notice enquiry and show cause mechanism. Substitution of provisions results in repeal of the earlier provisions and their replacement by the new provisions; absent any saving clause or clear legislative intent to keep the old provisions alive, the substituted law governs notices issued on or after its effective date. The amended Section 149 prescribes revised limitation periods (three years ordinarily; ten years where income represented as assets meets the specified threshold) and contains a proviso that precludes relying on the enlarged limitation of the substituted clause (b) to revive notices which were already time barred prior to substitution. Consequently, notices issued after 01.04.2021 must be issued in conformity with the substituted Sections including compliance with Section 148A, and notices issued after that date without following the substituted regime are invalid. [Paras 37]

All notices under Section 148 issued after 01.04.2021 without complying with the substituted reassessment provisions (including Section 148A and the limitation scheme of Section 149 as substituted) are invalid.

Ultra vires exercise of delegated legislative power - scope of power under Relaxation Act, 2020 - delegated legislation cannot amend parent Act - Explanations in the CBDT notifications dated 31.03.2021 and 27.04.2021, purporting to make the pre amendment provisions of Sections 148, 149 and 151 apply for issuance of notices, are beyond the delegated power and invalid. - HELD THAT: - Section 3(1) of the Relaxation Act, 2020 empowered the Central Government only to extend specified time limits by notification. The CBDT notifications exceeded that delegated power by introducing explanations purporting to preserve or apply the pre amendment provisions of the Income tax Act for purposes of issuing notices. A subordinate instrument cannot, under the guise of clarification, alter or revive the parent statute; where the plain statutory scheme and substitution are clear, a notification cannot re write the law. Applying established principles on vires of subordinate legislation, the explanations in the impugned notifications went beyond the scope of Section 3(1) and are therefore unconstitutional and invalid. [Paras 40]

The explanations in the CBDT notifications of 31.03.2021 and 27.04.2021 are ultra vires and are declared invalid.

Final Conclusion: The substituted reassessment scheme introduced by the Finance Act, 2021 governs notices issued on or after 01.04.2021; notices issued after that date without complying with the substituted provisions (including Section 148A and the substituted limitation provisions) are quashed. The CBDT explanations in the notifications dated 31.03.2021 and 27.04.2021 that sought to apply pre amendment provisions are ultra vires and invalid. Appeals dismissed and writ petitions allowed.

Unexplained investment / unexplained expenditure under section 69B - unexplained cash credit / unexplained advances under section 68 - evidentiary value of "dumb"/loose papers and survey statements - corroboration requirement for entries found in survey/seized documents - statement recorded under section 131 during survey vis-a -vis section 133A - burden on assessee to prove identity, genuineness and creditworthiness (section 68) - allowability of business expenditure under section 37 - percentage completion method for recognition of revenue in construction contracts

Unexplained investment / unexplained expenditure under section 69B - evidentiary value of "dumb"/loose papers and survey statements - corroboration requirement for entries found in survey/seized documents - Validity of additions made under section 69B for alleged undisclosed cash paid for purchase of shares/property (A.Y. 2012-13 and applied to A.Y. 2013-14). - HELD THAT: - The Tribunal examined the impugned additions which were founded primarily on statements recorded during survey at third party premises and on loose papers/diaries seized therein. It held that entries in dumb documents or notings in loose diaries do not ipso facto constitute admissible evidence of unexplained investments unless corroborated by other material. The statement of the third party (Shri Pradeep Aggarwal) contained contradictions and he failed to produce documentary substantiation; further the Settlement Commission's acceptance by a third party cannot bind the assessee. Reliance on CBDT instruction and authorities was placed to emphasise that confessions or notings during survey, absent cogent corroborative material, are insufficient to sustain additions. Accordingly the CIT(A)'s deletion of the additions was upheld and the Revenue's grounds were dismissed. [Paras 23]

Addition under section 69B deleted; Revenue's appeal dismissed for A.Y. 2012-13 (finding applied to A.Y. 2013-14).

Unexplained cash credit / unexplained advances under section 68 - burden on assessee to prove identity, genuineness and creditworthiness (section 68) - Whether advances recorded as 'advances from members' were exigible to tax as unexplained cash credit under section 68 (A.Y. 2012-13). - HELD THAT: - The assessee produced detailed particulars (names, addresses, shop numbers, agreements/cancellations), receipts, bank evidence and service tax returns showing receipt of advances and banking of amounts. The CIT(A) found these materials sufficient to discharge the primary onus under section 68, shifting the burden to Revenue to rebut by cogent material; Revenue did not produce contrary evidence nor utilize powers under sections 133(6)/131 to verify. On this basis the Tribunal agreed with the CIT(A) that the entries represented genuine advances and that section 68 could not be invoked. [Paras 41]

Addition under section 68 deleted for A.Y. 2012-13; Revenue's ground dismissed.

Evidentiary value of "dumb"/loose papers and survey statements - unexplained investment / unexplained expenditure under section 69B - Sustainability of addition on account of alleged unexplained Work in Progress (WIP) based on seized diary and survey admissions (A.Y. 2014-15). - HELD THAT: - Documents seized in survey (diary AS 2) contained estimated project figures; the Director's statement purportedly admitted unaccounted WIP. Tribunal analysed authorities holding that loose papers/dumb documents require corroboration before being converted into income. It observed that survey authorities exceeded jurisdiction by recording section 131 statements without requisite conditions; no corroborative documentary evidence established that diary entries had materialised into transactions. Distinguishing cases where sworn statements were submitted to banks, the Tribunal concluded that the AO's larger addition was unsustainable and limited addition confirmed by CIT(A) could not stand. The Tribunal set aside the CIT(A)'s confirmation and directed deletion of the WIP addition. [Paras 65]

Addition on account of alleged unexplained WIP deleted for A.Y. 2014-15; assessee's appeal allowed, Revenue's related ground dismissed.

Percentage completion method for recognition of revenue in construction contracts - revenue recognition and reconciliation of profit under percentage completion - Whether the assessee understated profit under percentage completion method such that an addition to profit (difference) was required (A.Y. 2014-15). - HELD THAT: - The Tribunal examined the percentage completion computation and the AO's assertion of actual sales area. It noted that under percentage completion method revenue is determined by cost incurred to date as proportion of estimated total cost and that recognition does not rely on sales value alone. The assessee had disclosed revenue under percentage completion and there was no evidence of completed conveyance/registering of sale in the year. The AO's finding of sales lacked supporting material and no evidence was produced at hearing. In these circumstances the Tribunal set aside the finding of additional profit. [Paras 82]

No addition for understatement of profit under percentage completion; ground of assessee allowed.

Allowability of business expenditure under section 37 - incidental/commercial expediency of expenses to obtain vacant possession - Deductibility of expenses incurred to vacate occupants/encroachments (claimed under section 37) (A.Y. 2014-15). - HELD THAT: - Although the MOU initially placed responsibility on the vendor, facts showed the vendor failed to clear encumbrances and the assessee incurred payments to obtain vacant possession necessary for carrying out its development project. The authorities did not dispute genuineness of the payments. Considering the commercial expediency and purpose of business, the Tribunal held such expenses to be allowable under section 37 and set aside the disallowance made by the CIT(A)/AO. [Paras 96]

Encroachment/vacation expenses allowed as business deduction under section 37; addition deleted.

Unexplained cash credit / unexplained loans under section 68 - burden on assessee to prove identity, genuineness and creditworthiness (section 68) - Whether unsecured loans from five parties were to be treated as unexplained cash credits under section 68 (A.Y. 2014-15). - HELD THAT: - The assessee furnished PAN copies, bank statements, ITRs and confirmations evidencing receipt through banking channels. The CIT(A) and AO doubted lenders' capacity based on low reported incomes, but did not undertake independent enquiries of the lenders. Tribunal observed that once the assessee discharges the primary onus by producing primary documentary evidence as to identity, genuineness and banking of transactions, the Revenue must investigate further if it disputes creditworthiness. Absent such inquiry or cogent contrary material, the Tribunal found the assessee had discharged its onus and the additions were not justified. [Paras 109]

Additions under section 68 in respect of unsecured loans set aside; assessment adjusted in favour of assessee.

Final Conclusion: The Tribunal dismissed the Revenue appeals and allowed the assessee's appeals in part: additions under section 69B for A.Y. 2012 13 and A.Y. 2013 14 were deleted; advances treated under section 68 for A.Y. 2012 13 were held genuine and deleted; for A.Y. 2014 15 the large WIP addition based on seized diary was deleted, the percentage completion/profit issue resolved in favour of the assessee, encroachment expenses were allowed under section 37, and unsecured loans treated as genuine for section 68 purposes were directed to be deleted.

Validity of notice under section 148 - Reassessment jurisdiction and condition precedent of valid notice - Section 159 and proceedings against legal representatives of deceased assessee - Waiver by participation versus requirement of fresh notice to legal heirs - Section 292B/292BB as curative provisions - Nullity versus irregularity where jurisdictional fetters are absent

Validity of notice under section 148 - Section 159 and proceedings against legal representatives of deceased assessee - Waiver by participation versus requirement of fresh notice to legal heirs - Nullity versus irregularity where jurisdictional fetters are absent - Whether reassessment proceedings initiated by issuance of notice under section 148 to an assessee who was deceased at the time of issue are valid and whether any subsequent participation by a legal heir cures the defect. - HELD THAT: - The Tribunal examined the facts that the jurisdictional notice under section 148 was issued and served on the deceased assessee more than three years after death, no notice under section 148 was issued in the names of the legal heirs, and the legal heirs were resident at a different city such that they did not receive the section 148 notice. Applying the principle that a notice under section 148 is a jurisdictional condition precedent to assume jurisdiction under section 147, the Tribunal followed the consistent decisions of the jurisdictional High Court which hold that where the assessee is dead on the date of issue of the section 148 notice the notice must be issued to the legal representatives under section 159(2)(b); issuance of the notice to a dead person is invalid unless the legal representatives, on receipt of that notice, submit to the jurisdiction without objection (i.e., participate by filing return and thereby waive the right). The Tribunal rejected the contention that section 292B/292BB would automatically validate the notice, observing that those provisions do not cure the absence of a valid jurisdictional notice where the legal representatives have not waived their right and have not participated. Relying on the distinction between an irregularity (waivable) and a nullity (not waivable) in respect of jurisdictional fetters, the Tribunal held that the defect here went to jurisdiction because the legal heirs had no knowledge of the proceedings and did not receive the section 148 notice, so there was no waiver and the proceedings are coram non judice. [Paras 16, 18, 19, 20]

The notice under section 148 issued to the deceased assessee is invalid and the reassessment proceedings and the assessment order passed pursuant thereto are null and void.

Final Conclusion: The appeal is allowed; the assessment framed in consequence of the notice under section 148 (issued to a deceased assessee) is set aside as null and void for want of jurisdiction, and the Tribunal did not decide the other grounds.

