TaxTMI Updates e-Newsletter
Feb 19,2022

Rectification of GSTR-1 - place of supply correction - representation pending for decision - remand for decision - application of Pentacle Plant Machineries v/s. GST Council Secretariat - Circular No. 26/26/2017 GST dated 29-12-2017 - direction to decide representations within time

Rectification of GSTR-1 - place of supply correction - representation pending for decision - application of Pentacle Plant Machineries v/s. GST Council Secretariat - Circular No. 26/26/2017 GST dated 29-12-2017 - direction to decide representations within time - Pending representations seeking rectification of inadvertent incorrect place of supply entries in GSTR-1 for February, 2018 to June, 2018 and October 2018 were to be decided by the tax authority within a specified time and in accordance with law. - HELD THAT: - The Court observed that representations dated 8th July, 2021 and 20th July, 2021 by the petitioner, seeking rectification of the place of supply mistakenly shown as Tamil Nadu instead of Puducherry in GSTR-1 for the specified periods, remained pending. Having regard to a similar order in an identical matter and the need to consider relevant precedent and administrative guidance, the Court directed respondent no.4 to decide the pending representations within eight weeks in accordance with law after considering the Madras High Court judgment in Pentacle Plant Machineries v/s. GST Council Secretariat and the applicability of Circular No. 26/26/2017 GST dated 29th December, 2017. The Court further directed that the order shall be communicated to the petitioner within one week of passing, and if the representations are allowed, respondent no.4 shall permit rectification in the GSTR-1 within one week of that order. If the decision is adverse, the petitioner is at liberty to initiate appropriate proceedings. These directions constitute a remand for expeditious decision rather than an adjudication on the merits of the rectification claim. [Paras 3, 4, 5]

Respondent no.4 directed to decide the pending representations within eight weeks in accordance with law, considering the cited Madras High Court decision and Circular No.26/26/2017, communicate the order within one week, and permit rectification in GSTR-1 within one week if representations are allowed; if adverse, petitioner may pursue appropriate proceedings.

Final Conclusion: Writ petition allowed by directing respondent no.4 to decide the pending representations seeking rectification of place of supply in GSTR-1 for the periods February, 2018 to June, 2018 and October 2018 within eight weeks, with consequential directions for communication and rectification if allowed; no order as to costs.

Interest on blocked Input Tax Credit - Blocking of Input Tax Credit under Rule 86A - Period of blocking of ITC - Remand for consideration of interest relief

Interest on blocked Input Tax Credit - Blocking of Input Tax Credit under Rule 86A - Period of blocking of ITC - Relief of interest claimed by the petitioner on account of alleged excessive blocking period of Input Tax Credit - HELD THAT: - The High Court recorded that the petitioner's Input Tax Credit account had been unblocked on 7th February, 2022. The petitioner submitted that under Rule 86A the ITC could have been blocked for only one year and that, in the present case, the blocking continued for two years, giving rise to a claim for interest. The Court did not adjudicate the substantive entitlement to interest on the merits. Instead, it directed the respondents to file reply affidavits confined to the specific relief of interest and permitted the petitioner to file rejoinder, thereby remanding the question of entitlement and quantum of interest for fresh consideration in the ongoing proceedings.

Respondents to file reply affidavits limited to the claim for interest; rejoinder permitted; matter listed for further hearing.

Final Conclusion: The Court recorded that the petitioner's ITC account stands unblocked (7th February, 2022) and directed the respondents to file reply affidavits restricted to the claim for interest; the petition remains pending and is listed for further hearing.

Services by way of renting of residential dwelling for use as residence - strict interpretation of exemption notification - burden on assessee to prove applicability of exemption - ordinary/popular meaning of 'residential dwelling' - distinction between residential dwelling and places for temporary stay (hotel, guest house, lodge)

Services by way of renting of residential dwelling for use as residence - ordinary/popular meaning of 'residential dwelling' - burden on assessee to prove applicability of exemption - Leasing of residential premises as a hostel to students and working professionals falls within Entry 13 of Notification No.9/2017 (services by way of renting of residential dwelling for use as residence) and is eligible for exemption under the notification. - HELD THAT: - The Court applied settled principles that exemption notifications are to be strictly construed and the assessee bears the burden of proving applicability, but where terminology is undefined it must be given its ordinary trade parlance meaning. The expression 'residential dwelling' is not defined in the Act; authoritative administrative clarification and dictionary meanings indicate that it denotes residential accommodation and excludes establishments meant for temporary stay such as hotels, motels, guest houses or lodges. The hostel in question, used by students and working professionals for sleeping, eating and study for periods ranging from three to twelve months, falls within the ordinary meaning of 'residence' and 'dwelling'. The notification requires that a residential dwelling be rented and used as a residence; it does not impose a condition that the lessee personally use the premises as a residence. Regulatory classifications (trade licence, commercial registration) do not alter the character of the accommodation for purposes of the exemption. The Appellate Authority's characterization of the premises as 'sociable accommodation' and its conclusion that the lessee must itself use the premises were held to be untenable. Applying these determinations, the Court concluded that the petitioner's leasing of the property as a hostel satisfies Entry 13 and is exempt under Notification No.9/2017. [Paras 13, 14, 15, 16, 17]

The order of AAAR Karnataka is quashed and the petitioner is entitled to the exemption under Entry 13 of Notification No.9/2017 for leasing the premises as a hostel.

Final Conclusion: Writ petition allowed; leasing of the petitioner's residential premises as a hostel to students and working professionals is covered by Entry 13 of Notification No.9/2017 and the petitioner is entitled to the exemption.

Provisional attachment of bank account - statutory life of provisional attachment - exercise of power under Section 83 of the GST Act - operation of bank account after expiry of attachment - rights of revenue to initiate further action in accordance with law

Provisional attachment of bank account - statutory life of provisional attachment - operation of bank account after expiry of attachment - Provisional attachment of the writ applicant's bank account has ceased to be in force on expiry of the statutory one year period and the bank must permit operation of the account. - HELD THAT: - The Court proceeded on the basis of the bank's intimation dated 20.01.2021 that the account had been instructed to be frozen by the Deputy Commissioner of State Tax under powers exercised under Section 83 of the GST Act. The intimation necessarily implies that the provisional attachment order was passed before 20.01.2021. As more than one year had elapsed since that date, the statutory life of the order of provisional attachment has expired and the order cannot be said to be in force. Consequently, the bank is directed to permit the writ applicant to operate the account. This direction is given without prejudice to the respondent department's right to initiate any further action in accordance with law. [Paras 5, 6]

Bank to permit operation of the account as the provisional attachment has expired; department may take further lawful action if so advised.

Final Conclusion: Writ application disposed of as the provisional attachment has lapsed; bank shall allow operation of the account while preserving the department's right to pursue further action in accordance with law.

Agricultural produce - seed versus grain distinction - exemption for services to a cultivator/for agricultural produce - processing as usually done by a cultivator - noscitur a sociis - supply to self

Agricultural produce - seed versus grain distinction - noscitur a sociis - Whether the seeds produced/procured, processed, packed and sold by the applicant qualify as "agricultural produce" under the Notifications. - HELD THAT: - The Authority examined the definition of agricultural produce in the notification and applied the tests contained therein: (i) produce of cultivation; (ii) meant for food/fibre/fuel/raw material or similar products; (iii) either no further processing or only processing usually done by a cultivator that does not alter essential characteristics. The Authority found that seeds of seed quality are treated separately from grain under both the Seed Act and the GST notifications, and that seeds are not intended as food/fibre/fuel/raw material in the sense contemplated by the definition. Applying the principle of noscitur a sociis, the general term 'raw material' is read in the cognate sense of the specific words, restricting its scope. Further, the processing undertaken to produce seed-quality material differs from processing usually performed by a cultivator for the primary market. On these bases the Authority concluded that the applicant's seeds do not satisfy the definition of agricultural produce in the notifications.

Seed is not an agricultural produce in terms of the definition in the said notifications.

Exemption for services to a cultivator/for agricultural produce - processing as usually done by a cultivator - Whether storage in leased godowns, loading, unloading and packing of seeds by a job worker on job work basis are exempt from GST under the cited notifications. - HELD THAT: - The notifications grant exemption to services relating to cultivation or to services engaged by a cultivator in respect of agricultural produce. Having held that the applicant's seeds are not agricultural produce and that the applicant is a seed company (not a cultivator), the Authority found that these services do not fall within the exemption entries which are directed to services for or by cultivators in relation to agricultural produce. Consequently, storage, loading/unloading and packing by job workers for the seed company do not attract the exemption entries relied upon.

Not exempt.

Exemption for services to a cultivator/for agricultural produce - processing as usually done by a cultivator - Whether cleaning, drying, grading and chemical treatment carried out by a job worker on job work basis are exempt from GST under the cited notifications. - HELD THAT: - The exemption entries relied upon are confined to services relating to cultivation or those engaged by a cultivator in relation to agricultural produce, and to processing that is of the kind usually done by a cultivator which does not alter essential characteristics. The Authority found that the applicant's processes to render products of seed quality are different from processing by a cultivator for the primary market and that the applicant is not a cultivator. Therefore such job-work processes carried out for the seed company do not qualify for the exemptions.

Not exempt.

Exemption for services to a cultivator/for agricultural produce - seed versus grain distinction - Whether transport of seeds (farm to storage, between storage facilities, to distributors and returns) is exempt from GST under the cited notifications. - HELD THAT: - The transport exemption relates to transportation of agricultural produce. Having concluded that seed quality goods produced/supplied by the applicant do not fall within the definition of agricultural produce in the notifications, the Authority held that transportation services engaged by the seed company are not covered by the exemption entries which are directed to movement of agricultural produce.

Not exempt.

Supply to self - Whether processes undertaken by the applicant for in-house seed production (cleaning, drying, grading, treatment and packing) constitute a taxable supply under section 7(a). - HELD THAT: - The Authority observed that when the applicant itself undertakes processing for its in-house seed production there is no outward supply constituting a taxable supply under the provision relied upon. The processes in that scenario amount to internal operations and do not attract tax as a supply to another person.

Supply to self is exempt.

Final Conclusion: The Authority ruled that the applicant's seed-quality goods are not "agricultural produce" under the notifications; consequently storage, job-work processing, and transportation services procured by the seed company do not qualify for the exemptions directed to cultivators or agricultural produce, while processing done by the applicant for its own in-house seed production does not constitute a taxable supply.

