TaxTMI Updates e-Newsletter
Feb 02,2021

Summary order. Application for advance ruling withdrawn on the applicant's request dated 05.08.2020 (received 11.08.2020); withdrawal accepted and the application is considered withdrawn.

Grant of bail under Section 439 Cr.P.C. - Arrest under Section 132 of the Central Goods and Services Tax Act, 2017 - Power of arrest under Section 69 and 132 of the Act to be exercised sparingly - Illustrative circumstances for arrest in tax evasion cases - Economic offences and bail jurisprudence - Tampering with evidence and influencing witnesses - Veil piercing to identify true persons behind firms - Presumption of validity of statutory provisions

Grant of bail under Section 439 Cr.P.C. - Arrest under Section 132 of the Central Goods and Services Tax Act, 2017 - Power of arrest under Section 69 and 132 of the Act to be exercised sparingly - Tampering with evidence and influencing witnesses - Veil piercing to identify true persons behind firms - Illustrative circumstances for arrest in tax evasion cases - Whether the petitioner should be granted bail pending investigation into alleged offences under Section 132 of the CGST Act, 2017. - HELD THAT: - The Court refused bail. The investigation was ongoing with 'missing links' yet to be joined and the period for filing challan not expired; these facts weighed against bail. Material collected pointed to the petitioner having hidden his identity and acting as an alias (Dharminder Arora @ Raja Bhaiya), and to his role in creating and operating bogus firms to procure and misuse Input Tax Credit; the veil over the firms therefore needed to be pierced. Given that registration, compliance and much evidence are electronic and the petitioner allegedly organized and assigned roles to others, there existed a realistic risk that on bail he could tamper with electronic evidence and influence witnesses. The Court held that clauses (a)-(d) of Section 132 are not confined to the person physically issuing invoices and that the petitioner's case fell within the illustrative circumstances permitting arrest (including concrete evidence of active involvement) as identified in Akhil Krishan Maggu. Although a factual error in the lower court's order about the transferee of a disputed payment was noted and corrected, that error was not decisive because other valid reasons supported denial of bail. The Court also observed that challenge to the vires of Sections 69 and 132 did not justify bail since those provisions remained operative and are entitled to a presumption of validity. Applying established principles for economic offences-whose gravity and potential for large-scale public harm demand caution in bail- the petition was dismissed. [Paras 31, 32, 33, 36, 37]

Bail refused and petition dismissed.

Final Conclusion: The bail application under Section 439 Cr.P.C. is dismissed; the petition is accordingly rejected and the petitioner shall remain in custody while investigation continues.

Summary order. The High Court did not decide the merits; it recorded that the central question was whether the impugned order was passed in violation of principles of natural justice for want of personal hearing, and directed the respondents to place on record, by the next date, any notice fixing a personal hearing along with proof of receipt and to examine the matter with reference to principles of natural justice and Section 75 of the GST Act, 2017. Matter posted on top of board to 04.02.2021.

Seizure under Section 129 of the GST Act - Summons under Section 70 of the GST Act - Release of seized property subject to undertaking - Use of seized vehicles pending investigation - Authority to issue MOV-10 under Section 130 of the GST Act

Seizure under Section 129 of the GST Act - Release of seized property subject to undertaking - Use of seized vehicles pending investigation - Authority to issue MOV-10 under Section 130 of the GST Act - Summons under Section 70 of the GST Act - Validity of continuing custody of two trucks seized from the assessee's premises under Section 129 when the vehicles were not in transit and the appropriate interim remedy. - HELD THAT: - The Court noted that both trucks were indisputably seized from the assessee's office premises and were not in transit carrying goods. While the Court declined to interfere with the ongoing inquiry or investigation, it held that, for the present stage of the proceedings, the trucks need not remain in departmental custody. The authority may continue the investigation and, if incriminating material emerges warranting issuance of MOV-10 under Section 130, act in accordance with law. In the interim the respondent was directed to release the two trucks upon the writ applicant furnishing a written oath undertaking before the concerned authority that, until conclusion of the inquiry/investigation, the applicant will not transfer the trucks, part with their possession, or create any encumbrance thereon. The Court expressly permitted the assessee to use the trucks in the normal course of business subject to that undertaking and reiterated the obligation of the assessee to cooperate with summons issued under Section 70. [Paras 4, 5, 6, 7]

The two trucks shall be released to the writ applicant on furnishing the specified undertaking on oath; the investigation may proceed and the authority remains free to take further lawful steps including issuance of MOV-10 if warranted.

Final Conclusion: Writ petition disposed by directing release of the two seized trucks on the writ applicant executing an undertaking on oath restraining transfer, parting with possession or creating encumbrance until conclusion of the investigation; the departmental inquiry remains unimpaired and may proceed in accordance with law.

Transitional credit under Section 140 of the CGST Act read with Rule 117 of the CGST Rules - rectification / re filing of Form GST TRAN 1 - bona fide inadvertent error in TRAN 1 - facility for rectification of bona fide errors in transitional claims - opening of online portal or manual acceptance for filing corrected TRAN 1 - verification of genuineness of transitional credit claim

Transitional credit under Section 140 of the CGST Act read with Rule 117 of the CGST Rules - bona fide inadvertent error in TRAN 1 - Petitioner's entitlement to carry forward transitional credit and to have omission in TRAN 1 rectified where TRAN 1 was filed within the prescribed time but certain invoices were inadvertently omitted. - HELD THAT: - The petitioner filed Form TRAN 1 within the time prescribed and holds documents evidencing payment of tax on inputs/input services under the erstwhile regime, making it eligible to carry forward such credit under the statutory transitional scheme. The omission in TRAN 1 arose from a bona fide, inadvertent human error in a new tax regime. Earlier decisions of the Court, and the dismissal of departmental SLP against a Punjab & Haryana High Court decision by the Supreme Court, recognise the difficulty and support providing a remedy for such bona fide errors. Denial of substantive rights on account of inadvertent omission would be unjust; the petitioner's claim must therefore be permitted to be examined on merits. [Paras 8, 9]

Omission in TRAN 1 caused by bona fide inadvertence does not bar consideration of the transitional credit claim; petitioner entitled to have the omission rectified and claim examined in accordance with law.

Rectification / re filing of Form GST TRAN 1 - opening of online portal or manual acceptance for filing corrected TRAN 1 - verification of genuineness of transitional credit claim - Relief to be granted to enable rectification: respondents to permit electronic re filing or manual submission of corrected TRAN 1 within a specified time and thereafter process and verify the claim. - HELD THAT: - In view of the established eligibility and the nature of the omission, the Court directed respondents to open the online portal to permit electronic re filing of the rectified TRAN 1, or alternatively to accept a manually corrected TRAN 1, within three weeks. Thereafter the respondents are to process the petitioner's claim in accordance with law and are at liberty to verify the genuineness of the documents and claim. The petitioner is also permitted to correspondingly revise Form TRAN 2 after the TRAN 1 rectification is processed. [Paras 10, 11]

Respondents directed to enable re filing (online or manual) within three weeks, to process and verify the claim in accordance with law, and to permit corresponding revision of TRAN 2.

Final Conclusion: Writ petition allowed: respondents directed to permit the petitioner to re file or submit a rectified TRAN 1 (electronically or manually) within three weeks, to process and verify the transitional credit claim in accordance with law, and to permit consequent revision of TRAN 2.

Reason to believe in the context of Section 147 (income escaping assessment) - mere change of opinion as a ground for reopening assessment - reopening assessment versus review - tangible material required to form reason to believe - oversight, inadvertence or mistake in original assessment

Precedential validity of a Division Bench decision - oversight, inadvertence or mistake in original assessment - Whether the Division Bench judgment in Commissioner of Income Tax v. Rinku Chakraborthy lays down correct law insofar as it treats oversight, inadvertence or mistake in the original assessment as a basis for reopening under Section 147. - HELD THAT: - The Full Bench examined Rinku Chakraborthy and found that it relied upon the two-Judge Bench decision in Kalyanji Mavji & Co., particularly the proposition that an income escaping assessment due to oversight, inadvertence or a mistake by the Assessing Officer authorises reopening. The Court contrasted this with the subsequent three-Judge Bench decision in M/s. Indian and Eastern Newspaper Society which expressly held that an error discovered on reconsideration of the same material does not confer power to reopen a concluded assessment. Applying that later authoritative ruling, the Full Bench held that Rinku Chakraborthy is not correct to the extent it follows the said part of Kalyanji Mavji and Company. [Paras 18, 19]

Rinku Chakraborthy does not lay down the correct position of law to the extent it treats oversight/inadvertence/mistake in the original assessment as a standalone basis for reopening.

Per incuriam reliance on an overruled Apex Court pronouncement - effect of subsequent contrary larger Bench decision - Whether the Rinku Chakraborthy judgment is per incuriam because it relied on Kalyanji Mavji & Co., a view subsequently disapproved by the Apex Court in Indian and Eastern Newspaper Society. - HELD THAT: - The Full Bench noted that the aspect of Kalyanji Mavji & Co. relied upon in Rinku Chakrabarthy was later considered and held to be incorrect by a larger Bench of the Supreme Court in Indian and Eastern Newspaper Society. Because the later Apex Court decision disapproved the relevant proposition in Kalyanji Mavji, the Division Bench decision that follows that proposition cannot be regarded as laying down correct law. Consequently, the Court answered the reference affirmatively that Rinku Chakrabarthy is not good law in that respect. [Paras 15, 18, 19]

Rinku Chakraborthy is to that extent per incuriam and does not state the correct law.

Reason to believe in the context of Section 147 (income escaping assessment) - mere change of opinion as a ground for reopening assessment - tangible material required to form reason to believe - reopening assessment versus review - 'Reason to believe' under Section 147 can or cannot be based on a mere change of opinion of the Assessing Officer. - HELD THAT: - Relying on the Supreme Court's reasoning in Indian and Eastern Newspaper Society and the three-Judge decision in CIT v. Kelvinator of India Ltd., the Full Bench emphasised that post-amendment Section 147 requires a 'reason to believe' supported by tangible material and that the concept of 'change of opinion' is an inbuilt test to check abuse. Mere reappraisal of the same material leading to a different view (i.e., mere change of opinion) does not constitute a valid 'reason to believe' to reopen a concluded assessment; otherwise reassessment would become a review in disguise. [Paras 16, 17, 19]

'Reason to believe' cannot be founded on mere change of opinion; there must be tangible material linking the reasons to the formation of belief that income has escaped assessment.

Final Conclusion: The Full Bench answered the three referred questions: (1) Rinku Chakraborthy does not lay down correct law insofar as it follows Kalyanji Mavji & Co. on oversight/mistake as a basis for reopening (answered in the negative); (2) Rinku Chakraborthy is thus vulnerable to the contention that it relied on a proposition subsequently disapproved by the Apex Court (answered in the affirmative); and (3) 'reason to believe' under Section 147 cannot be based on mere change of opinion of the Assessing Officer (answered in the negative). The writ appeal is to be placed before the concerned Division Bench for adjudication on merits in light of these conclusions.

Deduction under Section 80IA(4) for infrastructure development - statutory body under Article 12 - infrastructure facility - airport and aerodrome as inclusive concept - built, operate and transfer / Service Provider Right Holder (SPRH) agreement as development, operation and maintenance - concurrent findings of fact and limited scope of appellate interference

Statutory body under Article 12 - deduction under Section 80IA(4) for infrastructure development - Whether Bengaluru International Airport Limited (BIAL) is a 'statutory body' for the purposes of entitlement under Section 80IA(4). - HELD THAT: - The Bench held that the question whether BIAL is a statutory body is no longer res integra and followed this Court's earlier decision in M/s. FLAMINGO DUTYFREE SHOPS PVT. LTD., which determined that BIAL is a statutory body under Article 12. The Special Leave Petition against that decision having been disposed of with the question of law left open, the High Court's earlier view continues to bind. On that basis the assessee met the requirement of entering into an agreement with a statutory body as contemplated by the provision relied upon by the parties. [Paras 9]

BIAL is a statutory body and the assessee complied with the requirement of entering into an agreement with a statutory body.

Infrastructure facility - airport and aerodrome as inclusive concept - built, operate and transfer / Service Provider Right Holder (SPRH) agreement as development, operation and maintenance - concurrent findings of fact and limited scope of appellate interference - Whether the assessee's cargo handling activity at BIAL constitutes development, or operation and maintenance, of an 'infrastructure facility' within the meaning of Section 80IA(4). - HELD THAT: - The Tribunal and the Commissioner (Appeals) found that cargo handling services are located within the airport complex, are linked to airside infrastructure and statutory services (security, customs, x-rays), and are thus integral to the airport/aerodrome as an inclusive concept. The SPRH agreement was found to confer rights for design, construction, financing, testing, commissioning, management and operation for a 20 year built, operate and transfer concession, indicating the assessee was not merely a contractor but a developer/operator within the scope of the proviso and relevant explanations. Those findings were concurrent, supported by documentary material and not shown to be perverse; accordingly the court declined to interfere with the factual conclusions. [Paras 10, 11]

Cargo handling services at BIAL qualify as development/operation and maintenance of an infrastructure facility; the concurrent findings upholding that conclusion are sustained.

Final Conclusion: Both substantial questions of law admitted by this Court are answered against the revenue and in favour of the assessee; the appeals are dismissed.