Section 68 - unexplained cash credit - identity, genuineness and creditworthiness of lenders - burden of proof on the assessee - deeming provision - effect of repayment and debit entries on cash credits

Section 68 - identity, genuineness and creditworthiness of lenders - burden of proof on the assessee - Whether the addition made under Section 68 treating loans from M/s Satya Retail Pvt. Ltd. and M/s JA Infracon Pvt. Ltd. as unexplained cash credits was justified. - HELD THAT: - The Tribunal examined whether the assessee discharged the onus under Section 68 to prove identity, genuineness and creditworthiness of the lenders. The assessee produced ledger accounts, bank statements, income-tax returns and audited accounts of the lender companies, and the lender companies responded to notices under Section 133(6) admitting the loans and furnishing supporting documents. The Assessing Officer's case relied on adverse material from assessments of the lender companies and a statement recorded under Section 132(4) implicating those companies in accommodation entries. The Tribunal found that identity of the lender companies was established by the documents and responses on record. While the genuineness of the source of funds in the hands of the lender companies had been doubted in their own assessments, that circumstance, even if it warranted an adverse view against the lender companies, did not automatically justify treating the receipts in the hands of the assessee as unexplained without independent proof that the assessee was the ultimate beneficiary of undisclosed funds. The Tribunal also noted that the Revenue did not compel personal attendance of the lenders' directors under Section 131 to test veracity. On the totality of evidence, the Tribunal held that the assessee had satisfactorily explained the loans and discharged the statutory burden under Section 68, so the additions were not sustainable. [Paras 23, 24, 25, 27]

Addition under Section 68 held not justified and deleted.

Deeming provision - effect of repayment and debit entries on cash credits - Whether repayment of the loans in the subsequent year and attendant debit entries could be ignored for determining the taxability under Section 68. - HELD THAT: - The Tribunal recognised that Section 68 is a deeming provision and requires careful consideration of credit entries. However, it held that debit entries (repayment) cannot be ignored and that evidence of repayment in the subsequent year rebuts the inference that the assessee was the final beneficiary of undisclosed funds. Given the documentary evidence of repayments through banking channels and settlement of accounts, the Tribunal concluded that the credit entries could not be looked at in isolation and that repayment evidence supported the genuineness of the transactions in the assessee's hands. [Paras 26, 28, 29]

Repayment and subsequent debit entries undermined the AO's inference; credit entries could not be examined in isolation for treating receipts as income under Section 68.

Final Conclusion: The Revenue's appeal was dismissed: the Tribunal upheld the CIT(A)'s deletion of additions under Section 68 in respect of the loans from the two companies for A.Y. 2012-13, and the assessee's cross-objection was dismissed as infructuous.

Penalty under section 271(1)(c) - Concealment of particulars of income - Furnishing inaccurate particulars of income - Bona fide error - Standard form penalty notice - failure to strike out irrelevant portions - Section 292BB - validation of defective notice - Reliance on judicial precedent that incorrect claim in law is not furnishing inaccurate particulars

Penalty under section 271(1)(c) - Furnishing inaccurate particulars of income - Bona fide error - Reliance on judicial precedent that incorrect claim in law is not furnishing inaccurate particulars - Whether the penalty under section 271(1)(c) could be sustained for the addition of Rs. 91,96,966 insofar as that addition arose from an alleged excess provision for bad and doubtful debts in the return for AY 2012-13 - HELD THAT: - The Tribunal accepted the factual finding recorded by the lower authorities that the assessee made an erroneous claim in its return and subsequently filed a revised computation during assessment proceedings (letter dated 18/02/2015), and that the error was detected in the course of AO's scrutiny. Following the principle laid down by the Supreme Court in the Reliance Petro Products line of authority (as applied by the Tribunal), a mere incorrect claim in law or a claim not sustainable in law does not, by itself, amount to furnishing inaccurate particulars of income or concealment of income attracting section 271(1)(c). The Tribunal noted the CIT(A)'s observation that the assessee realised the mistake and filed the revised statement, and held that the nature of the error was bona fide. Although the notices were in standard form and the revenue relied on section 292BB to cure any defect, the determinative question was whether the facts demonstrated concealment or knowingly furnishing inaccurate particulars. On the material before it, the Tribunal concluded there was a bona fide error in the claim of expenditure and not deliberate concealment or inaccurate particulars warranting penalty. Therefore, the penalty could not be sustained. [Paras 6, 7, 10, 17, 19]

Penalty under section 271(1)(c) deleted as the addition arose from a bona fide error in claim and not from furnishing inaccurate particulars or concealment of income.

Standard form penalty notice - failure to strike out irrelevant portions - Section 292BB - validation of defective notice - Concealment of particulars of income - Whether the alleged defect in the penalty notice (failure to strike irrelevant portions of the standard form) vitiated the penalty proceedings - HELD THAT: - The assessee challenged initiation of penalty on the ground that the notice under section 274 r.w.s. 271(1)(c) was a standard form with irrelevant portions not struck out, and thus lacked the requisite specific charge. The revenue relied on the assessment record and section 292BB to contend that any defect was cured and that the assessee was aware that proceedings were for furnishing inaccurate particulars. The Tribunal observed the contention but proceeded to decide the appeal on the merits: having found the addition to be the result of a bona fide error (and not concealment or knowingly inaccurate particulars), the Tribunal deleted the penalty. Thus, any infirmity in the form of the notice became immaterial to the final outcome; the penalty was not sustained on substantive grounds and was set aside. [Paras 11, 12, 15, 17]

The procedural objection regarding the standard form notice did not prevail; however, the penalty was deleted on merits because the error was bona fide.

Final Conclusion: The Tribunal allowed the appeal for Assessment Year 2012-13 and deleted the penalty of Rs. 28,41,863 imposed under section 271(1)(c), holding that the addition resulted from a bona fide error in claim and did not constitute concealment or furnishing of inaccurate particulars of income.

Revisionary jurisdiction under section 263 - Erroneous and prejudicial to the interests of revenue - Depreciation on intangible asset under section 32 - Amortisation under section 35ABB - Application of mind / adequacy of enquiry by Assessing Officer - Binding effect of co-ordinate Bench decision - Put-to-use test for capitalization of spectrum

Revisionary jurisdiction under section 263 - Erroneous and prejudicial to the interests of revenue - Application of mind / adequacy of enquiry by Assessing Officer - Validity of the PCIT's order under section 263 setting aside the AO's assessment for alleged error prejudicial to revenue in allowing depreciation on spectrum - HELD THAT: - The Tribunal held that the AO had made discrete and adequate enquiries during assessment proceedings by issuing multiple notices under section 142(1) and seeking specific documents (agreements, details of upfront fees, proof of put-to-use, details of additions and depreciation rates), and had considered the assessee's detailed replies, annexures and tax-auditor certifications. Information furnished suo motu by the assessee during the assessment was nonetheless part of the record and was to be treated as examined by the AO. The show-cause notice issued by the PCIT did not invoke Explanation 2 to section 263, and the law requires that when Explanation 2 is not mentioned in the notice it cannot be relied upon while passing the revisionary order. On these foundations the Tribunal concluded that there was application of mind by the AO and no case of non-application or inadequate enquiry; accordingly invocation of revisionary jurisdiction by the PCIT was unsustainable. [Paras 17, 19, 26]

The PCIT's revision under section 263 was quashed; the assessment order was not erroneous or prejudicial to the revenue.

Depreciation on intangible asset under section 32 - Amortisation under section 35ABB - Put-to-use test for capitalization of spectrum - Binding effect of co-ordinate Bench decision - Whether the spectrum fee is eligible for depreciation under section 32 or must be amortised under section 35ABB - HELD THAT: - On the merits the Tribunal followed a co-ordinate Bench decision in the assessee's own case holding that spectrum fees represent a distinct intangible business/commercial right eligible for depreciation under Explanation 3(b) to section 32 (applying the put-to-use test) and that section 35ABB is not applicable to the payments in question. The PCIT's reliance on departmental disagreement with the Tribunal's earlier ruling and a pending appeal before the High Court did not justify disregarding the co-ordinate Bench's binding precedential effect. Applying that precedent and the factual matrix, the Tribunal held that the AO correctly allowed depreciation at the claimed rate and that the direction to amortise under section 35ABB was not sustainable. [Paras 20, 23, 25]

Depreciation on spectrum fees under section 32 is allowable on merits; section 35ABB does not apply and the PCIT's direction to amortise is set aside.

Final Conclusion: The Tribunal allowed the appeal: the PCIT's order under section 263 was quashed because the AO had applied his mind and made adequate enquiries, and on merits the claim for depreciation on spectrum fees under section 32 was upheld (section 35ABB held not applicable), resulting in dismissal of the revision and restoration of the assessment order.

Deduction under section 24(a) - income from house property - Applicability of sections 22 to 27 to trusts for computation of income from house property - Exemption under section 11 dependent on computation of taxable income - Condonation of delay in filing appeal

Deduction under section 24(a) - income from house property - Applicability of sections 22 to 27 to trusts for computation of income from house property - Exemption under section 11 dependent on computation of taxable income - Deduction under section 24(a) claimed by the charitable trust in respect of income from house property is allowable. - HELD THAT: - The Tribunal examined the rejection of the assessee's claim for deduction u/s 24(a) made in the CPC intimation and the confirmation of that rejection by the CIT(A), noting that CIT(A) relied upon an ITAT Chennai decision (Anjuman-E-Himayath-E-Islam). The Tribunal observed that the Chennai Tribunal's decision was reversed by the Hon'ble Madras High Court in T.C.A. No. 46 of 2021, which held that income from property must be computed under sections 22 to 27 and that such computed income, once determined, is relevant for claiming exemption under section 11 (subject to utilization conditions). Applying that ratio, the Tribunal held that section 24(a) deduction from income from house property is claimable by the trust and accordingly allowed the ground of appeal. The Tribunal therefore followed the High Court's authoritative reversal of the earlier tribunal view and allowed the deduction claimed by the assessee. [Paras 12, 13]

Assessee's claim for deduction under section 24(a) is allowed and the ground of appeal is allowed.

Condonation of delay in filing appeal - Condonation of delay in filing the appeal before the Tribunal is allowed. - HELD THAT: - The appeal was presented with delay and accompanied by an affidavit explaining the delay on medical grounds (progressive supra nuclear palsy of the deponent). The Revenue did not oppose condonation and left the matter to the Bench. Having considered the genuineness of the explanation, the Tribunal exercised its discretion to condone the delay and admit the appeal. [Paras 7, 8]

Delay in filing the appeal is condoned and the appeal admitted.

Final Conclusion: The Tribunal condoned the delay and allowed the appeal: the deduction under section 24(a) in respect of income from house property is held allowable to the charitable trust for Assessment Year 2015-16 and the appeal is allowed.

Reopening under section 148 on ground of escaped assessment - reopening of assessment - transfer of a capital asset - definition of transfer in section 2(47) - chargeability of capital gains under section 45 and computation under section 48 - substitution of consideration by fair market value under section 50C - part performance under Section 53A of the Transfer of Property Act

Reopening under section 148 on ground of escaped assessment - reopening of assessment - definition of transfer in section 2(47) - Validity of reopening assessment of AY 2005-06 when the alleged transfer was held to have occurred in AY 2004-05. - HELD THAT: - The Tribunal examined the reasons recorded for issuance of notice under section 148 which relied on stamp valuation showing a higher market value for a sale deed dated 23 April 2004. The assessee produced an agreement to sell dated 31 August 2003, proof of receipt of consideration and delivery of possession, and had offered and been assessed on the capital gain in AY 2004-05. Under the Income-tax Act the definition of 'transfer' in section 2(47) includes transactions covered by Section 53A of the Transfer of Property Act; the revenue did not dispute that part performance could constitute a transfer under section 2(47). The AO and DRP, however, treated the registered sale deed date as determinative and proceeded to reopen AY 2005-06. The Tribunal found this approach inconsistent: if transfer occurred in AY 2004-05 and was assessed under section 143(3) for that year, there was no escapement of income in AY 2005-06 to justify reopening. The DRP's direction both confirmed the AO's addition for AY 2005-06 and ignored the assessee's evidence of transfer in AY 2004-05, resulting in a contradiction in reasoning. On these facts the Tribunal held the reopening of AY 2005-06 to be without basis and therefore invalid. [Paras 12, 16, 17, 19, 20]

Reopening of assessment for Assessment Year 2005-06 quashed as transfer had occurred and been assessed in Assessment Year 2004-05; grounds for reopening AY 2005-06 lacked merit.