Definition of "agricultural produce" for exemption purposes - distinction between seed and grain - processing by a cultivator versus commercial processing - noscitur a sociis in inclusive definitions - exemption scope of services to cultivators versus services to seed companies

Distinction between seed and grain - definition of "agricultural produce" for exemption purposes - Seed produced and processed by the applicant does not qualify as "agricultural produce" under the relevant notifications. - HELD THAT: - The Authority examined the Seed Act, 1966 definition of "seed" and the exemption definition of "agricultural produce" in the notifications. It held that seed is treated separately from grain in GST law and that not all produce of cultivation qualifies as "agricultural produce." The Authority applied the fivefold test in the notification: produce must be out of cultivation, meant for food/fibre/fuel/raw material etc., be subjected to no further processing (or only processing usually done by a cultivator), not alter essential characteristics, and be marketable in the primary market. Applying noscitur a sociis to the words describing permitted uses, the Authority concluded that seeds (being of seed quality and not intended for direct consumption or industrial raw material use in the sense contemplated) do not fall within the notification's definition. Further, the processing performed by the applicant to convert grain into seed quality involves activities beyond those ordinarily carried out by a cultivator for the primary market. Therefore the seeds produced by the applicant cannot be treated as "agricultural produce" for the purpose of the cited exemptions.

Seed is not an "agricultural produce" within the meaning of the notifications relied upon.

Exemption scope of services to cultivators versus services to seed companies - processing by a cultivator versus commercial processing - Services of storage, loading, unloading and packing of the seeds by the applicant (job worker) are not exempt under the cited agricultural support services entries in the notifications. - HELD THAT: - The Authority determined that the exemption entries invoked (for services relating to cultivation or support services to agriculture engaged by a cultivator) are confined to services availed by cultivators/agriculturalists. Since the applicant is a seed company performing storage, handling and packing of seed-quality goods and the seeds were not held to be "agricultural produce," the services in question do not fall within the exemption entries which target services for cultivators and primary-market activities. Consequently, those services are not covered by the cited exemptions.

Storage, loading, unloading and packing by the job worker are not exempt under the cited notification entries.

Exemption scope of services to cultivators versus services to seed companies - definition of "agricultural produce" for exemption purposes - Processes of cleaning, drying, grading and chemical treatment carried out by the applicant (job worker) are not exempt under the cited agricultural services entries in the notifications. - HELD THAT: - The Authority found that the exemption entries for services relating to cultivation or support services to agriculture apply to services engaged by a cultivator and to processing ordinarily done by a cultivator for primary markets. The applicant's activities of cleaning, drying, grading and treating seeds are commercial processing to produce seed-quality goods and differ from the limited processing contemplated for "agricultural produce." Given that the goods are not "agricultural produce" and the services are provided to a seed company rather than a cultivator, the processes are not covered by the exemption entries invoked.

Cleaning, drying, grading and chemical treatment performed by the job worker are not exempt under the cited notification entries.

Final Conclusion: The Authority ruled that the seeds processed by the applicant are not "agricultural produce" under the notifications and, accordingly, the storage/handling/packing and the processes of cleaning, drying, grading and treatment performed by the job worker are not exempt under the cited exemption entries which apply to services for cultivators or produce marketed in the primary market.

Section 14A disallowance - Rule 8D - apportionment of expenditure - investment from interest-free funds - banks' securities as stock-in-trade - remand for fresh consideration

Section 14A disallowance - Rule 8D - apportionment of expenditure - Whether the Tribunal's direction to the Assessing Officer to apply Section 14A read with Rule 8D should be carried into effect in the facts of these appeals. - HELD THAT: - The Tribunal had remanded the question to the Assessing Officer to apply the Special Bench ratio and Rule 8D. The High Court, applying and following the subsequent decision of the Supreme Court in South Indian Bank Ltd. v. Commissioner of Income-tax and related Supreme Court and High Court authorities, directed that the issues be reconsidered afresh by the Assessing Officer in the light of those authorities. Consequently the question whether and how Section 14A and Rule 8D are to be applied has been left for re-determination by the Assessing Officer after giving the assessee opportunity of hearing and having regard to the Supreme Court precedents cited.

Matter remanded to the Assessing Officer to decide afresh the applicability and quantification (if any) under Section 14A and Rule 8D in accordance with the Supreme Court decisions, after giving the assessee an opportunity of being heard.

Investment from interest-free funds - banks' securities as stock-in-trade - Section 14A inapplicability where non-interest funds suffice - Whether proportionate disallowance under Section 14A is warranted in the case of banking concerns which have sufficient interest-free funds to cover investments in tax-free securities. - HELD THAT: - Relying on the Supreme Court's reasoning in South Indian Bank Ltd. and other authorities (including Maxopp and Godrej & Boyce), and having regard to the CBDT Circular and precedents treating bank-held securities (other than SLR) as stock-in-trade, the Court held that where an assessee (including a bank) has available non-interest-bearing (interest-free) own funds in excess of the investment in tax-free securities, a proportionate disallowance under Section 14A is not warranted. The Court noted that there is no statutory obligation to maintain separate accounts for different types of funds and that, where interest-free funds suffice to meet such investments, the investment may be presumed to have been made from such funds and Section 14A would not apply.

Proportionate disallowance under Section 14A is not warranted insofar as investments in tax-free bonds/securities are met out of interest-free own funds exceeding such investments; the Assessing Officer to reconsider in light of this principle.

Final Conclusion: Appeals disposed by remitting the matters to the Assessing Officer for fresh adjudication in accordance with the cited Supreme Court and other judicial authorities; where interest-free own funds exceeded investments in tax-free securities, disallowance under Section 14A is not warranted; Assessing Officer to decide afresh within three months after affording opportunity to the assessee.

Exemption under section 11 - Registration under section 12A - Furnishing of audit report in Form-10B under Rule 17/17B - Intimation under section 143(1) - Verification of departmental portal records before passing assessment/intimation

Exemption under section 11 - Furnishing of audit report in Form-10B under Rule 17/17B - Registration under section 12A - Verification of departmental portal records before passing assessment/intimation - Whether the assessee was entitled to exemption under section 11 for AY 2019-20 having regard to filing of Form-10B in time. - HELD THAT: - The Tribunal found as a fact that the assessee is registered under section 12A and had uploaded the audit report in Form-10B on the income-tax portal on 26.08.2019, prior to the relevant due date and at the time of filing the return. The lower authorities and NFAC/CIT(A) treated the exemption as not available because Form-10B was not on record; however the Tribunal accepted the assessee's portal acknowledgement and screenshot evidence and held that the date shown on the right of the screenshot (10.02.2022) was merely the date of printing and not the date of upload. The Tribunal concluded that the intimation under section 143(1) was issued without verification of the portal records and that the NFAC/CIT(A) erred in upholding the disallowance without verifying filing of Form-10B. In view of the timely furnishing of Form-10B, the assessee was entitled to the exemption under section 11 and the CPC/Assessing Officer was directed to allow the exemption. [Paras 5, 6]

The assessee's appeal is allowed; exemption under section 11 for AY 2019-20 is to be granted as Form-10B was filed in time and lower authorities failed to verify portal records.

Final Conclusion: Appeal allowed. The Tribunal held that Form-10B was uploaded on 26.08.2019 and, accordingly, directed the CPC/Assessing Officer to allow the exemption under section 11 for AY 2019-20.

Exclusion of the period 15.03.2020 to 14.03.2021 for computing limitation - allowability of employees' contribution to PF and ESI if paid on or before the due date for furnishing return under section 139(1) - limitations on making debatable adjustments while processing return under section 143(1)

Exclusion of the period 15.03.2020 to 14.03.2021 for computing limitation - Whether the period from 15.03.2020 to 14.03.2021 is to be excluded for computing limitation for filing the appeal before the CIT(A) and whether the CIT(A)'s dismissal of the appeal as belated is sustainable. - HELD THAT: - The Tribunal followed the Hon'ble Supreme Court's suo motu directions and CBDT Circular No.10/2021, holding that the period from 15.03.2020 to 14.03.2021 must be excluded in computing limitation. On this basis the Tribunal found the appeal before the CIT(A) to have been dismissed erroneously as time-barred and accordingly quashed the CIT(A)'s order dismissing the appeal in limine. [Paras 6, 7, 8, 9]

Order of the CIT(A) dismissing the appeal as belated is quashed and the appeal is restored for consideration.

Allowability of employees' contribution to PF and ESI if paid on or before the due date for furnishing return under section 139(1) - limitations on making debatable adjustments while processing return under section 143(1) - Whether the addition of employees' contribution to PF and ESI made by CPC while processing the return under section 143(1) (via rectification under section 154) is sustainable where such contributions were paid before the due date for filing the return. - HELD THAT: - The Tribunal held that debatable issues are not permissible adjustments when processing a return under section 143(1) and that the CPC's adjustment disallowing employees' contribution to PF and ESI under section 36(1)(va)/r.w.s.143(1) was unsustainable. On merits, after considering statutory scheme and judicial precedents, the Tribunal concluded there is no distinction between employees' and employer's contributions for the purpose of allowability where the total contribution is deposited on or before the due date for furnishing the return under section 139(1). The Tribunal relied on consistent decisions of coordinate benches and the principle that, where two reasonable constructions exist, construction favourable to the assessee should be adopted. Accordingly the addition was deleted and the appeal allowed on merits. [Paras 10, 11, 12, 13, 14]

The additions made by CPC u/s 154 r.w.s.143(1) disallowing employees' contribution to PF and ESI are deleted; the assessee's appeals are allowed on merits.

Final Conclusion: The Tribunal excluded the period 15.03.2020 to 14.03.2021 for computing limitation, quashed the CIT(A)'s summary dismissal, and on merits deleted the disallowance of employees' PF and ESI contributions made while processing the return under section 143(1), holding such contributions allowable where paid on or before the due date for furnishing the return under section 139(1); both appeals are allowed.

Non-maintainability of appeal where tax effect below threshold per CBDT Circular No.17/2019 - No requirement to deduct TDS on bank guarantee commission paid to a scheduled Indian bank - Applicability of CBDT Circular No.56/2012 as clarificatory

Non-maintainability of appeal where tax effect below threshold per CBDT Circular No.17/2019 - Maintainability of the Revenue's appeal in view of the limited tax effect arising from the alleged disallowance - HELD THAT: - The Tribunal noted that the Assessing Officer, by his rectification order, accepted that the maximum amount payable as guarantee commission for the year under dispute was limited to the lesser figure stated in the Section 154 order. On that undisputed factual basis the tax effect of the disputed addition would be below the monetary threshold specified in CBDT Circular No.17/2019. Consequently the appeal filed by the Revenue was not maintainable and had to be dismissed on that preliminary ground. [Paras 6, 7]

Appeal dismissed as not maintainable since the tax effect of the disputed addition is below the threshold in CBDT Circular No.17/2019.

