TaxTMI Updates e-Newsletter
Feb 14,2020

Concessional GST rate for research institutions - conditions for concessional supply to specified institutions - certificate to the supplier at the time of supply - scope of Section 97(2) of the CGST Act - maintainability of advance ruling - AAR jurisdiction

Concessional GST rate for research institutions - conditions for concessional supply to specified institutions - certificate to the supplier at the time of supply - Whether the applicant (manufacturer) can invoice sales to its distributors at the concessional GST rate of 5% under Notification Nos. 45/2017 and 47/2017 when the distributors further supply to notified research institutions. - HELD THAT: - The Notifications grant exemption (resulting in an effective 5% GST) only when goods are supplied to the specified institutions subject to the conditions set out in the Table. For institutions falling under Sr. No. 2 (research institutions other than hospitals) the notification mandates that the institution produce, at the time of supply, a certificate to the supplier (i.e., the person effecting the supply) from the head of the institution certifying that the goods are essential for research purposes and will be used for the stated purpose and are not to be sold or transferred for five years from installation. In the present facts the applicant supplies goods to its distributors who are traders and not the end-user research institutions; the required certificate must therefore be issued to the distributor (the supplier in the downstream transaction) and not to the applicant-manufacturer. Because the manufacturer does not itself supply directly to the notified institutions and does not receive the certificate required by the notification at the time of supply, the applicant does not satisfy the conditions of Notification No. 45/2017 and cannot charge the concessional rate when invoicing its distributors. [Paras 5]

Applicant cannot sell to its dealers/distributors by charging GST at 5% under Notification Nos. 45/2017 and 47/2017.

Scope of Section 97(2) of the CGST Act - maintainability of advance ruling - AAR jurisdiction - Whether the AAR can rule on the validity of certificates issued by end-user research institutions (naming both manufacturer and distributor) to enable the manufacturer to invoice its distributor at the concessional GST rate. - HELD THAT: - Section 97(2) prescribes the kinds of questions on which an advance ruling may be sought (classification, applicability of notification, time and value of supply, admissibility of input tax credit, liability to pay tax, registration requirement, and whether an activity amounts to supply). The question on validity of certificates issued by end users does not fall within any category enumerated in Section 97(2). Consequently the Authority lacks jurisdiction to decide on the validity of such certificates in an advance ruling application and the question is not maintainable before the AAR. [Paras 5]

Question on validity of end user certificates is not maintainable and the Authority has no jurisdiction to answer it in an advance ruling.

Final Conclusion: The application is disposed: the applicant may not invoice its distributors at the concessional 5% GST under Notification Nos. 45/2017 and 47/2017; the question on the validity of end user certificates falls outside the scope of matters on which an advance ruling can be sought and is not answered by the Authority.

Classification of goods - HSN 8504 - HSN 8607 - specific heading preferred to general heading - Note 2(f) to Section XVII - Note 2 to Chapter 86 - Circular No. 30/4/2018-GST

Classification of goods - HSN 8504 - HSN 8607 - specific heading preferred to general heading - Note 2(f) to Section XVII - Circular No. 30/4/2018-GST - Transformers supplied to Indian Railways are classifiable under HSN 8504 and not under HSN 8607. - HELD THAT: - The Authority examined the tariff headings and notes and found that electrical transformers are specifically covered by Heading 8504. Heading 8607 relates to parts of railway or tramway locomotives or rolling-stock such as bogies, axles, wheels, brakes and coachwork, and does not include electrical transformers. Note 2(f) to Section XVII excludes electrical machinery or equipment of Chapter 85 from being treated as parts under Section XVII. The principle that a specific heading prevails over a general heading supports classification under 8504. Further, Circular No. 30/4/2018-GST clarifies that only goods classified under Chapter 86 supplied to railways attract the concessional rate; goods falling in other chapters attract their general applicable GST rates even when supplied to the railways. Applying these provisions and clarifications, the Authority concluded that the subject transformers, though used in railway coaches, are not classifiable under HSN 8607 and must be classified under HSN 8504, attracting the general rate prescribed for that heading. [Paras 5]

Transformers supplied to Indian Railways are classifiable under HSN 8504 and taxable accordingly under the notification entry for that heading.

Final Conclusion: The Advance Ruling answers that the applicant's transformers supplied to Indian Railways fall under HSN 8504 and are taxable at the rate applicable to that heading (as per the Notification w.e.f. 01.7.2017), and do not qualify as parts under HSN 8607 for concessional treatment.

Taxability of transfer of development rights (TDR) / floor space index (FSI) - classification under Heading 9972 - GST rate 18% (9% CGST + 9% SGST)

Taxability of transfer of development rights (TDR) / floor space index (FSI) - incidence of tax on transfer of development rights - GST is leviable on sale/transfer of TDR/Additional FSI received as consideration for surrender of joint rights in land under Development Control Regulations. - HELD THAT: - The Authority examined the scheme of notifications and the FAQs issued by the Government (TRU FAQ, Part II) and the rate notifications. The TRU FAQ (F. No. 354/32/2019 TRU dated 14.05.2019) specifically states that GST on transfer of development rights or FSI (including additional FSI) is payable at 18% (9% + 9%). Notifications issued under the GST law (including Notification No. 4/2018 C.T. (Rate) and amendments to Notifications No. 12/2017 and 13/2017 C.T. (Rate)) indicate that transfers of development rights/additional FSI fall within the taxable ambit and that tax incidence and liability have been addressed by the Government, including provisions dealing with timing and reverse charge in specified situations. Reading these instruments together, the Authority concluded that transfers of TDR/FSI granted as compensation for surrendering rights in land are taxable supplies under the GST law and attract GST. [Paras 5]

Answered in the affirmative: GST is leviable on the sale/transfer of TDR/FSI.

Classification under Heading 9972 - GST rate 18% (9% CGST + 9% SGST) - The GST classification and applicable rate for supply of TDR/Additional FSI. - HELD THAT: - The Authority relied on the TRU FAQ and the Central Tax (Rate) notifications to identify the appropriate classification and rate. The TRU FAQ refers to Sl. No. 16, item (iii) of Notification No. 11/2017 Central Tax (Rate) (heading 9972) and specifies that GST on transfer of development rights or FSI (including additional FSI) is payable at 18% (9% CGST + 9% SGST). The Authority also noted the amendments and notifications addressing the mechanics of tax incidence and reverse charge but crystallised the classification and rate from the rate notification and the FAQ. [Paras 5]

Classified under Heading 9972; applicable GST rate is 18% (9% CGST + 9% SGST).

Final Conclusion: The Advance Ruling holds that transfer/sale of TDR/Additional FSI granted as consideration for surrender of joint rights in land is taxable under GST; such supplies are classifiable under Heading 9972 and attract GST at 18% (9% CGST + 9% SGST).

Supply of services - Restaurant services - Classification of food and non-alcoholic beverages as services under Schedule II - Restaurant located in premises of hotel with declared tariff of Rs. 7,500 or more - Applicability of 18% GST to restaurant services located in specified hotel premises

Restaurant services - Restaurant located in premises of hotel with declared tariff of Rs. 7,500 or more - Applicability of 18% GST to restaurant services located in specified hotel premises - Classification of food and non-alcoholic beverages as services under Schedule II - Whether the applicant's restaurant, located in an arcade inter-connected with and on the same premises as a hotel having rooms with declared tariff of Rs. 7,500 or more, is liable to GST at 18% under Sr. No. 7(iii) of Notification No. 11/2017-CT(Rate). - HELD THAT: - The Authority accepted that supplies of food and non-alcoholic beverages in a restaurant are supplies of services and fall under the GST law as per Schedule II. On the facts, the restaurant is situated in a retail arcade owned and operated by the same entity as the adjacent hotel, shares a common entry gate, and is inter-connected with the hotel by a private passageway such that entry and movement between the arcade and the hotel do not require exiting the premises. The applicant also conceded that the restaurant primarily services the hotel clientele. The hotel on the same plot has rooms with a declared tariff of Rs. 7,500 or more per unit/room per day. Sr. No. 7(iii) of Notification No. 11/2017-CT(Rate) prescribes an 18% rate for supply of food or drinks in a restaurant where the restaurant is located in the premises of hotels or other commercial places meant for residential or lodging purposes having such declared tariff. Applying that provision to the established factual matrix, the Authority concluded that the applicant's restaurant is located in the premises of the specified hotel and therefore the higher rate is attracted. [Paras 5]

The applicant's restaurant is liable to GST at 18% (9% CGST and 9% SGST) under Sr. No. 7(iii) of Notification No. 11/2017-CT(Rate).

Final Conclusion: On the facts that the restaurant is inter-connected with and situated in the same premises as a hotel having rooms with declared tariff of Rs. 7,500 or more and primarily serves the hotel's clientele, the Advance Ruling holds that the restaurant services attract GST at 18%.

Supply - Service - Business - Pure Agent - Admission of application under advance ruling provisions

Supply - Service - Business - Pure Agent - Application for advance ruling admitted but no substantive ruling could be given on whether amounts recovered from employees for parking constitute a taxable supply or qualify as a pure agent transaction due to absence of requisite documents. - HELD THAT: - The Authority examined the applicant's questions asking whether recovery of parking charges from employees amounts to a supply of service by the applicant, whether such supply (if any) would have nil value as a Pure Agent, and whether input tax credit would be admissible. The Authority considered the statutory definitions of Supply, Service and Business under the CGST Act and noted that the matter falls within the scope of determination of liability under the advance ruling provisions and admitted the application for consideration. However, material documents necessary to adjudicate the factual and legal issues - including the initial rent agreement, consistent transaction trails, and clarification of accounting/ recovery procedures from employees - were not provided or reconciled with application material. In view of these evidentiary gaps, the Authority concluded that it was not in a position to decide whether the recoveries constituted a supply in the course or furtherance of business, or whether the pure agent treatment and corresponding valuation and input tax credit consequences applied. Consequently no substantive ruling on the posed questions could be given and the application was disposed of for want of requisite documents. [Paras 10, 16, 17, 18]

Application admitted under advance ruling provisions but disposed of without answering substantive questions due to non-production of requisite documents; no ruling on taxability, valuation as pure agent, or input tax credit admissibility.

Final Conclusion: The Authority admitted the advance ruling application but, on finding absence of essential documents and unresolved evidentiary inconsistencies, declined to give a substantive ruling on whether the recovery of parking charges from employees is a taxable supply or qualifies as a pure agent transaction and disposed of the application.

Reverse charge - Notification No. 29/2018-Central Tax (Rate) - security services - educational institution exemption - Tax Deductor under Section 51 - forward charge

Reverse charge - Notification No. 29/2018-Central Tax (Rate) - Tax Deductor under Section 51 - forward charge - Liability to pay GST for security services supplied to the applicant while it was registered only as a tax deductor under Section 51 up to 24-6-2019. - HELD THAT: - The Authority examined Serial No.14 of Notification No.29/2018 which makes security services subject to reverse charge when supplied to a registered person, but contains a proviso excluding Departments or Establishments of Central/State Government, local authorities or governmental agencies that have taken registration solely for deducting tax under Section 51 and not for making taxable supplies. The University was established by State enactment and, until 24-6-2019, was registered only as a Tax Deductor under Section 51 (GSTIN-22AAAJH0647Q1DD) and had no other GST registration as a supplier. Applying the proviso, the Authority held that the exclusion is attracted and the reverse charge entry does not apply to the applicant in that period; consequently the supplier (security agency) remains liable to pay GST on a forward charge basis. [Paras 5, 8]

While the applicant was registered only as a Tax Deductor under Section 51 up to 24-6-2019, it is not liable to pay GST under reverse charge for security services and the supplier must discharge tax under forward charge.

Reverse charge - Notification No. 29/2018-Central Tax (Rate) - security services - Liability to pay GST for security services supplied to the applicant after it obtained registration as a regular dealer from 25-6-2019. - HELD THAT: - The Authority noted that with effect from 25-6-2019 the applicant also became registered as a regular dealer and normal taxpayer (GSTIN-22AAAJH0647Q1Z4). Once the applicant held registration as a supplier/regular taxpayer, the proviso excluding entities registered solely under Section 51 no longer applies. Therefore, from 25-6-2019 the applicant, as a registered person receiving security services, falls within the scope of the reverse charge entry in Serial No.14 of Notification No.29/2018 and is liable to pay GST under the reverse charge mechanism. [Paras 5, 9]

From 25-6-2019, having been registered as a regular dealer, the applicant is liable to pay GST on security services under reverse charge.

Final Conclusion: The Authority rules that for the period up to 24-6-2019 the University, being registered only as a Tax Deductor under Section 51, is excluded by the proviso to Serial No.14 of Notification No.29/2018 and the security service provider must pay tax under forward charge; with effect from 25-6-2019, when the University obtained regular taxpayer registration, the reverse charge mechanism applies and the University is liable to pay GST on security services.