Substitution of consideration by fair market value under section 50C - chargeability of capital gains under section 45 and computation under section 48 - part performance under Section 53A of the Transfer of Property Act - Whether the addition under section 50C (difference between stamp duty value and sale consideration) could be made in AY 2005-06 when capital gain was offered and assessed in AY 2004-05. - HELD THAT: - Section 50C operates by deeming the stamp valuation to be the full value of consideration for computation of capital gains under sections 45 and 48, but those provisions are triggered only in the year in which the transfer (as defined in section 2(47)) occurs. The Tribunal recorded that (a) the agreement to sell, receipt of full consideration and delivery of possession occurred in AY 2004-05; (b) the assessee offered and was assessed on the capital gain for AY 2004-05; and (c) in AY 2005-06 there was no fresh transfer attracting section 45 or computation under section 48. Consequently section 50C had no application to AY 2005-06. The Tribunal also noted that reliance on the Supreme Court decision on transfer of property (Suraj Lamp) was misplaced because the Income-tax Act specifically recognises transfers resulting from part performance under section 53A via section 2(47). Given the absence of any unapportioned or unassessed capital gain in AY 2005-06, the addition under section 50C in that year was unsustainable. [Paras 14, 15, 16, 18, 19]

Addition under section 50C in Assessment Year 2005-06 deleted as section 50C applies only in the year in which transfer under section 2(47) is triggered, which was AY 2004-05 in this case.

Final Conclusion: The Tribunal allowed the appeal, quashed the reopening of Assessment Year 2005-06 and deleted the addition made under section 50C, holding that the transfer occurred and capital gain was chargeable and assessed in Assessment Year 2004-05 and therefore there was no basis to reopen or tax AY 2005-06.

Revisionary jurisdiction under section 263 - Error in assessment causing prejudice to revenue - Non-verification of bank deposits and interest income - Initiation of penalty proceedings under section 271(1)(c) - Limits of Commissioner's power to direct penalty initiation under section 263 post-amendment

Revisionary jurisdiction under section 263 - Error in assessment causing prejudice to revenue - Non-verification of bank deposits and interest income - Validity of revision under section 263 insofar as the Assessing Officer failed to verify cash deposits in bank accounts and the interest income declared by the assessee. - HELD THAT: - The Tribunal held that the existence of the twin conditions for valid exercise of revisional power under section 263 - (i) an error in the order of the Assessing Officer and (ii) that the error is prejudicial to the revenue - must be prima facie established by the Commissioner/PCIT. The PCIT had found on the record that the AO did not inquire into substantial bank cash transactions and did not verify the interest income returned by the assessee. The fact that subsequent consequential proceedings resulted in no addition does not negate the correctness of the PCIT's prima facie satisfaction that an error causing prejudice existed. The Tribunal found no material before it to controvert the PCIT's finding on these two counts and accordingly upheld the PCIT's exercise of revision on these aspects and the direction to the AO to reframe the assessment after proper verification. [Paras 6]

The PCIT's revision under section 263 was validly exercised and is upheld insofar as it set aside the assessment for non-verification of cash deposits in bank accounts and non-verification of interest income.

Initiation of penalty proceedings under section 271(1)(c) - Limits of Commissioner's power to direct penalty initiation under section 263 post-amendment - Whether the Commissioner/PCIT could, in exercise of revisional powers under section 263, set aside the assessment order and direct initiation of penalty proceedings under section 271(1)(c). - HELD THAT: - The Tribunal reviewed the jurisprudence of the jurisdictional High Court and the ITAT Ahmedabad Bench and concluded that even after the amendment to section 271(1)(c) (post 1-4-2002) - which confers power on the administrative Commissioner to initiate penalty proceedings - the Commissioner cannot, by exercising section 263, set aside a completed assessment solely for the purpose of creating or directing initiation of distinct penalty proceedings. The reasons include that satisfaction for invoking penalty must be formed in the course of the relevant proceedings and penalty proceedings are separate and distinct from assessment proceedings; the Commissioner cannot fabricate or create those proceedings by revisional order. Applying these principles, the Tribunal held the PCIT's direction to initiate penalty proceedings to be not in accordance with law and set aside that part of the revisionary order. [Paras 6]

The PCIT's direction to initiate penalty proceedings under section 271(1)(c) by exercising power under section 263 is set aside as not in accordance with law.

Final Conclusion: The appeal is partly allowed: the PCIT's exercise of revision under section 263 is upheld with respect to non-verification of bank deposits and interest income, but the direction to initiate penalty proceedings under section 271(1)(c) is set aside.

Penalty under section 271(1)(b) - assessment under section 143(3) read with section 153A - willful default and non-cooperation - plausible explanation for non compliance due to volume of work - precedent of coordinate Benches in deletion of penalty

Penalty under section 271(1)(b) - assessment under section 143(3) read with section 153A - willful default and non-cooperation - plausible explanation for non compliance due to volume of work - precedent of coordinate Benches in deletion of penalty - Validity of penalty levied under section 271(1)(b) for Assessment Years 2005-06 to 2008-09 - HELD THAT: - The Tribunal found that the Assessing Officer imposed penalty under section 271(1)(b) on the ground of alleged non compliance with notices and non appearance, despite production of bank details and subsequent filing of information. The assessment had been completed under section 143(3) read with section 153A. The Tribunal followed coordinate Bench decisions which held that where assessment is finalized under section 143(3) (and not by ex parte order under section 144), subsequent compliance in the assessment proceedings indicates that earlier defaults were effectively cured and there is no demonstrable willful default or continuing non cooperation. The Bench also accepted that a plausible explanation - namely substantial volume of work and prior requests for seized material - could justify delays in specific compliances. In light of these precedents and absence of contrary material, the Tribunal concluded that the AO and CIT(A) erred in sustaining the penalty and that no cogent reason existed to find willful default. [Paras 8, 9, 10, 11]

Penalty under section 271(1)(b) imposed for the Assessment Years 2005-06, 2006-07, 2007-08 and 2008-09 is deleted and the Assessing Officer is directed to cancel the penalty.

Final Conclusion: All four appeals are allowed; the penalty imposed under section 271(1)(b) for the Assessment Years 2005-06 to 2008-09 is cancelled, following the view that finalisation of assessment under section 143(3)/153A and plausible explanations negate a finding of willful default.

Penalty under section 271(1)(c) - bar of limitation for imposing penalties - limitation under proviso to section 275(1)(a) for imposition of penalty where Commissioner (Appeals) disposes the appeal - power to keep penalty proceedings in abeyance pending appellate disposal

Penalty under section 271(1)(c) - limitation under proviso to section 275(1)(a) for imposition of penalty where Commissioner (Appeals) disposes the appeal - power to keep penalty proceedings in abeyance pending appellate disposal - Whether the penalty order dated 30.08.2012 levied under section 271(1)(c) was barred by limitation under the proviso to section 275(1)(a) and therefore liable to be cancelled. - HELD THAT: - The assessee filed return for A.Y.2003-04 and the assessing officer passed assessment order on 27.03.2006; first appellate order by the Commissioner (Appeals) in the quantum proceedings was passed on 19.01.2010. The proviso to section 275(1)(a), inserted w.e.f. 01.06.2003, limits the period for passing an order imposing penalty to either the end of the financial year in which penalty proceedings were initiated or within one year from the end of the financial year in which the order of the Commissioner (Appeals) is received by the relevant principal chief commissioner/commissioner, whichever is later. On the facts, the tribunal observed that the maximum permissible period for passing penalty would expire by 31.03.2011 in normal course, and even allowing for delay in receipt of the CIT(A)'s order the outer limit would be 31.03.2012. The assessing officer passed the penalty order on 30.08.2012, after both these outer limits. Decisions relied upon by the Revenue were held distinguishable as they pertained to assessment years governed by the pre-proviso law which permitted keeping penalty proceedings in abeyance until receipt of the tribunal's order; however, after insertion of the proviso the assessing officer may keep proceedings in abeyance only until disposal by the first appellate authority. Applying the statutory time-limit in the proviso, the tribunal concluded that the penalty order was time-barred and therefore liable to be set aside. As the penalty was cancelled on limitation grounds, the tribunal found it unnecessary to examine the merits of the levy. [Paras 3]

Penalty order dated 30.08.2012 under section 271(1)(c) is barred by limitation under the proviso to section 275(1)(a) and is cancelled.

Final Conclusion: The assessee's appeal is allowed and the penalty levied by the assessing officer is set aside as time-barred under the proviso to section 275(1)(a).

Revisional jurisdiction under section 263 - disallowance under section 14A read with Rule 8D - capital gains on merger/amalgamation (reverse merger) - merger of assessment order with appellate order

Revisional jurisdiction under section 263 - capital gains on merger/amalgamation (reverse merger) - Whether revision under section 263 was justified on the ground that capital gains escaped assessment on account of a reverse merger. - HELD THAT: - The Pr. CIT issued the revision notice alleging escape of capital gains because consideration received on reverse merger exceeded the net asset value reflected in the assessee's books. The Assessing Officer, pursuant to directions in the revisional order, made further enquiries and framed a consequential assessment on 31.12.2019. In that assessment the AO did not make any addition on account of the reverse merger. Having regard to the subsequent enquiry and the absence of any addition, the Tribunal held that the original assessment could not be characterised as erroneous and prejudicial to the revenue on this count and that invocation of section 263 was therefore not justified. [Paras 6, 7]

Revision under section 263 quashed insofar as it related to alleged capital gains on the reverse merger.

Revisional jurisdiction under section 263 - disallowance under section 14A read with Rule 8D - merger of assessment order with appellate order - Whether revision under section 263 was justified on the ground that the Assessing Officer failed to make proper enquiries regarding disallowance under section 14A read with Rule 8D. - HELD THAT: - The disallowance under section 14A had been computed by the AO in the original assessment, deleted by the CIT(A), and that appellate order was subsequently upheld by the Tribunal. On the date when the Pr. CIT invoked revision, the original assessment order stood merged with the appellate order. The Tribunal found that the 14A issue had already been adjudicated in appeal in favour of the assessee and that there was no material to show that the AO failed to make proper enquiries such as would render the assessment erroneous and prejudicial. Consequently, revisional exercise on this ground had no basis. [Paras 4, 5, 8]

Revision under section 263 quashed insofar as it related to disallowance under section 14A read with Rule 8D.

Final Conclusion: The revisional order dated 30.03.2019 passed by the Pr. CIT under section 263 is quashed in its entirety; the appeal is allowed.