Existence of Hindu Undivided Family (HUF) as a juridical status - treatment of declared agricultural income as unexplained income / cash credit - application of Section 68 to unexplained credits - appellate interference with findings of fact - perversity standard - jurisdiction of High Court under Section 260A of the Income Tax Act

Appellate interference with findings of fact - perversity standard - jurisdiction of High Court under Section 260A of the Income Tax Act - Validity of concurrent findings that the assessee did not own or possess the alleged agricultural land and did not carry out agricultural activity, and whether those findings could be set aside in this appeal under Section 260A. - HELD THAT: - The court held that the Assessing Officer, the Commissioner of Income Tax (Appeals) and the Tribunal recorded concurrent findings - based on appreciation of evidence including statements of the landowners and the lease documentation - that the assessee was neither in possession of the lands nor had undertaken agricultural activity. Those findings are findings of fact recorded after meticulous appreciation of evidence and have not been shown to be perverse. Given the settled principle that this Court exercising jurisdiction under Section 260A cannot interfere with findings of fact unless shown to be perverse, interference was not justified. The court therefore upheld the factual conclusion that no agricultural income arose to the assessee. [Paras 5, 6]

Concurrent factual findings that the assessee did not possess the land or carry out agriculture are upheld; no interference under Section 260A as findings are not perverse.

Existence of Hindu Undivided Family (HUF) as a juridical status - appellate interference with findings of fact - perversity standard - Contention that the assessee's return filed in the status of HUF was non est and that the Assessing Officer had no jurisdiction to assess the assessee as HUF. - HELD THAT: - Although the assessee disputed the existence of an HUF and relied on communications to that effect, the court treated the question as dependent on factual findings recorded by the authorities below. The lower authorities' conclusions were founded on the evidence on record and have not been demonstrated to be perverse. Consequently, the High Court declined to re-appraise the factual matrix or overturn the concurrent findings on the existence/status issue in exercise of appellate jurisdiction under Section 260A. [Paras 5, 6]

Dispute over the existence/status of HUF is treated as a factual matter; concurrent findings are not disturbed.

Treatment of declared agricultural income as unexplained income / cash credit - application of Section 68 to unexplained credits - appellate interference with findings of fact - perversity standard - Whether the agricultural income shown by the assessee could be treated as unexplained income (brought to tax as income from other sources) and whether Section 68 was properly invoked when books were not maintained. - HELD THAT: - The Assessing Officer added the declared agricultural receipts as unexplained income after finding that the assessee had not taken possession, had not developed the land and that landlords denied receipt of advances; the Commissioner (in para 6.4) and the Tribunal (in para 10 of their orders) concurred. Those conclusions involved appreciation of evidence and the court found no perversity in the findings. As these were factual conclusions on the nature and reality of receipts and the applicability of provisions concerning unexplained credits, the court refused to re-examine them in this Section 260A appeal. [Paras 5, 6]

Addition treating declared agricultural receipts as unexplained income and the consequent application of provisions relating to unexplained credits are sustained as factual findings not warranting interference.

Condonation of delay and discretionary relief - appellate interference with findings of fact - perversity standard - Whether the Tribunal ought to have condoned the delay of 145 days in filing the appeal and whether failure to do so vitiated the appellate process. - HELD THAT: - The appellant contended that the Tribunal erred in not condoning the delay. The High Court, having found that the substantive factual findings recorded by the authorities were not perverse and that the appeal lacked merit on its merits, treated the condonation contention as ancillary and not sufficient to warrant interference. The court did not find any error in the tribunal's exercise of discretion that would require intervention. [Paras 6]

The Tribunal's refusal to condone the delay does not warrant interference in view of the unassailable concurrent findings on merits.

Final Conclusion: The concurrent factual findings of the Assessing Officer, Commissioner (Appeals) and the Tribunal-that the assessee did not possess the lands, did not carry out agricultural activity, and that the declared agricultural receipts were not real-are not shown to be perverse; appeal under Section 260A is dismissed and the addition is sustained.

Relation between manual filing and subsequent e-appeal - condonation of delay in filing appeal - limitation for filing appeal - CBDT Circular as a one-time remedial measure - substantive right of appeal

Relation between manual filing and subsequent e-appeal - limitation for filing appeal - Whether the manual appeal filed by the assessee could be treated as proper filing when an e-appeal was submitted later. - HELD THAT: - The Court accepted the Tribunal's conclusion that the manual appeal could be reckoned in the circumstances, applying the reasoning in the Division Bench decision in CIT v. A.A. Antony & others. The Division Bench had observed that, having regard to the CBDT circular issued as a one time measure and the factual position prevailing in 2016 when the e filing procedure was being launched, substantive rights of assessees should not be defeated on a technical ground and appeals need not be rejected solely because they were not e filed within the period then envisaged. Applying that precedent, the Court found no error in the Tribunal's treatment of the manual filing and its consequence for limitation.

The Tribunal's view that the manual appeal could be treated as constituting the filing for limitation purposes was upheld.

Condonation of delay in filing appeal - CBDT Circular as a one-time remedial measure - substantive right of appeal - Whether the Tribunal was justified in condoning delay in filing the appeal despite Rules and Board circulars on e filing and in absence of a specific condonation petition before the CIT(A). - HELD THAT: - Relying on the Division Bench's reasoning, the Court treated the CBDT circular as a one time remedial concession that, in the factual matrix of 2016, warranted relief to assessees whose appeals were affected by the transition to mandatory e filing. The Court declined to remit the matter for a fresh condonation exercise before the CIT(A) as that would cause further hardship and merely lead to repetitive litigation on limitation. Consequently, the Tribunal's exercise of discretion in favour of the assessee was affirmed.

The Tribunal was correct to condone the delay in the circumstances; the exercise of discretion in favour of the assessee is sustained.

Final Conclusion: Following the Division Bench precedent in CIT v. A.A. Antony & others and having regard to the CBDT circular as a one time remedial measure during the transition to mandatory e filing, the High Court dismissed the Revenue's appeal, affirmed the Tribunal's order and answered the substantial questions of law against the Revenue.

Royalty - fees for technical services - use of or right to use industrial, commercial or scientific equipment - tax treaty interpretation vis-a -vis retrospective domestic amendment - permanent establishment under the Indo-US DTAA - interest under section 234B of the Income Tax Act

Royalty - use of or right to use industrial, commercial or scientific equipment - tax treaty interpretation vis-a -vis retrospective domestic amendment - permanent establishment under the Indo-US DTAA - Income from cloud hosting services is not royalty within the meaning of the India-US tax treaty or the domestic law as applied. - HELD THAT: - The Tribunal, following the coordinate-bench decisions in the assessee's own cases, held that the agreements with Indian customers were for provision of hosting and ancillary services and not for hiring, leasing or granting the use or right to use servers or other equipment. The customers had no physical control, possession, operation or management rights over the data centre servers; the infrastructure belonged to the assessee and was used by it to provide services under service level agreements. The definition of 'royalties' in Article 12(3)(b) of the Indo-US Treaty is exhaustive and requires appropriation of possession, control or a right to use the equipment; that factual and legal test was not met. Further, the Tribunal held that retrospective amendments to the domestic definition of royalty cannot be read into the treaty where the treaty definition remains unchanged. On the facts there was also no PE in India; accordingly, the receipts could not be taxed as business profits under the DTAA. Applying these determinative reasons, the Tribunal reversed the finding that the hosting receipts were royalty and allowed the appeal on this issue. [Paras 4, 5]

Issue decided in favour of the assessee; hosting receipts are not royalty and the AO/DRP orders classifying them as such are reversed.

Fees for technical services - royalty - tax treaty interpretation vis-a -vis retrospective domestic amendment - Income from cloud hosting services is not fees for technical services (FTS) or 'fees for included services' under the Indo-US DTAA. - HELD THAT: - The Tribunal treated the FTS contention as inseparable from the royalty finding and followed the coordinate bench reasoning: once the receipts were not characterised as royalty and the agreements evidenced pure service provision without transfer of technical knowledge, skill, or control of equipment, the premise for taxability as FTS/fees for included services under Article 12(4)(a) did not survive. The DRP's decision on FTS was rendered infructuous in view of the rejection of the royalty characterisation, and the Tribunal decided this issue in favour of the assessee. [Paras 4, 5]

Issue decided in favour of the assessee; hosting receipts are not FTS and the impugned classification is set aside.

Interest under section 234B of the Income Tax Act - withholding/deduction obligation of payer - Interest under section 234B cannot be levied on the assessee in the given facts and circumstances. - HELD THAT: - Relying on the Tribunal's earlier decision in the assessee's own case and the Bombay High Court precedent that where the law casts the obligation to deduct/pay tax on the payer, failure by the payer to deduct tax does not render the payee liable to interest under section 234B, the Tribunal directed that no interest under section 234B be charged. The Tribunal found the earlier reasoning applicable and binding on the present facts and accordingly allowed the assessee relief on this point. [Paras 4, 5]

Issue decided in favour of the assessee; no interest under section 234B is to be charged.

Final Conclusion: Following and applying the coordinate bench decisions in the assessee's own cases, the Tribunal allowed the appeal for AY 2016-17: the cloud hosting receipts are neither royalty nor fees for technical services under the Indo-US DTAA or domestic law as applied, there is no PE in India for taxing the receipts, and interest under section 234B is not leviable; the orders of the AO/DRP are set aside.

Erroneous and prejudicial to the interest of the Revenue - revision under section 263 - failure to make further inquiries / assessment without application of mind - special audit under section 142(2A) - when two views are possible

Erroneous and prejudicial to the interest of the Revenue - revision under section 263 - failure to make further inquiries / assessment without application of mind - special audit under section 142(2A) - Whether the Principal Commissioner rightly exercised jurisdiction under section 263 to set aside the assessment for A.Y. 2014-15 on the ground that the assessing officer's order was erroneous and prejudicial to the revenue. - HELD THAT: - The Tribunal examined the scope of section 263 and the established tests governing its exercise, including that the Commissioner must be satisfied that the assessing officer's order is both erroneous and prejudicial to the revenue and that he must have material to form such satisfaction. The facts show the AO issued a show-cause for special audit shortly before passing the assessment but passed the assessment without conducting the inquiry or recording reasons for dropping the proposal for special audit. The AO therefore did not adequately investigate or assess the impact of discrepancies in earlier years' special-audit reports and left material issues unadjudicated. The Tribunal held that where an order is passed without the requisite inquiries or application of mind-particularly when the AO himself had indicated the need for further scrutiny-the order becomes "erroneous" within the meaning of section 263. It is not sufficient that the CIT and AO differ in view; rather, section 263 is attracted where the AO has failed to examine or apply his mind to material discrepancies. On the cumulative appraisal of facts, the Tribunal concluded the Commissioner had material and rightly set aside the assessment directing fresh proceedings. [Paras 10, 11]

The Tribunal upheld the exercise of revision under section 263 and dismissed the assessee's appeal, agreeing that the assessment for A.Y. 2014-15 was erroneous and prejudicial to the revenue and must be set aside for fresh enquiry and assessment.

Final Conclusion: Appeal dismissed. The order of the Principal Commissioner under section 263 setting aside the assessment for A.Y. 2014-15 is upheld because the Assessing Officer failed to conduct necessary inquiries and apply his mind to material discrepancies, rendering the assessment erroneous and prejudicial to the revenue.

Forfeiture of convertible share warrants - short-term capital loss on forfeiture - transfer within the meaning of Section 2(47) of the Income-tax Act - conduit and layering of funds - colourable device to convert receipts into capital reserve - precedential reliance on Chand Ratan Bagri and Grace Collis

Forfeiture of convertible share warrants - short-term capital loss on forfeiture - conduit and layering of funds - precedential reliance on Chand Ratan Bagri and Grace Collis - Whether the assessee's claim of short-term capital loss on forfeiture of share warrants is admissible and whether the assessing officer's disallowance of that loss is sustainable - HELD THAT: - The Tribunal examined the material showing allotment of partly paid convertible warrants to the assessee, payment of the 25% upfront amount and subsequent non-exercise of the option resulting in forfeiture. The assessing officer treated the arrangement as a contrived scheme involving related group companies and conduits, contending that the transaction was a colourable device to transfer funds to Indiabulls Power Ltd and to create capital reserves, and therefore rejected the loss. The Tribunal, however, applied binding judicial precedents, observing that forfeiture of convertible warrants effects extinguishment of the right to obtain shares and the issue of whether such forfeiture amounts to a transfer has been authoritatively considered in the cited decisions including Chand Ratan Bagri and Grace Collis. Having regard to those precedents and the fact that the forfeited amount was claimed as capital loss and was not set off subsequently, the Tribunal held that the claim of short-term capital loss was covered in favour of the assessee. The Tribunal noted the factual matrix of group transactions and layering but concluded that the appropriate relief against any objection to the broader scheme lay outside the Income-tax Act, and that the assessing officer's substantive disallowance could not be sustained in view of the judicial authority relied upon by the assessee. [Paras 8, 9, 10]

The disallowance by the assessing officer is not sustained; the short-term capital loss on forfeiture of the warrants is allowable.

Final Conclusion: Revenue's appeal is dismissed; the order of the CIT(A) allowing the assessee's short-term capital loss on forfeiture of share warrants for Assessment Year 2012-13 is upheld.