Composite supply - works contract - classification under Entry (iv) to Serial No. 3 of the CGST Rate Notification - classification under Entry (vi) to Serial No. 3 of the CGST Rate Notification - scope of advance ruling - immovable property / annexation

Composite supply - works contract - classification under Entry (vi) to Serial No. 3 of the CGST Rate Notification - Classification of the applicant's supply to NHAI under Entry (vi) to Serial No. 3 of the CGST Rate Notification - HELD THAT: - The Authority examined whether the supply constituted a "composite supply" and a "works contract" and whether it fell within Entry (vi) which applies to works contracts provided to Governmental Entities for civil structures or original works meant predominantly for non-commercial use. The contract for ITS (Intelligent Transport System) installation involves supply of goods and services in conjunction and thus qualifies as a "works contract". However, having regard to the nature and purpose of ITS installation-being integral to the expressway and enabling public use-the Authority found the supply to be part of construction of road transportation for public use rather than an original civil structure predominantly for non-commercial use. Accordingly, the supply is not appropriately classified under Entry (vi). [Paras 12, 14, 15, 16]

The composite supply is not classifiable under Entry (vi) of Serial No. 3 of the CGST Rate Notification.

Composite supply - works contract - classification under Entry (iv) to Serial No. 3 of the CGST Rate Notification - Classification of the applicant's supply to NHAI under Entry (iv) to Serial No. 3 of the CGST Rate Notification - HELD THAT: - The Authority considered whether the ITS installation forms part of construction, erection, commissioning or installation of a road, bridge, tunnel or terminal for road transportation for use by the general public. The ITS provides real-time traffic, pollution and weather information and is necessary for the expressway to open for public use; the contract includes design, supply, installation, testing, commissioning and operation & maintenance of ITS on a turnkey basis. On the facts, installation of ITS was held to be part and parcel of construction of the road transportation system for public use and hence the supply is more appropriately classifiable under Entry (iv). The applicable rate under that entry is 12% (CGST + SGST/UPGST). [Paras 12, 15, 16]

The composite supply is classifiable under Entry (iv) of Serial No. 3 of the CGST Rate Notification and liable to effective GST at 12% (CGST and SGST/UPGST).

Scope of advance ruling - Whether the Authority can rule on the GST rate applicable to supplies made by the sub-contractor to the applicant - HELD THAT: - The Authority referred to the statutory definition of "advance ruling", which is confined to questions in relation to supplies being undertaken or proposed to be undertaken by the applicant seeking the ruling. The applicant sought a ruling on the tax rate applicable to services rendered by its sub-contractor to the applicant. That query pertains to supplies undertaken by a person other than the applicant and hence falls outside the statutory scope of advance ruling. Consequently, the Authority declined to adjudicate the tax rate for the sub-contractor's supplies. [Paras 17, 18, 19]

No ruling issued on the GST rate applicable to services rendered by the sub-contractor, as the question is outside the purview of Advance Ruling.

Final Conclusion: The Authority ruled that the applicant's ITS installation contract with NHAI is a works contract and is classifiable under Entry (iv) to Serial No. 3 of the CGST Rate Notification (at 12% GST), not under Entry (vi); and declined to rule on the GST rate applicable to the sub-contractor since that question falls outside the scope of advance ruling.

Composite supply and "naturally bundled" supplies - ancillary service to principal supply - exemption for transmission or distribution of electricity by an electricity transmission or distribution utility - input tax credit exclusion for construction of immovable property other than plant and machinery - definition of "plant and machinery" for input tax credit purposes

Composite supply and "naturally bundled" supplies - ancillary service to principal supply - Deposit Work undertaken by the applicant is an integral or ancillary part of supply of transmission or distribution of electricity - HELD THAT: - The Authority applied the concept of composite supply, emphasising that constituent supplies must be "naturally bundled" and that removal of one element must affect the nature of the overall supply. It found that deposit works (infrastructure laid at the request of a distribution licensee and paid for as non tariff charges by specific customers) are not directly related to transmission of electricity because transmission can occur with or without such deposit works. The fact that costs are recovered separately from identified customers as non tariff charges indicates independence of the deposit works from the transmission service, and thus they are neither integral nor ancillary to the principal supply of transmission or distribution of electricity. [Paras 9, 12]

Deposit Work is neither an integral part nor ancillary to transmission or distribution of electricity.

Exemption for transmission or distribution of electricity by an electricity transmission or distribution utility - Applicability of the exemption under Entry No. 25 of Notification No. 12/2017 for the deposit works and non tariff charges recovered by the applicant - HELD THAT: - The Authority considered the departmental clarification in Circular No. 34/8/2018 which distinguishes transmission/distribution services exempt under Entry No. 25 from other charges recovered by utilities (such as application fees, rental or testing charges and labour charges). Applying that clarification and its finding that deposit works are independent of transmission, the Authority held that the deposit works do not fall within the exempt description and the applicant is not eligible for the exemption in respect of non tariff charges recovered from customers for deposit works. [Paras 11, 12]

Exemption under Entry No. 25 does not apply to the deposit works and the non tariff charges recovered therefor.

Input tax credit exclusion for construction of immovable property other than plant and machinery - definition of "plant and machinery" for input tax credit purposes - Availability of input tax credit (ITC) to the applicant in undertaking deposit works (creating infrastructure for electricity transmission) - HELD THAT: - The Authority examined the applicant's own admission and subsequent submissions and applied Section 17(5) which denies ITC for works contract services and goods/services used for construction of immovable property (other than plant and machinery). The Explanation to Section 17(6) was applied to determine the meaning of "plant and machinery"; civil structures and similar immovable property are excluded. The infrastructure created by the applicant was held not to qualify as plant and machinery used for outward supply, and therefore ITC is not available for the deposit works. [Paras 13, 14, 15, 16]

Applicant is not eligible to claim input tax credit in respect of deposit works used for construction of immovable property.

Final Conclusion: The Authority ruled that deposit works carried out by the applicant are neither integral nor ancillary to transmission or distribution of electricity, the exemption for transmission/distribution under Entry No. 25 is not available for the non tariff charges collected for such works, and input tax credit is not available for the deposit works because the constructed immovable property does not qualify as plant and machinery.

Interim deposit - input tax credit - alleged profiteering - stay of penalty proceedings - investigation by the Director General

Interim deposit - input tax credit - alleged profiteering - Direction to make an interim deposit pending adjudication of alleged profiteering based on ITC computations - HELD THAT: - The Court accepted the petitioner's representation that the Director General had computed the input tax credit (ITC) and that the authority relied on those figures for two projects. The petitioner asserted that if ITC availed only for the residential project (Gulmohar Green) is considered, the profiteering demand would be substantially lower (not exceeding the amount asserted by the petitioner). On this basis and as an interim measure, the petitioner was directed to deposit a specified sum within a limited timeframe in three equated instalments with the first instalment due by the date fixed by the Court. The order permits the respondents to seek variation on proof that the petitioner's statement about the ITC allocation is incorrect by moving an appropriate application.

Petitioner directed to deposit the specified interim amount in three instalments, first by the date fixed; respondents may apply for variation if petitioner's ITC statement is incorrect.

Stay of penalty proceedings - investigation by the Director General - Status of penalty proceedings and further inquiry into ITC for the commercial project - HELD THAT: - Pending final adjudication, the Court ordered that penalty proceedings shall remain stayed as an interim protective measure. Simultaneously, noting that the authority had directed further investigation by the Director General in respect of the commercial project (Anandam Square), the Court directed compliance with that investigation direction and that the Director General carry out the enquiry as directed by the authority.

Penalty proceedings stayed in the interim; Director General directed to conduct the enquiry into the commercial project as ordered by the authority.

Final Conclusion: Interim directions: petitioner to deposit the specified sum in three instalments (first by the fixed date); respondents may seek variation on proof; penalty proceedings stayed meanwhile; Director General to conduct the directed enquiry into the commercial project; matter listed thereafter.

Rectification of order for apparent mistake on the face of the record - maintainability of rectification application under Section 102 - classification as a Governmental Authority - advance ruling

Classification as a Governmental Authority - rectification of order for apparent mistake on the face of the record - The request to rectify the advance ruling so as to hold Visvesvaraya National Institute of Technology (VNIT) to be a "Governmental Authority" was not maintainable and was rejected. - HELD THAT: - The Authority reproduced its earlier finding that VNIT had not been shown to have been set up by an Act of Parliament or State Legislature, nor established by government with ninety percent or more participation by way of equity or control, nor entrusted with functions of a Municipality or Panchayat under the Constitution, and therefore could not be treated as a "Governmental Authority". That issue had already been considered and decided in paragraph 5 of the advance ruling. The rectification application alleged an apparent error on the face of the record but did not point to any omission or clerical error distinct from the merits already adjudicated. In view of the fact that the question of VNIT's status was addressed on the material placed before the Authority, there was no ground to treat the original finding as an apparent mistake requiring correction, and the rectification claim was therefore not tenable. [Paras 5]

Rectification request to treat VNIT as a "Governmental Authority" rejected.

Maintainability of rectification application under Section 102 - advance ruling - The application for rectification under Section 102 was held to be non-maintainable and was rejected. - HELD THAT: - The Authority examined the rectification application filed within the prescribed time and determined that the matter raised was one of substantive adjudication already considered in the advance ruling order dated 24.05.2019. Since the application sought to revisit the merits rather than correct an apparent clerical or arithmetical error on the face of the record, it did not fall within the scope of rectification available under Section 102. Consequently the application was held to be not maintainable and dismissed under the provisions cited. [Paras 6]

Application for rectification under Section 102 held non-maintainable and rejected.

Final Conclusion: The Authority dismissed the rectification application: the advance ruling's conclusion that VNIT is not a "Governmental Authority" stands, and the application under Section 102 was held non-maintainable and rejected.

Advance ruling maintainability - scope of Section 97(2) - admissibility of input tax credit - drop-shipping treated as intermediary - no supply - GST liability

Scope of Section 97(2) - admissibility of input tax credit - Whether hard copies of shipping bills not traceable on ICEGATE are sufficient for filing claim for refund of input tax credit (ITC) - advance ruling maintainability under Section 97(2). - HELD THAT: - The Authority examined the applicant's first query and observed that the question is procedural/technical in nature and does not fall within any of the categories (a) to (g) of Section 97(2) of the CGST Act which define matters on which an advance ruling may be given. Accordingly, the Authority held that it lacks jurisdiction to decide the procedural question as to sufficiency of hard copy shipping bills for claiming refund of ITC under the advance ruling provisions. [Paras 5]

The first query is not a matter covered by Section 97(2) and is not amenable to an advance ruling by this Authority.

Drop-shipping treated as intermediary - no supply - GST liability - advance ruling maintainability - Whether drop-shipping transactions effected through the applicant amount to export sale or are liable to IGST. - HELD THAT: - On the facts as stated by the applicant, the Authority found that in the drop-shipment transactions the applicant neither owns nor delivers the goods but merely facilitates the transaction by passing order details to the supplier; therefore the applicant does not effect any supply of goods to the buyer. Since there is no supply by the applicant, the question of treating the transaction as an export sale by the applicant or of applicability of IGST to such supply does not arise. Because the core questions relate to matters outside the scope of supply by the applicant, the application falls outside the remit of the advance ruling provisions and is non-maintainable. [Paras 5]

Drop-shipment transactions, as described, do not constitute supply by the applicant; consequent questions of export sale or IGST liability do not arise, rendering the application non-maintainable.

Final Conclusion: The application for advance ruling is rejected as non-maintainable under the provisions of law; the Authority lacks jurisdiction to decide the procedural question on shipping bills and the described drop-shipment arrangement does not amount to supply by the applicant, so the substantive questions do not arise.

Export of Services - Place of Supply - Advance Ruling jurisdiction under Section 97(2) - Zero Rated Supply (export of services)

Advance Ruling jurisdiction under Section 97(2) - Place of Supply - Export of Services - Whether the Authority for Advance Ruling has jurisdiction to rule on whether the applicant's services qualify as export of services by determining the place of supply under Section 2(6) of the IGST Act. - HELD THAT: - The Authority examined the applicant's request which required determination of the place of supply to decide if the services amounted to export of services under Section 2(6) of the IGST/IGST framework. Section 97(2) prescribes the specific categories of questions on which an advance ruling may be given. The Authority found that determination of the place of supply is not included within the matters enumerated in Section 97(2) and therefore falls outside the scope of advance rulings that this Authority may pronounce. The Authority relied on precedents of the Appellate Authority for Advance Ruling (AAAR) which held similarly that questions involving determination of place of supply and, consequently, export of services are beyond the jurisdiction of the Advance Ruling Authority. In view of these statutory limits and the AAAR decisions, the Authority concluded it could not entertain the substantive question posed and declined to adjudicate on whether the services constituted export of services under Section 2(6). [Paras 5]

Application for advance ruling rejected as non-maintainable since the question requires determination of place of supply which is outside the Authority's jurisdiction under Section 97(2).

Final Conclusion: The application for an advance ruling was rejected as non-maintainable because the question raised requires determination of the place of supply (and thus whether the services are export of services), a matter not within the jurisdiction of the Advance Ruling Authority under Section 97(2).

Summary order. The application of M/s. DTL Ancillaries Limited (GST ARA Form No. 01, ARA No. 49 dated 04.10.2019) is disposed of as being voluntarily and unconditionally withdrawn; merits not considered.