Transfer pricing adjustment - arm's length price - international transaction - interest on delayed receivables as an international transaction - reimbursement of expenses and mark up - set off of brought forward unabsorbed depreciation - remand for fresh adjudication

Transfer pricing adjustment - arm's length price - comparability and benchmarking under Rule 10B/10D - Deletion of transfer pricing adjustment disallowing depreciation claimed on imported capitalised medical equipment - HELD THAT: - The Tribunal, following its coordinate-bench decision in the assessee's own case for AY 2012-13, held that treating the arm's length price of purchase of capital goods as nil was unsustainable. The TPO had accepted purchase price for trading stock but inexplicably determined ALP of capitalised assets at nil without applying any benchmarking method or producing comparables, in breach of the requirements of the transfer pricing rules. The Tribunal observed that importation at nil price is implausible and that identical products purchased from the same AE in the same year cannot be held at arm's length for trading goods and at nil for capitalised goods. On those findings the Tribunal directed that depreciation claimed on the imported fixed assets be allowed and deleted the adjustment made by the TPO/Assessing Officer/DRP. [Paras 9]

Adjustment of Rs. 77,04,297 disallowing depreciation on imported capitalised equipment deleted; ground allowed.

Interest on delayed receivables as an international transaction - international transaction - remand for fresh adjudication - Whether delay in realisation of receivables from the AE constitutes an international transaction attracting interest and the quantum/rate of such interest - HELD THAT: - The Tribunal noted that delay in receivables may, depending on context, fall within the definition of international transaction after the statutory amendment, but emphasized that this is not automatic. Material factual aspects-reason for delay, comparative average delay for AE and non-AE debtors, whether the assessee charged interest to AE or non-AE customers, and existence of outstanding payables to the AE that could be set off-were not examined by the TPO/DRP. The Tribunal also noted that the DRP had modified the rate to six months LIBOR plus 400 bps and applied a 60 day credit where none was specified, but left open the assessee's right to adduce material to show a lower applicable rate. In view of these unexamined factual matters, the Tribunal restored the issue to the Assessing Officer for fresh adjudication in light of the observations made. [Paras 14, 15]

Issue remanded to the Assessing Officer for fresh consideration of whether delay in receivables is an international transaction, appropriate credit period, rate of interest and netting with payables; assessee permitted to produce material on applicable rate.

Reimbursement of expenses and mark up - transfer pricing adjustment - Deletion of 5% mark up on reimbursement of expenses recovered from the AE - HELD THAT: - The Tribunal found that many expenses incurred by the assessee on behalf of the AE were reimbursed on a back to back, cost to cost basis and that reciprocally certain expenses incurred by the AE for the assessee were also so reimbursed without mark up. In those circumstances, and on the material demonstrating back to back invoicing and cost recovery, there was no justification to levy an ad hoc mark up of 5% on such reimbursements. Accordingly the Tribunal deleted the transfer pricing adjustment made by the TPO/DRP. [Paras 21]

Adjustment of Rs. 36,83,982 on account of mark up on reimbursements deleted; ground allowed.

Set off of brought forward unabsorbed depreciation - consequential relief - Grant of consequential set off of brought forward unabsorbed depreciation against income adjusted by transfer pricing - HELD THAT: - The parties agreed that consequential relief arising from decisions in the preceding assessment years required direction. The Tribunal directed the Assessing Officer to grant set off of brought forward unabsorbed depreciation after the position is crystallised in the earlier years, thereby preserving the assessee's entitlement subject to the final outcome in those years. [Paras 22]

Assessing Officer directed to grant set off of brought forward unabsorbed depreciation consequentially; ground allowed for statistical purposes.

Final Conclusion: The appeal is partly allowed: the transfer pricing adjustment disallowing depreciation on imported capitalised equipment and the imposition of mark up on reimbursements are deleted; the question of interest on delayed receivables is remanded to the Assessing Officer for fresh consideration on the factual aspects and appropriate rate; the Assessing Officer is directed to grant consequential set off of brought forward unabsorbed depreciation once earlier years are finalised.

Penalty under section 271(1)(c) for concealment of income - Effect of survey disclosure under section 133A on levy of penalty - Assessment completed on return inclusive of additional income declared during survey

Penalty under section 271(1)(c) for concealment of income - Assessment completed on return inclusive of additional income declared during survey - Validity of deletion of penalty levied under section 271(1)(c) where the assessment was completed on the revised return which included income admitted during survey under section 133A, without any further addition by the assessing officer. - HELD THAT: - The Tribunal noted that the assessee filed a revised return declaring additional income admitted in the course of survey under section 133A, and the assessing officer completed assessment accepting the revised return and determining income on that basis without making any disallowance or addition. The Commissioner (Appeals) relied on earlier decisions holding that when assessment is finalised on the basis of a return inclusive of income admitted during survey and no addition is made, penalty under section 271(1)(c) for concealment is not warranted. The Revenue did not dispute the factual position that the assessment was completed on the inclusive revised return. Applying the principle that penalty for concealment cannot be sustained where the returned income (inclusive of survey-admitted income) is accepted in assessment without adverse adjudication, the Tribunal found no infirmity in the CIT(A)'s deletion of the penalty and dismissed the Revenue's grounds. [Paras 3, 4]

Deletion of penalty under section 271(1)(c) upheld; Revenue's appeal dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s order deleting the penalty since the assessment was completed accepting the revised return inclusive of income admitted during survey without any addition.

Revision under section 263 - Arm's Length Price determination by TPO - Mandatory conformity of assessment with TPO order under section 92CA(4) - Erroneous and prejudicial to revenue test - Scope of PCIT's power vis-a -vis TPO - Rule of consistency in transfer pricing - Principles of natural justice (opportunity of hearing)

Revision under section 263 - Mandatory conformity of assessment with TPO order under section 92CA(4) - Scope of PCIT's power vis-a -vis TPO - Validity of exercise of jurisdiction by the PCIT under section 263 to revise an assessment made in conformity with the ALP determined by the TPO - HELD THAT: - Once the Assessing Officer referred the international transactions to the TPO and the TPO determined the ALP under section 92CA(3), section 92CA(4) mandated that the Assessing Officer compute the assessee's total income in conformity with the TPO's determination. Section 263 empowers the revisionary authority to revise orders passed by the Assessing Officer if they are erroneous and prejudicial to revenue; it does not confer administrative power to revise orders passed by the TPO. Where the AO has merely incorporated the TPO's determination as required by section 92CA(4), the AO has not committed an independent error in completing assessment. Therefore, the PCIT cannot, under section 263, revisit or revise the TPO's order by holding the subsequent assessment (which conforms to the TPO order) to be erroneous merely because the TPO did not examine some transactions. The Tribunal relied on this statutory interplay and prior precedent to conclude that PCIT lacked jurisdiction to revise the assessment order passed in compliance with the TPO's determination. [Paras 12, 13, 14, 15]

PCIT had no jurisdiction under section 263 to revise the assessment order that was completed in conformity with the TPO's determination under section 92CA(3)/(4); the exercise of revision was invalid.

Arm's Length Price determination by TPO - Erroneous and prejudicial to revenue test - Rule of consistency in transfer pricing - Whether the assessment order was erroneous and prejudicial to the revenue for not examining royalty payments on models other than 3DX - HELD THAT: - The record shows the assessee furnished details of royalty payments for all models and the TPO examined those details. The TPO reduced the royalty rate only for the 3DX model after finding the patent issue specific to that model and having regard to consistency with earlier years and rectification in assessment year 2010-11 where adjustments for other models were deleted. The department had historically accepted the 5% royalty for other models and the MAP proceedings also concerned only the 3DX model. Given these factual findings, the Tribunal held the TPO's acceptance of royalties for other models was a possible view based on past history and materials on record. The twin conditions under section 263(1)-that the order be both erroneous and prejudicial to the revenue-were not satisfied, and the PCIT failed to demonstrate any specific prejudice or error in respect of other models beyond asserting non-inquiry. [Paras 16, 17, 18, 19, 20]

The assessment order was not shown to be erroneous and prejudicial to the revenue for non-examination of royalty payments on other models; therefore, the section 263 order setting aside the assessment on that ground was invalid.

Final Conclusion: The appeals are allowed: the orders passed under section 263 for assessment years 2014-15 and 2015-16 are set aside and the assessment orders restored on the grounds that the PCIT lacked jurisdiction to revise an assessment completed in conformity with the TPO's determination and, in any event, the conditions of section 263(1) were not satisfied regarding royalty payments on models other than 3DX.

Maintainability of writ petition in presence of alternative statutory remedy - availability of statutory appeal under Section 128 of the Customs Act, 1962 - effect of corrigendum to show cause notice and prejudice to party - confiscation and penalty proceedings under the Customs Act, 1962

Maintainability of writ petition in presence of alternative statutory remedy - availability of statutory appeal under Section 128 of the Customs Act, 1962 - Whether the writ petition under Article 226 is maintainable notwithstanding the availability of an appeal under Section 128 of the Customs Act, 1962. - HELD THAT: - The court recorded that the petitioner indisputably has a statutory remedy by way of appeal to the adjudicating appellate authority under Section 128 of the Customs Act, 1962 and thereafter to the Customs, Excise and Service Tax Appellate Tribunal under the statutory scheme. All grounds urged in the writ petition, including technical contentions, are available to the petitioner before the appellate authorities who are competent to appreciate and decide them. In these circumstances the court found no ground to interfere with the impugned adjudication by exercising writ jurisdiction under Article 226, and therefore declined to entertain the petition on the ground that an alternative and efficacious remedy of appeal exists. The court clarified that observations made in the order would not influence the appellate authority, which must decide any appeal on its own merits. [Paras 7]

Writ petition dismissed for want of alternative and efficacious remedy of appeal; petitioner to pursue statutory appeals under Section 128 (and, if required, further remedies).

Effect of corrigendum to show cause notice and prejudice to party - confiscation and penalty proceedings under the Customs Act, 1962 - Whether the omission of certain sub-paragraphs in the show cause notice caused prejudice to the petitioner and vitiated the proceedings. - HELD THAT: - The court noted that, although sub-paragraphs were not printed in the copy of the show cause notice before the petitioner, the petitioner had nonetheless submitted a detailed reply addressing the proposed penalty and participated in the entire proceedings. The petitioner also raised an objection at the hearing and a corrigendum was issued the next day invoking the penal provisions. Given the petitioner's participation, detailed reply and awareness that penal provisions were invoked, the court concluded that no prejudice was caused by the typographical/printing omission in the notice. Consequently, this omission did not render the subsequent adjudication void. [Paras 4, 6]

Typographical omission in the printed show cause notice did not cause prejudice; corrigendum and the petitioner's participation cured any defect.

Final Conclusion: The petition is dismissed on grounds of non-maintainability in view of available statutory appeals; the court observed no prejudice from the typographical omission in the show cause notice and directed that any appeal filed shall be decided by the appellate authority without being influenced by this order.