No requirement to deduct TDS on bank guarantee commission paid to a scheduled Indian bank - Applicability of CBDT Circular No.56/2012 as clarificatory - Merits of the disallowance under section 40(a)(ia) in respect of bank guarantee commission paid to a scheduled Indian bank - HELD THAT: - On the merits the Tribunal upheld the Commissioner (Appeals). It accepted that the payment in question was bank guarantee commission made to a bank listed in the Second Schedule to the Reserve Bank of India Act and that the CBDT Circular No.56/2012 clarifies that TDS provisions do not apply to such payments. The Tribunal agreed with the appellate authority's reliance on judicial precedents that there is no element of agency between the assessee and the bank for such payments, and held that the Circular is clarificatory and properly applied to delete the disallowance under section 40(a)(ia). [Paras 4, 8]

Disallowance deleted; the Commissioner (Appeals)'s order upholding non-requirement of TDS on bank guarantee commission paid to a scheduled Indian bank is affirmed.

Final Conclusion: The Revenue's appeal is dismissed: it is not maintainable because the tax effect falls below the CBDT monetary threshold, and on the merits the deletion of the disallowance under section 40(a)(ia) in respect of bank guarantee commission paid to a scheduled Indian bank is upheld.

Unexplained cash credit under section 68 - onus of proof under section 68 - proviso to section 68 limited to share application money/share capital - disallowance of capital expenditure versus revenue treatment - rejection of additions based on conjecture, surmise or failure to verify evidence

Unexplained cash credit under section 68 - onus of proof under section 68 - proviso to section 68 limited to share application money/share capital - rejection of additions based on conjecture, surmise or failure to verify evidence - Whether the addition of Rs. 1,31,26,457/- as unexplained cash credit under section 68 was rightly deleted by the CIT(A). - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the assessee had discharged the onus by producing bank statements, income-tax returns, confirmations and transaction explanations for loans received from three creditors, and that the Assessing Officer had not brought cogent material to negatethe explanations. The Tribunal applied settled principles that the Department must not base findings on conjecture or surmise and that once the assessee furnishes a satisfactory explanation and supporting documents, the AO cannot treat the credits as unexplained without proper verification. The Tribunal also held that the newly inserted proviso to section 68 (applicable to share application money, share capital or share premium) was not applicable to unsecured loan transactions and the AO erred in invoking it. On these bases the deletion of the addition was sustained. [Paras 11, 12]

Deletion of the addition of Rs. 1,31,26,457/- under section 68 is sustained and the ground of appeal is rejected.

Disallowance of capital expenditure versus revenue treatment - rejection of additions based on conjecture, surmise or failure to verify evidence - Whether the disallowance of Rs. 87,54,200/- claimed as payments for technology transfer (treated by AO as bogus revenue expenditure) was rightly deleted by the CIT(A). - HELD THAT: - The Tribunal agreed with the CIT(A) that the amount related to capital expenditure - namely purchase of machinery shown as fixed assets (supported by customs documents and asset schedule) - and that the Assessing Officer's conclusion relied more on conjecture than on incontrovertible facts. The Tribunal accepted that factual evidence, including the existence of the asset and related documentation, outweighed circumstantial doubt, and that the payment could not be treated as a bogus revenue expenditure merely because the AO was not satisfied with some aspects of the explanation. Consequently, the disallowance treating capital expenditure as revenue was unsustainable. [Paras 13]

Deletion of the disallowance of Rs. 87,54,200/- is sustained and the ground of appeal is rejected.

Final Conclusion: Both grounds of the Revenue's appeal are dismissed: the Tribunal confirmed the CIT(A)'s deletion of the addition under section 68 (loan credits) and the deletion of the disallowance treating capital machinery purchase as bogus revenue expenditure, and upheld that the AO acted on insufficient verification and conjecture while the proviso to section 68 relied upon by the AO was inapplicable to unsecured loans.

Reopening under section 147 first proviso for assessments beyond four years - Change of opinion - Failure to disclose fully and truly all material facts - Eligibility for deduction under section 10A - Production of documents before the Assessing Officer and Explanation 1 to section 147

Reopening under section 147 first proviso for assessments beyond four years - Failure to disclose fully and truly all material facts - Eligibility for deduction under section 10A - Validity of reopening assessment beyond four years where original assessment was completed and whether there was failure to disclose material facts justifying reassessment. - HELD THAT: - The assessee had furnished Form No.56F, STPI approval, computation and FIRCs during the original assessment proceedings and the Assessing Officer, after scrutiny, allowed the claim of deduction under section 10A in the assessment order dated 10.01.2013. The reasons recorded for reopening under section 148 (framing reassessment under section 147) arising from an audit objection did not record any finding that the assessee had failed to disclose fully and truly all material facts necessary for assessment. Where the reopening is beyond four years and the case falls within the first proviso to section 147, reassessment is impermissible unless the AO records reason to believe that there was such failure of disclosure. Absent any whisper of non-disclosure in the reasons, the reassessment amounted to a change of opinion and was rightly quashed by the Commissioner (Appeals). [Paras 4, 5]

Reassessment quashed and reopening held invalid; appeal of the Revenue dismissed.

Final Conclusion: The Tribunal affirmed the CIT(A)'s order quashing reassessment for AY 2010-11: since the assessee had produced the documents on record in the original assessment and the reasons for reopening did not record any failure to disclose material facts, the reopening beyond four years under the first proviso to section 147 was invalid and the Revenue's appeal is dismissed.

Fair market value - conversion of capital asset into stock-in-trade - guideline value notified by State Government for stamp registration - reference to DVO for valuation - application of section 45(2)

Fair market value - conversion of capital asset into stock-in-trade - guideline value notified by State Government for stamp registration - reference to DVO for valuation - application of section 45(2) - Determination of the fair market value of assessee's agricultural land of 7.54 acres converted into stock-in-trade; whether the guideline value is conclusive or the value should be ascertained afresh and, if so, by whom. - HELD THAT: - The Tribunal examined section 45(2) which deems the fair market value of a capital asset on the date of its conversion into stock-in-trade to be the full value of consideration for purposes of computing profits. The definition of fair market value in section 2(22B) contemplates the price the asset would ordinarily fetch in the open market on the relevant date and permits consideration of surrounding circumstances such as sale instances in the area, urbanisation, future prospects and departmental valuations. The Tribunal noted Supreme Court authorities establishing that where a capital asset is converted into stock-in-trade its market value as on the date of conversion represents the cost to the business and must be used to calculate profits. While the Revenue and the CIT(A) considered the State's guideline value for registration as reflecting market value, the Tribunal found that the question of the correct fair market value for the specific 7.54 acres requires fresh ascertainment in light of the factors enumerated and the settled principle that real market value is the determinative criterion. Consequently, the Tribunal directed that the Assessing Officer refer the matter to a District Valuation Officer (DVO) for determination of fair market value on the date of conversion, so that the computation under section 45(2) may be completed consistently with the statutory concept of fair market value and the cited precedents. [Paras 7, 8]

Matter set aside and remanded to the Assessing Officer with direction to refer the valuation to the DVO for ascertainment of fair market value of the 7.54 acres on the date of conversion.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, set aside the orders of the lower authorities on the question of fair market value of the converted agricultural land, and remanded the matter to the Assessing Officer with a direction to obtain a valuation from the DVO and proceed to recompute the tax consequences under section 45(2).

Taxation of royalty and fees for technical services on gross receipts under section 115A - most-favoured-nation clause in DTAA Protocol - automatic notification of Protocol as integral part of the DTAA - interpretation of notification requirement under section 90(1) for importing MFN benefits - distinction between taxation on gross receipts and taxation of net income (reimbursements) - remand for verification of reimbursed receipts - verification and allowance of TDS credit on record

Most-favoured-nation clause in DTAA Protocol - automatic notification of Protocol as integral part of the DTAA - interpretation of notification requirement under section 90(1) for importing MFN benefits - Applicability of the reduced 10% withholding rate by importing the Portuguese DTAA rate into the India-Spain DTAA under the Protocol's MFN clause. - HELD THAT: - The Tribunal found no dispute as to nature or quantum of receipts; the sole controversy was the applicable rate. Article 13 of the India-Spain DTAA fixed a 20% rate for fees for technical services and other royalties. The Protocol to that DTAA contains an MFN clause (para 7) enabling importation of a lower rate agreed with a third OECD State. Portugal's DTAA (entered into after 1 1 1990) provides a 10% rate. The Protocol was signed on the same date as the main Convention and was described as an integral part thereof. On notification of the Convention, the Protocol therefore stood notified pro tanto. The CBDT Circular (03/2022) requiring a separate, subsequent notification to import MFN benefits was held not to control the period prior to its issuance and to be inapplicable for the year under consideration. The Tribunal read section 90(1) as empowering notification of the agreement (including its integral parts) for implementation, not as mandating piecemeal notifications of individual clauses. Consequently, the lower authorities erred in denying the MFN benefit and in treating section 115A as the source of a more beneficial rate when, on the facts, the 10% rate under the imported Portuguese DTAA applied (subject to surcharge and cess). [Paras 4, 7, 9, 11, 14]

The reduced 10% rate as per the Portuguese DTAA is applicable by virtue of the MFN clause in the Protocol to the India-Spain DTAA; no separate notification was required for the Protocol to operate for the assessment year in question, and the authorities were directed to apply that rate (with surcharge and cess).

Taxation of royalty and fees for technical services on gross receipts under section 115A - distinction between taxation on gross receipts and taxation of net income (reimbursements) - remand for verification of reimbursed receipts - Whether the amount claimed as reimbursement should be excluded from gross receipts for taxation as royalties/fees for technical services. - HELD THAT: - The assessee claimed certain receipts as reimbursements and excluded them from gross receipts; the AO treated them as part of gross receipts. The Tribunal explained the legal distinction: concessional taxation under section 115A proceeds on a gross receipt basis so that receipts which relate to costs contributing to earning the gross receipts must ordinarily be included; under normal income taxation, genuine reimbursements lacking any element of income are not taxable. The assessee, however, failed to place on record adequate particulars (invoices, ledger extracts, evidence of no markup or nexus showing that the amounts were not part of the gross consideration). Given absence of necessary details, the Tribunal set aside the matter and remitted it to the AO for fresh decision on the touchstone of the stated principles, permitting the assessee a reasonable opportunity to produce evidence. [Paras 15, 16, 17, 18, 19]

The question of exclusion of the claimed reimbursement from gross receipts is remanded to the AO for fresh consideration and verification in accordance with the Tribunal's analysis; the assessee shall be heard and may produce supporting evidence.

Verification and allowance of TDS credit on record - Allowability of claimed short TDS credit. - HELD THAT: - The assessee contended that the AO did not grant TDS credit. The Tribunal directed the AO to verify the factual position and allow the TDS credit as per law after verification. [Paras 20]

The AO is directed to verify the records and allow the appropriate TDS credit in accordance with law.

Consequential interest levy - Levy of interest consequential to tax adjustments. - HELD THAT: - The Tribunal observed that interest issues follow the tax adjustments and disposed of the ground as consequential. [Paras 21]

The ground relating to levy of interest is disposed of as consequential.