Summary order. Application for advance ruling by M/s. Junior Chamber International India disposed of as voluntarily and unconditionally withdrawn by the Authority for Advance Ruling, Maharashtra on 17-01-2020.

Advance ruling - jurisdiction of the Authority for Advance Ruling - supply of goods or services - maintainability under Section 95 - recipient versus supplier

Advance ruling - jurisdiction of the Authority for Advance Ruling - maintainability under Section 95 - supply of goods or services - recipient versus supplier - Whether the application for advance ruling is maintainable where the applicant is a recipient of immovable property and has not undertaken the supply of goods or services. - HELD THAT: - The Authority observed that Chapter XVII (Sections 95 to 98 etc.) confines advance rulings to questions relating to supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. The factual matrix disclosed that the applicant purchased shops and is the recipient in the transaction; she has not undertaken the supply of the immovable property. Because the statutory condition in Section 95 - that the question must relate to supply undertaken or proposed to be undertaken by the applicant - is not satisfied, the matter falls outside the jurisdiction of the Authority to decide on merits. Consequently the application was not admitted and the merits were not considered. [Paras 5]

Application for advance ruling is not maintainable and is rejected as outside the Authority's jurisdiction because the applicant is a recipient and has not undertaken or proposed a supply of goods or services; merits not adjudicated.

Final Conclusion: The Authority dismissed the advance ruling application as not maintainable under Section 95/98 of the CGST Act since the question related to a transaction where the applicant was a recipient and had not undertaken or proposed any supply; the merits of GST liability were not decided.

Deletion of disallowance for foreign exchange loss - disallowance under section 14A of the Income tax Act, 1961 - deletion of disallowance - depreciation claimed on infrastructure facility

Deletion of disallowance for foreign exchange loss - deletion of disallowance - Deletion of the addition/disallowance made on account of foreign exchange loss (amount stated in order). - HELD THAT: - The Revenue's challenge to the Tribunal's deletion of the disallowance in respect of forex loss was considered and, for the reasons recorded in Tax Appeal No.808 of 2019, the tax appeal is dismissed so far as this question is concerned. The High Court therefore declines to interfere with the Tribunal's deletion of the disallowance relating to foreign exchange loss. [Paras 3]

Appeal dismissed in respect of the deletion of the disallowance made on account of foreign exchange loss.

Disallowance under section 14A of the Income tax Act, 1961 - deletion of disallowance - Deletion of the disallowance made under section 14A. - HELD THAT: - The Revenue's contention against the Tribunal's deletion of the section 14A disallowance was considered and, referring to the reasons recorded in Tax Appeal No.808 of 2019, the tax appeal is dismissed on this question. The High Court does not disturb the Tribunal's order deleting the disallowance under section 14A. [Paras 3]

Appeal dismissed in respect of the deletion of the disallowance under section 14A.

Depreciation claimed on infrastructure facility - deletion of disallowance - Admissibility of challenge to the Tribunal's deletion of the disallowance of depreciation claimed on infrastructure facility is admitted for consideration. - HELD THAT: - The Revenue's substantial question challenging the Tribunal's deletion of the disallowance relating to depreciation on an infrastructure facility has been admitted for hearing. The matter is directed to be heard along with Tax Appeal No.808 of 2019, and no final adjudication on the merits of this question is recorded in the present order. [Paras 4]

Question admitted for hearing; to be heard with Tax Appeal No.808 of 2019.

Final Conclusion: The tax appeal is dismissed insofar as the Tribunal's deletions of the disallowances for foreign exchange loss and under section 14A are concerned; the Revenue's challenge to the Tribunal's deletion of the disallowance of depreciation on the infrastructure facility has been admitted for hearing and is to be heard with Tax Appeal No.808 of 2019.

Approval under Section 10(23C)(vi) of the Income tax Act - registration under Section 12AA of the Income tax Act - solely for educational purpose - objects test for charitable/educational institution - reliance on prior adjudication in subsequent approval proceedings

Solely for educational purpose - objects test for charitable/educational institution - The object 'to work for social, moral, intellectual upliftment of general public especially women' does not take the assessee outside the requirement of being 'solely for educational purpose' for grant of approval under Section 10(23C)(vi). - HELD THAT: - The Court examined the assessee's memorandum of objects and held that the object relating to upliftment of the general public, especially women, is contextual and directed to intellectual upliftment which necessarily envisages education. Accordingly, that object is to be read in the light of the primary objects promoting education and managing the rural school. The Tribunal's conclusion that the assessee's activities fall within the scope of educational purpose was not shown to be erroneous or perverse on the record.

The contention that the said object removes the assessee from being 'solely for educational purpose' is rejected and the Tribunal's view is upheld.

Registration under Section 12AA of the Income tax Act - reliance on prior adjudication in subsequent approval proceedings - approval under Section 10(23C)(vi) of the Income tax Act - The Tribunal was justified in relying on the findings made while deciding registration under Section 12AA (corpus creation, acquisition of land and building from donations, and application of fee receipts for running the school) in allowing the assessee's appeal under Section 10(23C)(vi). - HELD THAT: - The Court noted that the Tribunal had earlier examined objections regarding accumulation of corpus and fixed assets and had recorded that land and buildings were acquired out of donations for setting up the school and that fee receipts were applied for running the school. Those findings were available on record and were considered by the Tribunal in the Section 10(23C)(vi) proceedings. The Revenue failed to demonstrate that the Tribunal's reliance on those findings led to any illegality or perversity warranting interference.

The Tribunal's reliance on its earlier findings relating to registration under Section 12AA and its consequent grant of approval under Section 10(23C)(vi) is sustained.

Final Conclusion: There is no merit in the appeal; the Tribunal's order allowing the assessee's claim for approval under Section 10(23C)(vi) is affirmed and the appeal is dismissed.

Registration under Section 12AA(1) of the Income Tax Act - genuineness of charitable activities - requirement of registration under local public trust law - mandatorily registered as a Public Charitable Trust

Registration under Section 12AA(1) of the Income Tax Act - mandatorily registered as a Public Charitable Trust - Whether registration as a public charitable trust under the local law (M.P. Public Trust Act, 1951) is a prerequisite for grant of registration under Section 12AA(1) of the Income Tax Act. - HELD THAT: - The Court upheld the Tribunal's construction of Section 12AA(1), noting that the provision refers to the "trust or institution" and empowers the Principal Commissioner or Commissioner to call for such documents or information as considered necessary to satisfy himself about the objects and genuineness of the applicant. There is no express statutory mandate in Section 12AA(1) requiring that a trust be previously registered under the local public trust statute before applying for registration under the Income-tax Act. Consequently, refusing registration under Section 12AA(1) solely on the ground that the applicant was not registered under the M.P. Public Trust Act, 1951 was not justified.

Registration under the local public trust law is not a statutory prerequisite for registration under Section 12AA(1); denial of registration solely for lack of such local registration was unjustified.

Genuineness of charitable activities - requirement of registration under local public trust law - Whether the assessment of the "genuineness of activities" for registration under Section 12AA(1) includes mandatory compliance with the local public trust registration requirement. - HELD THAT: - The Tribunal's finding, affirmed by the Court, is that the satisfaction required under Section 12AA(1) relates to the objects of the trust and the genuineness of its activities as demonstrable to the Commissioner by such documents or enquiries as he may deem necessary. Compliance with the local statute's registration requirement is not by itself part of the statutory test of genuineness under Section 12AA(1) unless the Commissioner, in the exercise of his powers, identifies specific non-genuineness arising from non-compliance. In the present case, the mere absence of registration under the M.P. Public Trust Act was not a sufficient basis to conclude lack of genuineness.

Genuineness of activities for Section 12AA(1) purposes does not automatically encompass mandatory compliance with local public trust registration; absence of such registration alone does not establish lack of genuineness.

Final Conclusion: The High Court dismissed the departmental appeal, agreeing with the Tribunal that there is no statutory requirement under Section 12AA(1) to be previously registered under the M.P. Public Trust Act, 1951 and that denial of registration solely on that ground was unwarranted; no substantial question of law arises.

Allowability of salary and bonus as business expenditure - evidentiary requirement for disallowance of salary payments - judicial discretion in quantification of disallowance

Allowability of salary and bonus as business expenditure - evidentiary requirement for disallowance of salary payments - judicial discretion in quantification of disallowance - Extent of disallowance of salary and bonus claimed by the assessee-company - HELD THAT: - The Assessing Officer treated the salary and bonus payments as bogus and disallowed the claim after the assessee failed to furnish Aadhaar numbers, provident fund details and bank payment particulars for nine employees; the Commissioner (Appeals) sustained 90% disallowance. The Tribunal examined the material on record and observed that the assessee, an investment company, had substantial investment activity during the year (increase in investments in unlisted equity and recovery of loans and advances subsequently invested), a fact noted by the Assessing Officer. Having regard to (a) the assessee's corporate status and attendant statutory obligations, (b) the admitted deficiencies in documentary proof, and (c) the demonstrable scale of genuine investment transactions during the year, the Tribunal held the 90% disallowance to be excessive. Exercising judicial discretion in quantification, and balancing the evidentiary lacunae against the commercial activity of the company, the Tribunal restricted the disallowance to 50% of the salary and bonus claimed. [Paras 3]

Disallowance of salary and bonus sustained by the lower authorities is reduced and restricted to 50%.

Final Conclusion: The appeal is partly allowed; the disallowance of the claimed salary and bonus is restricted to 50% by the Tribunal.

Membership card as a personal privilege not susceptible to attachment - priority of the exchange over security deposits vis-a -vis the Revenue - exercise of lien by the exchange under its by-laws - obligation to intimate the jurisdictional Income Tax Officer before disbursement - attachment/prohibitory orders in respect of security deposits - disposal of subsequent petitions in terms of binding precedent

Membership card as a personal privilege not susceptible to attachment - priority of the exchange over security deposits vis-a -vis the Revenue - Whether the petitioner-Exchange's rights in respect of a defaulting member's membership card and security deposit are to be governed by the decision in Bombay Stock Exchange vs. B.S. Kandalgaonkar and, on that basis, whether the prohibitory and attachment orders impinging those rights must be dealt with in accordance with that precedent. - HELD THAT: - The court held that the decision of the Apex Court in Bombay Stock Exchange vs. B.S. Kandalgaonkar covers the lis in the present petition. That precedent establishes that the membership card is a personal privilege granted by the exchange and not a transferable right that can be attached by the Income Tax Department. As to security deposits, the exchange enjoys a priority over the Revenue for adjustment of liabilities under its rules, but any amount remaining in excess after meeting such liabilities is liable to be handed over to the Income Tax Department since amounts in excess stand attached in favour of the Revenue. The petitioner did not dispute this position. Applying that precedent, the court concluded that the petition is governed by those principles and must be disposed of accordingly. [Paras 7, 8]

Petition disposed of in terms of the earlier order applying the Apex Court's decision: membership card not attachable and exchange has priority on security deposits subject to handing over any excess to the Income Tax Department.

Exercise of lien by the exchange under its by-laws - obligation to intimate the jurisdictional Income Tax Officer before disbursement - The procedural manner in which the petitioner-Exchange may adjust and disburse security deposits held in respect of defaulting members. - HELD THAT: - Following the earlier order (reproduced), the court confirmed that the petitioner-Exchange is entitled to exercise its lien over security deposits in accordance with its by-law 400. Before making payments in terms of that by-law the exchange must intimate the manner of adjustment to the jurisdictional Income Tax Officer (as identified for the defaulting assessee). If no response or objection is received from the jurisdictional income tax officer within three weeks of such intimation, the exchange may make disbursements in accordance with its intimation; any excess after adjustment is to be made available to the Income Tax Department. The present petition was disposed of on that basis. [Paras 6, 7, 8]

Exchange may exercise lien and adjust security deposits under its by-law subject to prior intimation to the jurisdictional Income Tax Officer and waiting period for objection; excess, if any, to be handed over to the Income Tax Department.

Final Conclusion: The writ petition is disposed of in terms of the earlier order following the Supreme Court's decision in Bombay Stock Exchange vs. B.S. Kandalgaonkar: the membership card is not attachable, the exchange has priority over security deposits subject to adjustment under its by-laws, the exchange must intimate the jurisdictional Income Tax Officer before disbursement and, absent objection within three weeks, may disburse with any excess payable to the Income Tax Department.

Estimation of excess consumption of raw materials-verification by production, wastage and yield data - business expenditure-proof of benefit to employees - adverse inference for non-production of evidence - concurrent findings of fact - appeal under Section 260A-maintainability where findings are concurrent and not perverse

Estimation of excess consumption of raw materials-verification by production, wastage and yield data - adverse inference for non-production of evidence - The addition on account of estimated variation in consumption of raw materials was justified and upheld. - HELD THAT: - The Tribunal and the authorities below compared ratios of raw material consumption and production, and found abnormal increase in consumption. The assessee failed to furnish the requisite verificatory data - including detailed information on quantity produced, wastage, yield and losses - in its audit report under Section 44AB and did not adequately respond to the assessing officer's queries. In the absence of those particulars, the authorities were unable to establish that the increased consumption represented genuine production rather than abnormal shortage/wastage, and therefore drew an adverse inference and sustained the addition. The High Court found these concurrent factual findings not perverse and declined to interfere.