Mandatory issuance of draft assessment order under section 144C(1) - jurisdictional consequence of non-compliance with section 144C where Transfer Pricing Officer proposes variation - final assessment under section 143(3) rendered void-ab-initio for absence of draft under section 144C(1) - no estoppel or consent can cure a jurisdictional defect

Mandatory issuance of draft assessment order under section 144C(1) - final assessment under section 143(3) rendered void-ab-initio for absence of draft under section 144C(1) - jurisdictional consequence of non-compliance with section 144C where Transfer Pricing Officer proposes variation - Validity of assessment orders for A.Y. 2010-11 and A.Y. 2011-12 where Assessing Officer passed final orders under section 143(3) without issuing draft assessment orders under section 144C(1) after TPO's upward transfer pricing adjustment - HELD THAT: - The Tribunal examined the facts and applicable authorities and held that where the Assessing Officer proposes to make an addition based on the TPO's order under section 92CA(3), the statutory procedure mandated by section 144C(1) - namely, issuance of a draft assessment order subject to representation to the DRP - is mandatory and not a mere formality. Reliance was placed on the decisions of the Bombay High Court and this Tribunal which applied the same principle, and on the assessee's factual position (including communication accepting the TP adjustment) the Tribunal observed that voluntary participation or consent by the assessee cannot confer jurisdiction where the statutory pre-condition of issuing a draft order has not been complied with. Consequently, final assessments passed without issuing the draft order were held to be without jurisdiction and liable to be quashed as void-ab-initio. [Paras 12, 13, 14, 15, 16]

Final assessment orders for A.Y. 2010-11 and A.Y. 2011-12 passed under section 143(3) without issuance of draft assessment orders under section 144C(1) are void-ab-initio and are quashed.

No estoppel or consent can cure a jurisdictional defect - Effect of assessee's acceptance/participation in assessment proceedings on the validity of the final assessment in absence of compliance with section 144C(1) - HELD THAT: - The Tribunal considered the Revenue's contention that the assessee's participation and apparent acceptance of the transfer pricing adjustment estopped it from challenging the assessment. Relying on authoritative precedents, the Tribunal held that consent or participation by the assessee does not validate an order which is beyond the Assessing Officer's jurisdiction; jurisdictional defects arising from non-compliance with mandatory statutory procedure can be raised at any time and are not cured by estoppel. [Paras 14, 15]

Assessee's participation or acceptance does not cure the jurisdictional defect arising from non-issuance of draft assessment order; estoppel is inapplicable.

Effect of quashing on ancillary grounds - Consequences for other grounds and disallowances considered in the assessment once the assessment is quashed for jurisdictional defect - HELD THAT: - Having quashed the final assessment orders as void for failure to comply with the mandatory procedure under section 144C(1), the Tribunal held that the remaining grounds raised by Revenue and the substantive disallowances made in the impugned assessments become academic and do not require adjudication in the present proceedings. [Paras 17, 18, 19, 20]

Other grounds and disallowances become academic in view of quashing of the assessments; no adjudication on merits required.

Final Conclusion: Both appeals filed by the Revenue (for A.Y. 2010-11 and A.Y. 2011-12) are dismissed; the Tribunal quashed the final assessment orders as void for failure to issue draft assessment orders under section 144C(1) where the TPO proposed transfer pricing variations, and directed that ancillary grounds remain academic.

Cost of improvement (deduction under computation of capital gains) - revisionary jurisdiction under section 263 - application of section 48 to cost of improvement - adoption of full value under section 50C - conversion of Nazul (leasehold) land into freehold as improvement of title - indexation / cost inflation index for computation of capital gains

Cost of improvement (deduction under computation of capital gains) - revisionary jurisdiction under section 263 - conversion of Nazul (leasehold) land into freehold as improvement of title - application of section 48 to cost of improvement - adoption of full value under section 50C - Whether the revisionary order under section 263 cancelling the reassessment was justified insofar as the Assessing Officer allowed deduction for freehold conversion charges as cost of improvement while computing long term capital gains. - HELD THAT: - The Tribunal examined the registered agreement to sell (15.07.2011), the freehold deed (13.03.2012) and the sale deed (25.04.2012). The agreement explicitly stated the total sale consideration included freehold premium and conversion charges and obliged the sellers to apply for conversion, with the buyers advancing funds for that purpose; the freehold grant was ultimately made in favour of the lessees (sellers). Conversion of the Nazul leasehold to freehold removed an impediment to transfer, improved title and marketability, and therefore qualified as cost of improvement allowable in computing capital gains under the scheme of section 48. The Tribunal found no material to infer mala fide or concealment and held the AO had applied his mind in allowing the deduction; the Commissioner's exercise of revisional jurisdiction under section 263 to cancel the assessment on the ground that the conversion charges were not incurred by the assessee was not justified except as limited below. The Tribunal also noted that the assessee had adopted the adopted full value (section 50C) of the property (higher figure) in computing capital gains, and there was no grievance on that account. [Paras 6]

Revision under section 263 was not justified insofar as it challenged the allowance of freehold conversion charges as cost of improvement; the assessee's claim for deduction on that basis is upheld.

Indexation / cost inflation index for computation of capital gains - application of section 48 to cost of improvement - Whether the Assessing Officer erred in applying the incorrect cost inflation index (CII) base while indexing cost of improvement and cost of acquisition. - HELD THAT: - The Tribunal found that payments towards freehold conversion charges and stamp duty were made in the previous year relevant to AY 2012 13 (FY 2011 12). The AO had used the CII base of FY 2012 13 (852) instead of the correct CII for FY 2011 12 (785) while indexing both cost of improvement and cost of acquisition. The Tribunal held this to be an error in computation which caused prejudice to Revenue and directed rectification by the Assessing Officer. The Tribunal observed that since payments were made in the relevant previous year, actual payments ought to have been claimed without applying a later indexation base. [Paras 6]

Proceedings under section 263 are upheld to the limited extent that the AO must correct the indexation base (apply CII 785 for FY 2011 12) and recompute capital gains accordingly.

Final Conclusion: Appeal partly allowed: the Tribunal sustains the allowance of freehold conversion charges as deductible cost of improvement (setting aside the Commissioner's cancellation on that point) but upholds revision to the limited extent that the Assessing Officer must correct the cost inflation index base for FY 2011 12 (apply CII 785) and recompute the capital gains accordingly.

Bonafide estimate under section 192 - assessee in default under section 201 - exemption under section 10(5) read with Rule 2B - restriction to fare by the shortest route

Bonafide estimate under section 192 - assessee in default under section 201 - exemption under section 10(5) read with Rule 2B - Whether the employer can be held an assessee in default under section 201 for not deducting tax at source from leave travel concession payments where the employer had, in bonafide belief, estimated employees' income under section 192 and allowed exemption consistent with section 10(5) read with Rule 2B. - HELD THAT: - Section 192 requires deduction of tax on the employer's estimate of an employee's income from salaries for the financial year, not on the employee's ultimately taxable income. If the employer honestly and reasonably forms an opinion and deducts tax on that estimated income, mere incorrectness of the estimate does not inevitably imply lack of good faith. The Tribunal examined the branch's documented policy and administrative guidelines showing that exemption under section 10(5) was granted only where the designated place was in India and the employee actually visited that place, and that reimbursements were limited in accordance with Rule 2B (economy class, national carrier fare, and restriction to the amount actually incurred or the cost by the shortest route). There is no explicit statutory bar in section 10(5) or Rule 2B against a foreign leg being part of the itinerary where the designated place is in India; Rule 2B's reference to the fare by the shortest route contemplates limiting the exempt amount but does not preclude circuitous travel. In the factual matrix, the employer's conduct in estimating and deducting tax on the basis that exemption would apply to the Indian leg (to the extent permitted by Rule 2B) was bona fide and reasonable. Consequently, the foundation for demands raised under section 201 r.w.s. 192 falls away and such demands are liable to be cancelled. The Tribunal expressly refrained from finally determining the broader question of actual taxability of the leave travel concession in the hands of employees and noted that coordinate-bench contrary decisions addressing that question do not bind the present conclusion on the employer's liability under section 192. [Paras 7, 8, 9]

Impugned demands under section 201 r.w.s. 192 are cancelled as the employer had made a bonafide and reasonable estimate under section 192 and therefore cannot be treated as an assessee in default.

Final Conclusion: The appeal is allowed: demands under section 201 r.w.s. 192 for AY 2012-13 are set aside on the ground that the employer acted with a bonafide estimate under section 192; the Tribunal did not finally adjudicate the broader question of taxability of the leave travel concession in the hands of employees.

Reopening of assessment under section 147/148 on information from Investigation Wing - rejection of books of account under section 145(3) and estimation of income by application of gross profit rate - assessee's initial burden to prove genuineness of purchases - estimation limited to profit element where purchases are unverified - adequacy of reasons recorded for reopening not examinable on merits

Reopening of assessment under section 147/148 on information from Investigation Wing - adequacy of reasons recorded for reopening not examinable on merits - Validity of issuance of notice under section 148 and reopening of assessment under section 147 based on information from the Investigation Wing. - HELD THAT: - The Tribunal held that reassessment proceedings could validly be initiated on the basis of a report/information received from the Directorate/Investigation Wing when the Assessing Officer records reasons and forms a subjective belief that income has escaped assessment. While the reasons must have nexus to the Assessing Officer's subjective opinion, the AO is not required to finally ascertain escapement of income at the reasons-recording stage; it is sufficient that he had cause or justification to suppose income had escaped. The Tribunal therefore upheld the reopening in the present case on the material available to the AO and by reference to jurisdictional precedent confirming the validity of proceedings initiated on the basis of investigation reports. [Paras 9]

Reopening under section 148/147 upheld; assessee's ground challenging reopening dismissed.

Rejection of books of account under section 145(3) and estimation of income by application of gross profit rate - assessee's initial burden to prove genuineness of purchases - estimation limited to profit element where purchases are unverified - Whether additions on account of alleged bogus/unverifiable purchases and the application of a prescribed gross profit (GP) rate by the authorities were justified. - HELD THAT: - The Tribunal examined the documentary evidence produced by the assessee (invoices, VAT registration, PAN, bank payments and confirmations) and noted that the assessee had discharged the initial burden of proof regarding the purchases. The Tribunal also took into account the change in nature of business for the year under consideration (shift to diamond exports) which led to a legitimately lower GP margin compared to earlier years. Relying on precedents and coordinate-bench decisions, the Tribunal concluded that where sales are not disputed and purchases are in issue, the appropriate approach is to estimate the profit element rather than treat the entire purchases as bogus; further, past history and industry particulars must be considered when estimating GP. In the facts of this case the Tribunal found the CIT(A)'s application of a 12% GP addition (and the AO's 25% disallowance basis advanced in cross-appeal) to be unwarranted and deleted the addition confirmed by the CIT(A). [Paras 14]

Addition confirmed by CIT(A) by applying GP rate deleted; Revenue's appeals on higher disallowance/alternate GP rejected.

Final Conclusion: The Tribunal upheld the validity of reassessment proceedings initiated under section 147/148 on information from the Investigation Wing but, on the merits, directed deletion of the trading addition sustained by the CIT(A) after finding that the assessee had discharged the initial burden to prove purchases and that a lower GP margin for the year (due to change to diamond trading) made the addition unwarranted; assessee's appeal allowed in part and revenue's appeal dismissed.

Validity of assessment in absence of notice u/s. 143(2) - Jurisdiction of assessing officer - Notice issued by non-jurisdictional officer is null and void - Section 292BB not applicable to complete absence of statutory notice - Section 68 unexplained cash credits - proof of identity, creditworthiness and genuineness of creditors

Validity of assessment in absence of notice u/s. 143(2) - Jurisdiction of assessing officer - Notice issued by non-jurisdictional officer is null and void - Section 292BB not applicable to complete absence of statutory notice - Assessment passed without issuance of statutory notice by the jurisdictional assessing officer is bad in law. - HELD THAT: - The Tribunal found that the statutory notice under section 143(2) was not issued by the Assessing Officer having jurisdiction who ultimately completed the assessment. Following precedent and authorities, the Bench held that service of notice under section 143(2) is a sine qua non for valid scrutiny assessment and a notice issued by an officer lacking jurisdiction is null and void. Section 292BB can validate infirmities in service but does not cure complete absence of a notice emanating from the department; where the notice did not originate from the proper jurisdictional officer the provision is inapplicable. Applying these principles to the facts, the assessment completed by DCIT, Circle-11(1) without having issued the statutory notice was held invalid and the assessment order was quashed. [Paras 10, 11]

Assessment is invalid for want of issuance of notice under section 143(2) by the jurisdictional Assessing Officer; consequential assessment order set aside.

Section 68 unexplained cash credits - proof of identity, creditworthiness and genuineness of creditors - Notice issued by non-jurisdictional officer is null and void - Addition under section 68 treating unsecured loans as unexplained cash credits and disallowance of interest thereon was not sustainable on merits. - HELD THAT: - On the merits the Tribunal examined the documents produced creditor-wise, including confirmations, bank evidence showing transfers through banking channels, audited accounts, income-tax returns of creditors, TDS on interest and evidence of repayments. The Assessing Officer and the CIT(A) had no adverse material to controvert these records and relied on conjecture regarding creditworthiness. Having considered the voluminous documentary evidence and the fact that many creditors were assessed to tax and loans were repaid, the Tribunal concluded the assessee had established the identity, creditworthiness and genuineness of the transactions. Consequently, the addition made under section 68 as unexplained cash credits was deleted and the corresponding disallowance of interest was directed to be deleted. [Paras 12, 13]

Addition under section 68 deleted and disallowance of interest on those loans deleted as the transactions were proved genuine.