Confiscation and consequential penalty - pre-shipment inspection certificate as technical opinion - proof and quantification of non-conforming constituents - definition and scope of "municipal waste" under Customs Tariff - applicability of Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 - seizure not sustainable in absence of cogent evidence - order of re-export and clearance for home consumption

Confiscation and consequential penalty - pre-shipment inspection certificate as technical opinion - seizure not sustainable in absence of cogent evidence - definition and scope of "municipal waste" under Customs Tariff - applicability of Hazardous and Other Wastes (Management and Transboundary Movement) Rules, 2016 - Whether the imported consignments of Waste Paper (CTH 47079000) were liable to confiscation and whether penalties were imposable. - HELD THAT: - On the facts found by the Tribunal, the consignments were predominantly waste paper and importers produced pre-shipment inspection certificates from DGFT-approved agencies and chemical analysis reports stating the material to be waste paper, absence of putrefiable organic matter, and approximate non-recyclable content not exceeding stated low percentages. Visual inspection noted traces of non-paper items, but no quantification of such contaminants was placed on record and there was no evidence that the material was collected from households or similar sources falling within the definition of "municipal waste." In these circumstances the Tribunal held that the findings of the revenue were not supported by cogent contrary evidence sufficient to discard the technical opinion in the pre-shipment certificates. Consequently, seizure and confiscation were not justified and the Hazardous and Other Wastes Rules, 2016 were inapplicable in absence of clear evidence that the consignments were municipal or hazardous waste. The Tribunal therefore concluded that confiscation and penalties could not be sustained on the material before it. [Paras 5]

Confiscation of the consignments and imposition of penalties are not sustainable for want of cogent evidence and in view of the pre-shipment inspection certificates and other material on record.

Order of re-export and clearance for home consumption - manufacture as bona fide user - Whether the orders for re-export and the consequential direction and penalties should be set aside and the goods allowed clearance for home consumption. - HELD THAT: - The Tribunal noted that the appellants are manufacturers of craft paper and that the imported paper waste was intended for use as raw material. Having held that confiscation and penalties were unsustainable, the Tribunal found the re-export directions and penalty orders also liable to be set aside. The goods were therefore permitted to be cleared for home consumption in accordance with law and the appeals were allowed with consequential reliefs as per law. [Paras 6, 7, 8]

Orders for re-export and imposition of penalties are set aside; consignments are allowed clearance for home consumption and the appeals are allowed with consequential relief.

Final Conclusion: The Tribunal allowed the appeals, set aside the orders of confiscation, re-export and penalties in respect of the imported waste paper consignments, and directed that the goods may be cleared for home consumption in accordance with law.

Mandatory pre-deposit for entertaining appeal under Section 129E of the Customs Act - condition precedent to exercise of statutory right of appeal - limits on waiver of statutory pre-deposit by courts or tribunals - non-entertainment of appeal for failure to comply with pre-deposit

Mandatory pre-deposit for entertaining appeal under Section 129E of the Customs Act - non-entertainment of appeal for failure to comply with pre-deposit - limits on waiver of statutory pre-deposit by courts or tribunals - Whether the appeal could be entertained despite non-compliance with the statutory pre-deposit requirement under Section 129E of the Customs Act. - HELD THAT: - The Tribunal found that Section 129E mandates deposit of a specified percentage of the duty demanded or penalty before an appeal can be entertained and that the Customs Act does not provide for judicial waiver of this mandatory deposit. The Court applied the principle that a condition precedent attached to a statutory right of appeal must be complied with before the appellate forum can entertain the appeal. Reliance was placed on the Supreme Court's decision in Narayan Chandra Ghosh (and its reiteration in Kotak Mahindra Bank Pvt. Ltd. v. Ambuj A. Kasiwal) which held that where a statute prescribes pre-deposit as a condition precedent the appellate tribunal cannot entertain the appeal without compliance and cannot grant a waiver beyond what the statute permits. The Tribunal also noted the decision of the Delhi High Court in Dish TV which interpreted Section 129E as leaving no room for courts to be more lenient than the statutory scheme that effectively requires deposit of 7.5% or 10% of the duty. After recording that the appellant had been repeatedly granted opportunities to make the pre-deposit but failed to comply, the Tribunal held that the appeal could not be entertained and was liable to be dismissed for non-compliance with the statutory requirement. [Paras 5, 6, 9]

Appeal dismissed for non-compliance with the mandatory pre-deposit under Section 129E of the Customs Act; judicial waiver beyond the statute is impermissible.

Final Conclusion: The appeal is dismissed for failure to make the statutory pre-deposit under Section 129E; the Tribunal reiterated that compliance with the pre-deposit condition is mandatory and cannot be waived beyond the limits prescribed by statute.

Fraud vitiates judicial acts - order obtained by fraud is nullity - liquidator cannot sell property not owned by the company - registered sale deed gives constructive notice - equitable condonation of delay in cases of fraud - sale certificate dependent on and falls with a void court order

Fraud vitiates judicial acts - order obtained by fraud is nullity - Order dated 24th December, 2013 allowing Official Liquidator's Report No.168 of 2013 was obtained by fraud and must be set aside. - HELD THAT: - The court found that late Chudasama suppressed the registered sale in favour of the applicant and misrepresented his ownership so as to procure the Liquidator's report and the court's order. The Liquidator proceeded on the mistaken belief that the company/Bank had title; the report and the resulting order were founded on that misrepresentation. Applying the settled principle that fraud vitiates judicial acts, the court concluded that the order was obtained by fraud and could be recalled. The court also rejected contentions that the applicant was disentitled by delay or unclean hands, holding that the circumstances of fraud and the applicant's explained steps justified setting aside the order. [Paras 23, 29, 33, 34, 35]

Order dated 24th December, 2013 is recalled and Report No.168 of 2013 is rejected.

Liquidator cannot sell property not owned by the company - sale certificate dependent on and falls with a void court order - registered sale deed gives constructive notice - Sale Certificate dated 11th April, 2014 issued by the Official Liquidator is null and void and is to be cancelled. - HELD THAT: - The court held that the Liquidator had no title to the plot because the registered sale deed in favour of the applicant effected an absolute transfer and gave constructive notice to all. The Liquidator's sale certificate was founded upon the court order on the Liquidator's report; once that order is set aside as obtained by fraud, the sale certificate cannot survive. The Liquidator's inclusion in land records as 'other rights' and the attachment effected after the registered sale did not confer power to sell the property. Consequently, the sale certificate must be cancelled and registry entries updated. [Paras 21, 23, 25, 33, 35]

Undated Sale Certificate at Exhibit A-2 (registered under no.HVL-22-3191 of 2014) is cancelled and the sub-registry directed to update registration records accordingly.

Equitable condonation of delay in cases of fraud - fraud vitiates judicial acts - Applicant's delay and the absence of an express prayer for condonation did not bar relief; a separate suit under Section 31 Specific Relief Act was not necessary in the facts. - HELD THAT: - The court examined objections based on limitation, laches and the contention that a suit under Section 31 of the Specific Relief Act was the proper remedy. Given the fraud permeating the transaction, the court applied the principle that equities are to be adjusted and found the applicant's explanation acceptable. The court held that the fraud vitiating the order permitted recall of the order and cancellation of the sale certificate without relegating the applicant to a separate suit; therefore the delay was condoned in view of the merits and the nature of fraud. [Paras 31, 32, 33, 34]

Delay is excused; it was not necessary to require a separate suit under Section 31 and the applicant was entitled to the relief granted.

Final Conclusion: The court recalled the order dated 24th December, 2013, rejected Official Liquidator's Report No.168 of 2013, cancelled the Sale Certificate dated 11th April, 2014 (registered as HVL-22-3191 of 2014) with directions to update registration records; the order is stayed for six weeks.

Jurisdiction of the Adjudicating Authority to direct re-consideration of proposals after CoC approval and pending adjudication under section 31 - limits of judicial review over the commercial wisdom of the Committee of Creditors - binding nature and legal status of a CoC approved Resolution Plan in the intervening period before Adjudicating Authority approval - prohibition on importing contractual remedies or negotiation rights into the IBC regime between CoC approval and NCLT approval - role of the Adjudicating Authority to examine compliance with Section 30(2) and not to re open commercial decisions

Jurisdiction of the Adjudicating Authority to direct re-consideration of proposals after CoC approval and pending adjudication under section 31 - limits of judicial review over the commercial wisdom of the Committee of Creditors - binding nature and legal status of a CoC approved Resolution Plan in the intervening period before Adjudicating Authority approval - Whether the Adjudicating Authority could direct the CoC to convene a meeting and place the second settlement proposal for consideration, decision and voting after the CoC had approved a resolution plan and while the plan approval application was pending before the Adjudicating Authority. - HELD THAT: - Relying on the statutory scheme of the Insolvency and Bankruptcy Code and the Supreme Court's exposition of the legal status of a CoC approved resolution plan, the Tribunal held that once the CoC had approved the resolution plan and the plan approval application was pending under Section 31, there was no scope for courts or tribunals to direct re negotiation or to compel the CoC to entertain fresh settlement proposals as that would amount to interfering with the commercial wisdom of the CoC. The Adjudicating Authority's jurisdiction at that stage is confined to determining whether the plan as approved by the CoC meets the requirements of Section 30(2); it cannot, by exercising inherent or ancillary procedural powers, create a mechanism to reopen or re negotiate commercial decisions that the IBC does not authorize. The Tribunal therefore concluded that directing the Administrator/CoC to place the second settlement proposal for consideration and voting while the resolution plan approval was pending was beyond the Adjudicating Authority's jurisdiction and inconsistent with the IBC framework which forecloses importation of ordinary contract law remedies or unfettered negotiations in the intervening period. [Paras 9]

The direction of the Adjudicating Authority directing the Administrator/CoC to place the second settlement proposal before the CoC while the resolution plan approval application was pending was beyond its jurisdiction and unsustainable; the impugned orders are set aside.

Final Conclusion: The appeals are allowed; the impugned orders dated 19.05.2021 directing placement of the second settlement proposal before the CoC are set aside as being beyond the Adjudicating Authority's jurisdiction and inconsistent with the limited scope of judicial review and the IBC regime.

Liquidation under section 33(1) and section 33(2) of the Code - Appointment of Liquidator subject to valid Authorisation for Assignment - Initiation of liquidation process under Chapter III and Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - Cessation of powers of the board of directors and vesting of powers in the Liquidator - Restriction on institution of suits during liquidation and liberty to the Liquidator to institute proceedings - Deemed notice of discharge to officers, employees and workmen under section 33(7) - Filing of liquidation order with the Registrar of Companies

Liquidation under section 33(1) and section 33(2) of the Code - The Corporate Debtor is to be ordered into liquidation where no resolution plan has been received before the expiry of the CIRP. - HELD THAT: - The Tribunal found that Form 'G' was published and no expression of interest or resolution plan was received within the prescribed/time extended CIRP period. Section 33(1)(a) mandates liquidation where no resolution plan is received before expiry of the CIRP, and section 33(2) requires the Adjudicating Authority to pass a liquidation order where the Resolution Professional so intimates pursuant to a CoC decision. Reading these provisions together left the Tribunal no alternative but to order liquidation of the Corporate Debtor. The application filed by the Resolution Professional was therefore allowed and the Corporate Debtor ordered to be liquidated. [Paras 7, 8, 9]

IA(IB) No. 695/KB/2021 is allowed and the Corporate Debtor is ordered to be liquidated in terms of section 33(2) read with section 33(1) of the Code.

Appointment of Liquidator subject to valid Authorisation for Assignment - The Resolution Professional is appointed as Liquidator, subject to possession of a valid Authorisation for Assignment (AFA). - HELD THAT: - The Tribunal appointed Mr. Jai Narayan Gupta as Liquidator under section 34(1) of the Code, noting the Resolution Professional's consent to act as Liquidator and annexure evidencing the same. The appointment was made conditional upon his holding a valid Authorisation for Assignment issued by the Insolvency Professional Agency of which he is a member, pursuant to regulation 7A of the Insolvency and Bankruptcy Board of India (Insolvency Professionals) Regulations, 2019. [Paras 9]

Mr. Jai Narayan Gupta is appointed as Liquidator subject to his possessing a valid Authorisation for Assignment.