Final Conclusion: The appeal is partly allowed: the Tribunal held that the MFN clause in the Protocol to the India-Spain DTAA (an integral part of the Convention) permits importation of the 10% rate from the India-Portugal DTAA for the assessment year 2016 17 without a separate notification; the reimbursement claim was remanded to the AO for verification; TDS credit directed to be verified and allowed; interest issue disposed of consequentially.

Consignment sale versus ordinary sale - addition to income from undisclosed/under reported sales limited to estimated profit embedded in sales - remand for computation of taxable profit on unrecorded turnover - allowability of interest on borrowed capital for business purpose under u/s 36(1)(iii) and u/s 37(1) - verification and onus in reassessment proceedings initiated under direction of the Commissioner under u/s 263

Consignment sale versus ordinary sale - addition to income from undisclosed/under reported sales limited to estimated profit embedded in sales - remand for computation of taxable profit on unrecorded turnover - Whether the difference in turnover of Rs. 66,35,957/- should be added to the assessee's income in full or only to the extent of estimated profit embedded in such sales, and whether the matter should be remanded for verification and computation. - HELD THAT: - The Tribunal found that, on the material before it, the assessee failed to satisfactorily prove the character of the disputed receipts as consignment sales. However, the Tribunal held that characterization as consignment sale or ordinary sale was immaterial to the legal principle applicable: an entire sale consideration cannot automatically be treated as the assessee's income. Applying the reasoning in the cited authorities, the Tribunal explained that tax liability in respect of unrecorded or unverified sales should be confined to the profit attributable to such sales and not the full turnover. In view of the absence of conclusive verification, the Tribunal restored the matter to the Assessing Officer for fresh adjudication limited to computing and adding the estimated profits embedded in the disputed turnover, taking into account the gross profit declared by the assessee for the year and after affording reasonable and adequate opportunity of hearing to the assessee. [Paras 9]

Matter remitted to the Assessing Officer to make addition only to the extent of estimated profits embedded in sales of Rs. 66,35,957/-, applying the GP declared by the assessee and after providing opportunity of hearing.

Allowability of interest on borrowed capital for business purpose under u/s 36(1)(iii) and u/s 37(1) - Whether interest of Rs. 2,63,659/- paid on unsecured loans (claimed in personal books but utilized for the business) is allowable. - HELD THAT: - The Tribunal reviewed the accounts and documentary material, noting that loans were genuine, sourced through market finance brokers, paid through banking channels with TDS deducted, and that the funds were deployed into the proprietary business (M/s Kanodia Enterprises). The Tribunal rejected the CIT(A)'s speculative view that the unsecured loans were not applied to the business or that the interest was excessive, observing there was no evidence of related party payments or market rate contravention and that the assessee maintained separate personal and business books. Considering the totality of facts, including capital structure and utilization, the Tribunal concluded that the interest pertained to capital borrowed for business purposes and was therefore allowable under the cited provisions. [Paras 11]

Addition disallowing interest of Rs. 2,63,659/- deleted; interest held allowable as business expenditure.

Final Conclusion: The appeal is partly allowed: the addition for unexplained turnover is set aside for limited recomputation by the Assessing Officer to tax only estimated profit embedded in the disputed sales; the disallowance of interest on unsecured loans is deleted and the interest is allowed.

Deductibility of employee's contribution to provident/ESI funds - due date for crediting employee contributions - application of Section 43B to employee's contribution - retrospective effect of Finance Act, 2021 amendment to section 36(1)(va) r.w.s. 43B - precedential effect of Coordinate Bench decision

Deductibility of employee's contribution to provident/ESI funds - due date for crediting employee contributions - application of Section 43B to employee's contribution - Whether delayed remittance of employees' contribution to PF/ESI, though not deposited by the statutory due date but paid before the due date of filing the return, is allowable as a deduction for assessment year 2019-20. - HELD THAT: - The Tribunal examined the position that employee contributions are the employees' own money deposited by the employer in a fiduciary capacity and considered conflicting authority. The Tribunal followed the Coordinate Bench decision in Adyar Ananda Bhavan Sweets India P. Ltd. which applied the Supreme Court ratio in Vinay Cement and subsequent High Court decisions holding that where employee contributions are deposited before the due date for filing the return under section 139(1), no disallowance arises. Applying that precedent to the facts, the Tribunal held that the assessee, having remitted employee contributions before filing the return, is entitled to the deduction for AY 2019-20 despite the assessing officer's disallowance under section 36(1)(va). [Paras 6]

Claim for deduction of employee's contribution to PF/ESI paid before filing the return is allowed for AY 2019-20.

Retrospective effect of Finance Act, 2021 amendment to section 36(1)(va) r.w.s. 43B - precedential effect of Coordinate Bench decision - Whether the Finance Act, 2021 amendment (inserting Explanation 2 to section 36(1)(va) and related Explanation to section 43B) operates retrospectively so as to defeat the assessee's claim for AY 2019-20. - HELD THAT: - The Tribunal considered the legislative memorandum and the stated effective date of the amendment (with effect from 01.04.2021 for AY 2021-22 onwards) and the divergent judicial authorities. It agreed with the Coordinate Bench approach that the Finance Act, 2021 amendment is prospective in operation and therefore does not apply to assessment years prior to 2021-22. Relying on the Coordinate Bench decision and the principles governing retrospective or clarificatory amendments, the Tribunal held that the amended provisions do not affect AY 2019-20. [Paras 6]

The Finance Act, 2021 amendment to section 36(1)(va) r.w.s. 43B is not applicable to AY 2019-20; it applies from AY 2021-22 onwards.

Final Conclusion: Following the Coordinate Bench precedent, the Tribunal allowed the assessee's claim for deduction of employee PF/ESI contributions paid before filing the return for AY 2019-20 and held that the Finance Act, 2021 amendment does not apply to that assessment year; the appeal is allowed.

Reopening of assessment under section 147/148 of the Income tax Act - reasons to believe - application of mind by the Assessing Officer - prima facie material for reopening - addition under section 68 as unexplained cash credit - accommodation entries - natural justice - confronting assessee with material and opportunity to cross examine third party statements

Reopening of assessment under section 147/148 of the Income tax Act - reasons to believe - application of mind by the Assessing Officer - prima facie material for reopening - natural justice - confronting assessee with material - Validity of reassessment initiated under section 147/148 based on the report of DGIT(Inv.) and whether the Assessing Officer applied his mind in recording reasons to believe. - HELD THAT: - The Tribunal examined the reasons recorded for reopening and found that the Assessing Officer had largely reproduced the conclusions of the Investigation Wing without independent scrutiny. The AO did not demonstrate that he had examined the investigative reports, nor did he articulate how the material formed a nexus with escapement of income. The reasons contain conclusions rather than the factual or inferential basis required to constitute an independent satisfaction. In these circumstances there is a total non application of mind by the AO when recording the reasons to believe, and reliance solely on investigative findings not placed on record or independently considered is insufficient to sustain assumption of jurisdiction under section 147/148. [Paras 10, 11]

Reopening of assessment is invalid for lack of independent application of mind by the Assessing Officer; assumption of jurisdiction under section 147/148 is bad in law and cannot be sustained.

Addition under section 68 as unexplained cash credit - accommodation entries - creditworthiness and genuineness of loans - Whether the unsecured loans received from entities connected to Shri Praveen Kumar Jain could be treated as accommodation entries and added to income under section 68. - HELD THAT: - On merits the Tribunal considered the documentary material placed on record: bank statements showing receipts and repayments, ledger confirmations from the lenders and party books, and evidence that loans were transacted and settled through banking channels within the same or subsequent year. The Tribunal noted that the hallmark of accommodation entries-monetary amounts remaining in books and carried forward for years-was not present. The AO's treatment of the accounting entries as accommodation entries rested principally on the investigation report rather than on examination of the contemporaneous banking and ledger evidence. Applying these facts, the Tribunal found the assessee's evidence sufficient to establish identity, creditworthiness and genuineness of the loan transactions and therefore disagreed with the characterization as unexplained cash credit. [Paras 12, 14, 15]

Addition under section 68 treating the unsecured loans as accommodation entries is not sustained; the loans were held to be genuine and the related grounds of appeal are allowed.

Final Conclusion: The Tribunal held the reassessment was invalid for want of independent application of mind by the Assessing Officer and, on the merits, found the unsecured loans to be genuine; the appeal is allowed.

Characterisation of commission income as HUF income - allocation of commission income between HUF and individual member - relevance of documentary evidence (bill, books of account, TDS certificate, bank entry) to ownership of income - deletion of assessment addition where income is shown and taxed by HUF

Characterisation of commission income as HUF income - relevance of documentary evidence (bill, books of account, TDS certificate, bank entry) to ownership of income - allocation of commission income between HUF and individual member - Whether the commission of Rs. 8,35,000 was income of the HUF and taxable in the hands of the HUF or income of the individual assessee - HELD THAT: - The Tribunal examined documentary material on record and the comparative treatment in a closely related case. The HUF had filed a computation declaring commission income and paid tax thereon; a commission bill submitted by the HUF to the payer, entries in the payer's books showing payment to the HUF, the TDS certificate issued in favour of the HUF, and the bank statement evidencing deposit into the HUF's account were placed on record. On identical facts the HUF of the assessee's brother had been taxed on similar commission, which the Tribunal treated as relevant. In view of the contemporaneous documents demonstrating receipt and accounting of the commission by the HUF, the Tribunal found that the commission belonged to the HUF and not to the individual assessee. The Assessing Officer's conclusion that the income was that of the individual was therefore not sustainable and required deletion. [Paras 4, 10, 11, 12]

Addition of Rs. 8,35,000 made in the hands of the individual assessee deleted; the commission is held to be income of the HUF and taxed accordingly.

Final Conclusion: The appeal is partly allowed: the addition of commission income in the hands of the individual assessee is deleted and the income is held to belong to and be taxable in the HUF for Assessment Year 2011-12.

Moratorium against institution and enforcement of proceedings - suspension of appellate proceedings during moratorium - liberty to approach after moratorium - effect of higher court moratorium on subordinate proceedings

Moratorium against institution and enforcement of proceedings - effect of higher court moratorium on subordinate proceedings - Whether the Revenue's appeal could be proceeded with in view of the Supreme Court's moratorium order affecting the assessee and its subsidiaries. - HELD THAT: - The Tribunal noted the Supreme Court's order placing a moratorium against institution of proceedings and enforcement of orders in respect of Unitech Limited and its subsidiaries and accepted that the moratorium operates to suspend subordinate proceedings. In consequence, the Tribunal did not adjudicate the merits of the revenue grounds and dismissed the appeal on the ground that the moratorium precluded continuation of the appeal at this stage. The Tribunal recorded that the dismissal is without prejudice to the Revenue's right to seek adjudication once the moratorium period expires and relevant legal provisions permit resumption of proceedings. [Paras 5, 6]

Appeal dismissed in view of the Supreme Court's moratorium; merits not decided.