Addition for excess consumption of raw materials sustained; appeal dismissed on this ground.

Business expenditure-proof of benefit to employees - adverse inference for non-production of evidence - The contribution made to Lady Ampthill Hospital was not allowable as a business expenditure for want of evidence that employees actually benefited. - HELD THAT: - The assessee claimed the contribution as staff welfare expenditure, asserting it provided employees concessional medical facilities. Neither before the assessing officer nor on appeal did the assessee produce evidence showing that employees derived benefit from the contribution. Given the absence of any proof that the contribution resulted in a business-related advantage to employees, the authorities correctly disallowed the claim. The High Court accepted the concurrent factual conclusion that lack of supporting material justified the disallowance.

Disallowance of the hospital contribution upheld; appeal dismissed on this ground.

Concurrent findings of fact - appeal under Section 260A-maintainability where findings are concurrent and not perverse - The appeals under Section 260A were not maintainable on questions of law because the Tribunal's adverse findings were concurrent findings of fact not shown to be perverse. - HELD THAT: - The High Court observed that the Tribunal and the two lower authorities had reached concurrent factual conclusions based on the record, particularly the assessee's failure to produce relevant evidence. Since the appeals raised no substantial question of law separable from these factual findings and no perversity was demonstrated, the statutory route under Section 260A did not warrant interference. Consequently, the Court declined to entertain the appeals on the admitted questions.

Appeals under Section 260A dismissed as not maintainable in respect of the concurrent factual findings.

Final Conclusion: In view of the assessee's failure to produce requisite verificatory evidence, the Tribunal's concurrent factual findings upholding the additions for excess raw material consumption and disallowance of the hospital contribution are not perverse; the appeals are dismissed and the questions framed answered against the assessee.

Permission to travel abroad - look-out circular - risk of flight / availability for investigation - prima facie large-scale tax evasion - non-cooperation / evasive conduct during investigation - sealed investigative report and non-disclosure

Permission to travel abroad - look-out circular - risk of flight / availability for investigation - non-cooperation / evasive conduct during investigation - prima facie large-scale tax evasion - sealed investigative report and non-disclosure - Application seeking permission to travel abroad and interim stay of the look-out circular issued against the petitioner was considered and refused. - HELD THAT: - The Court considered the petitioner's request to travel to Dubai for business reasons but found that the investigation into alleged large-scale tax evasion by the group, of which the petitioner is a promoter and director, was ongoing. A sealed investigative report was placed before the Court but not disclosed to the petitioner; the Court did not rely on the sealed report's contents for adjudication, yet noted that the material prima facie indicated the petitioner's central role in the group and involvement in large-scale tax evasion and related irregularities. The petitioner was found to have been evasive and not cooperating during interrogation. In view of these facts, the Court held there was a strong apprehension that the petitioner might not return if permitted to travel, which would impede the investigation and related proceedings. Balancing the petitioner's commercial hardship against the need to secure his availability for investigation and the public interest in ongoing tax investigations, the Court concluded that permission to travel and lifting of the look-out circular could not be granted at this stage.

Application for travel permission and stay of the look-out circular dismissed; look-out circular to remain in force.

Final Conclusion: The petition for leave to travel abroad and for interim relief against the look-out circular was dismissed because the ongoing investigation, prima facie evidence of large-scale tax evasion, the petitioner's role in the group, and his evasive conduct created a real risk of non return and would frustrate the investigation.

Reassessment under Section 147/148 - change of opinion - availability of alternative remedy by way of appeal to First Appellate Authority - entertainment of appeal despite limitation

Reassessment under Section 147/148 - change of opinion - Whether the learned Single Judge was justified in quashing the reassessment proceedings for Assessment Year 2008-09 on the ground that the Assessing Officer acted on a prohibited 'change of opinion'. - HELD THAT: - The High Court declined to rest its decision on the Assessee's asserted contemporaneous filing of a communication dated 9 November 2010 because the original assessment record produced in court did not show that the document was taken on file on that date and no separate order-sheet entry for 9 November 2010 appears. The court expressly refused to undertake an inquiry into the provenance of the said communication in writ proceedings and noted that, prima facie, it could not rely on the letter as an established contemporaneous disclosure to the Assessing Officer. In that factual backdrop the Single Judge's conclusion that reassessment amounted to a forbidden 'second shot' based on change of opinion was held to be unsustainable: the High Court observed that it was not appropriate in the exercise of extraordinary writ jurisdiction to probe and resolve the disputed factual question about whether the information had been placed on record during the original assessment proceedings. [Paras 7, 9, 10]

Order of the learned Single Judge quashing the reassessment on the ground of 'change of opinion' set aside; matter not finally decided on merits as to contemporaneous disclosure.

Availability of alternative remedy by way of appeal to First Appellate Authority - entertainment of appeal despite limitation - Whether the Assessee should be relegated to the statutory appellate remedy and the manner in which the appeal should be entertained. - HELD THAT: - The High Court accepted the Revenue's objection to the writ being entertained in place of the alternative statutory remedy. The court directed that if the Assessee files a regular appeal before the CIT(A) against the reassessment order for Assessment Year 2008-09 within four weeks, the CIT(A) shall entertain the appeal without raising limitation as a bar and decide it on merits and in accordance with law, subject to other conditions the CIT(A) may impose. The court clarified that the CIT(A) must decide the appeal independently, uninfluenced by observations in the Single Judge's order. [Paras 11, 12, 13]

Revenue's intra-court appeal allowed; Assessee relegated to appeal before CIT(A) which is to be entertained notwithstanding limitation and decided on merits.

Final Conclusion: Writ court's quashing of reassessment set aside; Revenue's intra-court appeal allowed. Assessee directed to prefer appeal to CIT(A) within four weeks, which is to be entertained despite limitation and decided on merits.

Reopening of assessment - Change of opinion doctrine - Reassessment under section 147/148 - Maintenance of audited statement and compliance with Rule 5D - Entitlement to deduction under section 35(1)(ii) - Quashing of reassessment proceedings

Reopening of assessment - Change of opinion doctrine - Reassessment under section 147/148 - Reopening of assessment for A.Y. 2007-2008 was unjustified and constituted a mere change of opinion, and therefore the reassessment proceedings were quashed. - HELD THAT: - The Tribunal upheld the conclusion of the First Appellate Authority that the Assessing Officer recorded reasons to reopen the assessment after completion under section 143(3) although the materials relied upon at reassessment were already available on record at the time of the original assessment. The authorities below found that the assessee had furnished the details necessary for completion of the assessment (including list of donors and related documents) during the original proceedings, so the reopening amounted to a change of opinion. The Tribunal applied the principle in CIT v. Nagpur Hotel Owners' Association that reassessment is impermissible where the material on which reopening is based was already available to the AO at the time of original assessment; no new material was produced to justify invoking section 147/148. Consequently, the reassessment was quashed as not being justified on merits. [Paras 4, 5, 7]

Reopening under section 147/148 was quashed as a mere change of opinion; reassessment proceedings dismissed.

Maintenance of audited statement and compliance with Rule 5D - Entitlement to deduction under section 35(1)(ii) - Quashing of reassessment proceedings - Addition of surplus as taxable income was deleted because the condition of Rule 5D (audited statement of donations) had effectively been complied with during the original assessment proceedings. - HELD THAT: - The AO had made an addition on the ground that the assessee had not furnished the certified audited statement of donations along with the return as required by Rule 5D, and treated the surplus as taxable. The Tribunal, following the CIT(A)'s findings, accepted that the audited statement and list of donors were available on record and had been furnished during the original scrutiny/assessment proceedings. As no failure to disclose relevant facts existed and no fresh material was brought to light at reassessment, the addition was unsustainable. Applying the settled principle that technical non compliance which does not amount to non disclosure cannot justify reassessment, the Tribunal deleted the addition. [Paras 4, 5, 7]

Addition of surplus as taxable income was deleted; assessee's entitlement under section 35(1)(ii) upheld for the year under consideration.

Final Conclusion: The Revenue's appeal was dismissed; the reassessment for A.Y. 2007-2008 was quashed as a mere change of opinion and the addition made by the AO was deleted since the requisite details were on record at the time of original assessment.

Validity of show cause notice under section 274 - Penalty under section 271(1)(c) - Concealment of income vs furnishing inaccurate particulars - Section 292B - curative provision - Valuation estimate cannot by itself sustain a finding of concealment - CBDT Circular No.3/2018 - monetary limit for filing appeals

Validity of show cause notice under section 274 - Penalty under section 271(1)(c) - Concealment of income vs furnishing inaccurate particulars - Whether the penalty proceedings and penalty orders under section 271(1)(c) are vitiated by the Assessing Officer's failure to strike out the irrelevant limb in the show cause notice issued under section 274. - HELD THAT: - The Tribunal held that the notice reproduced in the record did not indicate whether proceedings were initiated for "concealment of particulars of income" or for "furnishing inaccurate particulars of such income" because the irrelevant limb was not struck out. The Tribunal applied the decision of the Cochin Bench in DCIT v. M/s R.R. Holidays Homes (and the reasoning in Manjunatha/SSA's Emerald Meadows line of authorities) to conclude that when the notice and penalty order are ambiguous as to which limb of section 271(1)(c) is invoked, the penalty proceedings are void ab initio. The Tribunal examined the penalty order and found it equally unclear on the limb relied upon by the AO. On that basis the Tribunal confirmed the CIT(A)'s deletion of the penalty for all the relevant assessment years and declined to remit the matter for fresh adjudication on this procedural defect. [Paras 8]

Penalty proceedings and the penalty orders under section 271(1)(c) are void for failure to strike out the irrelevant limb in the show cause notice; penalty deleted for all assessment years.

Section 292B - curative provision - Validity of show cause notice under section 274 - Whether the defect in the show cause notice (non-striking of the irrelevant limb) is cured by section 292B and therefore the penalty proceedings should be sustained. - HELD THAT: - The Tribunal considered the Revenue's contention that section 292B cures defects in notices and relied on later Karnataka High Court authority (Sri Durga Enterprises) to contend that a defective notice may not be invalidated if the proceedings were followed in substance. However, having examined the notice, the penalty order and the applicable precedents, the Tribunal found the procedural defect in the present notice to be fundamental and, following the jurisdictional precedents relied upon by the assessee and the Cochin Bench decision, did not accept the Revenue's contention that section 292B would validate the proceedings. The Tribunal therefore upheld the CIT(A)'s conclusion that the penalty proceedings are invalid on account of the defective show cause notice. [Paras 6, 8]

Section 292B does not cure the fundamental defect in the notice in the facts of this case; the penalty proceedings remain invalid.

Valuation estimate cannot by itself sustain a finding of concealment - Penalty under section 271(1)(c) - Whether, on merits, the addition based on the Departmental Valuer's estimate of construction cost justifies a finding of concealment and the levy of penalty under section 271(1)(c). - HELD THAT: - The Tribunal examined the material relied upon by the Assessing Officer (DVO valuation and spread of unexplained investment) and noted binding and persuasive authority (including Apsara Talkies and related precedents) that a valuation estimate, being inherently inexact, cannot alone support a finding of deliberate concealment. Given that the ITAT in the quantum matter had already sustained only part of the addition and in light of the principles that valuation estimates alone do not establish concealment, the Tribunal observed there was no utility in remitting the matter to the CIT(A) and affirmed deletion of penalty on merits as well. [Paras 8]

Even on merits, the addition based solely on valuation estimate does not justify a finding of concealment; penalty deletion is confirmed.

CBDT Circular No.3/2018 - monetary limit for filing appeals - Whether the Department was precluded from pursuing the appeal to the Tribunal in view of the CBDT Circular No.3/2018 monetary limits. - HELD THAT: - The Tribunal observed that the addition and penalty in this case were not within the exceptions listed in para 10(d) of the Circular and that the CBDT prescription of a monetary threshold for filing departmental appeals (subject to the Circular's exceptions) applied. Having found no applicable exception, the Tribunal noted the Department was precluded from further appeal in the circumstances and treated the appeal as not maintainable on that administrative ground as well. [Paras 8]

CBDT Circular No.3/2018's monetary limits operate to preclude the Department's appeal in the facts of this case.

Final Conclusion: The Tribunal dismissed the Revenue's appeals and confirmed deletion of penalties under section 271(1)(c) for assessment years 2000-01 to 2004-05 on the grounds that the show cause notice under section 274 was defective for not striking out the irrelevant limb, that valuation estimates alone do not sustain a concealment finding, and having regard to the CBDT Circular the Department was not entitled to pursue the appeal.