Final Conclusion: Appeal allowed: assessment quashed for want of jurisdictional issuance of notice under section 143(2); on merits the addition under section 68 and consequential disallowance of interest are deleted.

Reassessment Proceedings - Notice under Section 143(2) - Section 292BB - deemed service and its limits - Participation of assessee and effect on notice - Validity of assessment and void ab initio for failure to issue mandatory notice

Notice under Section 143(2) - Section 292BB - deemed service and its limits - Reassessment Proceedings - Void ab initio - Whether reassessment completed without issuance of notice under Section 143(2) is valid or is void ab initio, and whether Section 292BB cures the absence of such notice where the assessee participated in proceedings. - HELD THAT: - The assessee e-filed a return and, after issuance of notice under Section 148, replied that the original return may be treated as return in response to that notice and participated in reassessment proceedings. The AO, however, did not issue any notice under Section 143(2) during reassessment and proceeded to make additions. The Tribunal examined the scope of Section 292BB as explained by the Hon'ble Supreme Court in CIT v. Laxman Das Khandelwal, which held that Section 292BB operates by legal fiction only where a notice has in fact emanated from the Department and is infirm in manner or service; the provision does not validate a complete absence of notice. Applying that principle, since no notice under Section 143(2) was issued by the Department in reassessment, Section 292BB cannot be invoked to cure that absence. Consequently the reassessment was held to be without jurisdiction and void ab initio, requiring quashing of the reassessment order and deletion of the additions. [Paras 8, 9]

Reassessment quashed as void for absence of mandatory notice under Section 143(2); additions deleted and appeal allowed.

Final Conclusion: The Tribunal, following the Supreme Court's ruling in Laxman Das Khandelwal, held that Section 292BB cannot cure the complete absence of a mandatory notice under Section 143(2); accordingly the reassessment for AY 2010-11 was quashed, the additions deleted and the assessee's appeal allowed.

Exemption under sections 11 and 12 - Registration under section 12A restored by appellate order - Nature of infrastructure reserve fund receipt-capital versus revenue - Remand to Assessing Officer for computation and fresh decision - Right to opportunity of being heard / natural justice in reassessment

Exemption under sections 11 and 12 - Registration under section 12A restored by appellate order - Remand to Assessing Officer for computation and fresh decision - Entitlement to exemption under sections 11 to 13 for assessment year 2012-13 in view of restoration of registration under section 12A. - HELD THAT: - The Tribunal noted that the assessee's earlier cancellation of registration under section 12AA had been set aside by the Tribunal for earlier years and that that restoration remains unrevoked by any higher forum. On that basis, the Appellate Tribunal held that the assessee is entitled to claim exemption under sections 11 to 13 and therefore the computation of income for AY 2012-13 must be done in accordance with those provisions. The Tribunal accordingly directed that the matter be remitted to the Assessing Officer to compute income under sections 11 to 13 after examining records and after giving the assessee an opportunity of being heard. The appellate court followed its earlier finding and proceeded by way of remand rather than deciding computation issues on merits. [Paras 5]

Remanded to the Assessing Officer to compute income for AY 2012-13 in accordance with sections 11 to 13 after examining records and giving the assessee opportunity of being heard; ground allowed for statistical purposes.

Nature of infrastructure reserve fund receipt-capital versus revenue - Exemption under sections 11 and 12 - Remand to Assessing Officer for computation and fresh decision - Right to opportunity of being heard / natural justice in reassessment - Characterisation of surplus in infrastructure reserve fund and its tax treatment for assessment year 2012-13. - HELD THAT: - Relying on precedents where similar receipts from State authorities for infrastructure development were held not to have an evident profit element and where the question of entitlement to exemption under section 11 required fresh examination, the Tribunal concluded that the issue could not be finally decided by the lower authorities. It observed that whether the infrastructure fund is taxable or exempt depends on the factual matrix and on whether the receipts were applied or earmarked in terms of the relevant approvals; therefore the finding of the AO and CIT(A) treating the fund as revenue could not stand without fresh enquiry. The Tribunal set aside the orders below on this issue and restored the matter to the Assessing Officer for reconsideration in accordance with law after affording the assessee a reasonable opportunity to be heard. [Paras 7]

Issue remitted to the Assessing Officer for fresh decision on the nature and tax treatment of the infrastructure reserve fund, with directions to decide in accordance with law and after giving the assessee an opportunity of being heard; grounds allowed for statistical purposes.

Right to opportunity of being heard / natural justice in reassessment - Consequence of grounds relating to interest under section 234B and consequential grounds. - HELD THAT: - The Tribunal treated grounds consequential to the remanded issues as rendered infructuous. Having remitted the substantive issues for fresh consideration, the Tribunal dismissed the consequential grounds as not requiring separate adjudication. [Paras 8]

Consequential grounds (including challenge to interest u/s 234B) dismissed as infructuous.

Final Conclusion: The appeal is allowed for statistical purposes: registration restoration entitles the assessee to claim exemption under sections 11-13 subject to recomputation by the Assessing Officer; the character and tax treatment of the infrastructure reserve fund are set aside for fresh decision by the Assessing Officer after affording the assessee an opportunity of being heard; consequential grounds are dismissed as infructuous.

Unexplained cash credit under section 68 - genuineness, identity and creditworthiness of share applicant - share premium validity and fair market value - effect of non-appearance to summons under section 131 - valuation by net asset value and EPS methods - deletion of addition on facts and documentary evidence

Unexplained cash credit under section 68 - genuineness, identity and creditworthiness of share applicant - deletion of addition on facts and documentary evidence - Addition of Rs. 9.50 crores treated as unexplained cash credit under section 68 was not justified and was to be deleted. - HELD THAT: - The Tribunal agreed with the finding of the Commissioner (Appeals) that the assessee had filed the documents called for under section 142(1) and that the share subscribing company's identity, creditworthiness and the genuineness of the transactions were established by the material on record. The record showed the subscriber was a registered NBFC, regular income tax assessee, with adequate share capital and reserves as on March 31, 2012; bank statements traced the application monies to the assessee; and the same subscriber subsequently advanced substantial loans to the assessee which were accepted in scrutiny assessment for the subsequent year by the same Assessing Officer. These factual findings that the subscriber had funds and the transactions were traceable were not challenged by the Revenue and crystallized; on that basis the Tribunal found no infirmity in the Commissioner (Appeals)' deletion of the addition made under section 68. [Paras 15, 16]

Addition of Rs. 9.50 crores under section 68 deleted; Revenue's appeal dismissed on this ground.

Share premium validity and fair market value - valuation by net asset value and EPS methods - effect of non-appearance to summons under section 131 - Premium of Rs. 1,990 per share was justified and the subscriber's initial non appearance to a short notice summon could not sustain an adverse inference to uphold the addition. - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s factual conclusion that the assessee had produced computations of fair value by net asset value (rule 11UA) and earnings per share capitalisation, which yielded values close to the issue price (NAV Rs.1,988; EPS based Rs.1,933), demonstrating that the issue price of Rs.2,000 was not unreasonable. The Tribunal also endorsed the view that the summons under section 131 was issued at the fag end with limited notice and that mere non appearance of directors at short notice did not justify treating the credits as unexplained where documentary evidence, bank traces and the subscriber's status and subsequent dealings supported the transaction. Accordingly the Assessing Officer's adverse inference and the addition based on the high premium and non appearance were held to be unwarranted. [Paras 5, 15]

Share premium of Rs.1,990 per share upheld as justified; non appearance on short notice did not sustain adverse inference.

Final Conclusion: The Tribunal confirmed the Commissioner (Appeals)' order deleting the addition under section 68 and upholding the share premium; Revenue's appeal is dismissed.

Provisional release under Section 110A of the Customs Act, 1962 - provisional release - finalisation of adjudication - bond and bank guarantee - CBEC Circular No. 01/2011-Cus dated 04.01.2011 - detention and demurrage waiver

Finalisation of adjudication - provisional release under Section 110A of the Customs Act, 1962 - CBEC Circular No. 01/2011-Cus dated 04.01.2011 - Whether the revenue's delay in completing adjudication proceedings was justified and what remedial direction should be issued. - HELD THAT: - The Tribunal found no justification for the prolonged delay between completion of departmental examination and investigation (samples drawn on 10.04.2019) and the impugned provisional release communication dated 13.06.2019. The Board's Circular No. 01/2011-Cus mandates prompt handling of export consignments detained for investigation and contemplates provisional release in appropriate cases to minimize prejudice to exporters and revenue. The appellants had requested provisional release promptly and had waived service of a show cause notice and personal hearing; that waiver cannot be used by the revenue to justify inordinate delay in adjudication. The Tribunal noted that the delay adversely affected both exporters and revenue and directed the revenue to finalise adjudication at the earliest, preferably within one month from the date of the order, with monitoring by the Principal Chief Commissioner, JNCH, Nhava Sheva. [Paras 4]

Revenue is directed to finalise and complete the adjudication proceedings preferably within one month from the date of the order under supervision of the Principal Chief Commissioner, JNCH, Nhava Sheva.

Provisional release - bond and bank guarantee - CBEC Circular No. 01/2011-Cus dated 04.01.2011 - In the event the revenue cannot complete adjudication within the directed time, what conditions should govern provisional release of the detained export goods. - HELD THAT: - Balancing the interests of exporters and revenue, and having regard to the Board's instructions permitting provisional release subject to execution of bond and furnishing of security, the Tribunal provided an alternative course. If the revenue is unable to conclude proceedings within the prescribed period, provisional release must be permitted immediately within one week of receipt of the Tribunal's order on execution of a bond equivalent to the value of the goods and upon furnishing security in the form of a bank guarantee. The Tribunal fixed the bank guarantee at Rs. 20,00,000 as the security to be furnished while determining security, taking note of relevant High Court decisions cited by the parties. [Paras 4]

If adjudication is not completed within one month, revenue shall allow provisional release within one week on execution of a bond equal to the value of goods and on furnishing a bank guarantee of Rs. 20,00,000.

Detention and demurrage waiver - Handling of Cargo in Customs Areas Regulations, 2009 - Whether detention and demurrage charges incurred by the appellants should be waived. - HELD THAT: - The Tribunal took note of the revenue's statement that Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009 would be followed and that the office admits these goods were detained. Given the admitted detention by the department and the delay attributable to revenue, the Tribunal held that demurrage and detention charges should be waived and directed the concerned authorities to issue an appropriate certificate to that effect. [Paras 4]

Detention and demurrage charges are to be waived and the concerned authorities shall issue a certificate to that effect.

Final Conclusion: The appeal is disposed of by directing the revenue to finalise adjudication preferably within one month under monitoring of the Principal Chief Commissioner, JNCH; if not completed within that period, provisional release must be granted within one week on execution of bond and furnishing of a bank guarantee of Rs. 20,00,000; and detention/demurrage charges incurred are to be waived with issuance of a certificate.

Restoration of name under Section 252(3) of the Companies Act, 2013 - carrying on business / possession of assets as ground for restoration - requirement to file outstanding statutory documents and payment of late fees for restoration - direction to set aside freezing of company bank accounts consequent to restoration - award of costs payable to public relief fund as condition of restoration

Restoration of name under Section 252(3) of the Companies Act, 2013 - carrying on business / possession of assets as ground for restoration - Whether the name of the Company should be restored to the Register of Companies. - HELD THAT: - The Tribunal found that the Company, though struck off for failure to file statutory returns, held title to multiple immovable properties and produced balance sheets and an income-tax return indicating activity and assets. The Registrar of Companies raised no objection to restoration and the Tribunal relied on precedent recognising protection of substantial assets from dereliction or fraud. Applying the criteria in Section 252(3), the Tribunal concluded it would be just and equitable to restore the Company's name to the ROC register to enable it to carry on business in accordance with its objects. [Paras 10]

Appeal allowed and name of the Company ordered to be restored in the Register of Companies.

Requirement to file outstanding statutory documents and payment of late fees for restoration - conditions precedent to restoration - What conditions should attend restoration of the Company's name. - HELD THAT: - The Tribunal conditioned restoration on the Company filing all outstanding statutory documents for the defaulting years and completing all formalities, including payment of any late fees or other charges leviable for late filing. Only after such compliances are made will the Registrar of Companies restore the name as if it had not been struck off. This sequencing preserves the Registrar's statutory role in receiving required filings while giving effect to the Tribunal's order for restoration. [Paras 12]

Restoration subject to filing of outstanding documents and payment of applicable late fees/charges; restoration to operate as if name had not been struck off after compliance.

Award of costs payable to public relief fund as condition of restoration - Whether costs should be imposed and the manner of their payment. - HELD THAT: - The Tribunal imposed costs as a condition of allowing the appeal and directed payment to the Prime Minister's Relief Fund. Proof of deposit is to be furnished to the Tribunal registry within seven days and the registry is to maintain separate e-record of such deposit. The imposition of costs was treated as part of the equitable relief granted for restoration. [Paras 11]

Appellant directed to pay costs to the Prime Minister's Relief Fund and furnish proof to the Tribunal registry within seven days.

Direction to set aside freezing of company bank accounts consequent to restoration - Whether freezing of the Company's bank account(s) should be continued after restoration. - HELD THAT: - The Tribunal ordered that any directions freezing the Company's bank accounts on the ground of striking off shall be set aside immediately to enable the Company to carry on business operations. This relief was made consequential to restoration and to take effect once the appellant completes the mandated compliances, with the Registrar to give effect to the order within one week of such compliances. [Paras 13]

Any freezing of the Company's bank accounts on the ground of striking off is to be set aside to enable business operations, with consequential compliance by the Registrar within one week after the appellant's compliance.