Liberty to approach after moratorium - suspension of appellate proceedings during moratorium - Whether the Revenue is permitted to seek adjudication after the moratorium period. - HELD THAT: - Although the Tribunal dismissed the appeal on account of the moratorium, it explicitly granted liberty to the Revenue to approach the Tribunal for adjudication once the moratorium period is over and as per law. This preserves the Revenue's right to pursue the raised grounds after the moratorium ceases to operate. [Paras 5]

Liberty granted to the Revenue to approach the Tribunal after the moratorium period for adjudication of the issues.

Final Conclusion: The appeal is dismissed on account of the Supreme Court's moratorium affecting Unitech and its subsidiaries; the merits of the revenue grounds remain undecided, and the Revenue is granted liberty to seek adjudication after the moratorium period ends.

Deductibility of employee's share of ESI/PF under section 36(1)(va) - application of section 43B to employee's contributions - due date for furnishing return under section 139(1) - retrospective effect of Finance Act, 2021 amendments - declaratory/clarificatory nature of statutory amendment

Deductibility of employee's share of ESI/PF under section 36(1)(va) - application of section 43B to employee's contributions - due date for furnishing return under section 139(1) - Employees' share of contribution to ESI/PF paid on or before the due date for furnishing the return for AY 2018-19 is allowable to the assessee. - HELD THAT: - The Tribunal noted that there is judicial authority (including the decision of the Karnataka High Court in Essae Teraoka Pvt. Ltd.) recognising that employee's contributions for purposes of section 36(1)(va) fall to be considered having regard to the payment rules under section 43B so as to permit deduction where payment is made on or before the due date for furnishing the return under section 139(1). In the present case there was no dispute that the employees' share of PF/ESI was paid on or before the due date for filing the return for AY 2018-19. Applying the view that employee contributions are covered by the payment-date regime reflected in section 43B, the Tribunal held that the addition under section 36(1)(va) could not be sustained for AY 2018-19 and that the addition should be deleted. [Paras 8, 10]

Addition made under section 36(1)(va) deleted and appeal allowed.

Retrospective effect of Finance Act, 2021 amendments - declaratory/clarificatory nature of statutory amendment - The amendments made by the Finance Act, 2021 to section 36(1)(va) and section 43B are prospective (applicable from 01.04.2021) and are not to be applied retrospectively to AY 2018-19. - HELD THAT: - The Tribunal examined the explanatory memorandum to the Finance Act, 2021 and observed that the amendments were stated to be applicable from 01.04.2021. The Tribunal held that provisions which impose or clarify liabilities generally cannot be given retrospective operation unless the legislature clearly intends so. In consequence, the clarificatory language inserted by the Finance Act, 2021 cannot be read as affecting periods prior to 01.04.2021, and therefore the amended position could not be invoked to sustain the addition for AY 2018-19. [Paras 8]

Amendments by Finance Act, 2021 held to be prospective and not applicable to AY 2018-19; amendment-based justification for addition rejected.

Final Conclusion: The Tribunal allowed the assessee's appeal for Assessment Year 2018-19, deleting the addition under section 36(1)(va) because the employees' contributions were paid before the due date for filing the return and the Finance Act, 2021 amendments relied upon by the revenue operate prospectively from 01.04.2021 and do not apply to the year under appeal.

Deductibility under section 36(1)(va) of employees' contribution deposited before due date of filing return - Deposit of employees' share of EPF/ESI after statutory due date but before due date for filing return u/s. 139(1) - Prospective amendment by Finance Act, 2021 introducing Explanation 2 and non-application of section 43B for determining due date under clause

Deductibility under section 36(1)(va) of employees' contribution deposited before due date of filing return - Deposit of employees' share of EPF/ESI after statutory due date but before due date for filing return u/s. 139(1) - Prospective amendment by Finance Act, 2021 introducing Explanation 2 and non-application of section 43B for determining due date under clause - Whether employees' share of contribution to EPF/ESI deposited after the due date under the respective Acts but before the due date for filing return under section 139(1) is allowable as deduction under section 36(1)(va) for the assessment years under consideration. - HELD THAT: - The Tribunal found as an admitted fact that the assessee deducted employees' share of EPF/ESI and deposited the same after the statutory due date under the respective enactments but before the due date for filing the return under section 139(1). Reliance was placed on precedent holding that there is no distinction between employer's and employees' contribution and that such deposits, if made before the due date of filing return, are deductible under the provision. The Tribunal noted that Finance Act, 2021 inserted an Explanation (Explanation 2) clarifying that section 43B would not apply for determining the due date under clause w.e.f. 01.04.2021, with effect from assessment year 2021-22; that amendment makes disallowance possible notwithstanding deposit before section 139 due date for later years. However, since the assessment years before the Tribunal (2018-19 and 2019-20) are anterior to the amendment, the pre-amendment position of law applies. Applying that law, the Tribunal held that no disallowance was warranted as the contributions were deposited before the due date for filing the return under section 139(1).

The disallowances of the employees' share of contribution to EPF/ESI for the assessment years 2018-19 and 2019-20 are deleted.

Final Conclusion: Both appeals by the assessee are allowed and the additions/disallowances made by the AO and sustained by the CIT(A) in respect of employees' share of contribution to EPF/ESI for the assessment years 2018-19 and 2019-20 are deleted, applying the pre Finance Act, 2021 position of law.

Summary order. Petition seeking special leave to appeal under Article 136 dismissed; all pending applications disposed of.

Summary order. Special Leave Petition under Article 136 of the Constitution of India dismissed; pending applications, if any, disposed of.

Non-compliance of court order - direction to process pending applications - opportunity of hearing - Focus Product Scheme - Clause 9.3 of Chapter 9 of Foreign Trade Policy and Handbook of Procedures - remand for fresh consideration - communication of decision and timelines

Non-compliance of court order - direction to process pending applications - remand for fresh consideration - Focus Product Scheme - Respondent No.3 has not complied with the earlier order dated 29th July 2021 and is directed to consider and decide the remaining applications. - HELD THAT: - The Court found prima facie that Respondent No.3 failed to comply with the Division Bench's order of 29th July 2021 which had directed processing of the petitioner's applications. Rather than initiating contempt proceedings at this stage, the Court directed Respondent No.3 to consider and process the remaining 46 applications afresh and to take a final decision in accordance with law after granting an opportunity of hearing to the petitioner's authorised officer, unless such opportunity is excluded by law or necessary implication. The order requires that this consideration and decision be completed within one month from receipt of this Order, thereby effectively remanding the applications for fresh consideration on merits and procedure. [Paras 2, 5, 6]

Respondent No.3 shall consider and process the remaining 46 applications and take a final decision thereon in accordance with law after affording an opportunity of hearing, within one month from receipt of this Order.

Clause 9.3 of Chapter 9 of Foreign Trade Policy and Handbook of Procedures - opportunity of hearing - The Respondent is required to consider Clause 9.3 of Chapter 9 of the Foreign Trade Policy and Handbook of Procedures while passing the decision. - HELD THAT: - The Court expressly directed that while deciding the pending applications Respondent No.3 must take into account Clause 9.3 of Chapter 9 of the Foreign Trade Policy and Handbook of Procedures. The petitioner had submitted that even delayed applications could be considered subject to application of the late cut as prescribed by that Clause; the Court therefore required Respondent No.3 not to ignore that provision in its fresh consideration of the applications. [Paras 3, 6]

Respondent No.3 shall consider Clause 9.3 of Chapter 9 of the Foreign Trade Policy and Handbook of Procedures while passing the decision on the applications.

Communication of decision and timelines - consequential benefit - Deadlines for communication of the decision and grant of consequential benefits; liberty to the applicant to challenge any adverse order. - HELD THAT: - The Court mandated that the Order passed by Respondent No.3 be communicated to the applicant within one week of its passing. If the decision is adverse, the applicant is at liberty to initiate appropriate proceedings. Conversely, if the decision is favourable, any consequential benefit shall be granted to the applicant within two weeks from the date of that decision. The Court recorded that it would not require the petitioner to file a fresh petition on the basis of the present non-compliance. [Paras 6]

The decision of Respondent No.3 shall be communicated within one week of being passed; the applicant may challenge any adverse order; if favourable, consequential benefits shall be granted within two weeks of that decision.

Final Conclusion: Interim application allowed. Respondent No.3 is directed to reconsider and decide the remaining applications under the Focus Product Scheme in accordance with law and Clause 9.3 of the Foreign Trade Policy, after affording an opportunity of hearing, within one month; the decision must be communicated promptly and consequential benefits, if any, implemented within the timelines specified; liberty granted to the applicant to pursue remedies against any adverse order.

Registration of duty credit scrips - binding effect of affidavit and earlier judicial proceedings - withdrawing from Denied Entity List (DEL) - protection of revenue by deposit and security - continuing investigation by enforcement agency not ipso facto bar to registration

Registration of duty credit scrips - binding effect of affidavit and earlier judicial proceedings - withdrawing from Denied Entity List (DEL) - continuing investigation by enforcement agency not ipso facto bar to registration - protection of revenue by deposit and security - Respondents' obligation to register duty credit scrips issued by DGFT, notwithstanding an ongoing DRI investigation, and the effect of earlier affidavit/withdrawal from DEL on respondents' ability to refuse registration. - HELD THAT: - The court found that DGFT had withdrawn the petitioner from the Denied Entity List and had issued the duty credit scrips, and that an affidavit to that effect was placed before and relied upon by the court in earlier proceedings which rendered that writ petition infructuous. Having accepted and acted on that affidavit, the respondents could not thereafter decline to register the scrips by back tracking without having moved in the earlier proceedings to recall or review the order. The mere pendency of an investigation by DRI, without any show cause notice or pending proceeding under the Act against the petitioner, did not justify withholding registration. The court observed that the authorities retain power to proceed against the petitioner and recover any amounts found due even after registration, and that indefinite delay in registration would cause prejudice to the petitioner. To protect the revenue while ordering registration, the court accepted the petitioner's offer to make an additional deposit and to furnish security, and accordingly directed registration subject to specified deposits and guarantees. The court therefore directed registration of the scrips in accordance with law within a short period after compliance with the conditions imposed. [Paras 13, 14]

Petition allowed in part; respondents directed to register the duty credit scrips upon petitioner complying with payment of additional deposit and furnishing of security, registration to be completed within 15 days of compliance.

Final Conclusion: Writ petition disposed of by directing registration of the duty credit scrips already issued by DGFT, subject to the petitioner depositing an additional sum and furnishing personal sureties as security; respondents may still proceed to recover any amounts found due after registration.