Initiation of liquidation process under Chapter III and Insolvency & Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - Cessation of powers of the board of directors and vesting of powers in the Liquidator - Restriction on institution of suits during liquidation and liberty to the Liquidator to institute proceedings - Deemed notice of discharge to officers, employees and workmen under section 33(7) - Filing of liquidation order with the Registrar of Companies - Directions incidental to initiation of the liquidation process are to be carried out by the Liquidator and relevant authorities. - HELD THAT: - The Tribunal directed the Liquidator to initiate the liquidation process in accordance with Chapter III of the Code and the IBBI (Liquidation Process) Regulations, 2016, and ordered publication of a public notice in the same newspapers earlier used. It held that all powers of the board and key managerial personnel cease and vest in the Liquidator under section 34(2). The order restrained suits against or by the Corporate Debtor after initiation of liquidation, subject to section 52 and the proviso permitting the Liquidator to institute proceedings with prior approval of the Adjudicating Authority under section 33(5). The liquidation order was declared to be a deemed notice of discharge to officers, employees and workmen under section 33(7). The Liquidator was directed to file a copy of the order with the Registrar of Companies, West Bengal, Kolkata, and the Registry was directed to forward a copy to the ROC and send the order to the IBBI and parties by e mail. [Paras 9]

The Liquidator shall commence the liquidation process in terms of the Code and applicable regulations, public notice shall be issued, corporate powers shall vest in the Liquidator, suits are restricted subject to statutory exceptions, the liquidation order operates as a notice of discharge, and the Liquidator shall file the order with the Registrar of Companies.

Final Conclusion: The Tribunal allowed the application of the Resolution Professional and ordered liquidation of Barcley Enterprises Limited, appointed the Resolution Professional as Liquidator subject to a valid AFA, and issued consequential directions for commencing and administering the liquidation process.

Extension of time to comply with resolution plan - bona fides of the successful resolution applicant - liquidation as last resort - binding nature of a CoC approved resolution plan and limits on modification/withdrawal - reliance on an 'in principle' bank offer as a ground for indulgence

Maintainability of appeal through authorised representative - Maintainability of the appeal filed by Tricounty Premier Hearing Service Inc. through Tri County Holding (P) Ltd. and signed by Rajesh Kumar Sinha as authorised representative. - HELD THAT: - The Tribunal found that Tri County Holding Pvt. Ltd. is an Indian subsidiary/associate of the Resolution Applicant and has been managing the Corporate Debtor post effective date and making payments under the approved Resolution Plan. Minutes and authorisations placed on record show Tri County Holding Pvt. Ltd. authorised representation and the same representative had signed earlier pleadings before the Adjudicating Authority without objection by the State Bank of India. On these facts the Tribunal held there was no infirmity in the Appellant being represented through Tri County Holding Pvt. Ltd. and in Rajesh Kumar Sinha signing the pleadings on its behalf; the appeal is therefore maintainable. [Paras 11, 12, 13]

Appeal is maintainable; objection to competence of authorised signatory is rejected.

Extension of time to comply with resolution plan - bona fides of the successful resolution applicant - liquidation as last resort - Whether the Adjudicating Authority erred in rejecting the application for 30 days' extension to comply with the financial obligations under the approved Resolution Plan. - HELD THAT: - The Tribunal recognised that the Resolution Applicant had defaulted under the payment schedule and had not complied with earlier directions (including the deposit directed by order dated 12 April 2021 and the last opportunity fixed by 20 September 2021). Nevertheless, the record showed payments already made (approximately Rs.15 crores) and other payments towards CIRP costs, employees and operational creditors, evidencing attempts to implement the Plan. The Adjudicating Authority had itself granted a last opportunity till 31 October 2021 observing that liquidation is a last resort. Considering (a) the payments already made, (b) the adverse consequence of immediate liquidation and the principle that liquidation should be last resort, and (c) that a further short indulgence would not cause prejudice to creditors who have been deprived for long, the Tribunal exercised its appellate discretion to grant a limited extension while making clear that failure to comply would leave liquidation proceedings open. [Paras 16, 18, 26, 27]

Set aside the Adjudicating Authority's order of 24 November 2021; grant 30 days' time from the date of the order to make the balance payment, failing which liquidation proceedings may be proceeded with.

Reliance on an 'in principle' bank offer as a ground for indulgence - Whether the Kotak Mahindra Bank 'in principle offer' constituted a sufficient ground to consider granting further time. - HELD THAT: - The Tribunal noted that an 'in principle' offer is subject to due diligence and final approval and is not a definitive commitment; however, the communication of an offer to provide a term loan of Rs. 20 crores, accepted by the Appellant and relied upon in the additional affidavit, amounted to a substantial ground to consider the request for a short extension. The Tribunal accepted that while offer and disbursement are distinct, the bank's in principle offer comprised relevant material supporting the Appellant's bona fides and ability to procure funds, and therefore warranted consideration in granting limited relief. [Paras 20, 21]

The Kotak Mahindra Bank 'in principle' offer was a relevant circumstance supporting the grant of a short extension, though not a final assurance of disbursement.

Binding nature of a CoC approved resolution plan and limits on modification/withdrawal - Whether the Ebix Singapore judgment precluded the Adjudicating Authority from granting an extension of time to the Successful Resolution Applicant. - HELD THAT: - The Tribunal examined the ratio in Ebix Singapore which prohibits withdrawals or post approval modifications of a CoC approved Resolution Plan at the behest of the Successful Resolution Applicant and cautions against creating unregulated avenues for renegotiation. The Tribunal distinguished the present case: the Appellant was not seeking withdrawal or modification of the Plan but a short extension to comply with commitments; where the Adjudicating Authority itself had earlier granted time and treated liquidation as last resort, a limited extension did not amount to an impermissible modification or withdrawal under Ebix. Accordingly, Ebix did not bar the exercise of discretion to grant a temporal indulgence in these circumstances. [Paras 22, 23, 24]

Ebix Singapore (supra) does not prohibit the Adjudicating Authority (or appellate forum) from granting a time limited extension to comply with an approved Resolution Plan where no modification or withdrawal of the Plan is sought.

Final Conclusion: The Tribunal allowed the appeal: the objection to maintainability was rejected; the Adjudicating Authority's order rejecting the application for 30 days' extension was set aside; the Appellant was granted 30 days' time to make the balance payment, failing which liquidation proceedings may be continued.

Existence of pre-existing dispute - Notice of dispute under Section 8(2) within ten days - Default on operational debt - Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Corporate Insolvency Resolution Process (CIRP) initiation - Moratorium under Section 14 - Appointment of Interim Resolution Professional

Existence of pre-existing dispute - Notice of dispute under Section 8(2) within ten days - Corporate Debtor's contention of a pre-existing dispute and whether its reply to the demand notice complied with the ten-day requirement under Section 8(2). - HELD THAT: - The Tribunal found that the Corporate Debtor's reply to the demand notice was sent on 28.12.2019 (received 01.01.2020), which was beyond the ten-day period prescribed by Section 8(2) of the IBC. The emails relied upon by the Corporate Debtor related to rejection of certain survey reports, but the Operational Creditor had resubmitted reports and those resubmissions were not disclosed by the Corporate Debtor. The record therefore did not establish a pre-existing dispute that met the statutory requirement to be communicated within ten days of receipt of the demand notice. [Paras 8]

Corporate Debtor failed to prove a pre-existing dispute; its reply was not within the ten-day period and cannot be treated as a notice of dispute under Section 8(2).

Default on operational debt - Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Whether the Operational Creditor established existence of default and whether the Section 9 application was complete and liable to be admitted. - HELD THAT: - The Tribunal accepted the Operational Creditor's documentary record including invoices, ledger, bank statements and demand notice as establishing non-payment and default. It rejected the Corporate Debtor's contentions that penalties or validation processes negated default, noting contractual provisions allowing resubmission and limited penalties which did not extinguish the unpaid debt. Having found the application complete and the absence of an effective notice of dispute, the Tribunal concluded the requirements of Section 9(5)(i) were satisfied. [Paras 8, 9]

The application under Section 9 was complete, default was established and the application was admitted.

Corporate Insolvency Resolution Process (CIRP) initiation - Moratorium under Section 14 - Appointment of Interim Resolution Professional - Directions consequent to admission: commencement of CIRP, operation of moratorium, appointment of IRP and interim cost directions. - HELD THAT: - Upon admission, the Tribunal directed commencement of the CIRP and imposed the moratorium as contemplated by Section 14, staying institution or continuation of suits, transfers, enforcement of security and recovery of property. The Tribunal noted no IRP had been proposed by the Operational Creditor and appointed a named Insolvency Professional to act as IRP, directing him to perform steps under the Code. The Operational Creditor was ordered to deposit a sum to meet immediate IRP expenses, to be accounted for and recoverable as CIRP costs. [Paras 10, 11, 12]

CIRP initiated; moratorium imposed; specified IRP appointed; Operational Creditor directed to deposit funds for IRP's immediate expenses.

Final Conclusion: The Section 9 application was admitted: the Corporate Debtor's purported pre-existing dispute was not established within the statutory time, default was held to exist, CIRP was initiated, moratorium imposed, an Interim Resolution Professional was appointed and the Operational Creditor directed to deposit funds for immediate IRP expenses.

Financial debt - financial creditor - default (non-payment of debt) - commercial effect of borrowing - disbursal against the consideration for the time value of money

Financial debt - financial creditor - commercial effect of borrowing - Interest-free short-term loan advanced to the corporate debtor for working capital purposes qualifies as a financial debt and the applicant is a financial creditor. - HELD THAT: - The Tribunal applied the Supreme Court's exposition in M/s. Orator Marketing Pvt. Ltd. v. M/s. Samtex Desinz Pvt. Ltd., holding that the definition of financial debt is not to be constricted so as to exclude loans that have the commercial effect of borrowing merely because they do not carry interest. The Tribunal noted the authorities' emphasis that while the principal clause requires a disbursal against consideration for the time value of money, the clauses giving illustrative forms of financial debt (including transactions having the commercial effect of borrowing) are to be read in a manner that captures transactions which, in substance, finance the corporate debtor's operations. Applying that principle to the facts - a Board Resolution requesting financial assistance and subsequent disbursal by the applicant to meet working capital without claiming interest, and non-repayment by the corporate debtor - the Tribunal concluded that the outstanding principal amounts fall within the meaning of financial debt, thereby designating the applicant as a financial creditor entitled to initiate proceedings under Section 7 of the IBC. The Tribunal accordingly directed issuance of notice on the corporate debtor. [Paras 9, 10]

The interest-free amounts advanced for working capital are financial debt; the applicant is a financial creditor and notice is to be issued on the corporate debtor.

Final Conclusion: The application under Section 7 is prima facie maintainable: the unpaid interest-free short-term loan advanced to meet the corporate debtor's working capital is held to be a financial debt and the applicant is held to be a financial creditor; consequential notice on the respondent was ordered.

Lookout-Circular (LOC) - Criteria for issuance and recall of Lookout-Circular - LOC as a coercive measure to secure surrender or appearance - Requirement to join investigation / surrender before court - Power of court to rescind LOC and impose travel conditions - Statement recorded under Section 164 Cr.P.C.