Final Conclusion: The appeal is allowed: the Tribunal directed restoration of the Company's name in the ROC register as just and equitable, subject to payment of specified costs to the Prime Minister's Relief Fund and completion of all outstanding statutory filings and fees; consequentially, any bank-account freeze arising from the striking off is to be set aside once compliances are made.

Dispensing with meetings of shareholders - dispensing with meetings of secured creditors - dispensing with meetings of unsecured creditors - consent affidavits by shareholders and creditors - Scheme of Amalgamation - service of notice under Section 230(5) read with Rule 8 - first motion petition - compliance report

Dispensing with meetings of shareholders - consent affidavits by shareholders and creditors - Scheme of Amalgamation - Meetings of equity shareholders of the Transferee and Transferor companies dispensed with - HELD THAT: - The Tribunal considered the affidavits of consent filed by all equity shareholders of the Transferee Company and the Transferor Companies adopting the Scheme of Amalgamation without modification and, having heard counsel and examined those consents, waived their rights to participate in meetings. On that basis the convening and holding of separate meetings of equity shareholders was dispensed with and the application proceeded as a first motion petition. [Paras 28]

Meetings of equity shareholders are dispensed with in view of unanimous written consents; first motion petition to proceed.

Dispensing with meetings of secured creditors - nil secured creditors - Scheme of Amalgamation - Meetings of secured creditors dispensed with where no secured creditors exist - HELD THAT: - The Tribunal noted the certification in the record that the Transferee Company and the Transferor Companies have NIL secured creditors and, having regard to the material and the consent affidavits, held that there was no requirement to convene meetings of secured creditors. Accordingly, the meetings of secured creditors were dispensed with. [Paras 28]

Meetings of secured creditors dispensed with where there are no secured creditors.

Dispensing with meetings of unsecured creditors - consent affidavits by creditors - majority in value consent - Scheme of Amalgamation - Meetings of unsecured creditors dispensed with where required majority in value have given written consent - HELD THAT: - The Tribunal examined the lists and statutory auditor certificates showing the numbers and value of unsecured creditors and the affidavits of consent filed: for the Transferee Company unsecured creditors representing over 90% in value consented; for the Transferor Companies the requisite unsecured creditors similarly consented. On that basis and having heard submissions, the Tribunal waived convening meetings of unsecured creditors and allowed the first motion to proceed. [Paras 28]

Meetings of unsecured creditors dispensed with where the requisite creditors have filed written consents.

Service of notice under Section 230(5) read with Rule 8 - service on regulatory authorities - time bound opportunity to make representations - Direction to serve statutory notices on specified authorities and other sectoral regulators and to allow 30 days for representations - HELD THAT: - The Tribunal directed the Applicant Companies to serve notices in Form CAA.3 with the disclosures required by Rule 6, as mandated by Section 230(5) read with Rule 8, upon the Regional Director (NER), Registrar of Companies, Official Liquidator, Income Tax Authorities and Competition Commission, and other applicable sectoral regulators. The notices must inform those authorities to make representations within 30 days; service modes and consequences of non representation were specified. The Applicants must also host notices on their websites and file a compliance report. [Paras 29, 30, 31, 32]

Applicants directed to serve statutory notices on listed authorities and sectoral regulators, allow 30 days for representations, host notices and file compliance report.

First motion petition - sanction of Scheme of Amalgamation - First motion petition allowed and application disposed of with directions - HELD THAT: - Having considered the consents, auditor certificates and statutory material, and having dispensed with the requisite meetings while directing service of statutory notices and compliance steps, the Tribunal concluded that the joint application for first motion sanction of the Scheme of Amalgamation merits allowance. The Company Application (first motion) was allowed in terms of the prayer clause subject to the directions given. [Paras 33]

Company Application (first motion) allowed and disposed of subject to the directions in the order.

Final Conclusion: The Tribunal allowed the first motion joint application for sanction of the Scheme of Amalgamation, dispensed with convening meetings of shareholders, secured and/or unsecured creditors where consents or absence of secured creditors justified waiver, directed service of statutory notices on specified authorities and sectoral regulators with 30 days for representations, required hosting of notices and filing of a compliance report, and disposed of the petition subject to those directions.

Prima facie case for winding up on grounds of fraudulent conduct and misfeasance - power to appoint a provisional liquidator at the admission/interim stage - protection and preservation of company property pending winding up - ouster of civil court jurisdiction where the Tribunal is empowered under the Companies Act - inherent power to condone procedural irregularities in petitions

Ouster of civil court jurisdiction where the Tribunal is empowered under the Companies Act - Tribunal's jurisdiction to entertain the winding up petition under the Companies Act - HELD THAT: - The Tribunal held that it has exclusive jurisdiction to decide matters arising under the Companies Act and that Section 430 (as quoted) ousts civil court jurisdiction in respect of matters the Tribunal is empowered to determine. The proceedings and appeals in other fora arising from the arbitral award were found to relate to different subject-matters and did not oust the Tribunal's competence to consider a petition for winding up under Chapter XX, Part I of the Act. Consequently the Tribunal may proceed to examine the petition on merits notwithstanding parallel proceedings in other courts. [Paras 8]

The Tribunal has jurisdiction to entertain and decide the winding up petition.

Prima facie case for winding up on grounds of fraudulent conduct and misfeasance - power to appoint a provisional liquidator at the admission/interim stage - protection and preservation of company property pending winding up - Whether a prima facie case was made out for interim relief and appointment of a provisional liquidator - HELD THAT: - On the material placed before it - including the circumstances of rapid incorporation, award of a major government contract shortly thereafter, investigative findings and proceedings by CBI, ED and other statutory authorities, and allegations of diversion of foreign investment - the Tribunal was satisfied prima facie that the affairs of the company were conducted in a fraudulent manner and that preservation of assets was necessary. The Tribunal observed that, while principles of natural justice require reasonable opportunity, interim/ad interim orders including appointment of a provisional liquidator may be made at the admission stage where circumstances justify it; the company had notice and its counsels appeared. The Tribunal also noted it may under its inherent powers condone procedural irregularities in the petition and permit rectification. [Paras 10, 11, 12, 13, 14]

Provisional Liquidator appointed and interim reliefs granted to protect and preserve the company's property pending final adjudication.

Inherent power to condone procedural irregularities in petitions - natural justice and opportunity to be heard before interim adverse orders - Maintainability of the petition and the requirement of affording opportunity before appointing a provisional liquidator - HELD THAT: - The Tribunal addressed the Respondent's contention that the petition was not filed in prescribed Forms/Rules and that the proviso to Section 273(1) mandates notice before appointing a provisional liquidator. The Tribunal held that mis quoting or procedural inaccuracies in the petition are not necessarily fatal and that the Tribunal may, by exercise of inherent powers, condone such mistakes and permit rectification. Regarding natural justice, the Tribunal recognised the need to afford reasonable opportunity but observed that interim orders can be passed at admission if circumstances justify them; here the company received short notice, its counsels appeared and were heard, and thus the requirement was satisfied for the interim appointment. [Paras 12, 14]

The petition is maintainable; procedural non compliance is condoned and the respondents were granted time to file replies while the interim appointment stands.

Final Conclusion: Company petition admitted; Official Liquidator, Bangalore appointed as Provisional Liquidator to take custody and control of the respondent company's assets and management pending final adjudication, with directions to cooperate and to preserve properties, without prejudice to parties' rights in other pending litigation.

Service of Demand Notice under Section 8 of the I&B Code - Deemed delivery by service on a Director / Officer of the Corporate Debtor - Initiation of Corporate Insolvency Resolution Process under Section 9 of the I&B Code - Proceeding ex parte where notice and petition are served - Existence of a pre existing dispute as bar to admission under Section 9

Service of Demand Notice under Section 8 of the I&B Code - Deemed delivery by service on a Director / Officer of the Corporate Debtor - Initiation of Corporate Insolvency Resolution Process under Section 9 of the I&B Code - Service of the demand notice on a Director of the Corporate Debtor and on its functional/registered address satisfied the requirement of service under Section 8 and authorised filing under Section 9. - HELD THAT: - The Tribunal noted that demand notices sent to the corporate debtor's registered and functional addresses bore postal remarks 'addressee moved' and 'unclaimed', while a copy was duly received by one of the directors. The legislative purpose of Section 8 is mandatory: notice must be served and 10 days must lapse before an operational creditor can invoke Section 9. A document served on a company or on an officer thereof is recognised service under company law; a director falls within the definition of officer. Read with principles of natural justice and the Companies Act provisions on service, delivery on the director/functional address amounted to effective service for the purposes of Section 8. On that basis the Adjudicating Authority correctly concluded that the mandate of Section 8 was fulfilled and admission under Section 9 was permissible. [Paras 4, 7]

Demand notice served on the director/functional address fulfilled the Section 8 requirement and justified admission under Section 9.

Proceeding ex parte where notice and petition are served - Adjudicating Authority was justified in proceeding ex parte where demand notice under Section 8 and the Section 9 application were duly served but the Corporate Debtor did not appear. - HELD THAT: - The record shows that despite service of the demand notice and the application, the corporate debtor did not appear before the Adjudicating Authority. In those circumstances, and having found service to be in order, the Tribunal held that the Adjudicating Authority rightly proceeded ex parte in accordance with its order. [Paras 8]

Ex parte proceedings were justified because service was effected and the corporate debtor failed to appear.

Existence of a pre existing dispute as bar to admission under Section 9 - Allegation of a pre existing dispute by the Corporate Debtor was not established and therefore did not preclude admission of the Section 9 application. - HELD THAT: - The appellant alleged that the operational creditor's claim was 'seriously disputed' but did not place any evidence or documents before the Tribunal to prove that a dispute existed prior to issuance of the demand notice. Mere averment of dispute, without supporting material showing its existence before the demand notice, is insufficient to deny admission. The Tribunal therefore declined to treat the claim as barred by a pre existing dispute. [Paras 9]

No established pre existing dispute; the allegation of dispute did not prevent admission under Section 9.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority's admission of the Section 9 application and ex parte proceedings are affirmed, and no error is shown in the impugned order.

Corporate Insolvency Resolution Process - Corporate Applicant - authorisation under constitutional documents - maintainability of an application under section 10 - special resolution requirement under section 10(3)(c) - disqualification of directors under the Companies Act, 2013 - abuse of process / mala fide invocation of moratorium

Corporate Applicant - authorisation under constitutional documents - maintainability of an application under section 10 - The petition under section 10 was not maintainable for want of proper authorisation of the person who filed it. - HELD THAT: - The Tribunal found on record that no Board resolution authorised Mr. Sanjay Gupta to prosecute the petition and that the Extraordinary General Meeting held purportedly to grant such authority flouted statutory norms, rendering the purported delegation of power bad in law. The definition of "Corporate Applicant" requires that the applicant be a corporate debtor or a person authorised under the corporate constitutional documents; since the petitioner did not demonstrate valid authorisation under those documents and no proper board action was shown, the application failed the threshold of maintainability under section 10 of the Code. [Paras 21, 22, 23, 24]

Application dismissed as not maintainable for want of proper authorisation.

Special resolution requirement under section 10(3)(c) - maintainability of an application under section 10 - No special resolution under section 10(3)(c) was produced and the requirement was not satisfied. - HELD THAT: - The Tribunal observed that section 10(3)(c) contemplates a special resolution by shareholders (or equivalent partners' approval) approving the filing of the section 10 application. The record did not show any such special resolution having been passed in accordance with the statutory requirement, which contributed to the conclusion that the application could not be maintained. [Paras 25]

Requirement of section 10(3)(c) not complied with; supports dismissal of the petition.

Disqualification of directors under the Companies Act, 2013 - powers of promoters versus directors - authorisation under constitutional documents - The person presenting the petition lacked authority because the directors were recorded as disqualified and the affairs are to be managed by directors, not promoters. - HELD THAT: - The Tribunal noted that the company's affairs are managed by directors and that the record indicated directors were disqualified under the Companies Act, 2013; consequently, promoters (including the person who filed the petition) could not validly exercise managerial powers or act as authorised corporate applicant in place of properly authorised directors. The absence of valid director-level authorisation undermined the appellant's capacity to file under section 10. [Paras 23, 24]

Filing by the promoter without valid director authorisation was untenable and contributed to non-maintainability.

Abuse of process / mala fide invocation of moratorium - maintainability of an application under section 10 - The petition was held to be an attempt to obtain moratorium to stall existing recovery proceedings, amounting to abuse/mala fide invocation. - HELD THAT: - The record showed that financial creditors had initiated recovery proceedings under the RDDB Act and SARFAESI Act, and the Tribunal concluded that the insolvency petition had been filed to trigger the moratorium and stay those proceedings. Such conduct, aimed at defeating recovery actions and avoiding statutory responsibilities, was treated as devoid of merit and indicative of mala fide invocation of the Code's processes. [Paras 26]

Petition found to be filed with intent to stall recovery proceedings; factored into dismissal for non-maintainability.