Confiscation of imported goods - clandestine removal to DTA - jurisdiction of customs authorities over SEZ units - application of SEZ Act as a self-contained code - rule favouring the assessee in case of ambiguity in taxing statutes - presumption of innocence

Confiscation of imported goods - clandestine removal to DTA - presumption of innocence - Validity of confiscation of 4 kgs. of gold imported and lying at Air Cargo Complex, Nedumbassery - HELD THAT: - The Tribunal examined the adjudicating authority's finding that absence of apparent supporting documents, suspension of the SEZ unit's licence and removal of machinery justified treating the 4 kgs. import as clandestine diversion to DTA and hence liable for confiscation. The Tribunal held that the Revenue had not shown that, at the time of import, the unit lacked licence or authorisation to import; the Development Commissioner had not cancelled the licence until a later date and the adjudicating authority acted prematurely on assumptions and presumptions. The Tribunal emphasised principles of natural justice and the presumption of innocence, observing that confiscation based on such premature inference and without adequate evidence was an abuse of process. For these reasons the confiscation order in respect of the 4 kgs. was found legally infirm and set aside. [Paras 6, 7]

Confiscation of the 4 kgs. gold set aside as unsustainable; impugned confiscation quashed.

Jurisdiction of customs authorities over SEZ units - application of SEZ Act as a self-contained code - rule favouring the assessee in case of ambiguity in taxing statutes - Whether authorities under the Customs Act had jurisdiction to adjudicate confiscation, demand duties and impose penalties in respect of activities of SEZ units - HELD THAT: - The Tribunal reviewed competing precedents and two conflicting Gujarat High Court decisions. Noting the inconsistency in authority and the existence of decisions of this Tribunal and High Court holding that the SEZ Act and its rules constitute a self-contained code excluding ordinary Customs Act jurisdiction, the Tribunal applied the established interpretive rule that ambiguities in taxing statutes are to be resolved in favour of the assessee. On that basis and having regard to the construction adopted by coordinate benches and the binding effect of the favourable High Court precedent, the Tribunal concluded that Customs authorities lacked jurisdiction to proceed under the Customs Act against the SEZ units in these appeals. Consequently the Tribunal did not deem it necessary to examine merits of other additions or penalties which became inconsequential. [Paras 8, 10]

Proceedings, demands and penalties under the Customs Act in respect of the appellants (SEZ unit and associated parties) set aside for lack of jurisdiction; appeals allowed with consequential relief.

Final Conclusion: The confiscation of 4 kgs. of gold is quashed for want of evidence and as an abuse of process; further, on the principal ground that the Customs authorities lacked jurisdiction to invoke the Customs Act against the SEZ unit(s) in these matters, the impugned orders, demands and penalties are set aside and the appeals are allowed with consequential relief as per law.

Amendment of documents under Section 149 of the Customs Act - Conversion of free shipping bill to export promotion scheme shipping bill - Time limit prescribed by administrative circular versus statutory provision - Proviso to Section 149 - documentary evidence in existence at the time of export - Requirement of physical examination for permitting amendment - Inadvertent clerical mistake versus fraud or mis-declaration - Applicability and limits of Board Circular No.36/2010

Amendment of documents under Section 149 of the Customs Act - Time limit prescribed by administrative circular versus statutory provision - Applicability and limits of Board Circular No.36/2010 - Whether a request to convert a free shipping bill into an advance authorization shipping bill can be rejected on the ground that it was filed beyond the three months' period prescribed by Board Circular No.36/2010 when Section 149 contains no time limit. - HELD THAT: - Section 149 permits the proper officer, in his discretion, to authorise amendment of a shipping bill provided the proviso's requirement of documentary evidence in existence at the time of export is satisfied; the provision contains no statutory time-limit for seeking amendment. A Board circular cannot override or defeat the statutory scheme by imposing a period which the statute does not prescribe. The Tribunal and High Court authorities relied upon establish that the three-month constraint in Board Circular No.36/2010 cannot be applied to deny conversion where Section 149's conditions are met. Applying this principle to the facts, the rejection of the appellant's request solely on the ground of delay beyond three months is not sustainable. [Paras 10, 11, 12, 13]

The three-month time-limit in Board Circular No.36/2010 cannot be invoked to refuse conversion/amendment where Section 149 applies and the requisite documentary evidence existed at the time of export.

Requirement of physical examination for permitting amendment - Proviso to Section 149 - documentary evidence in existence at the time of export - Inadvertent clerical mistake versus fraud or mis-declaration - Whether amendment/conversion can be refused because the exported goods were not subjected to physical examination before export. - HELD THAT: - Section 149 does not impose any condition that physical examination must have been carried out before an amendment can be authorised; the statutory test is documentary - amendment after export is permissible only on the basis of documentary evidence that existed at the time of export. Where the record shows that the shipping bills and invoices indicated export under advance authorization and the mistakes were inadvertent clerical errors (wrong scheme code and an incorrect licence number), and there is no material suggesting fraud or mis-declaration, the request for conversion should not be rejected on the ground that physical verification did not take place. [Paras 14, 15, 16]

Absence of physical examination is not a bar to allowing conversion/amendment under Section 149 where documentary evidence existing at the time of export establishes eligibility and the error is inadvertent.

Final Conclusion: The impugned order rejecting conversion of the free shipping bills to advance authorization shipping bills is set aside; the appeal is allowed and the matter is remediable with consequential reliefs consistent with the court's reasoning.

Rectification of clerical error in tribunal order - requirement of sending notices 30 days in advance - service of meeting notices by registered post, courier or email - proxy appointment for meetings held through video conferencing - compliance with Ministry of Corporate Affairs circular dated 08th April 2020 - representation of members for voting under Section 112 and 113 of the Companies Act, 2013

Requirement of sending notices 30 days in advance - service of meeting notices by registered post, courier or email - Modification of the direction on timing and mode of service of notices for convening meetings of shareholders, secured creditors and unsecured creditors. - HELD THAT: - The Tribunal modified its earlier order to clarify that notices for the meetings of shareholders of Transferee Company No.1 and Transferor Company No.3, and for the meetings of shareholders, secured creditors and unsecured creditors referred to in paragraphs 18A(i), 18B(i) and 18C(i)(ii), shall be sent 30 days in advance of the scheduled meeting date. Such notices are to be dispatched by registered post or courier or by email and must indicate the date, place and time and be accompanied by the proposed scheme, explanatory statement and other documents required under the Companies Act, 2013. The modification rectifies the earlier phrasing and prescribes the manner and timeframe for service of the meeting notices.

The original order is modified to require dispatch of meeting notices by registered post, courier or email 30 days before the meeting, accompanied by the scheme and explanatory materials.

Proxy appointment for meetings held through video conferencing - compliance with Ministry of Corporate Affairs circular dated 08th April 2020 - representation of members for voting under Section 112 and 113 of the Companies Act, 2013 - Whether the direction to send prescribed proxy forms along with scheme documents should stand where meetings are to be convened through video conferencing. - HELD THAT: - Relying on the MCA circular dated 08th April 2020, the Tribunal held that the facility for appointment of proxies is not applicable to meetings convened through video conferencing. Consequently, the earlier direction to send prescribed proxy forms with scheme documents has been recalled. However, the Tribunal clarified that in pursuance of Sections 112 and 113 of the Companies Act, 2013, representatives of members may be appointed for the purposes of voting through remote e voting or for participation and voting in meetings held via video conferencing or OAVM. Paragraph 18(D) of the earlier order is accordingly modified to reflect these directions.

Direction to send proxy forms is recalled for meetings held via video conferencing; appointment of member representatives under Sections 112 and 113 and remote e voting remain permissible.

Rectification of clerical error in tribunal order - Clarification whether individual notices to shareholders, secured creditors and unsecured creditors (including small balance creditors) need to be dispensed with. - HELD THAT: - The Tribunal examined the applicant's requests for clarification concerning the necessity of sending individual notices to shareholders and to secured and unsecured creditors (including creditors with small outstanding balances). It found that there is no confusion regarding the requirement to send individual notices of convening the meetings of secured and unsecured creditors of the Transferee Company and directed the applicant to comply with the directions of the order in letter and spirit. No dispensation from sending individual notices was granted.

No dispensation from the requirement of sending individual notices was made; the applicant must comply with the order as modified.

Final Conclusion: The application is disposed of by modifying the earlier order: notices for the specified meetings must be sent 30 days in advance by registered post, courier or email with the requisite documents; the direction to send proxy forms is recalled for meetings held via video conferencing in accordance with the MCA circular, while representatives under Sections 112 and 113 and remote e voting are permitted; and no exemption from sending individual notices to creditors/shareholders is granted.

Limitation bar to an application under Section 9 of the Code - accrual of right to sue from last payment / date debt fell due - effect of correspondence / legal notice on running of limitation - condonation of delay under Section 5 of the Limitation Act

Limitation bar to an application under Section 9 of the Code - accrual of right to sue from last payment / date debt fell due - Application under Section 9 was barred by limitation and rightly dismissed. - HELD THAT: - The Adjudicating Authority and this Tribunal proceeded on the basis that the debt in respect of the unpaid invoices last fell due on 10.04.2014 and no payment was made thereafter. The right to sue accrued from the last payment made (31.03.2014) and, in any event, the limitation period would run from the date the debt fell due as shown in Part IV of the Section 9 application. On the material placed on record there is no event which extended the period of limitation beyond three years from the relevant date. Accordingly the Section 9 application, filed on 26.03.2021, was time barred and its rejection on that ground was confirmed. [Paras 6, 7, 10]

Section 9 application dismissed as barred by limitation.

Effect of correspondence / legal notice on running of limitation - condonation of delay under Section 5 of the Limitation Act - Correspondence between parties (legal notice and reply) did not stop or extend limitation and there was no sufficient cause shown for condonation under Section 5. - HELD THAT: - The legal notice dated 25.04.2014 and the Corporate Debtor's reply seeking a 10% bank guarantee did not arrest or suspend the running of limitation which began when the amount became due and payable. The Appellant did not place any material to demonstrate sufficient cause for condonation of delay under Section 5 of the Limitation Act, and the Tribunal found no basis to exercise jurisdiction to condone the delay. In the absence of supporting evidence justifying extension or condonation, the benefit of Section 5 could not be granted. [Paras 8, 9, 10]

No extension of limitation from the correspondence; no condonation under Section 5 could be granted.

Final Conclusion: The appeal is dismissed; the Section 9 application was time barred and the correspondence relied upon did not extend limitation nor furnish sufficient cause for condonation under Section 5 of the Limitation Act.