Admission of additional evidence before first appellate authority - Compliance with rule 46A when assessee files additional evidence suo motu - Power of first appellate authority under section 250(4) to make further enquiry - Obligation to afford Assessing Officer opportunity to verify and comment on additional evidence - Assessment completed to best judgment under section 144 due to assessee's non compliance - Remand for fresh adjudication after procedural compliance with rule 46A

Admission of additional evidence before first appellate authority - Compliance with rule 46A when assessee files additional evidence suo motu - Obligation to afford Assessing Officer opportunity to verify and comment on additional evidence - Learned Commissioner (Appeals) erred in accepting additional evidence filed by the assessee without following the procedure under rule 46A and without affording the Assessing Officer an opportunity to verify and comment. - HELD THAT: - The assessee did not cooperate during assessment proceedings and the Assessing Officer completed assessment under section 144 relying on CIB/AIR information. The assessee subsequently filed additional evidence before the first appellate authority which had not been filed before the Assessing Officer and thus constituted additional evidence. Rule 46A(3) bars the first appellate authority from taking such evidence into account unless the Assessing Officer is given a reasonable opportunity to verify and comment. Although section 250(4) empowers the Commissioner (Appeals) to make such enquiries, where the assessee files additional evidence suo motu the specific procedure in rule 46A(2) and (3) must be followed. The Commissioner (Appeals) neither sought verification from the Assessing Officer nor obtained his report but deleted the addition solely on the basis of the additional evidence. This amounted to violation of the conditions of rule 46A and improper exercise of appellate discretion, warranting setting aside the order and remand for fresh adjudication after compliance with rule 46A and affording the assessee a reasonable opportunity of being heard. [Paras 9, 10, 11]

Impugned order of the Commissioner (Appeals) set aside and issue remitted to his file for fresh adjudication after necessary compliance with rule 46A and giving the Assessing Officer opportunity to verify and comment; grounds allowed.

Remand for fresh adjudication after procedural compliance with rule 46A - Effect of appellate decision on cross objection - Cross objection in support of the Commissioner (Appeals) order became infructuous consequent to allowing the Revenue's appeal and remanding the matter. - HELD THAT: - The assessee's cross objection sought to sustain the deletion made by the Commissioner (Appeals). As the Tribunal has set aside that deletion for procedural non compliance and remitted the matter for fresh adjudication, the cross objection no longer survives and must be dismissed as infructuous. [Paras 12, 13]

Cross objection dismissed as infructuous.

Final Conclusion: Revenue's appeal allowed for statistical purposes by setting aside the Commissioner (Appeals) order deleting the addition and remitting the matter to the Commissioner (Appeals) for fresh adjudication after compliance with rule 46A and giving the Assessing Officer a reasonable opportunity to verify and comment; cross objection dismissed.

Undisclosed investment under Section 69B - Admissibility and evidentiary value of material seized in survey - Survey under Section 133A - Remand for fresh consideration - Opportunity of being heard and procedural fairness

Undisclosed investment under Section 69B - Survey under Section 133A - Admissibility and evidentiary value of material seized in survey - Remand for fresh consideration - Opportunity of being heard and procedural fairness - Addition made as unexplained investment in construction of hotel premises and the related assessment records set aside for fresh examination by the Assessing Officer. - HELD THAT: - The Tribunal found that the loose excel sheets seized during the survey contain entries - cash deposits, partner drawings, loan repayments and instances of double counting - which prima facie are not necessarily expenditure on construction and therefore cannot be accepted at face value as unexplained investment under Section 69B. The assessee had submitted a contemporaneous statement of sources before DDIT (Inv.-II) explaining sale of personal effects, loans recovered/obtained, receipts from operations and past savings as sources for the construction, which the Assessing Officer had not considered. Although the Assessing Officer and the CIT(A) had afforded opportunities, the Tribunal noted the peculiar factual background, including the death of the Karta and transitional difficulties in the family-run business, and concluded that in the interest of justice the matters relating to undisclosed investment should be re-examined by the Assessing Officer. The Tribunal directed that the Assessing Officer examine the seized material and the sources already placed on record afresh, afford reasonable opportunity to the assessee to produce evidence and file contentions, and proceed without being influenced by the Tribunal's prima facie observations. [Paras 5, 6, 8, 9]

Matters relating to the additions made under Section 69B in respect of construction of the hotel are set aside and remanded to the Assessing Officer for fresh adjudication in accordance with law, with liberty to the assessee to lead evidence and contentions; appeals are partly allowed for statistical purposes.

Final Conclusion: The Tribunal set aside the additions treated as unexplained investments in construction of the hotel and remanded the matters for fresh examination by the Assessing Officer, directing that reasonable opportunity be given to the assessee; the four appeals are partly allowed for statistical purposes.

International transaction - transfer pricing adjustment - arm's length price - remand for fresh adjudication - disallowance under section 14A read with rule 8D - computation of book profit under section 115JB - expenses not in the nature of advertisement and publicity

International transaction - transfer pricing adjustment - Deletion of transfer pricing addition in respect of compensation for advertising, marketing and promotion (AMP) expenses - HELD THAT: - The Tribunal followed the Division Bench decision in the assessee's own case which held that, on the facts, AMP expenses cannot be regarded as an international transaction within the meaning of Section 92B and therefore provisions of transfer pricing cannot be invoked. The coordinate bench had considered precedent and factual similarities (manufacturing and sale operations) and concluded that AMP expenditures do not amount to international transactions; accordingly the TP adjustment was held to be unsustainable and deleted. The present appeal presents no change in facts or law and Revenue produced no material to distinguish the earlier coordinate-bench finding; the Tribunal therefore deleted the TP addition made in respect of AMP expenses. [Paras 7]

TP adjustment on account of AMP expenses deleted; ground of appeal allowed.

Arm's length price - remand for fresh adjudication - Determination of arm's length price of intra-group support services (claimed as Nil) - direction to restore the issue to AO/TPO for fresh consideration - HELD THAT: - The Tribunal followed its Division Bench's earlier order in the assessee's own case which set aside the TPO/DRP/AO's approach where no proper ALP determination had been carried out and remitted the matter for fresh adjudication. The coordinate-bench had noted that TPO had not undertaken the statutory exercise under Section 92C(1) and had erred in refusing to consider agreements; accordingly the issue was restored to the file of the Assessing Officer/TPO for afresh determination after giving the assessee opportunity to be heard. The Tribunal found no change in facts or law warranting a different conclusion and therefore restored the issue. [Paras 12]

Issue restored to AO/TPO for fresh adjudication in accordance with law; ground allowed for statistical purposes.

Remand for fresh adjudication - transfer pricing adjustment - Transfer pricing adjustment in respect of contract research and development (Contract R&D) services rendered to the AE - remand to TPO/AO for fresh consideration - HELD THAT: - The Tribunal, following the Division Bench decision in the assessee's own case, observed that the TPO should re-examine the comparables and the factual matrix (including exclusion of certain comparables like pharma companies where appropriate) and pass a speaking order after giving opportunity to the assessee. Given identity of issues and absence of any distinguishing material from Revenue, the Tribunal remanded the matter back to the TPO/AO for fresh adjudication in accordance with law. [Paras 17]

Issue remanded to TPO/AO for fresh consideration; ground allowed for statistical purposes.

International transaction - transfer pricing adjustment - Deletion of transfer pricing adjustment in respect of research & training expenditure provided to the AE - HELD THAT: - The coordinate-bench in the assessee's own case had found on facts that the R&T expenditures related to local manufacturing support and captive services provided by a not-for-profit group entity, and did not constitute R&T activities giving rise to an international transaction under Section 92B. The Tribunal accepted those factual findings and legal conclusions, found no change in facts or law, and deleted the TP adjustment made in relation to research and training expenditure. [Paras 22]

TP adjustment in respect of research & training expenditure deleted; ground allowed.

Expenses not in the nature of advertisement and publicity - remand for fresh adjudication - Disallowance under section 37(1) of amounts treated as advertisement and publicity - remit to Assessing Officer for fresh examination - HELD THAT: - The Assessing Officer had disallowed certain expenditures on an estimated basis following DRP directions, but the assessee contended incorrect classification and absence of documentary verification at assessment. The Tribunal noted that the AO had not verified the nature of the expenses on record and that the assessee should be given an opportunity to explain and produce evidence. Consequently, the Tribunal set aside the AO/DRP order on this point and remitted the issue back to the Assessing Officer for fresh adjudication in accordance with law, allowing the ground for statistical purposes. [Paras 27]

Issue remitted to Assessing Officer for fresh examination and adjudication; ground allowed for statistical purposes.

Disallowance under section 14A read with rule 8D - computation of book profit under section 115JB - Computation of disallowance under section 14A and its treatment while computing book profit under section 115JB - HELD THAT: - On computation under rule 8D, the Tribunal directed the AO to adopt the approach that only investments yielding dividend during the previous year be taken into account when applying the average value formula, following its own precedents and the Calcutta High Court's affirmation. Separately, with regard to inclusion of any section 14A disallowance while computing book profit under section 115JB, the Tribunal held that Explanation 1 to Section 115JB exhaustively lists items to be added to book profit and does not include a Section 14A disallowance; hence the AO cannot make such an adjustment when redetermining book profit. The Tribunal directed the AO/TPO accordingly. [Paras 30, 31]

AO directed to compute rule 8D disallowance considering only dividend-bearing investments; AO directed not to consider any Section 14A disallowance while computing book profit under Section 115JB.

Final Conclusion: Appeal partly allowed: TP additions in respect of AMP expenses and research & training expenditure deleted; issues relating to arm's length price of intra-group support services and contract R&D remanded to AO/TPO for fresh adjudication; disallowance under section 37(1) remitted to AO for verification; section 14A disallowance to be computed per rule 8D considering dividend-bearing investments and shall not be included in computation of book profit under section 115JB.

Weighted deduction under section 35(2AB) - recognition/approval of in house R&D facility by prescribed authority (Secretary, DSIR) - necessity of Form 3CM for entitlement to section 35(2AB) benefit - procedural delay in issuance of DSIR approval and its effect on eligibility - penalty under section 271(1)(c) consequent upon additions later deleted

Weighted deduction under section 35(2AB) - recognition/approval of in house R&D facility by prescribed authority (Secretary, DSIR) - necessity of Form 3CM for entitlement to section 35(2AB) benefit - procedural delay in issuance of DSIR approval and its effect on eligibility - Whether the assessee was entitled to weighted deduction claimed under section 35(2AB) for A.Y. 2010-11 despite absence of a Form 3CM for the impugned year when initial recognition by DSIR existed and an application in Form 3CK was pending. - HELD THAT: - The Tribunal found as an undisputed fact that the assessee had set up in house R&D facilities which were initially recognized by the prescribed authority (DSIR) from A.Y. 2001 02 and that existence of the R&D centres and genuineness of expenditure were not disputed by the Department. Rules 6 and 7A prescribe the procedure for approval and envisage filing of Form 3CK and issuance of Form 3CM by the prescribed authority if conditions are satisfied. Having examined the authorities, the Tribunal applied the settled principle in the cited High Court decisions that once an R&D facility has been approved/recognized by the competent authority, the assessee should not be penalised for bureaucratic or administrative delay in issuance/recording of the subsequent approval communication and that what is material is the existence of recognition. On the facts, recognition existed for the units (with renewals thereafter), the assessee had filed the application in Form 3CK which remained pending (and was not rejected), and the Department eventually granted recognition for later periods. In these circumstances the Tribunal held that absence of the Form 3CM on the record for the impugned year could not be a ground to deny the statutory weighted deduction where recognition was in force and other conditions of section 35(2AB) were satisfied. The Tribunal therefore directed allowance of the weighted deduction. [Paras 14, 15, 16, 17, 18]

Weighted deduction under section 35(2AB) allowed for A.Y. 2010-11; assessee entitled to benefit despite non availability of Form 3CM for the impugned year where initial recognition by DSIR existed and application for approval was pending.

Penalty under section 271(1)(c) consequent upon additions later deleted - Whether penalty under section 271(1)(c) could be sustained when the addition (disallowance of the weighted deduction) on which the penalty was based was deleted on appeal. - HELD THAT: - The Tribunal observed that the quantum addition which gave rise to the penalty (disallowance of the weighted deduction under section 35(2AB)) was finally deleted by the appellate authority. Where the foundational addition is deleted on appeal, the basis for levy of penalty under section 271(1)(c) falls away. The CIT(A) had deleted the penalty on the substantive ground that a claim not accepted by the AO does not necessarily establish furnishing of inaccurate particulars; the Tribunal found no reason to interfere and held that nothing survives to support the penalty once the addition was vacated. [Paras 19, 20, 21]

Penalty under section 271(1)(c) deleted as the addition on which it was based was reversed; revenue's appeal dismissed.

Final Conclusion: The Tribunal allowed the assessee's appeal and directed grant of the weighted deduction under section 35(2AB) for A.Y. 2010-11 on the basis that recognition by DSIR and pending approval sufficed; the Tribunal also dismissed the Revenue's appeal and upheld deletion of penalty under section 271(1)(c) since the underlying addition was deleted.