Interlocutory application - Interlocutory Application No. 76 of 2020 filed by M/s. Paisalo Digital Ltd. was allowed. - HELD THAT: - The Tribunal considered the interlocutory application filed by the objector seeking that the main petition not be admitted until outstanding dues under an arbitral award were paid. Having dismissed the main petition as not maintainable, the Tribunal allowed the interlocutory application in consequence. [Paras 19, 20, 28]

IA No. 76 of 2020 allowed.

Final Conclusion: The Company Petition under section 10 is dismissed as not maintainable for want of valid authorisation, non-compliance with section 10(3)(c), and apparent mala fide invocation to obtain moratorium; IA No. 76 of 2020 is allowed; no order as to costs.

Resolution Plan vested assets free from encumbrances - Section 31 approval binds all persons - Section 60(5) IBC - inherent powers of Adjudicating Authority - Section 238 of the IBC - Code overrides inconsistent laws - Revenue Recovery Certificate creates a charge; does not transfer ownership - Section 3(8) & (9) of Sugarcane (Control) Order, 1966 - Collector as executing authority - Section 32A IBC - immunity from prior fraudulent acts (where invoked)

Resolution Plan vested assets free from encumbrances - Revenue Recovery Certificate creates a charge; does not transfer ownership - Section 31 approval binds all persons - Direction to remove the entry of Government of Maharashtra (R.R.C. charge) from the 7/12 extracts and to vest the immoveable property in the Successful Resolution Applicant pursuant to the approved Resolution Plan. - HELD THAT: - The Tribunal found that upon approval of the Resolution Plan under section 31 of the IBC the assets of the Corporate Debtor stand transferred and vested in the Successful Resolution Applicant free from encumbrances. The R.R.Cs. issued by the Sugar Commissioner created only a charge/encumbrance and did not operate to transfer ownership; where the amounts admitted under the Resolution Plan in respect of farmers' claims have been or are secured for payment, continuation of the R.R.C. as an encumbrance prejudices the Applicant's title and hinders effective use of the property, operation of the sugar plant and implementation of the Resolution Plan. Having regard to the record of payments made, the Bank Guarantee securing the balance, and the approval of the Resolution Plan which is binding on all persons, the Tribunal concluded there was no apparent reason to keep the properties charged in respect of the past dues and directed removal of the entry from the 7/12 extracts and insertion of the name of the Successful Resolution Applicant.

Application allowed; Sugar Commissioner and Collector/Sub-Divisional Officer/Gram Panchayat/Talathi of Sakharwadi directed to remove the Government of Maharashtra entry on the 7/12 extracts for the specified GAT Nos. and insert the name of the Successful Resolution Applicant.

Section 60(5) IBC - inherent powers of Adjudicating Authority - Section 238 of the IBC - Code overrides inconsistent laws - Section 3(8) & (9) of Sugarcane (Control) Order, 1966 - Collector as executing authority - Whether the Tribunal had jurisdiction under the IBC to entertain and grant relief for withdrawal/removal of R.R.C. entries notwithstanding the respondent's contention of alternative remedies and pending proceedings under the Sugarcane Control Order. - HELD THAT: - The Tribunal held that section 60(5) of the IBC read with Rule 11 of the NCLT Rules confers inherent powers on the Adjudicating Authority to adjudicate matters directly relating to the CIRP. Section 238 of the IBC gives the Code overriding effect over inconsistent laws. The Collector's role under section 3(8)/(9) of the Sugarcane (Control) Order is execution of recovery as arrears of land revenue on the basis of a certificate; it does not confer a superior right that can defeat a Resolution Plan approved under the IBC. Given that the approved Resolution Plan binds all persons and the admitted dues to farmers have been paid or secured as per the Plan, the Tribunal found that it had jurisdiction to direct withdrawal/removal of the R.R.C. entries despite alternative or pending proceedings.

The jurisdictional objection was rejected; the Tribunal exercised its inherent powers under section 60(5) to grant the relief sought.

Final Conclusion: The Interlocutory Application was allowed: the Tribunal directed the Sugar Commissioner and the local revenue authorities to remove the Government's entry (R.R.C. charge) from the 7/12 extracts in respect of the specified GAT numbers and to record the Successful Resolution Applicant as the owner, holding that an approved Resolution Plan vests assets free of encumbrances and that the NCLT has jurisdiction under the IBC to order such relief.

Jurisdiction of the Comptroller and Auditor General under Section 16 of the CAG's (DPC) Act - audit of receipts payable into the Consolidated Fund - power to audit private entities - special audit under statutory provisions (Section 72A of the Finance Act and Rule 5A of the Service Tax Rules) - Section 20 request by the President/Governor to CAG to undertake audit of bodies not otherwise entrusted

Jurisdiction of the Comptroller and Auditor General under Section 16 of the CAG's (DPC) Act - audit of receipts payable into the Consolidated Fund - power to audit private entities - Whether CERA/CAG under Section 16 of the CAG's (DPC) Act had power or jurisdiction to call for and audit the accounts of the petitioner, a private company, for the period 2015-16 to 2017-18. - HELD THAT: - Chapter III of the CAG's (DPC) Act and Articles 148, 149 and 151 of the Constitution limit the CAG's duties and powers to accounts of the Union, States and offices or departments of the Government. Section 16 obliges the CAG to audit receipts payable into the Consolidated Fund and to examine accounts as he thinks fit; Section 13 confines audit to expenditure from Consolidated Fund, Contingency Funds, Public Accounts and accounts kept in any department of the Union or State. The statutory definition of "accounts" contemplates commercial undertakings of Government, not private entities. The only statutory route to audit a body not otherwise entrusted to the CAG is by request/sanction under Section 20 by the President or Governor, subject to public-interest satisfaction and opportunity to the body. No such request or sanction was shown in this case. Accordingly the scheme of Chapter III does not empower CERA/CAG under Section 16 to directly call for and conduct a detailed audit of a private company's accounts; the impugned intimation relying on Section 16 therefore lacked jurisdiction. [Paras 16, 17, 18, 23]

Impugned CERA intimation dated 10.01.2019, insofar as it sought audit of the petitioner's private-company accounts under Section 16 of the CAG's (DPC) Act for 2015-16 to 2017-18, is without jurisdiction and is quashed.

Special audit under statutory provisions (Section 72A of the Finance Act and Rule 5A of the Service Tax Rules) - access to records and role of chartered/cost accountant in special audit - requirement of statutory backing for special audit of private assessees - Whether the impugned intimation could be sustained as a special audit under Service Tax / Finance Act provisions (e.g., Section 72A and Rule 5A) or otherwise without explicit statutory authority. - HELD THAT: - Section 72A of the Finance Act envisages special audit by a Chartered Accountant or Cost Accountant appointed by the Commissioner where statutory criteria are met; Rule 5A prescribes access to registered premises and obligation to furnish specified records to officers or an audit party deputed by the Commissioner or the audit party, but it does not independently confer power on the CAG to audit private companies. For private assessess the Commissioner refers matters to an authorised officer or appoints an auditor; the audit itself is performed by a Chartered/Cost Accountant and the assessee is entitled to notice and opportunity. The impugned communication was not premised on Rule 5A/Section 72A procedures nor did it demonstrate invocation of any specific statutory provision entitling CERA to perform a direct detailed audit of the petitioner's accounts. Absent invocation of the proper statutory mechanism, a detailed special audit cannot be lawfully undertaken. [Paras 11, 12, 13, 14, 22]

The intimation cannot be upheld as a valid special-audit exercise under Section 72A or Rule 5A in the absence of statutory invocation and requisite procedures; the demand for a detailed audit of the petitioner's accounts for 2015-16 to 2017-18 was invalid.

Final Conclusion: Writ petition allowed: the CERA communication dated 10.01.2019 and its annexure, to the extent they called for a detailed audit of the petitioner's private-company accounts for 2015-16 to 2017-18 under Section 16 of the CAG's (DPC) Act (or otherwise without statutory basis), are quashed; costs ordered.

Right to fair hearing / principles of natural justice - adjournment of personal hearing - discretionary power of authority - decision based on available record where declarant absent - correction of clerical or arithmetical error apparent on face of record - reliance on adverse third party report - duty to furnish relied documents - remand for fresh consideration and speaking order

Right to fair hearing / principles of natural justice - adjournment of personal hearing - discretionary power of authority - decision based on available record where declarant absent - Whether the petitioner was denied a valid opportunity of personal hearing before issuance of the impugned order dated 05.05.2020 and whether the action violated principles of natural justice. - HELD THAT: - Section 127(3) makes grant of an opportunity of hearing mandatory where the designated committee's estimate exceeds the declarant's declared amount, while the proviso permits the committee to grant only one adjournment on sufficient cause being shown. That discretion to grant an adjournment must be exercised justly and cannot be construed to foreclose further hearing where the adjourned date itself becomes impossible to attend for reasons beyond the control of the parties or the authority, including an act of God such as a pandemic. The designated committee fixed an initial hearing, granted an adjournment to 30.03.2020 at the petitioner's request, but 30.03.2020 fell within the nationwide lock down declared w.e.f. 25.03.2020. Attendance on that date was therefore impossible; treating that adjourned date as the sole hearing date and proceeding to decide without fixing a fresh hearing deprived the petitioner of a real opportunity to be heard. Further, where an authority proceeds to decide adversely on the basis of material (including DGGI reports) relied upon, principles of natural justice require that the essence or copy of such material be disclosed to the affected party so that it may be met. The failure to grant a fresh hearing and non furnishing of relied reports vitiated the decision-making process. [Paras 28, 29, 30, 32, 33]

Impugned order dated 05.05.2020 is set aside to the extent that the petitioner was denied a valid opportunity of personal hearing; matter remanded to the designated committee for fresh hearing and consideration.

Reliance on adverse third party report - duty to furnish relied documents - correction of clerical or arithmetical error apparent on face of record - remand for fresh consideration and speaking order - Whether the CENVAT credit claimed by the petitioner was rightly excluded from the pre deposit for purposes of relief under the Scheme and whether that question was finally adjudicated. - HELD THAT: - The designated committee limited the pre deposit to the cash payment on the basis of reports from DGGI; those reports were not annexed to the impugned order nor furnished to the petitioner. Given the court's finding that the procedure adopted by the designated committee violated natural justice (absence of effective hearing and nondisclosure of relied materials), the court declined to adjudicate the substantive claim on the merits. Instead the court remanded the matter so the designated committee can consider the petitioner's declaration and claim of CENVAT credit (in addition to the cash deposit), after giving an opportunity of hearing and producing a speaking order. All contentions on the correctness of treating the CENVAT credit as pre deposit were kept open for fresh decision by the designated committee. [Paras 31, 32, 33]

Substantive question as to treatment of claimed CENVAT credit as pre deposit not decided on merits; matter remanded to the designated committee for fresh consideration after hearing and with disclosure of relied materials.

Final Conclusion: Writ petition allowed in part: impugned order dated 05.05.2020 quashed to the extent it was issued without affording a valid personal hearing and without disclosure of relied reports; matter remanded to the designated committee to reconsider the petitioner's declaration and claim of CENVAT credit (in addition to the cash deposit) after affording hearing and issuing a speaking order within six weeks; all other contentions kept open; no order as to costs.

Verification by designated committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - mandate of designated committee to verify declarations based on particulars furnished by the declarant and departmental records - scope of verification not to be confined to the show cause-cum-demand notice or order in original - meaning and effect of the word 'verify' in administrative verification - beneficial/amnesty scheme to be implemented with a liberal approach and principles of natural justice - remand for fresh verification and requirement of a speaking order after opportunity of hearing

Verification by designated committee under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - mandate of designated committee to verify declarations based on particulars furnished by the declarant and departmental records - scope of verification not to be confined to the show cause-cum-demand notice or order in original - remand for fresh verification and requirement of a speaking order after opportunity of hearing - Designated committee's verification of the declarant's claimed pre-deposits was inadequate and required fresh independent verification and a speaking order after hearing. - HELD THAT: - The Sabka Vishwas Scheme is a beneficial one-time measure aimed at liquidation of legacy disputes and the designated committee is mandated by section 126(1) and rule 6(1) to 'verify' declarations based on particulars furnished by the declarant as well as departmental records. The court construed 'verify' to mean authenticate, confirm or substantiate the truth of claimed payments and held that such verification is not an adjudicatory or appellate exercise confined to the show cause-cum-demand notice or order in original. Given the object of the scheme and the Board's instructions that it be implemented to facilitate settlement, the designated committee must independently examine the documents furnished (including challans and professional certificates) and not merely rely on the adjudicating authority's earlier findings. In the present case the committee disallowed two claimed pre-deposits without conducting a full and complete verification or assigning reasons in Form SVLDRS 3; the replies indicate that the committee had not ascertained with confidence whether the payments related to the investigation period. Accordingly, the impugned order was set aside and the matter remitted to the designated committee to re-verify after providing the petitioner an opportunity of hearing and to pass a speaking order in accordance with law within a fixed timeframe. [Paras 36, 38, 39, 40, 41]

Impugned order dated 25.02.2020 quashed; matter remitted to the designated committee for fresh verification of the claimed pre-deposits after giving opportunity of hearing and for passing a speaking order within six weeks.

Final Conclusion: Writ petition allowed in part: the designated committee's order disallowing certain pre-deposits is quashed and the matter is remanded for fresh, independent verification and a speaking decision after hearing the petitioner within six weeks; no costs.