Exclusion of period of CIRP - extension of CIRP period - discretion to extend CIRP beyond 330 days in exceptional cases - Committee of Creditors' approval by 100% voting - objective of the Insolvency and Bankruptcy Code to revive corporate debtor; liquidation as a last resort

Exclusion of period of CIRP - extension of CIRP period - discretion to extend CIRP beyond 330 days in exceptional cases - Application for exclusion/extension of CIRP period by further 90 days was permissible and appeal allowed. - HELD THAT: - The Tribunal examined the Adjudicating Authority's refusal to grant exclusion of a further 90 days despite the Committee of Creditors having approved the resolution-related steps by 100% voting. It accepted that, in exceptional circumstances, the adjudicatory authorities possess discretion to permit exclusion/extension of the CIRP period (as recognised by higher authority), and that such discretion may be exercised to further the remedial objective of the Code. Applying that principle, the Tribunal found the case to be exceptional and that allowing the exclusion would aid revival of the corporate debtor and align with the Code's object that liquidation is a last resort. On that basis the Tribunal set aside the impugned order and allowed the appeal to permit the sought exclusion/extension.

Appeal allowed; impugned order set aside and exclusion/extension for 90 days permitted.

Committee of Creditors' approval by 100% voting - objective of the Insolvency and Bankruptcy Code to revive corporate debtor; liquidation as a last resort - The CoC's unanimous approval to reissue EOI and to file application for exclusion was a material and persuasive factor in permitting the extension. - HELD THAT: - The Tribunal recorded that the Resolution Professional and the CoC had taken concrete steps - including reissuing EOI and authorising filing of an application for exclusion - and that a resolution plan had been submitted by a prospective applicant and was under scrutiny. Coupled with impediments caused by the pandemic and attachment of the corporate debtor's assets by investigative agencies, these circumstances justified treating the matter as exceptional. The Tribunal held that permitting the exclusion would prevent prejudice and promote substantial justice in furtherance of the Code's rehabilitative purpose.

CoC's unanimous resolution and the circumstances stated justified allowing the exclusion; no order as to costs.

Final Conclusion: The Tribunal allowed the appeal, set aside the Adjudicating Authority's order refusing exclusion, and permitted exclusion/extension of the CIRP period by 90 days on the facts and in view of the Code's object to preserve the corporate debtor where revival was plausible.

Section 9 application under Insolvency and Bankruptcy Code, 2016 - pre-existing dispute - spurious, hypothetical or illusory dispute - plausible contention which requires further investigation - limited inquiry by the adjudicating authority into existence of a dispute - notice under Section 8

Pre-existing dispute - spurious, hypothetical or illusory dispute - limited inquiry by the adjudicating authority into existence of a dispute - Section 9 application under Insolvency and Bankruptcy Code, 2016 - plausible contention which requires further investigation - Existence of a pre existing dispute between the parties prior to issuance of Section 8 notice such as would bar admission of the Section 9 application. - HELD THAT: - Applying the test laid down in Mobilox Innovative Pvt. Ltd. (as reproduced in the judgment), the Adjudicating Authority's role at the threshold is confined to determining whether a dispute truly exists in fact and is not a patently feeble, spurious, hypothetical or illusory defence warranting rejection. The material on record shows extensive WhatsApp communications and reminders from the appellant about non payment, none of which prior to 20.05.2019 contain any complaint about the quality of goods. The first email asserting deficiency in quality was dated 20.05.2019, after repeated reminders and after the appellant warned of approaching the NCLT. Documents relied on by the respondent (credit notes issued to its buyers) were not linked by any contemporaneous communication to complaints made to the appellant about the supplied goods; no correlation was established that those credit notes resulted from defects in the appellant's supplies. On this material the alleged dispute was held to be an after thought raised when legal action loomed and therefore patently illusory. Consequently, the adjudicating authority's conclusion that a pre existing dispute existed was erroneous and the Section 9 application could not have been rejected on that ground. [Paras 6, 12, 13, 14, 15]

There was no bona fide pre existing dispute prior to the Section 8 notice; the contention of deficiency in quality was illusory and raised belatedly, and the Adjudicating Authority's rejection of the Section 9 application on that basis was set aside.

Final Conclusion: The order of the Adjudicating Authority dated 01.04.2021 rejecting the Section 9 application is set aside; the matter is remitted to the Adjudicating Authority to admit the Section 9 application after four weeks, with liberty to the parties to settle in the meantime.

Operational debt and default - Pre-existing dispute under section 5(6) of IBC, 2016 - Limitation under Article 137 of Limitation Act - Admission under section 9(5) of IBC, 2016 - Moratorium under section 14(1) of IBC, 2016 - Appointment of Interim Resolution Professional

Operational debt and default - Operational Creditor established existence of operational debt and default by the Corporate Debtor in respect of invoices for logistics services. - HELD THAT: - The Tribunal examined the demand notice, ledger and invoices annexed to the Section 8 notice and found that the invoices were made out in the Corporate Debtor's name and accounted in the Corporate Debtor's ledger. The ledger shows a running account of transactions between the parties for services rendered from 1.4.2014 to 18.2.2019, with the last payment received on 19.10.2016 and outstanding entries reflecting the claimed liability. The Corporate Debtor failed to produce cogent evidence to rebut the ledger entries or to demonstrate that the amounts were not payable; the points raised in reply related to reconciliation of payments rather than the non-existence of the debt. [Paras 8, 9]

Debt and default in respect of the invoices were held proved and established against the Corporate Debtor.

Pre-existing dispute under section 5(6) of IBC, 2016 - Alleged pre-existing dispute was not established within the meaning of section 5(6) of the Code. - HELD THAT: - The Corporate Debtor's reply to the Section 8 notice raised issues about non-accounting of certain payments, claims of refunds, TDS credits and alleged discrepancies in invoicing and rates. The Tribunal found these contentions to amount to matters of reconciliation and accounting, contended to have been raised after receipt of the demand notice, and not supported by cogent evidence showing a bona fide existing dispute prior to the demand notice. Consequently, the defence did not qualify as a pre-existing dispute that would bar the Section 9 application. [Paras 7, 8]

The plea of a pre-existing dispute was rejected and held insufficient to defeat the Section 9 petition.

Limitation under Article 137 of Limitation Act - The application under Section 9 was held to be within limitation as governed by Article 137 of the Limitation Act. - HELD THAT: - The Tribunal noted the last payment on running account was made on 19.10.2016 and the Section 9 application was filed on 14.8.2019. Applying the principle that an admission restarts limitation, and considering the ledger entries and admitted transactions, the Tribunal held the application to be within the period prescribed by Article 137 and not time-barred. [Paras 9]

The petition was held to be filed within limitation and not barred by time.

Admission under section 9(5) of IBC, 2016 - Appointment of Interim Resolution Professional - Moratorium under section 14(1) of IBC, 2016 - The Tribunal admitted the Section 9 application under section 9(5), appointed an Interim Resolution Professional and declared moratorium; directions were given for deposit of funds to meet IRP's expenses. - HELD THAT: - Having found debt, default, no bona fide pre-existing dispute, and that the application was within limitation, the Tribunal admitted the application under section 9(5) of the IBC. As the Operational Creditor had not proposed an IRP, the Tribunal appointed a named registered IRP subject to standard conditions of consent and disclosures. The statutory moratorium under section 14(1) was directed to follow, listing prohibitions during the moratorium. The Operational Creditor was directed to deposit a specified amount with the IRP to enable performance of her functions, subject to later adjustment by the Committee of Creditors. [Paras 9, 10, 11, 12]

Section 9 application admitted; IRP appointed; moratorium declared; Operational Creditor directed to deposit funds to the IRP.

Final Conclusion: The Tribunal admitted the Section 9 petition, holding that the Operational Creditor established operational debt and default, that no pre-existing dispute barred the petition, and that the petition was within limitation; an Interim Resolution Professional was appointed, statutory moratorium under section 14(1) was declared, and the Operational Creditor was directed to deposit funds to meet the IRP's initial expenses.

Initiation of Corporate Insolvency Resolution Process - admission of application under Section 9 of the IBC, 2016 - moratorium under Section 14 of the IBC, 2016 - supply of essential goods or services during moratorium - supersession of the board of directors upon initiation of CIRP - appointment of Interim Resolution Professional subject to IBBI authorisation - discharge of Official Liquidator on initiation of CIRP

Initiation of Corporate Insolvency Resolution Process - admission of application under Section 9 of the IBC, 2016 - appointment of Interim Resolution Professional subject to IBBI authorisation - supersession of the board of directors upon initiation of CIRP - discharge of Official Liquidator on initiation of CIRP - Corporate Insolvency Resolution Process is to be initiated against the corporate debtor and the interim resolution professional appointed; the Official Liquidator is discharged and the board of directors stands superseded. - HELD THAT: - The proceedings transferred from the High Court to this Adjudicating Authority were examined and it was found that the affairs of the corporate debtor have not been completely wound up. On that basis the petition is admitted under Section 9 of the Code and CIRP is initiated. The applicant's proposed candidate for Interim Resolution Professional has filed consent in Form-2 and the IBBI record shows authorisation for assignment; accordingly the proposed IRP is appointed to take forward the CIRP, perform functions required by the Code (including actions under Sections 15, 17 and 18) and file his report within the time directed. As a consequence of initiation of CIRP, the Official Liquidator is discharged of duties relating to the company in liquidation and the powers of the board of directors are superseded for the duration of the CIRP.

Petition admitted under Section 9; CIRP initiated; proposed IRP appointed; Official Liquidator discharged; board of directors superseded.

Moratorium under Section 14 of the IBC, 2016 - supply of essential goods or services during moratorium - Moratorium under Section 14 (including its scope, exceptions and duration) is to operate from the date of this order in relation to the corporate debtor. - HELD THAT: - On admission of the Section 9 petition, the moratorium envisaged by Section 14(1) follows and bars institution or continuation of suits or proceedings, transferring or disposing of assets, enforcement of security interests and recovery of property occupied by the corporate debtor, subject to the statutory explanation concerning licences and similar grants. The statutory non-termination protection for supply of essential goods or services under Section 14(2) and the preservation of critical supplies under Section 14(2A) are noted. The moratorium period is to remain in effect from the date of this order until completion of the CIRP, and will cease earlier if a resolution plan is approved or an order for liquidation is passed in accordance with Section 14(4).

Moratorium under Section 14 operates from the date of this order until completion of CIRP (or earlier on approval of a resolution plan or liquidation), with statutory protections and specified exceptions as set out.

Final Conclusion: The Section 9 petition is admitted and CIRP is initiated against the corporate debtor; the appointed Interim Resolution Professional shall proceed in accordance with the Code, the Official Liquidator is discharged, the board is superseded and moratorium under Section 14 is effective from the date of this order until completion of the CIRP (subject to the statutory exceptions and earlier cessation upon approval of a resolution plan or liquidation).