Lookout-Circular (LOC) - Criteria for issuance and recall of Lookout-Circular - Whether the lookout circular issued against the petitioner in RC No.224/2017/A-001 should be recalled/quashed - HELD THAT: - Applying the principles laid down in the Division Bench decision in Sumer Singh Salkan, the Court held that LOC is a coercive measure available where an accused is deliberately evading arrest, not appearing despite NBWs and other coercive measures, and there is a likelihood of leaving the country to evade trial/arrest. The petitioner was not named in the FIR as an accused and his statement was recorded under Section 164 Cr.P.C.; he has neither been arrested nor charge-sheeted in the RC, has regularly joined the investigation on multiple occasions and has obtained court permission to travel abroad on earlier occasions. There is no material to show deliberate evasion of arrest or non-appearance nor coercive measures having been taken against him. In these circumstances continuation of the LOC against the petitioner was unjustified and the respondent was directed to recall its request for opening the LOC against him. [Paras 9, 10]

LOC recalled/quashed in respect of the petitioner; respondent directed to withdraw the request for opening the LOC against him.

Power of court to rescind LOC and impose travel conditions - Requirement to join investigation / surrender before court - Conditions applicable to the petitioner after recall of the LOC and the petitioner's obligations pending further proceedings - HELD THAT: - The Court clarified that recall of the LOC is without prejudice to the investigatory process and ordered that the petitioner must continue to join the investigation as and when directed by the Investigating Officer. Any condition imposed by the learned Special Judge in relation to the petitioner in proceedings arising from the ECIR (such as requirement to seek permission before travelling abroad or furnishing security) will be applicable for the purposes of the above RC until a charge-sheet is filed; if and when the petitioner is subsequently charge-sheeted and summoned as an accused, appropriate consequential obligations will follow. The Court thereby exercised its power to rescind the LOC while preserving the trial court's authority to regulate travel and impose conditions so as to balance liberty with investigational needs. [Paras 10]

Petitioner to continue cooperating with investigation; travel/permission conditions imposed by the Special Judge in related ECIR proceedings remain applicable to the RC until charge-sheeting and thereafter as appropriate.

Final Conclusion: The petition seeking quashing of the LOC issued against the petitioner in RC No.224/2017/A-001 is allowed: the respondent is directed to recall the LOC. The petitioner must continue to join the investigation as required, and any conditions imposed by the Special Judge in related ECIR proceedings (including requirements for seeking permission to travel abroad) shall apply in relation to the RC until the petitioner is charge-sheeted and, thereafter, if summoned as an accused.

Refund of wrongly paid tax - mistaken payment treated as deposit - non-leviability of service tax on specified electrical/cabling services - inapplicability of limitation under Section 11B to mistaken deposits - unjust enrichment defence where prices were fixed by competitive open bid - interest on delayed refund

Non-leviability of service tax on specified electrical/cabling services - refund of wrongly paid tax - Service tax was not leviable on the services rendered by the appellant and the amount paid by them is a mistaken deposit refundable to the appellant. - HELD THAT: - The Tribunal found on the material before it that the works undertaken by the appellant (including shifting and laying of overhead/underground cables, installation of street/traffic lights, erection and commissioning of lines and related equipment) did not attract service tax. Accordingly, amounts paid under the belief that service tax was payable are to be treated as deposits made by mistake and are refundable to the appellant. The factual description of the nature of services rendered supports this conclusion. [Paras 10, 11]

Refundable: the payments are mistaken deposits and not taxable service amounts.

Inapplicability of limitation under Section 11B to mistaken deposits - Limitation under Section 11B does not apply to the refund claim because the amount deposited was not tax but a mistaken revenue deposit. - HELD THAT: - The Tribunal held that where an amount paid is not a tax liability but a mistaken deposit, the time-bar under Section 11B is not applicable. The view is supported by precedent relied upon by the appellant, and the Tribunal applied that principle to conclude that the delayed filing does not bar the refund of amounts which were not leviable as service tax. [Paras 12]

Limitation under Section 11B is not a bar to refund in respect of mistaken deposits.

Unjust enrichment defence where prices were fixed by competitive open bid - Unjust enrichment is not attracted because the appellant did not pass on or collect service tax from the service recipient and contracts were awarded by open competitive bidding with firm prices. - HELD THAT: - The Tribunal examined the contractual matrix and found that the work orders were obtained through open competitive bidding and that prices were firm and independent of tax variations. There was no evidence that the appellant recovered the tax component from the service recipients or adjusted prices to include tax; invoices did not show a tax collection. On these facts, the element of unjust enrichment is absent and does not defeat the refund claim. [Paras 13]

Unjust enrichment defence is not applicable; refund claim is not barred on that ground.

Interest on delayed refund - refund of wrongly paid tax - The adjudicating authority is directed to grant the refund in cash with interest, and the Tribunal specified the timeframe and rate for payment of interest. - HELD THAT: - As the payments were held to be mistaken deposits refundable to the appellant, the Tribunal set aside the appellate authority's order and directed the adjudicating authority to refund the amount in cash under the Transitional Provisions of the CGST Act within 45 days of receipt of the order. The Tribunal further directed payment of interest at the rate of 12% per annum from the end of three months from the date of the refund application until the date of actual refund. [Paras 14]

Refund to be granted in cash within 45 days and interest at 12% p.a. to be paid from end of three months from date of application until refund.

Final Conclusion: The appeal is allowed: the payments made for the specified services during 2007-08 to 2009-10 are held to be mistaken deposits not leviable to service tax; limitation under Section 11B and unjust enrichment objections are rejected; the adjudicating authority is directed to grant cash refund with interest as specified.

Taxability of mark up on resale of booked cargo space - trading in space versus provision of taxable support/business services - class of business auxiliary/support services vis a vis steamer/booking agent - binding effect of Tribunal precedents and overruling by Larger Bench

Taxability of mark up on resale of booked cargo space - trading in space versus provision of taxable support/business services - class of business auxiliary/support services vis a vis steamer/booking agent - Characterisation of the appellant's activity of buying cargo space from carriers and reselling it at a mark up as a taxable service or as mere trading in space - HELD THAT: - The Tribunal accepted the appellant's contention that its activity amounted to trading in space and not the rendering of a service taxable as business support/business auxiliary services. The Bench relied on earlier Tribunal decisions (including Greenwich Meridian Logistics and Karam Freight Movers) and the Division Bench decision in Satkar Logistics, which treated similar transactions as trading in space rather than a taxable service. Distinctions drawn by the Commissioner (Appeals) with reference to Bhuvaneshwari Agencies were not found to be applicable to the facts of the present case. The Tribunal also noted that a decision relied upon by the Department (D. Pauls) has been subsequently overruled by a Larger Bench in Kafila Hospitality & Travels, reducing its precedential value for sustaining the demand.

The mark up charged by the appellant on resale of booked cargo space is trading in space and not a taxable business support/business auxiliary service; therefore the demand based on contrary characterisation is unsustainable.

Binding effect of Tribunal precedents and overruling by Larger Bench - Validity of the orders of the Additional Commissioner and the Commissioner (Appeals) confirming service tax demands in the assessed periods - HELD THAT: - Applying the legal characterisation above and the controlling Tribunal precedents, the Bench found that the impugned orders confirming demands for the specified periods cannot be sustained. The Commissioner (Appeals) had dismissed the appellant's appeals, but the Tribunal held that the earlier Tribunal decisions favourable to the appellant and the overruling of D. Pauls by a Larger Bench required setting aside the impugned appellate order. No issue was remanded for fresh consideration.

Impugned orders of the Commissioner (Appeals) and the Additional Commissioner are set aside; the appeals are allowed.

Final Conclusion: Applying Tribunal precedent that buying and reselling carriage space for a mark up constitutes trading in space and not a taxable support/auxiliary service, the Tribunal set aside the impugned orders for the stated periods and allowed the appeals.

Service tax on ocean freight - refund of service tax - precedential effect of High Court judgment - remand for fresh adjudication

Service tax on ocean freight - refund of service tax - precedential effect of High Court judgment - remand for fresh adjudication - Liability of ocean freight paid on imported goods to service tax and entitlement to refund remitted to the adjudicating authority for fresh consideration. - HELD THAT: - The Tribunal noted that the question whether ocean freight paid for imported goods attracts service tax and whether any service tax paid is refundable engages the legal view taken by the Gujarat High Court in SAL Steel Limited. Relying on the Tribunal's earlier Final Order No. A/12453/2021 in Coromandel International Ltd., where the matter was remitted for reconsideration in light of the Gujarat High Court decision and the proceedings before the sanctioning authority, the Tribunal observed that the present case involves an identical issue. The Tribunal did not decide the controversy on merits but directed that the adjudicating authority reconsider and pass a fresh order taking into account the observations in the cited Tribunal order and the Gujarat High Court judgment. All ancillary issues were left open for determination by the adjudicating authority.

Appeal allowed by way of remand to the adjudicating authority to pass a fresh order in light of the Gujarat High Court decision; all issues kept open.

Final Conclusion: The appeal is allowed by remitting the matter to the adjudicating authority for fresh adjudication on the question of service tax liability (and any refund) on ocean freight paid for imports, following the Tribunal's earlier order and the Gujarat High Court decision; ancillary issues remain open.

Credit of goods used in the factory as inputs - Proportionate cenvat credit for inputs and input services used in captive power generation - Limitation - extended period and change of opinion - Interpretation of "no relationship whatsoever with the manufacture of a final product" in Board Circular - Rule 2(k) of Cenvat Credit Rules, 2004

Credit of goods used in the factory as inputs - Interpretation of "no relationship whatsoever with the manufacture of a final product" in Board Circular - Rule 2(k) of Cenvat Credit Rules, 2004 - Cenvat credit on M.S. grating, M.S. stair case and LED street light used in the factory was allowable as inputs. - HELD THAT: - The items in dispute were admitted to have been used in the factory of production. The Board's clarification requires that goods used in the factory are to be allowed as credit except where they have no relationship whatsoever with manufacture of the final product. The Tribunal held that the lower authorities erred in treating the alternative plea as dehors the show cause notice and in refusing to decide the legal point. Applying Rule 2(k) of the Cenvat Credit Rules, 2004 and the Board Circular guidance, the cenvat credit on the items used in the factory is allowable as inputs. [Paras 5, 7, 8, 12]

Disallowance of cenvat credit of Rs. 21,80,258/- in respect of the listed items is set aside and credit is held allowable.

Proportionate cenvat credit for inputs and input services used in captive power generation - Limitation - extended period and change of opinion - Disallowance of proportionate cenvat credit for inputs/input services used in captive power generation supplying power to residential colony is barred by limitation and set aside. - HELD THAT: - The Tribunal noted multiple earlier audit reports over the relevant period which did not raise the objection regarding proportionate credit for power supplied to the residential colony. The Department raised the demand later by invoking the extended period, which the Tribunal treated as a mere change of opinion. In absence of suppression or mala fide conduct by the appellant and given prior audits where the issue was not taken, the extended period of limitation was held not invokable. Consequently the proposed disallowance and the penalty founded on that demand could not be sustained. [Paras 9, 10, 12]

Proportionate disallowance of Rs. 4,31,419/- is set aside as time-barred and the penalty proposed on that basis is also set aside.

Final Conclusion: The appeal is allowed: the cenvat credit on the disputed factory items is permitted as inputs and the proportionate disallowance for captive power supplied to the residential colony (and related penalty) is held time-barred and set aside; the appellant is entitled to consequential relief in accordance with law.