Withdrawal of writ petitions - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - settlement of central excise and service tax disputes - disposal on withdrawal - refund as per Rules

Withdrawal of writ petitions - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - settlement of central excise and service tax disputes - disposal on withdrawal - refund as per Rules - Petitioner permitted to withdraw two writ petitions relating to orders-in-original dated 09.10.2001 (Thane factories) which have been settled under the Sabka Vishwas Scheme; matters disposed of on withdrawal with refund as per rules. - HELD THAT: - The petitioner had filed writ petitions challenging CESTAT orders arising from original orders dated 09.10.2001 relating to its Thane factories. The petitioner submitted declarations and, in respect of the Thane matters, the designated committee accepted the tax dues declared and the petitioner paid the amount determined under the Scheme. On that basis the petitioner sought leave to withdraw the two writ petitions. The respondents raised no objection to withdrawal. Having regard to the settlement under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 and the payment made pursuant to the designated committee's determination, the Court allowed the petitioner to withdraw the two writ petitions and disposed of them on withdrawal. The Court further directed that refund, if any, be made in accordance with the applicable Rules. [Paras 7, 8, 9, 10]

Withdrawal of the two writ petitions pertaining to orders-in-original dated 09.10.2001 (Thane factories) allowed; writ petitions disposed of on withdrawal; refund as per Rules.

Final Conclusion: The Court permitted withdrawal and disposed of the two writ petitions concerning the Thane-related original orders dated 09.10.2001 pursuant to settlement under the Sabka Vishwas Scheme, 2019; refund to be processed as per applicable Rules. The petition challenging the Chhindwara determination remains subject of separate proceedings before the Madhya Pradesh High Court.

Non-consideration of material evidence - distinction between exempted services and non-taxable turnovers - ST-3 returns-no column for non-taxable turnover - remand for fresh consideration with opportunity to produce evidence - judicial review under Article 226 despite existence of alternative remedy - arbitrariness and exercise of power without application of mind

Non-consideration of material evidence - arbitrariness and exercise of power without application of mind - Validity of the Order-in-Original dt.23.01.2019 confirming service tax demand where material submitted by the petitioner was not considered and no further documents were called for. - HELD THAT: - The Court held that the adjudicating authority proceeded to confirm the demand without considering material already on record and available with the department, and without calling for further clarification or documents which it could have requested during adjudication or personal hearing. Reliance was placed on the settled principle that exercise of administrative power is vitiated by non-consideration or non-application of mind to relevant factors. Given that the petitioner had produced work-sheets, agreements, audit reports and had explained the difference between Balance Sheet figures and ST-3 returns, the authority's failure to examine that material and its reliance on balance-sheet figures rendered the impugned order arbitrary. The Court concluded that such non-consideration vitiated the exercise of power and required interference by way of judicial review. [Paras 22, 23, 24, 25, 28]

Impugned Order-in-Original dt.23.01.2019 set aside for failure to consider material and for arbitrary exercise of power.

Distinction between exempted services and non-taxable turnovers - ST-3 returns-no column for non-taxable turnover - Whether the petitioner could be faulted or penalized for not indicating non-taxable turnover in ST-3 returns which do not provide a column for non-taxable turnovers, and whether material explaining that distinction required examination. - HELD THAT: - The Court noted that ST-3 returns do contain a column for exempted services but do not have a provision for declaring non-taxable turnovers such as supply of goods or activities in non-applicable territories. The respondents did not dispute absence of a column for non-taxable turnovers. In view of this, the petitioner could not be penalized solely for not indicating such turnovers in ST-3 returns when it had repeatedly furnished explanatory material, contracts and audit reports. The authority ought to have tested and examined that material rather than proceed to confirm demand based on balance-sheet entries alone. [Paras 16, 18, 19, 20, 21]

Petitioner cannot be penalized merely for non-declaration of non-taxable turnovers in ST-3 returns where no such column exists; the material submitted required examination.

Judicial review under Article 226 despite existence of alternative remedy - remand for fresh consideration with opportunity to produce evidence - Maintainability of the writ petition despite alternative remedies and the appropriate relief to be granted. - HELD THAT: - The Court observed that where a statutory authority acts arbitrarily, without jurisdiction or in breach of principles of natural justice, the High Court may exercise its writ jurisdiction notwithstanding the availability of alternative remedies. Applying these principles, the Court found interference justified because the authority acted without due consideration of relevant material. Rather than decide the tax liability on merits, the Court remitted the matter to the adjudicating authority for fresh consideration. The remand requires the authority to afford the petitioner a personal hearing, permit filing of written submissions with supporting material within four weeks, and then pass a reasoned order in accordance with law. [Paras 25, 26, 27, 28, 29]

Writ petition allowed; matter remitted to the adjudicating authority for fresh consideration after giving the petitioner opportunity to file material and a personal hearing.

Final Conclusion: The High Court set aside the Order-in-Original dt.23.01.2019 as vitiated by non-consideration of material and arbitrariness, held that the petitioner could not be penalized for non-declaration of non-taxable turnovers in ST-3 returns where no such column exists, and remitted the matter for fresh, reasoned consideration after permitting submission of documents and a personal hearing within the time stipulated.

Selling of space or time slots for advertisement other than advertisements broadcast by Radio or Television - negative list of services - advertising agency (making, preparation, display or exhibition of advertisement) - naturally bundled service / principal service rule - admissibility of statements recorded during investigation and right to cross-examine (Section 9D Central Excise Act as applicable) - time of providing service vs. date of invoice for taxability - extended period of limitation and bona fide belief

Selling of space or time slots for advertisement other than advertisements broadcast by Radio or Television - negative list of services - advertising agency (making, preparation, display or exhibition of advertisement) - Whether the appellant's activity of providing hoarding/kiosk space (including electrification and maintenance) for display of advertisements falls within the negative-list entry for sale of advertising space for the period 01.07.2012 to 30.09.2014. - HELD THAT: - The Tribunal examined the appellant's factual practice and invoices and found that the appellant charged fixed display/media-space charges, did not engage in conceptualization, visualization or preparation of advertisements, and ordinarily received ready-printed material from clients or advertising agencies which the appellant merely mounted and displayed. The statutory definition of advertising agency includes making, preparation, display or exhibition of advertisement, but the record showed absence of making/preparation; the appellant's activity is confined to display/space provision. The Tribunal applied precedents holding that mere provision of site/space for display, without creativity or preparation, is not taxable as advertising agency service. Ancillary services such as electrification, repair and maintenance were held to be incidental to the principal activity of sale of space and did not alter classification. On these grounds the Tribunal concluded that the appellant's services for the period 01.07.2012 to 30.09.2014 fall within the negative-list entry and are not taxable. [Paras 6, 7, 8, 9, 10]

The appellant's provision of space/time for display of advertisements (including incidental electrification and maintenance) is covered by the negative-list entry for the period 01.07.2012 to 30.09.2014 and the demand for that period is set aside.

Admissibility of statements recorded during investigation and right to cross-examine (Section 9D Central Excise Act as applicable) - Whether the adjudicating authority could rely on statements of witnesses recorded during investigation without allowing cross-examination under Section 9D. - HELD THAT: - The Tribunal held that Section 9D mandates that statements recorded during investigation may be used as evidence only after the deponent is examined and the noticee is given opportunity of cross-examination unless exceptional circumstances apply. The adjudicating authority had rejected the appellant's request for cross-examination of the four customer-deponents relied upon. In absence of cross-examination and without exceptional circumstances, those statements could not be relied upon and were therefore to be discarded; adjudication must be based on other admissible material. [Paras 6]

Statements recorded during investigation which were not subjected to cross-examination could not be relied upon by the adjudicating authority and were discarded.

Time of providing service vs. date of invoice for taxability - Whether taxability is determined by date of provision of service or by date of invoice where services were rendered during 01.07.2012 to 30.09.2014 but invoiced after 01.10.2014. - HELD THAT: - The Tribunal held that taxability is to be determined by the time of providing the service irrespective of the date of invoicing. Thus services actually provided during the negative-list period remain non-taxable even if invoices were raised subsequently after the entry was withdrawn from the negative list. The Tribunal cited authority supporting this proposition and applied it to the facts, concluding that services rendered prior to 01.10.2014 cannot be charged tax merely because invoicing occurred later. [Paras 11, 12]

Taxability is to be determined by the time of providing the service; services provided during 01.07.2012 to 30.09.2014 remain non-taxable despite invoices raised later.

Naturally bundled service / principal service rule - Whether the appellant's provision of ancillary services (mounting, electrification, maintenance) converts the package into a taxable composite service rather than sale of space for advertisement. - HELD THAT: - The Tribunal applied the principle that where services are naturally bundled and one service gives the essential character to the package, the package is to be classified as that principal service. Examining the invoices and business practice, the Tribunal found the dominant/essential character to be sale of space for advertisement with ancillary services incidental and not separately charged. Consequently the ancillary services did not change the classification; the package remained sale of space for advertisement. [Paras 2, 6, 7, 8, 9]

Ancillary services including mounting, electrification and maintenance are incidental to the principal service of sale of space and do not alter its classification under the negative-list entry.

Extended period of limitation and bona fide belief - Whether extended period of limitation and penalties were invocable against the appellant for the period 01.07.2012 to 30.09.2014. - HELD THAT: - The Tribunal observed that the appellant had paid service tax before 01.07.2012 and from 01.10.2014, and had bona fide belief that the service fell under the negative list during 01.07.2012-30.09.2014. The issue was interpretative and several precedents favored assessee. The appellant had filed returns and there was no suppression or mala fide intention. On these facts the Tribunal found invocation of extended limitation and imposition of penalty unsustainable both on merits and on limitation principles. [Paras 4, 14]

Extended period of limitation and penalties were not sustainable and were set aside.

Calculation and verification of tax liability for post-amendment period - Whether the adjudicating authority's computation for the period 01.10.2014 to March, 2016 required further verification. - HELD THAT: - The Tribunal noted that the adjudicating authority did not properly examine the appellant's contention that service-tax payments may have been made regularly from 01.10.2014 and that invoices relating to pre-01.10.2014 services were raised later. Given the view on taxability for the negative-list period, the Tribunal allowed the adjudicating authority liberty to verify calculations for 01.10.2014 to March, 2016 and communicate any net demand or refund after correct computation. [Paras 11, 12, 13]

The adjudicating authority was remitted the matter to verify calculations for the period 01.10.2014 to March, 2016 and to determine any net demand or refund accordingly.

Final Conclusion: The appeal is allowed: the Tribunal held that the appellant's supply of hoarding/kiosk space (with incidental electrification and maintenance) constituted sale of advertising space and fell within the negative-list entry for 01.07.2012 to 30.09.2014, set aside the demand and penalties for that period, discarded untested investigation statements not cross-examined, ruled that taxability is determined by time of service (not invoice date), and remitted verification of computations for 01.10.2014 to March, 2016 to the adjudicating authority for adjustment or refund as appropriate.

Penalty under Section 78A of the Finance Act, 1944 - Sabka Vishwas Legal Dispute Resolution Scheme - liability for recovery of service tax collected but not paid - requirement of material to prove negligence, contumacious or dishonest conduct before imposing penalty - extended period for assessment under proviso to sub section (1) of Section 73

Penalty under Section 78A of the Finance Act, 1944 - requirement of material to prove negligence, contumacious or dishonest conduct before imposing penalty - Imposition of penalty under Section 78A on the Managing Director and Chief Financial Officer - HELD THAT: - Both authorities below imposed penalties on the Managing Director and Chief Financial Officer on the sole ground of alleged negligence for non payment of service tax collected. The Tribunal examined the record and found no material placed by the Department to substantiate that these officers acted deliberately in defiance of law, in a contumacious or dishonest manner, or in conscious disregard of obligations. The officers had acted pursuant to the contractual arrangements and there was no evidence imputing actual knowledge of deliberate violation. Reliance was placed on the principle that penalty is not ordinarily justified unless deliberate or contumacious conduct is shown. In absence of such material, the imposition of penalty could not be sustained. [Paras 6, 7]

Penalties imposed on the Managing Director and Chief Financial Officer under Section 78A are set aside for lack of material proving negligence or contumacious conduct.

Sabka Vishwas Legal Dispute Resolution Scheme - liability for recovery of service tax collected but not paid - Effect of Sabka Vishwas scheme applications by the company and individuals on the appeals - HELD THAT: - During pendency, the company availed the Sabka Vishwas scheme and obtained a Discharge Certificate, resulting in withdrawal of the company's appeal. The Managing Director and Chief Financial Officer had also applied under the scheme but their applications were rejected by the Department. The Tribunal proceeded to decide the individuals' appeals on merits and, separately on merits, found the penalties unsustainable. The Tribunal did not adjudicate entitlement to scheme benefits for the individuals beyond noting the company's discharge and the Department's rejection of the individuals' applications. [Paras 1, 6]

Company's appeal dismissed as withdrawn on account of Discharge Certificate under the Sabka Vishwas scheme; individuals' applications were rejected by the Department and the Tribunal decided their appeals on merits, ultimately setting aside penalties.

Final Conclusion: The appeals filed by the Managing Director and the Chief Financial Officer are allowed; the imposition of penalties under Section 78A is set aside for want of material proving negligence, contumacious or dishonest conduct. The company's appeal was dismissed as withdrawn pursuant to issuance of a Discharge Certificate under the Sabka Vishwas Legal Dispute Resolution Scheme.