Validity of assessment under section 153A where assessments were completed/non-abated - requirement of incriminating material found during search for making additions in completed assessments - additions based on assessment enquiry as distinct from additions founded on seized incriminating material - cross objections rendered infructuous where primary proceedings are quashed

Validity of assessment under section 153A where assessments were completed/non-abated - requirement of incriminating material found during search for making additions in completed assessments - additions based on assessment enquiry as distinct from additions founded on seized incriminating material - Whether assessments completed/non abated on the date of search could be reopened under section 153A and additions sustained when no incriminating material was found during the search - HELD THAT: - The Tribunal found that for the Assessment Years under dispute the original returns had been filed and the earlier assessments were completed (non abated) on the date of search. The Assessing Officer's additions in the section 153A proceedings were shown to be founded on questions raised and information obtained during assessment enquiries and on accounting records, not on any incriminating material seized during the search. Applying the settled principle that completed/non abated assessments can be interfered with under section 153A only upon discovery of incriminating material in the search, and following the coordinate decisions and High Court authority considered by the CIT(A) and the Tribunal, the Tribunal held that additions made in the absence of any seized incriminating material could not be sustained. The Tribunal therefore upheld the CIT(A)'s conclusion quashing the section 153A assessments for the three Assessment Years. [Paras 16, 17, 18, 19]

Assessments framed under section 153A for Assessment Year 2005-06, Assessment Year 2006-07 and Assessment Year 2009-10 are invalid insofar as additions were made without any incriminating material found/seized; revenue's appeals dismissed.

Cross objections rendered infructuous where primary proceedings are quashed - Whether the assessee's cross objections raising merits of additions required adjudication after the section 153A assessments were quashed - HELD THAT: - Because the Tribunal dismissed the revenue's appeals by holding the section 153A assessments invalid for lack of incriminating material, the substantive additions that the assessee had sought to challenge on merits fell away. The Tribunal considered that dealing with the merits after quashing the primary proceedings would be academic. Accordingly, the cross objections asserting error in not adjudicating additions on merits were held to be infructuous and were dismissed. [Paras 20, 21]

Assessee's cross objections for Assessment Year 2005-06, Assessment Year 2006-07 and Assessment Year 2009-10 dismissed as infructuous.

Final Conclusion: The Tribunal dismissed the revenue's appeals for Assessment Year 2005-06, Assessment Year 2006-07 and Assessment Year 2009-10, holding that additions made in section 153A proceedings could not be sustained in the absence of any incriminating material seized during the search; the assessee's cross objections were dismissed as infructuous.

Order XII Rule 6 of the Code of Civil Procedure, 1908 - decree on admission - Categorical, unconditional and unequivocal admission - Discretionary nature of the power under Order XII Rule 6 - Joint Hindu family property held from the family/business nucleus - Benami Transactions (Prohibition) Act - applicability to voluntary purchase in the name of another - Limitation under Article 58 of the Schedule to the Limitation Act, 1963 - distinction between declaratory relief and partition

Order XII Rule 6 of the Code of Civil Procedure, 1908 - decree on admission - Categorical, unconditional and unequivocal admission - Discretionary nature of the power under Order XII Rule 6 - Whether the applicant was entitled to a decree under Order XII Rule 6 of the CPC on the basis of purported admissions by the plaintiff. - HELD THAT: - To obtain relief under Order XII Rule 6, the admission relied upon must be categorical, unconditional and unequivocal. The Court applied the principles in Jeevan Diesels and Himani Alloys and emphasised the discretionary character of Order XII Rule 6. Having read the pleadings holistically, the Court found no such unequivocal admission by the plaintiff that would disentitle him to a trial; the plaint contains clear averments of a joint family nexus and trust-like/fiduciary character in respect of properties, including those said to stand in the applicant's name. On that basis the Court concluded that summary decree on admission was not warranted and declined to exercise its discretionary power in favour of the applicant. [Paras 12, 13, 18]

Application under Order XII Rule 6 dismissed; no summary decree on admission as admissions were not categorical and discretion declined.

Joint Hindu family property held from the family/business nucleus - Whether the pleadings disclose that certain properties, though standing in individual names, were purchased from joint family/business funds and held for the family. - HELD THAT: - The plaint contains multiple averments that properties were acquired from the profits of the joint family business, that accounts were not maintained separately, and that properties were held in trust for the family. Those pleadings, taken together, sufficiently raise the contention that properties purchased in individual names may be joint family properties acquired from the family/business nucleus. The Court held that such contentions cannot be finally adjudicated on an application for summary judgment and must be investigated at trial. [Paras 10, 11, 13, 14]

Question of whether the properties are joint family property is reserved for trial and cannot be finally decided on the present application.

Benami Transactions (Prohibition) Act - applicability to voluntary purchase in the name of another - Whether the Benami Act bars the plaintiff's claim so as to justify summary rejection at this stage. - HELD THAT: - The Court considered the applicant's submission and the decision in Amar Gugnani but observed that the present facts differ: decisions about purchases and in whose name transactions were effected were allegedly made by the father and thereafter by defendant no.1 as head of the family. The Court expressed a prima facie view that Amar Gugnani is distinguishable and noted that the present case appears closer to precedents holding that pleas of joint family/trust cannot be disposed of summarily. The Court declined to decide the applicability of the Benami Act finally on this interlocutory application and left the matter for trial. [Paras 15]

Applicability of the Benami Act not finally determined; left open for adjudication at trial.

Limitation under Article 58 of the Schedule to the Limitation Act, 1963 - distinction between declaratory relief and partition - Whether the plaintiff's suit is barred by limitation under Article 58, such that summary relief must be denied. - HELD THAT: - The Court noted that the suit seeks not only declaratory relief but also partition. Following Anita Anand, a claim for partition requires adjudication of title and share and may render a separate declaration superfluous; accordingly, it cannot be held on admitted facts at this stage that the suit is barred by Article 58. Limitation involves mixed questions of law and fact, including the date when exclusion from the joint family was discovered, and therefore the point must be examined at trial rather than on this application. [Paras 16, 17]

Limitation issue reserved for final adjudication; not a ground for summary dismissal.

Final Conclusion: The application seeking deletion of properties from the schedule and summary decree under Order XII Rule 6 is dismissed. The Court held that there were no categorical admissions entitling the applicant to summary relief; issues regarding characterization of properties as joint family assets, applicability of the Benami Act, and limitation are reserved for trial and the observations made are without prejudice to the parties' rights at final adjudication.

Provisional release of detained goods - detention of goods for over-valuation - judicial restraint where statute provides for provisional release

Detention of goods for over-valuation - mandamus to return detained goods - detention certificate - Prayers for writs directing return of the goods and issuance of a detention certificate were not acceded to; the writ petition was disposed without directing immediate release. - HELD THAT: - The court recorded that the goods covered by shipping bill No.4651654 dated 4.6.2019 were detained on account of alleged over-valuation and that a detention memo dated 31.8.2019 has been issued. Having considered the facts and the authorities, including the Supreme Court's recent criticism of writ courts directing release where statutory provisional-release mechanisms exist, the High Court declined to grant the mandamus sought for immediate return or issuance of the detention certificate. Instead, the court directed the respondents to deal with the petitioner's pending application for provisional release in accordance with the applicable rules, regulations and Government policies, and to do so as early as possible and preferably within eight weeks. [Paras 2, 3, 4, 5]

Prayers for mandamus directing return of goods and issuance of a detention certificate refused; writ petition disposed with direction to decide the provisional-release application in accordance with law.

Provisional release of detained goods - judicial restraint where statute provides for provisional release - The petitioner's application for provisional release of the detained goods was remitted to the respondents for fresh decision in accordance with applicable law. - HELD THAT: - The court observed that the petitioner had filed an application for provisional release and, rather than ordering release by writ, directed the respondents to consider and decide that application on merits and in conformity with statutory rules, regulations and Government policy. The direction reflects the principle of judicial restraint where the statute provides a specific provisional-release mechanism, and requires the respondents to expedite the decision, preferably within eight weeks from the date of the order. [Paras 3, 5]

Application for provisional release remanded to the respondents for decision in accordance with applicable rules, regulations and Government policy, preferably within eight weeks.

Final Conclusion: Writ petition disposed. The High Court declined to order immediate return of the goods or issue a detention certificate, and directed the respondents to decide the petitioner's application for provisional release in accordance with the applicable rules and policies, preferably within eight weeks.

Imposition of penalty - installation condition precedent for import - breach of condition of import notification - parallel proceedings - consideration of subsequent developments - remand for de-novo consideration - waiver/reduction of fine and penalty

Parallel proceedings - consideration of subsequent developments - remand for de-novo consideration - waiver/reduction of fine and penalty - Whether the Commissioner of Customs should be directed to reconsider de novo the imposition of fine and penalty in view of parallel proceedings before the DGFT which resulted in a substantially reduced penalty. - HELD THAT: - The Tribunal had upheld the imposition of customs duty, redemption fine and penalty on the assessee for alleged non-installation and non-availability of a portion of imported machines, noting breach of the installation condition under the relevant import notification. While proceedings under the Customs Act resulted in the imposition of fine and penalty, separate parallel proceedings before the DGFT arose from the same facts and ultimately produced a favourable outcome for the assessee by reducing the DGFT penalty. Given that two parallel proceedings were taken on the same set of facts and that the DGFT proceeding produced subsequent developments favourable to the assessee, those developments are material and ought to be taken into account by the customs authority. The High Court declined to decide the substantial questions of law on the merits and, in view of the changed circumstances, directed that the Commissioner of Customs reconsider the question of fine and penalty de novo, uninfluenced by the Tribunal's order, allowing the assessee to file a fresh application for waiver or reduction which the Commissioner is to consider fairly and objectively in accordance with law. [Paras 4, 5]

The Commissioner of Customs is directed to decide afresh the imposition of fine and penalty, taking into account the subsequent DGFT developments; the appeal is disposed without adjudicating the substantial questions of law and the assessee may file a fresh application for waiver/reduction.

Final Conclusion: The appeal is disposed directing the Commissioner of Customs to reconsider de novo the fine and penalty in the light of subsequent favourable developments before the DGFT; the court did not decide the substantial legal questions and permitted the assessee to file a fresh application for waiver or reduction.

Striking off and restoration of a company's name on the Register of Companies - non-filing of annual returns and financial statements as ground for striking off under Section 248 procedure - restoration subject to compliance, payment of costs and filing of past statutory returns - Registrar of Companies' liberty to initiate punitive or other actions for non-filing/late filing

Non-filing of annual returns and financial statements - striking off and restoration of company's name - Whether the order striking off the appellant company's name from the Register of Companies was sustainable and whether the company's name should be restored. - HELD THAT: - The Tribunal and ROC struck the company's name for non-filing of annual returns and financial statements since 2006. The appellate bench found on the record that the company owns identifiable assets (including land and compensation received) and that the directors had legitimate personal difficulties which impeded carrying on business and timely filings. The appellant placed on record annual returns and statements for 2006 onwards before the Tribunal. In these circumstances the Court concluded that, except for failure to file statutory returns, there was no other complaint against the company and the NCLT's affirmation of striking off was not sustainable. Applying these facts, the Court directed restoration of the company's name to the Register of Companies, while attaching conditions to cure the statutory defaults. [Paras 9, 10, 11, 12, 13]

Impugned order set aside and the appellant company's name is restored to the Register of Companies subject to specified compliances.

Restoration subject to compliance and costs - Registrar of Companies' power to take punitive or other steps for non-filing/late filing - On what terms restoration should be ordered and whether ROC may proceed with further action for prior non-compliance. - HELD THAT: - The Court imposed conditional restoration: the company must pay costs to the ROC within a specified period; following restoration the company must file all outstanding annual returns and balance sheets for the period from 2006 onwards and pay requisite charges, fees and applicable late fees; and the ROC is left free to initiate any punitive or other actions available under the Companies Act, 2013 for prior non-filing or late filing. These conditions balance restoration with accountability for statutory defaults. [Paras 13]

Restoration ordered subject to payment of costs, filing of past statutory returns with fees and late fees, and with liberty to the ROC to take further action under the Companies Act, 2013.

Final Conclusion: The appeal is allowed: the order striking off the company's name is set aside and the company's name is restored to the Register of Companies subject to payment of costs, filing of outstanding annual returns and balance sheets from 2006 onwards with requisite fees and late fees, and with liberty to the Registrar of Companies to take such punitive or other actions as permitted under the Companies Act, 2013.

Laches / inordinate delay in initiating proceedings - reasonableness of exercise of regulatory power where no statutory limitation - quashing of adjudication order on account of delay - matched trades and self trades as elements of fraudulent and unfair trade practices - insufficiency of evidence to infer manipulative intention

Laches / inordinate delay in initiating proceedings - reasonableness of exercise of regulatory power where no statutory limitation - quashing of adjudication order on account of delay - Whether the penalty proceedings initiated by SEBI by issuance of the second show cause notice dated July 20, 2017 are vitiated by inordinate delay and liable to be quashed on the ground of laches. - HELD THAT: - The Tribunal found that the respondent had investigated the relevant scrip for the entire period (March 1, 2009 to January 10, 2011) in September 2011 and yet issued a first show cause notice in April 2012 for one part of the period and waited more than five years to issue a second show cause notice dated July 20, 2017 in respect of the remaining period. In the absence of a statutory limitation, the authority must act within a reasonable time; what is reasonable depends on facts, prejudice and other circumstances. The Tribunal noted precedent holding that powers must be exercised within a reasonable period and observed that no justification was shown for the long delay here. On these facts the delay was held to be inordinate and prejudicial to the exercise of regulatory power, warranting quashing of the subsequent proceedings initiated after the unexplained lapse of time. [Paras 11, 12, 13]

The second show cause notice and the consequent adjudication and penalty were quashed on account of inordinate delay; the proceedings are vitiated by laches.