Clandestine removal - proof required for clandestine sale - third-party documents as evidence - onus of proof on the Revenue - corroborative evidence - extended period of limitation

Clandestine removal - onus of proof on the Revenue - corroborative evidence - Whether the demand for duty could be sustained on the basis of loose and handwritten documents recovered from a third party's premises without corroborative evidence linking the appellant or the appellant's premises to alleged clandestine removal. - HELD THAT: - The Tribunal found that the documents upon which the show cause notice was based were loose parchments and handwritten ledger books recovered from the premises of a third party (SSSRM). There was no evidence seized from the appellant or from M/s RIGL premises, nor evidence from transporters, suppliers or purchasers to connect those third party records to clandestine removals by the appellant. The appellant's statement, as recorded, denied any clandestine removal and referred to clearances reflected in a chart; there was no admission of the alleged clandestine activity. Relying on established precedents and the requirement that clandestine removal is a serious charge demanding tangible and positive evidence, the Tribunal held that mere third party records, unsupported by corroborative proof, cannot sustain a finding of clandestine removal. Consequently, the adjudicating authority's reliance on presumptive inferences from private records of a third party was held to be insufficient to uphold the demand. [Paras 5, 6, 8, 9]

Demand confirmed on the basis of third party loose and handwritten documents without corroborative evidence is unsustainable and is set aside.

Third-party documents as evidence - proof required for clandestine sale - Whether third party records alone, in absence of clinching positive evidence of clandestine manufacture and removal, can support confirmation of duty. - HELD THAT: - The Tribunal reiterated the legal principle that third party records cannot, by themselves and in absence of positive corroboration, form the basis for confirming clandestine removals. Reference was made to prior decisions holding that unless there is clinching evidence - such as excess production details, raw material purchases, dispatch particulars from regular transporters, realization of sale proceeds, receipt details from buyers, or abnormal power consumption - demands based solely on third party private records are impermissible. Given that the Department did not collect such corroborative evidence, the confirmation based on third party documents was held liable to be overturned. [Paras 7, 9]

Findings of clandestine removal based only on third party documents without positive corroborative evidence cannot be upheld.

Extended period of limitation - Whether invocation of the extended period of limitation for issuing the show cause notice was justified in the absence of any positive act amounting to suppression by the appellant. - HELD THAT: - The Tribunal noted that the appellant had been regularly filing returns and the Department failed to produce any material showing a positive act of suppression by the appellant. In the absence of evidence of suppression of material facts, invocation of the extended limitation period is not permissible. Therefore, the show cause notice issued invoking the longer limitation period was held to be time barred and the consequent adjudication unsustainable on this technical ground as well. [Paras 10]

Show cause notice invoking the extended period of limitation is barred by time in the absence of evidence of suppression and cannot be sustained.

Final Conclusion: The appeal is allowed; the order in original confirming duty and penalty is set aside on merits for lack of corroborative evidence and on the ground that the invocation of the extended period of limitation was not justified.

Grant of bail - cancellation of bail - non-application of mind - relevant considerations for bail: nature and gravity of accusation, prima facie evidence, likelihood of tampering/absconding - modus operandi involving siphoning through shell companies and misuse of KYC/documents - quashing of an order granting bail as perverse or unjustified - surrender and liberty to seek fresh bail after a specified interval

Grant of bail - relevant considerations for bail: nature and gravity of accusation, prima facie evidence, likelihood of tampering/absconding - modus operandi involving siphoning through shell companies and misuse of KYC/documents - non-application of mind - Validity of the High Court's order releasing the accused on bail. - HELD THAT: - The High Court granted bail primarily on the basis that the dispute arose out of a commercial transaction and that documents were already seized, without advertence to and consideration of the material in the investigation and charge sheets showing a systematic modus operandi of siphoning funds through shell entities, misuse of KYC/documents and routing of loan proceeds to clear liabilities of related concerns. This Court applied settled principles governing grant and cancellation of bail, emphasising that a court must consider factors including nature and gravity of accusation, character of evidence, prima facie satisfaction, risk of tampering or absconding and the specific circumstances peculiar to the accused. Where a court grants bail by overlooking such relevant factors or acts mechanically, the order can be set aside as an improper exercise of discretion. Applying these principles, the Court found that the High Court had not taken note of the status report, charge sheets and the learned Sessions Judge's reasons rejecting bail, and therefore the grant of bail was vitiated by non application of mind and was unsustainable. [Paras 8, 9, 11, 13]

The High Court's order releasing Respondent No.2 on bail is quashed and set aside for failure to consider relevant factors and material.

Cancellation of bail - quashing of an order granting bail as perverse or unjustified - surrender and liberty to seek fresh bail after a specified interval - Consequences of setting aside the High Court's bail order and subsequent procedural directions. - HELD THAT: - Having quashed the High Court's grant of bail as vitiated by non application of mind, the Court directed that the bail stands cancelled and Respondent No.2 shall surrender forthwith before the concerned court/jail authority. The Court clarified that its observations are confined to the impugned bail order and shall not prejudice the trial. Further, the Court permitted Respondent No.2 the procedural right to move the High Court afresh for bail after three months, to be considered on merits and after taking into account the relevant material in the charge sheets and investigation. [Paras 14]

Bail is cancelled; Respondent No.2 to surrender immediately and may apply for bail before the High Court after three months, which shall be considered on merits with reference to the investigation material.

Final Conclusion: The appeal is allowed: the High Court's order granting bail to Respondent No.2 is quashed and set aside for non application of mind and failure to consider the nature, gravity and evidentiary material (including alleged siphoning through shell companies); bail is cancelled, the accused is directed to surrender forthwith, and liberty is granted to seek fresh bail in the High Court after three months which must be decided on merits after considering the charge sheets and investigation material.

Pre-appointment jurisdiction under Section 11(6) - prima facie validity of arbitration agreement - deadwood doctrine - doctrine of separability - stamp duty and admissibility of underlying contract - warranty estoppel

Pre-appointment jurisdiction under Section 11(6) - prima facie validity of arbitration agreement - deadwood doctrine - Whether the Court should refuse to appoint an arbitrator at the pre appointment stage on the ground that the underlying Hotel Management Agreement is insufficiently stamped. - HELD THAT: - The Court applied the limited scope of judicial interference at the pre appointment stage and reiterated that under Section 11(6) Courts must take a prima facie view of the existence of an arbitration agreement and avoid occupying the arbitral tribunal's domain except to "cut the deadwood." Drawing from prior decisions, the Court held that mere disputes regarding stamp duty do not automatically render an arbitration agreement unworkable unless they constitute clear deadwood. The factual and legal contentions raised by the respondent about insufficiency or misclassification of stamp duty engage substantive issues (including whether the respondent is estopped by contractual warranties), which are not amenable to final determination at the pre appointment stage. Because stamp duty had in fact been paid by the petitioners (albeit contested as to classification and adequacy), this was not a case of complete non stamping that would justify refusal to refer to arbitration. The Court therefore concluded that the stamping objection did not demonstrate the non existence of an arbitration agreement on a prima facie basis and that the matter should be referred to arbitration. [Paras 18, 22, 23, 24, 26]

The stamping objection does not constitute deadwood and is not a bar to appointment of an arbitrator; the matter must be referred to arbitration.

Stamp duty and admissibility of underlying contract - warranty estoppel - doctrine of separability - Whether issues relating to adequacy/classification of stamp duty and the Owner's contractual warranty must be finally adjudicated before appointment of an arbitrator or can be decided by the arbitral tribunal. - HELD THAT: - The Court noted that the petitioners had paid stamp duty and a penalty, but the respondent disputed the classification and adequacy of that payment. The Court observed that questions of whether the arbitration agreement survives notwithstanding stamp issues, and whether the respondent is estopped from raising stamping objections because of contractual warranties, involve deeper factual and legal inquiry. These matters fall within the remit of the arbitral tribunal or await authoritative resolution by a larger Bench on the interplay between stamp laws and arbitration agreements; they do not justify precluding the arbitration process where there is no complete non stamping. Accordingly, these contentions should be left for determination in arbitration (or at a later stage) rather than being resolved under Section 11(6). [Paras 24, 25, 26]

Questions as to adequacy/classification of stamp duty and estoppel arising from contractual warranty are not to be finally decided at the pre appointment stage and should be left for the tribunal or later adjudication.

Pre-appointment jurisdiction under Section 11(6) - appointment of sole arbitrator - Whether a sole arbitrator should be appointed forthwith in terms of the arbitration clause. - HELD THAT: - Given that the stamping objection did not amount to deadwood and there was a valid prima facie arbitration agreement, the Court exercised its power under Section 11(6) to appoint a sole arbitrator so that the disputes may be expeditiously adjudicated. The Court directed that the appointment be communicated to SIAC to proceed in terms of its rules. [Paras 27, 28, 29]

Mr. Justice A.V. Chandrashekara (former Judge, High Court of Karnataka) is appointed as sole arbitrator and the petition is allowed; parties to notify SIAC to proceed under SIAC rules.

Final Conclusion: The petition is allowed: the Court finds that the respondent's stamping objection does not constitute deadwood and is not a bar to reference; disputed questions regarding adequacy/classification of stamp duty and warranty based estoppel are to be decided in arbitration or later proceedings; a sole arbitrator is appointed and the parties are directed to inform SIAC to proceed under its rules.

Offence under Section 138 of the Negotiable Instruments Act - Requirement of proof of debt or liability for prosecution under the NI Act - Authenticity of supporting documentary evidence for establishing debt - Legal notice requirement under Section 138(b) - furnishing notice within thirty days - Proof of proprietorship of a firm for claiming cheque proceeds - Acquittal where prosecution fails to prove case beyond reasonable doubt

Offence under Section 138 of the Negotiable Instruments Act - Requirement of proof of debt or liability for prosecution under the NI Act - Authenticity of supporting documentary evidence for establishing debt - Proof of proprietorship of a firm for claiming cheque proceeds - Legal notice requirement under Section 138(b) - furnishing notice within thirty days - Whether the prosecution established the ingredients of offence under Section 138 of the NI Act by proving the debt/liability, authenticity of supporting documents and the complainant's right to sue in respect of the cheque issued in the firm's name - HELD THAT: - The Court examined the evidence and found that although the cheque was issued in the name of the complainant's firm and a notice was sent and received, the prosecution failed to produce cogent documentary proof to establish the alleged debt. The only bill relied upon (Ex.P6) had its authenticity specifically denied by the accused and did not bear the signatures of the parties; consequently no permissible presumption could be drawn against the accused from that bill. Further, no documentary proof was produced to establish that the complainant was the sole proprietor entitled to sue on behalf of the firm. While the statutory requirement of sending notice within thirty days was noted, the primary defect was the suspicion regarding the claimed consideration amount and absence of evidence to prove the debt beyond reasonable doubt. In view of these lacunae in proof, the learned JMFC correctly concluded that the prosecution had not established the ingredients of Section 138 and acquitted the accused. [Paras 6, 7]

Acquittal under Section 138 of the NI Act upheld for failure of the prosecution to prove the debt/liability and authenticity of supporting documents and the complainant's entitlement to sue.

Final Conclusion: The appeal is dismissed; no interference is warranted with the judgment of acquittal as the prosecution failed to prove the case under Section 138 of the Negotiable Instruments Act beyond reasonable doubt.