Input service - Cenvat credit - input service distributor - distribution of credit by ISD - Rule 7 of the Cenvat Credit Rules - Rule 2(l) definition of input service - divisions and units of a company not separate legal entities

Input service - Rule 2(l) definition of input service - Cenvat credit - The service rendered under the BEBP agreement qualifies as an input service and the service tax paid is eligible for cenvat credit by the assessee. - HELD THAT: - The Tribunal found that the BEBP Agreement permitted use of the 'Tata' brand on goods manufactured at the Jamshedpur factory and that such use enhanced marketability of the final dutiable products. Applying the main and inclusive limbs of Rule 2(l) of the Cenvat Credit Rules, the service was held to have been used indirectly in relation to manufacture and in relation to the business of manufacture; therefore it qualified as an 'input service'. The Tribunal relied on precedent (including Ultratech Cement and Jubilant Life Sciences) treating similar brand/related services and R&D/consultancy services as input services and concluded that tax paid on the service was admissible as cenvat credit. The issue was answered in favour of the appellants. [Paras 7]

Service under the BEBP agreement is an input service and the service tax paid is available as cenvat credit to TSL.

Input service distributor - distribution of credit by ISD - Rule 7 of the Cenvat Credit Rules - divisions and units of a company not separate legal entities - TSL, as an input service distributor, was entitled during the relevant period to distribute the credit of service tax exclusively to its Jamshedpur Steelworks without pro rata distribution to other units. - HELD THAT: - The Tribunal examined Rule 2(m) and Rule 7 (as in force prior to 01.04.2012) and noted that Rule 7 imposed only two limitations: (a) distribution against a document cannot exceed the service tax paid thereon, and (b) credit attributable to units exclusively engaged in manufacture/provision of exempted goods/services cannot be distributed. There was no provision then requiring pro rata distribution among multiple units; the pro rata requirement was inserted later. The Tribunal further held that the various divisions/units of TSL are not separate legal persons but parts of the same company, and separate registrations under excise/service law do not alter that legal status. Following relevant High Court and Tribunal precedents, the Tribunal concluded that the ISD could lawfully distribute the credit to the Jamshedpur unit alone within the Rule 7 limits. The issue was decided in favour of the appellants. [Paras 8]

TSL, as ISD, validly distributed the service tax credit exclusively to the Jamshedpur Steelworks in the relevant period.

Final Conclusion: The Tribunal set aside the Commissioner's order disallowing cenvat credit and imposing demand and penalties; the appeals are allowed and the cenvat credit availed, distributed and utilised by the appellants is held to be lawful, with consequential reliefs granted.

Summary order. Notice issued to respondents returnable on 13.01.2021; respondents directed to consider revocation of the bank-account attachment in view of settled law; interim protection granted by prohibiting any appropriation from the petitioner's current bank account pending final disposal.

Penalty for concealment of particulars of net wealth under Explanation 3 to section 18(1)(c) of the Wealth Tax Act - deeming fiction under Explanation 3 - discretion in levy of penalty - reassessment proceedings under section 17 and acceptance of return filed in response to notice - bonafide non filing and subsequent disclosure on reopening

Deeming fiction under Explanation 3 - penalty for concealment of particulars of net wealth under Explanation 3 to section 18(1)(c) of the Wealth Tax Act - Whether Explanation 3 to section 18(1)(c) automatically mandates levy of penalty where return of wealth was not furnished within the prescribed time but was thereafter filed and accepted in reassessment proceedings. - HELD THAT: - The Tribunal examined the operation of Explanation 3 which creates a deeming fiction where a return was not furnished within the specified period and assessable net wealth is established on reopening. A plain reading shows the deeming fiction makes the person 'deemed to have concealed particulars' for purposes of clause (c). However, the court held that the existence of the deeming fiction does not result in an automatic or mechanical imposition of penalty. The authorities accepted the return filed in response to notice under section 17 and admitted taxes; the Tribunal found that acceptance of such return and payment of tax, together with a bonafide explanation for non filing, take the matter out of automatic penalisation. The deeming provision identifies the class of cases for which concealment is to be presumed, but it does not oust consideration of the surrounding facts that bear on whether penalty should be levied. [Paras 8, 9]

Deeming fiction in Explanation 3 does not compel automatic levy of penalty; penalty cannot be mechanically imposed where return is subsequently filed, accepted and taxes paid in reassessment.

Discretion in levy of penalty - bonafide non filing and subsequent disclosure on reopening - Whether the authority was required to exercise judicial discretion before imposing penalty under section 18(1)(c) after reassessment and acceptance of return. - HELD THAT: - Relying on settled principle that imposition of penalty for failure of statutory obligation is a matter of discretion to be exercised judicially, the Tribunal held that the Assessing Officer should have applied his discretion and considered the assessee's bonafide explanation for non filing, the subsequent disclosure on issuance of notice under section 17, and payment of taxes. The Tribunal noted that where the assessee has shown a bona fide belief of non taxability and has cooperated by filing return and paying tax upon reopening, the authority must not impose penalty as a matter of course but must apply judicially its discretion considering all relevant circumstances. The Tribunal found that neither the Assessing Officer nor the Commissioner (Appeals) exercised such discretion before levying the penalty and that the circumstances warranted deletion of the penalty. [Paras 8, 9]

Penalty set aside because authority failed to exercise judicial discretion in light of bonafide non filing, subsequent disclosure and acceptance of return; directed deletion of penalty.

Final Conclusion: Appeals allowed; penalty levied under Explanation 3 to section 18(1)(c) deleted for assessment years 2010 11, 2011 12 and 2012 13, the Tribunal holding that the deeming provision does not mandate automatic penalty and that imposition of penalty requires exercise of judicial discretion in the facts of the case.

Power to cancel or suspend licences under Section 34 - Discretionary nature of Section 34(2) - Circumstances permitting cancellation of other licences upon cancellation of one licence - Requirement of prior show cause notice for cancellation under Section 34(2) - Distinction between cancellation under Section 34 and administrative cancellation under Section 35 - Forfeiture and bar on compensation consequent to cancellation under Section 34(3)

Maintainability of writ in view of revisability before State Government - Maintainability of the writ petition challenging the order of the Additional Excise Commissioner (Administration) Uttar Pradesh. - HELD THAT: - The preliminary objection that the impugned order was revisable before the State Government and therefore the writ was not maintainable was rejected. A question of law existed regarding the proper scope and meaning of Section 34(2) of the Act and the fate of the present petition was materially linked to the remand of proceedings in respect of the Gehrukheda licence. Affidavits had been exchanged and, in these circumstances, requiring the petitioner to first approach the revising authority would serve no useful purpose. [Paras 8]

The writ petition is maintainable and is proceeded with in this Court.

Power to cancel or suspend licences under Section 34 - Discretionary nature of Section 34(2) - Circumstances permitting cancellation of other licences upon cancellation of one licence - Forfeiture and bar on compensation consequent to cancellation under Section 34(3) - Whether the Majhenpurwa licence could be cancelled merely because another licence (Gehrukheda) of the same licensee was cancelled, and whether an independent violation in respect of the Majhenpurwa licence was a pre condition to cancellation under Section 34(2). - HELD THAT: - The Court construed Section 34(1) and 34(2) of the United Provinces Excise Act, 1910 and held that Section 34(2) confers a discretionary power on the licensing authority to cancel other licences of the same licensee after one licence has been cancelled under clause (a), (b) or (c) of Section 34(1). There is no textual requirement that an independent violation under Section 34(1) must be established in respect of the other licence before Section 34(2) can be invoked. To read such a pre condition into subsection (2) would render it superfluous. However, Section 34(2) is not automatic or mandatory; it must be exercised with caution and only where the proven facts in the earlier cancellation proceeding disclose reasons sufficiently grave to satisfy the licensing authority that continuance of the other licence(s) would be detrimental to the interests of revenue. Further, before exercising Section 34(2) the authority must have (i) an order cancelling another licence under Section 34(1)(a)/(b)/(c) and (ii) must issue a show cause notice to the licensee specifying why the other licence(s) should be cancelled. The consequences of cancellation under Section 34 (including forfeiture and bar on compensation) distinguish it from cancellation under Section 35, which is administrative and may attract proportional refund/compensation. [Paras 20, 21, 22, 27, 29]

Section 34(2) empowers a discretionary cancellation of other licences after cancellation of one licence under Section 34(1)(a)/(b)/(c); independent proof of violation in respect of the other licence is not a statutory pre condition, but the power is not automatic and must be exercised only where facts proven in the earlier proceeding justify it, and after issuance of a show cause notice.

Requirement of prior show cause notice for cancellation under Section 34(2) - Proceedings remitted for fresh consideration - Whether the cancellation of the Majhenpurwa licence could be finally examined while the foundational proceedings in respect of the Gehrukheda licence remained non final, and what relief should follow. - HELD THAT: - The basic facts giving rise to cancellation of the Gehrukheda licence had not attained finality because those proceedings were remitted to the Appeal Authority to examine afresh whether tampered QR codes and caps were in the petitioner's possession. Since the validity of the Majhenpurwa cancellation stems from and depends upon the outcome of the Gehrukheda proceedings, it would be premature to adjudicate the Majhenpurwa cancellation independently. The Court set aside the orders dated 30.10.2019 and 05.02.2020 and remitted the matter to the licensing authority with a stipulation that remanded proceedings may be recommenced, if required, only after the Appeal Authority decides the Gehrukheda licence matter. If the petitioner succeeds in the Gehrukheda appeal, the Majhenpurwa cancellation would fall; if not, the licensing authority may consider exercise of Section 34(2) in light of the observations in this order. The Court further directed that, if no case is made out for cancellation under Section 34(2), the petitioner's claim for renewal for the Excise Year 2021 22 be considered treating him as a continuing licensee on a notional basis or, if he does not seek renewal, that proportional refund under Section 35 be considered. The remanded proceedings were to be completed by 15.04.2021. [Paras 30, 31, 32]

The impugned orders are set aside and the matter is remitted to the licensing authority to recommence proceedings, if necessary, only after the Appeal Authority decides the Gehrukheda licence; consequential directions regarding renewal or refund and timeline were given.

Final Conclusion: The writ petition is partly allowed: the Court refuses the preliminary bar, holds that Section 34(2) is a discretionary (not automatic) power to cancel other licences after cancellation of one licence under Section 34(1)(a)/(b)/(c) and requires issuance of a show cause notice before exercising it; the orders cancelling the Majhenpurwa licence and dismissing the appeal are set aside and the matter is remitted to the licensing authority to proceed only after the Appeal Authority decides the Gehrukheda licence, with directions for consideration of renewal or proportional refund and completion of remanded proceedings by 15.04.2021.

Modification of bail conditions - deposit as condition for continuance of bail - stay of arrest - exercise of inherent jurisdiction under Section 482 Cr.P.C. - consequences of non-compliance with court undertaking/affidavit (perjury and vacating interim relief) - judicial discretion to refuse extended time in face of delay and COVID-19 adjournments

Modification of bail conditions - deposit as condition for continuance of bail - judicial discretion to refuse extended time in face of delay and COVID-19 adjournments - Application for extension of time to deposit the compensation amount as a condition of bail was considered and refused insofar as a four months' extension was sought, but a limited extension until 12.02.2021 was granted on the petitioner's sworn undertaking. - HELD THAT: - The High Court examined the petition under Section 482 Cr.P.C. seeking enhancement of time to four months to deposit the compensation amount ordered by the trial court as a condition of bail. The Court noted that the original direction to deposit (25%, later reduced to 20%) had been in place for almost a year and that the petitioner had benefitted from pandemic-related adjournments. The petitioner's earlier statement to the High Court undertaking to comply with the trial court's order was recalled. On balance, the Court declined to grant the extended four-month period sought but accepted the petitioner's notarized affidavit filed on 28.01.2021 offering immediate deposit of Rs. 4 lakhs and remaining payment within 15 days. Relying on that sworn undertaking, the Court exercised its discretion to permit a limited, time-bound extension to 12.02.2021 to make the complete payment, while emphasising that prior delay and availability of time during pandemic did not justify a longer extension.

Application for four months' extension refused; limited extension granted to 12.02.2021 subject to the petitioner's notarized undertaking to deposit specified amounts within the stated time.

Stay of arrest - deposit as condition for continuance of bail - consequences of non-compliance with court undertaking/affidavit (perjury and vacating interim relief) - exercise of inherent jurisdiction under Section 482 Cr.P.C. - Interim stay of arrest was continued till 12.02.2021 on condition of compliance with the deposit undertaking; failure to comply would result in vacating interim relief and exposure to perjury proceedings. - HELD THAT: - Having accepted the petitioner's notarized affidavit undertaking immediate payment of a part amount and the balance within 15 days, the High Court ordered that the petitioner must appear before the Sessions Court on the specified date and make the immediate deposit. The Court directed that the arrest of the petitioner would be stayed only until 12.02.2021. It made clear that if the petitioner failed to deposit the immediate amount or the balance within the extended period, the interim relief would be treated as vacated and the petitioner could face perjury proceedings for breach of the sworn affidavit. The direction links continuance of interim protection directly to strict compliance with the time-bound financial undertaking.

Arrest stayed till 12.02.2021 conditioned on the petitioner's compliance with the deposit undertaking; non-compliance will vacate the interim relief and may attract perjury proceedings.

Final Conclusion: The petition under Section 482 Cr.P.C. is disposed of by refusing the four-month extension sought; a limited extension until 12.02.2021 is granted on the petitioner's notarized undertaking to deposit specified amounts, the arrest is stayed till that date subject to compliance, and failure to comply will vacate the interim relief and invite perjury consequences.