Matched trades and self trades as elements of fraudulent and unfair trade practices - insufficiency of evidence to infer manipulative intention - Whether the Adjudicating Officer's finding that the appellants indulged in matched trades and self trades in a manipulative and fraudulent manner was sustainable on the merits. - HELD THAT: - The Tribunal recorded that the AO's findings relied on observed variations in prices and quantities and on percentages of matched trades. On examination, the Tribunal noted that variations during the investigation period were less than pre-investigation trends and that the percentage of matched trades was negligible except in respect of a few noticees. Given these material observations, the Tribunal found the inference of a deliberate intent to manipulate to be weak. Although the primary ground for quashing was delay, the Tribunal also expressed that the merits did not compellingly support the AO's conclusion of widespread manipulative conduct by the appellants. [Paras 14, 15]

The AO's finding of manipulative matched/self trades was not convincingly established on the materials; the inference of manipulation was weak.

Final Conclusion: The show cause notice dated July 20, 2017, the adjudication order imposing penalty and the impugned order of the Adjudicating Officer are quashed on account of inordinate delay; the Tribunal also found the material supporting the AO's finding of manipulative matched/self trades to be weak. All appeals are allowed; no orders as to costs.

Withdrawal of petition under the Insolvency and Bankruptcy Code, 2016 by consent - recall of corporate insolvency resolution process - discharge of Interim Resolution Professional and handover of records - public advertisement and claims verification by Interim Resolution Professional - imposition of costs for conduct and judicial time - payment of costs to Prime Minister's National Relief Fund

Withdrawal of petition under the Insolvency and Bankruptcy Code, 2016 by consent - recall of corporate insolvency resolution process - The miscellaneous application under section 12A for withdrawal of the company petition and recall of the CIRP was allowed. - HELD THAT: - The Bench accepted that the Operational Creditor and Corporate Debtor executed Consent Terms on 25.10.2019 and that the Operational Creditor received the full and final settlement amount. The IRP filed Form FA under section 12A read with Regulation 30A and issued the public advertisement; no claims were received in response to the advertisement except a claim by the Sales Tax Department which is under appeal. Having considered the settlement between the parties, the filings by the IRP, and the absence of competing claimants, the Adjudicating Authority found it appropriate to allow the withdrawal and recall the CIRP initiated by earlier orders. [Paras 3, 4, 5, 6]

MA under section 12A allowed; CIRP initiated vide orders dated 22.10.2019 and 25.10.2019 in CP 1497/2019 recalled.

Discharge of Interim Resolution Professional and handover of records - public advertisement and claims verification by Interim Resolution Professional - The IRP was discharged and directed to hand over records and books to the management of the Corporate Debtor. - HELD THAT: - Following allowance of the withdrawal and recall of the CIRP, the Tribunal directed that the IRP, who had taken charge, issued the statutory public advertisement and received no material claims (other than a departmental claim under appeal), be discharged from his role. The IRP was ordered to return the records and books to the corporate debtor's management, thereby restoring management control following the recalled proceedings. [Paras 3, 4, 6]

IRP discharged and directed to hand over records/books to management of the Corporate Debtor.

Imposition of costs for conduct and judicial time - payment of costs to Prime Minister's National Relief Fund - A cost was imposed on account of the conduct of the Corporate Debtor and judicial time spent, payable to the Prime Minister's National Relief Fund. - HELD THAT: - The Tribunal recorded that considerable judicial time had been spent and, having regard to the conduct of the Corporate Debtor and the circumstances surrounding the admission and subsequent settlement, was inclined to impose costs. The Tribunal quantified the cost and directed payment into the Prime Minister's National Relief Fund within ten days and required proof of payment to be submitted to the Court. [Paras 7, 8]

Cost directed to be paid into the Prime Minister's National Relief Fund within ten days and proof of payment to be filed.

Final Conclusion: The Tribunal allowed the withdrawal under section 12A, recalled the CIRP in CP 1497/2019, discharged the IRP with directions to hand over records to management, and imposed costs payable to the Prime Minister's National Relief Fund.

Voluntary liquidation of a corporate person under Section 59 of the Insolvency and Bankruptcy Code, 2016 - Compliance with statutory and regulatory procedural requirements for voluntary liquidation - Liquidator's final report and completion of liquidation - Dissolution order and notification to Registrar of Companies

Compliance with statutory and regulatory procedural requirements for voluntary liquidation - Voluntary liquidation of a corporate person under Section 59 of the Insolvency and Bankruptcy Code, 2016 - Whether the petitioner complied with the procedural and documentary requirements for initiating and conducting voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code, 2016. - HELD THAT: - The Tribunal examined the statutory framework in Section 59 and the documents filed by the liquidator. The petitioner produced the directors' solvency declarations, audited financial statements for the prescribed period, valuation and liquidation reports, records of the board and members' resolutions approving voluntary liquidation and appointment of the insolvency professional, public announcements and communications to IBBI and ROC, and evidence of absence of creditor claims. On the basis of the material on record and the Liquidator's submissions, the Adjudicating Authority found that the prescribed conditions and procedural steps under Section 59 and the Voluntary Liquidation Process Regulations were duly complied with by the petitioner and the liquidator. [Paras 23, 24]

The petitioner complied with the statutory and regulatory procedural requirements for voluntary liquidation under Section 59 of the Code.

Liquidator's final report and completion of liquidation - Dissolution order and notification to Registrar of Companies - Whether the affairs of the company have been completely wound up and its assets completely liquidated so as to warrant an order of dissolution. - HELD THAT: - The Liquidator's final report, supported by the auditor's final report, recorded disposal of all assets, payment of tax liabilities and other costs, absence of operational or financial creditors and of any pending litigation, and closure of the liquidation bank account. After considering these documents and submissions, the Tribunal found that the affairs of the company were completely wound up and the assets fully liquidated, and that there remained no outstanding debts or litigations that would prevent dissolution. [Paras 19, 24, 25]

The affairs of the company are completely wound up and its assets completely liquidated; the company is fit to be dissolved.

Final Conclusion: The petition under Section 59(7) is allowed; the Tribunal orders dissolution of the company with effect from the date of the order and directs the liquidator to forward an authenticated copy of the order to the Registrar of Companies for necessary action.

Manufacture - process amounting to manufacture under Chapter Note 3 of Chapter 16 of the Central Excise Tariff Act, 1985 - Business Auxiliary Service (BAS) - classification of activity as central excise manufacture versus taxable service - exemption/threshold for service tax on renting of immovable property where primary activity is manufacture

Manufacture - process amounting to manufacture under Chapter Note 3 of Chapter 16 of the Central Excise Tariff Act, 1985 - classification of activity as central excise manufacture versus taxable service - Whether the appellant's processing of marine products amounts to 'manufacture' and is not liable to service tax as Business Auxiliary Service. - HELD THAT: - The Tribunal examined the processes performed by the appellant - washing, grading, de-skinning, deveining, removal of inedible parts, treatment with permitted additives and preservatives, glazing and freezing, packing and storage - and found that these processes are intended to render the goods marketable to consumers. Section 2(f) of the Central Excise Act includes within 'manufacture' processes specified in Section or Chapter Notes of the First Schedule to the CETA. Chapter Note 3 to Chapter 16 of the CETA states that labeling, repacking or adoption of any other treatment to render the product marketable to the consumer shall amount to 'manufacture'. Applying that Note to the undisputed processing steps performed by the appellant, the Tribunal held that the activity falls within the definition of manufacture. The Tribunal further found that the activities do not fall within the definition of Business Auxiliary Service under Section 65(19) of the Finance Act, 1994, and that reliance on a Sales Tax decision (Sterling Foods) was inapposite. The authorities below failed to appreciate the processes vis-a -vis Chapter Note 3 and therefore erred in treating the activity as a taxable service.

The processes undertaken by the appellant constitute 'manufacture' under the Central Excise law and are not taxable as Business Auxiliary Service; the impugned confirmations of service-tax demand on that basis are set aside.

Exemption/threshold for service tax on renting of immovable property - classification of activity as central excise manufacture versus taxable service - Whether the demand of service tax on renting of immovable property survives once the primary activity is held to be manufacture. - HELD THAT: - The Tribunal reasoned that if the appellant's primary activity amounts to manufacture, ancillary demands framed as service-tax liabilities (including renting of immovable property) must be examined in that factual and legal matrix. It held that the renting demand would fall within the threshold/exemption limits once the principal activity is treated as manufacture and therefore the appellant is not liable to pay service tax on the renting claim made by the authorities.

The demand of service tax on renting of immovable property does not survive in view of the classification of the appellant's activity as manufacture and is therefore not payable.

Final Conclusion: All impugned orders upholding service-tax demands were set aside; the appellant's processing of marine products was held to be manufacture under Chapter Note 3 of Chapter 16 CETA and not a taxable Business Auxiliary Service, and the related demand for service tax on renting of immovable property was held not to survive.

Substantial question of law - appeal under section 35G(1) of the Central Excise Act, 1944

Substantial question of law - appeal under section 35G(1) of the Central Excise Act, 1944 - The maintainability of the appeal to the High Court under section 35G(1) on the ground that the matter involves a substantial question of law. - HELD THAT: - Section 35G(1) permits an appeal to the High Court from an Appellate Tribunal order only if the High Court is satisfied that the case involves a substantial question of law. A perusal of the Customs, Excise and Service Tax Appellate Tribunal's order dated 27th June, 2019 does not disclose any substantial question of law being raised or decided by the Tribunal. The High Court therefore applied the statutory threshold in section 35G(1) and found no basis to entertain the appeal under that provision.

The appeal is not maintainable under section 35G(1) as it does not involve a substantial question of law; the appeal is dismissed.

Final Conclusion: The High Court dismissed the appeal for want of a substantial question of law under section 35G(1) of the Central Excise Act, 1944; no further adjudication on the merits was undertaken.

Entitlement to refund of excess duty - interpretation of rate entries in a tariff notification - applicability of lower duty where retail sale price (RSP) is declared on packaged goods - distinction between packaged goods with declared RSP and goods cleared in other than packaged form - effect of Standards of Weights & Measures (Packaged Commodities) Rules, 1997 on duty classification - precedential weight of tribunal decision for identical factual matrix

Applicability of lower duty where retail sale price (RSP) is declared on packaged goods - interpretation of rate entries in a tariff notification - entitlement to refund of excess duty - effect of Standards of Weights & Measures (Packaged Commodities) Rules, 1997 on duty classification - Whether the assessee, having supplied cement in packaged form with the retail sale price declared and at a per-bag price below the RSP threshold, was entitled to duty at the lower rate prescribed for such packaged supplies and to refund of the excess duty paid. - HELD THAT: - The Tribunal found that the cement was cleared in packaged form with the retail sale price marked on the bags and the per-bag price fell within the threshold prescribed for the lower rate entry in the notification. The notification prescribed distinct rates for differently described categories; where the conditions of a specific entry are satisfied the corresponding rate applies. The appellant had paid duty at a higher provisional rate due to confusion but invoiced at the lower rate and claimed refund, which the original authority allowed after fact-verification. The Commissioner(Appeals) erred in disallowing the refund by not properly interpreting the notification. The Tribunal followed its earlier decision in Sagar Cements Ltd., where supplies to the State housing corporation with RSP declared on bags were held to fall within the lower rate entry; that precedent applies on identical facts and supports the appellant's entitlement. Applying the notification's scheme and the Tribunal's precedent, the appellant's supplies satisfy the conditions for the lower rate and thus the excess duty paid was refundable.

The appeal is allowed; the Commissioner(Appeals) order is set aside and the appellant is entitled to the refund as originally granted by the original authority.

Final Conclusion: Tribunal allowed the appeal, set aside the Commissioner (Appeals) order and restored the refund granted by the original authority on the ground that packaged supplies with declared RSP below the threshold attract the lower rate and the excess duty paid is refundable.

Interest on differential duty - interpretation of Section 11AB regarding time when duty 'ought to have been paid' - value at time of removal - provisional assessment and retrospective variation - statutory duty payment timeline under rules requiring duty to be paid for every removal on or before the 6th day of the succeeding month

Interest on differential duty - provisional assessment and retrospective variation - value at time of removal - interpretation of Section 11AB regarding time when duty 'ought to have been paid' - Whether interest is payable on differential duty arising from retrospective price variation under a provisional price/escalation clause. - HELD THAT: - The Tribunal observed that the question is squarely covered by the decision of the Hon'ble Supreme Court dated 08.05.2019. The Supreme Court held that the reasoning that the expression 'ought to have been paid' in Section 11AB should be read as the time when price is finally agreed does not accord with the clear words of Section 11AB and the rules. The rules require duty to be paid for every removal on or before the 6th day of the succeeding month. Where the price at removal was provisional and later varied retrospectively under an escalation clause, the revised price operates retrospectively and constitutes the value at the time of removal; consequently, the differential duty and interest relate back to the month for which the duty is determined. The Tribunal accordingly applied the Apex Court's reasoning and concluded that the appeal lacked merit. [Paras 3, 4, 5, 6, 63]

Appeal dismissed as the issue is covered by the Supreme Court's decision against the assessee and in favour of the Revenue.

Final Conclusion: The appeal is dismissed; the Supreme Court's decision establishes that where price is provisionally fixed and later varied retrospectively the revised price is treated as value at the time of removal, rendering differential duty and interest payable, and the present appeal is devoid of merit.

Transfers to defraud revenue void - charge created by operation of law - proviso to Section 24-A - adequate consideration and without notice - jurisdiction of writ court versus Civil Court for declaration and trial - interim protection against revenue recovery pending institution of suit

Proviso to Section 24-A - adequate consideration and without notice - jurisdiction of writ court versus Civil Court for declaration and trial - Whether the writ court can decide the petitioner's defence under the proviso to Section 24-A of the TNGST Act, 1959 that the purchase was for adequate consideration and without notice, or whether that defence must be established in a civil suit. - HELD THAT: - The Court held that the question whether the petitioner paid adequate consideration and purchased without notice of a charge created by operation of law involves disputed facts and the burden of proof under the proviso to Section 24-A. Determination of those facts would require a trial and a declaration/action in a civil court; courts exercising jurisdiction under Article 226 are not the appropriate forum to undertake such trial-type fact finding. Consequently, the writ petition seeking to establish the defence under the proviso to Section 24-A could not be finally adjudicated in the writ jurisdiction and must be pursued before a Civil Court. [Paras 10, 11]

The writ petition cannot decide the proviso defence under Section 24-A on merits; the petitioner must file a suit in a Civil Court to establish that the purchase was for adequate consideration and without notice.

Interim protection against revenue recovery pending institution of suit - charge created by operation of law - Whether interim relief should be granted restraining the respondent from proceeding with revenue recovery proceedings against the petitioner and the property, and on what terms. - HELD THAT: - Balancing the parties' positions, the Court observed that the Department had not registered the charge as required and there was a significant lapse between the alleged defaults and the impugned notice. The Court declined to adjudicate the substantive title question but granted limited interim protection to enable the petitioner to seek appropriate relief in a Civil Court. The petitioner was given liberty to institute a suit within a specified short period; if the petitioner filed such suit within that period, the respondent was restrained from proceeding with distraint or revenue recovery against the petitioner and the property for a limited period, subject to the respondent's right to contest the suit and to seek extension of protection before the trial court. [Paras 8, 9, 12, 13, 14]

Writ petition dismissed, but petitioner granted liberty to file a suit within 30 days; if suit is filed, respondent shall not proceed with distraint or revenue recovery against the petitioner and the property for six months from receipt of this order, subject to the conditions and further orders of the Civil Court.

Final Conclusion: The writ petition is dismissed as the factual and evidentiary issues necessary to invoke the proviso to Section 24-A must be established in a Civil Court; limited interim protection from revenue recovery is granted for six months if the petitioner institutes suit within 30 days, failing which the respondent is at liberty to proceed.

Conditional exemption for wheat bran as cattle feed - Section 8(2)(A) - exemption in course of interstate trade and commerce - Burden of proof to establish use as cattle feed - Remand for fact-finding by Assessing Officer

Conditional exemption for wheat bran as cattle feed - Section 8(2)(A) - exemption in course of interstate trade and commerce - Whether wheat bran sold in the course of interstate trade is exempt under the State Act only when it is established to be used as cattle feed. - HELD THAT: - The Court held that Entry 57(v) of Part A of the Third Schedule grants exemption to cattle feed and to wheat bran used for cattle feed only where the wheat bran is actually used for that purpose; the exemption is therefore conditional and not general. The legislature's distinction reflects that wheat bran may be used for human consumption as well as for cattle feed, and consequently exemption under Section 8(2)(A) applies only if the sale is of wheat bran used as cattle feed. The Court applied this interpretative principle to the facts, observing that the claimed interstate exemption depends on proof that the goods were sold as cattle feed. [Paras 5, 6]

Wheat bran is exempt under the cited entry only when it is established that the wheat bran was sold for use as cattle feed; the exemption is conditional and must be determined on that basis.

Burden of proof to establish use as cattle feed - Remand for fact-finding by Assessing Officer - Whether the denial of exemption could be sustained without the Assessing Officer making a factual finding that the interstate sales were not for use as cattle feed, and what remedy is appropriate. - HELD THAT: - The Court found that the Assessing Officer and the first appellate authority did not undertake the necessary fact-finding exercise to determine whether the wheat bran sold interstate was actually used as cattle feed. The denial of exemption was recorded without evaluating relevant evidence on that factual question. Given that the availability of exemption under Section 8(2)(A) turns on such factual determination, the Court concluded that the proper course is to remit the matter to the Assessing Officer to examine evidence and decide whether the sales were of wheat bran used as cattle feed. The remand is for determination of fact and not for the Court to decide the factual question on the record before it. The Court directed completion of the exercise within six months. [Paras 6, 7, 8, 9]

Impugned orders set aside and the matter remanded to the Assessing Officer to determine, on relevant evidence, whether the interstate sales were of wheat bran used as cattle feed; decision to be taken afresh within six months.

Final Conclusion: Impugned Tribunal and assessing orders set aside; the matter remanded to the Assessing Officer to undertake fact-finding on whether the wheat bran sold in interstate trade was used as cattle feed (the condition for exemption), with directions to decide the matter within six months.

Exemption for self-occupied property under Section 5(vi) of the Wealth Tax Act - Finality of the option exercised in the Wealth Tax return - Enhancement of taxable wealth on discovery of true value - Deduction of loan liability for computation of taxable wealth

Exemption for self-occupied property under Section 5(vi) of the Wealth Tax Act - Finality of the option exercised in the Wealth Tax return - Whether the assessee could substitute the property in respect of which exemption under Section 5(vi) was claimed after filing the Wealth Tax return without filing a revised return. - HELD THAT: - The Tribunal found that the assessee had already exercised the option to claim exemption under Section 5(vi) in respect of the Shimla property in the return filed for the year and did not file any revised return seeking to change that option to the Aralias DLF property. On these facts the Tribunal held that the assessee could not, at the appellate stage, seek to alter the property for which the exemption under Section 5(vi) was claimed. The contention that the exemption could be reassigned to the Aralias DLF flat was therefore rejected as not permissible in the absence of any revision of the return.

Claim to substitute the exempt self-occupied property (to Aralias DLF) after filing the return is not permitted; the option exercised in the return (Shimla property) stands.

Enhancement of taxable wealth on discovery of true value - Deduction of loan liability for computation of taxable wealth - Whether the Commissioner (Appeals) was justified in enhancing the value of the Aralias DLF property and whether the loan taken for acquisition should be allowed for computing taxable wealth. - HELD THAT: - The Tribunal noted that the conveyance deed showed a higher sale consideration for the Aralias DLF property than the value adopted in assessment and that the Commissioner (Appeals) issued notice for enhancement and increased the value accordingly. The Tribunal confirmed the enhancement of the Aralias DLF property's value as made by the Commissioner (Appeals). However, both parties before the Tribunal agreed that the loan shown in the balance sheet taken from Citi Bank for acquisition of the property was admissible; the Tribunal directed the Assessing Officer to allow the deduction of that loan amount for the purpose of assessing taxable wealth. Subject to allowing the loan deduction, the enhancement made by the Commissioner (Appeals) was upheld.

Enhancement of the Aralias DLF property's value is confirmed; the Assessing Officer is directed to allow deduction of the loan taken for acquisition when computing taxable wealth.

Final Conclusion: The appeal is partly allowed: the Tribunal upheld the Commissioner (Appeals)'s enhancement of the Aralias DLF property's value but directed that the loan taken for acquisition be allowed as a deduction in computing taxable wealth; the claim to change the property entitled to exemption under Section 5(vi) without filing a revised return was rejected.

Validity of power of attorney issued by a managing partner under a partnership deed - competence of power of attorney holder to file and verify complaint under Section 138 N.I. Act - evaluation of disputed factual questions in quash proceedings - vicarious/criminal liability of a Managing Director for offences under the Negotiable Instruments Act - effect of moratorium under Section 14 of the Insolvency and Bankruptcy Code on criminal proceedings

Validity of power of attorney issued by a managing partner under a partnership deed - Whether a power of attorney given by one managing partner was a valid authorization to file the complaints on behalf of the partnership firms. - HELD THAT: - The partnership deeds (Clause 13) confer upon the named managing partners the powers to sign and verify plaints, initiate civil and criminal proceedings and appoint authorised representatives. There is no provision in the deeds requiring all managing partners to join jointly in initiating proceedings or in giving authorization. In the absence of any restriction to the contrary in the partnership deeds, the court held that authorization by any one of the managing partners is sufficient and the challenge to the power of attorney on this ground cannot sustain quashment of the complaints at this stage. [Paras 14, 15, 16]

Authorization by one managing partner to initiate proceedings and to appoint an authorised representative is valid under the partnership deeds; the contention that all managing partners must jointly authorize is rejected.

Competence of power of attorney holder to file and verify complaint under Section 138 N.I. Act - Whether the complaints filed through the power of attorney holder (internal auditor) could be quashed for want of personal knowledge by the power of attorney holder. - HELD THAT: - It is settled that a complaint under Section 138 N.I. Act can be filed through a power of attorney and the holder may depose and verify the complaint provided he has witnessed the transaction or has personal knowledge of it. The power of attorney here was accompanied by an affidavit/sworn statement asserting personal knowledge, and the Magistrate has taken cognizance and issued summons based on those materials. Whether the power of attorney holder truly possesses the requisite personal knowledge is a matter of evidence to be examined at trial; it is not a ground for quashing at the cognizance stage. [Paras 17, 18]

Filing and verification by the power of attorney holder who asserts personal knowledge is permissible; absence of adjudication on the holder's actual knowledge at cognizance stage precludes quashment.

Evaluation of disputed factual questions in quash proceedings - Whether the court should decide at the quash stage the contention that the Madurai firm lacks a legally enforceable liability because the cheques were issued only to the Nagercoil firm. - HELD THAT: - The existence and scope of legally enforceable liability between the parties and the intended payees of the cheques are disputed questions of fact. The complaints disclose alleged outstanding advances and the issuance and presentation of cheques, but competing contentions as to whether liability pertains to the Madurai firm or only to Nagercoil require evidence. Such factual disputes cannot be resolved in proceedings under Section 482 and are to be adjudicated during trial. [Paras 19, 20, 21]

The factual controversy over which partnership firm is entitled and whether there is legally enforceable liability against the Madurai firm cannot be decided in quash proceedings and must be determined at trial.

Vicarious/criminal liability of a Managing Director for offences under the Negotiable Instruments Act - Whether it was necessary to make specific averments in the complaint that the petitioner, as Managing Director, was in charge of and responsible for the conduct of the company's business. - HELD THAT: - While vicarious liability must generally be pleaded, the court noted settled authority that where the accused is the Managing Director or Joint Managing Director, it is not necessary to make separate specific averments because by virtue of such position they are ordinarily liable to be proceeded with. The petitioner, being the Managing Director and having unsuccessfully sought discharge earlier, cannot now avoid the liability by contending absence of specific averments; the complaints and attendant material disclose issuance of cheques and alleged liability implicating him. [Paras 22, 23, 24, 25]

Specific averments are not necessary where the accused is the Managing Director; the petitioner may be proceeded against in the criminal complaints.

Effect of moratorium under Section 14 of the Insolvency and Bankruptcy Code on criminal proceedings - Whether the moratorium declared under Section 14 of the Insolvency and Bankruptcy Code bars continuation of criminal proceedings under Section 138 of the Negotiable Instruments Act. - HELD THAT: - Section 14(1)(a) declares moratorium prohibiting institution or continuation of suits or proceedings against the corporate debtor, but the court construed the provision as confined to civil proceedings (suits and proceedings of a like nature) directed towards realization of assets and discharge of liabilities. The expression 'suit or other proceedings' is to be read ejusdem generis with 'suits' and does not extend to criminal complaints under Section 138 N.I. Act. Reliance on analogous High Court decisions and principle of ejusdem generis led to the conclusion that the moratorium does not affect criminal proceedings under Section 138. [Paras 27, 28, 29, 30, 31]

Moratorium under Section 14 of the Code does not operate to bar criminal proceedings under Section 138 of the Negotiable Instruments Act; such criminal proceedings may continue.

Final Conclusion: Both Criminal Original Petitions to quash the complaints under Section 138 of the Negotiable Instruments Act are dismissed. The trial, which has commenced and has been pending since 2015, is directed to be completed by the learned Judicial Magistrate No.I (Fast Track Court), Madurai within three months from receipt of a copy of this order.