Withdrawal of application under Section 12A - Rule 11 inherent powers of NCLT - Regulation 30A of CIRP Regulations - Constitution of the Committee of Creditors - Inherent jurisdiction cannot be invoked to bypass prescribed procedure - Distinction between withdrawal simpliciter and scheme of arrangement

Rule 11 inherent powers of NCLT - Regulation 30A of CIRP Regulations - Inherent jurisdiction cannot be invoked to bypass prescribed procedure - Invocation of Rule 11 of NCLT Rules, 2016 for withdrawal of an admitted petition in lieu of the procedure under Section 12A and Regulation 30A. - HELD THAT: - The Tribunal examined whether the applicants could invoke Rule 11 (inherent powers) to procure withdrawal of the admitted Company Petition instead of following the procedure under Section 12A read with Regulation 30A. It noted that prior to substitution of Regulation 30A (25.07.2019) Rule 11 was the only recourse, but after substitution Regulation 30A prescribes the specific mechanism for withdrawal both before and after constitution of the CoC. The Tribunal relied on the Supreme Court's discussion in Arun Kumar Jagtramka that the substitution of Regulation 30A followed Swiss Ribbons and now contemplates withdrawal through the IRP (before constitution of CoC) and through IRP/RP thereafter. It also relied on NCLAT authority that inherent power is available only where no specific remedy exists and cannot be used to bypass a prescribed statutory procedure. In view of these legal propositions and the absence of any higher court decision overruling Regulation 30A, the Tribunal held that Rule 11 cannot be invoked to circumvent the Statutory procedure under Section 12A/Regulation 30A and refused to exercise inherent jurisdiction in the instant case. [Paras 14, 17, 20, 21, 24]

Rule 11 shall not be invoked in the instant case; applicants must follow the withdrawal procedure under Section 12A and Regulation 30A.

Withdrawal of application under Section 12A - Regulation 30A of CIRP Regulations - Constitution of the Committee of Creditors - Distinction between withdrawal simpliciter and scheme of arrangement - Effect and applicability of Regulation 30A (as substituted) and the position in light of Swiss Ribbons and Arun Kumar Jagtramka. - HELD THAT: - The Tribunal considered the applicants' reliance on Swiss Ribbons and on selective portions of Arun Kumar Jagtramka. It observed that Swiss Ribbons (dated 25.01.2019) allowed recourse to the NCLT under Rule 11 where the CoC had not yet been constituted at a time when no specific regulation existed. However, Regulation 30A was substituted on 25.07.2019 to provide a statutory procedure for withdrawal under Section 12A both before and after constitution of the CoC (application through the IRP before constitution, and through IRP/RP thereafter). The Tribunal found that Arun Kumar Jagtramka records this legislative and regulatory development and distinguishes withdrawal simpliciter from settlement and scheme processes. Given the substituted Regulation 30A and absence of any higher court decision invalidating it, the Tribunal held that Regulation 30A furnishes the appropriate and exclusive procedure for withdrawal of an admitted application under Sections 7, 9 or 10, and that the applicants' contention of inconsistency or reliance on pre-amendment practice is unsustainable. [Paras 18, 20, 22, 23, 24]

Regulation 30A (as substituted) is the prescribed mechanism for withdrawal under Section 12A and must be followed; the applicants' contentions to the contrary are rejected.

Final Conclusion: The interlocutory application under Rule 11 is dismissed; liberty granted to the applicants to file the appropriate application for withdrawal in accordance with Section 12A and Regulation 30A of the CIRP Regulations.

Business auxiliary service - definition of business auxiliary service under Section 65(19) - including promotion for marketing or sale of goods - promotion for marketing or sale of goods - service tax liability on auxiliary services

Business auxiliary service - promotion for marketing or sale of goods - service tax liability on auxiliary services - Characterisation of facilitation charges received by the State tourism corporation from empanelled shop owners as a business auxiliary service attracting service tax. - HELD THAT: - The court examined the agreements under which shop owners paid facilitation fees to the appellant on condition that the appellant's tourist buses would stop at their showrooms so that tourists could be taken for shopping. The definition of business auxiliary service in Section 65(19) of the Finance Act, 1994 includes promotion for marketing or sale of goods produced or provided by or belonging to the client. The tribunal had found on the facts that the arrangement amounted to promotion of the sale of goods of the shop/showroom owners. The High Court, on perusal of the agreements and the factual matrix, agreed with the tribunal's factual conclusion that the activity amounted to marketing of the shop owners' goods and therefore fell within the ambit of business auxiliary service, rendering the facilitation charges taxable as such.

The levy of service tax on the facilitation charges as a business auxiliary service is upheld and the appeal is dismissed.

Final Conclusion: The High Court affirmed the tribunal's conclusion that the facilitation charges constituted a taxable business auxiliary service (promotion of sale of goods) and dismissed the appeal; no question of law arose.

Mandatory online payment of filing fees - acceptance of demand drafts in lieu of online payment - bona fide tender within period of limitation - admission of appeals upon payment - technical glitches in online payment

Bona fide tender within period of limitation - acceptance of demand drafts in lieu of online payment - The petitioner had bona fide tendered demand drafts within the period of limitation and the bona fides of the petitioner cannot be doubted. - HELD THAT: - The Court noted that the petitioner had taken demand drafts on 23.12.2020, a date falling within the period of limitation. On the materials before it, the Court found that this fact establishes the petitioner's bona fides in attempting to pay the filing fee by demand draft. Having recorded that the demand drafts were tendered within the limitation period and relying on that factual position, the Court held that the petitioner's bona fides could not be doubted and that this circumstance warranted equitable consideration of the appeals despite the change in the fee-payment mechanism. [Paras 9]

Petitioner's tender of demand drafts within the limitation period is bona fide and cannot be doubted.

Mandatory online payment of filing fees - technical glitches in online payment - admission of appeals upon payment - Although the system now requires online payment, the petitioner is permitted to make the filing fee payment online within a stipulated time and, upon such payment, the appellate authority must accept the payment and consider the appeals on merits. - HELD THAT: - Respondents asserted that the mode of payment has shifted exclusively to online and that any earlier technical snag is now rectified; petitioner accepted that he could now make the online payment. Balancing the respondents' procedural position with the petitioner's bona fide tender within limitation, the Court exercised its supervisory jurisdiction to afford the petitioner an opportunity to comply with the current online requirement. The Court directed that if the petitioner pays the filing fees through the online method within 30 days from receipt of a copy of the judgment, the appellate authority shall accept the payment into its files and proceed to consider the stay petition and the appeal on merits. The Court left any issue of expired demand drafts to be resolved between the petitioner and the bank. [Paras 9, 10]

Petitioner permitted to pay filing fees online within 30 days; upon payment the appellate authority shall accept and consider the appeals on merits.

Final Conclusion: Writ petitions disposed of by permitting the petitioner to make the filing-fee payment by the mandated online method within 30 days from receipt of the judgment; on such payment the appellate authority shall admit the appeals and consider them on merits; issues regarding expired demand drafts to be taken up with the bank.

Liability to service tax on services provided by clubs/associations - binding precedent of State of West Bengal v. Calcutta Club Limited - adjudication under the Finance Act, 1994

Liability to service tax on services provided by clubs/associations - binding precedent of State of West Bengal v. Calcutta Club Limited - adjudication under the Finance Act, 1994 - Service tax demand for services rendered by the petitioner as a club/association for the period April 2016 to June 2017 was not maintainable in view of prevailing precedent. - HELD THAT: - The Court found that the question whether the petitioner was liable to pay service tax for services rendered as a club/association is covered in favour of the petitioner by the decision of the Hon'ble Supreme Court in State of West Bengal v. Calcutta Club Limited, a decision which this Court has applied previously in the petitioner's own case. Having applied that binding precedent, the Court held there was no need to require the petitioner to file a reply or undergo the adjudication process under the Finance Act, 1994 in respect of the stated period, and accordingly allowed the writ petition with consequential relief. [Paras 3, 4]

Writ petition allowed; service tax demand for April 2016 to June 2017 set aside in view of the Supreme Court decision and the Court's earlier order; no need for filing reply or further adjudication; connected petitions closed; no costs.

Final Conclusion: The writ petition challenging the service tax statement of demand for April 2016 to June 2017 is allowed; the demand is set aside in view of the Supreme Court's decision in State of West Bengal v. Calcutta Club Limited and this Court's earlier order in the petitioner's case, with consequential relief and no costs.

Disproportionate penalty - Penalty not to exceed tax liability - Principles of natural justice - Quantification of penalty - Remand for de-novo adjudication

Disproportionate penalty - Penalty not to exceed tax liability - Quantification of penalty - Principles of natural justice - Validity of imposition and quantification of penalty which aggregated to an amount exceeding the confirmed duty demand and deduction from the refund. - HELD THAT: - The Tribunal examined whether the penalty quantified and adjusted against the appellant's refund was permissible when it far exceeded the confirmed duty demand of Rs. 40,318/-. Relying on authoritative decisions cited by the Tribunal, it was held that a penalty which exceeds the tax (duty) liability becomes disproportionate, loses its corrective nexus and may be constitutionally infirm. The Tribunal noted that the adjudicating order for the first time quantified interest and penalty and that the show cause notice did not specifically invoke the provision permitting per day penalty. Having regard to settled principles that penalty must be reasonable and not exceed the extent of the levy, the Tribunal concluded that the aggregate deductions (penalty and other sums) from the refund were unreasonable. Consequently, adjustment of amounts beyond the confirmed duty (i.e., other than Rs. 40,318/-) from the sanctioned refund was held impermissible. [Paras 7, 8, 9]

Imposition and quantification of penalty to the extent it exceeded the duty demand was set aside; deduction from the refund limited to the duty amount of Rs. 40,318/-.

Remand for de-novo adjudication - Status of the remaining adjudication on show cause notices seeking demands for multiple periods and whether remand affects the present relief. - HELD THAT: - The Tribunal observed that adjudication in relation to the impugned show cause notices (including claims for abatement and reverse charge) remains pending because the matter was earlier remanded for de-novo fresh adjudication. The Tribunal clarified that setting aside the quantification of penalty and limiting the deduction from the refund to the confirmed duty would not prejudice the pending de-novo adjudication and that the remanded proceedings shall take their independent course. [Paras 1, 9]

Matters remanded for fresh adjudication remain pending; present order setting aside excess deductions will not prejudice the pending de-novo adjudication.

Final Conclusion: Appeal allowed; impugned order set aside to the extent it quantified and adjusted penalties and other amounts beyond the confirmed duty demand - refund adjustment limited to the duty amount of Rs. 40,318/-. The adjudication on the show cause notices remains remanded for fresh de-novo consideration.

Quashing of show-cause notice for inordinate delay - duty to adjudicate show-cause notice within a reasonable period - requirement to inform party when show-cause notice is kept in call book - violation of principles of natural justice by belated adjudication - onus on revenue to preserve prosecution-readiness and not on assessee to retain evidence indefinitely

Quashing of show-cause notice for inordinate delay - duty to adjudicate show-cause notice within a reasonable period - violation of principles of natural justice by belated adjudication - Validity of the Show Cause Notice dated 16 September 2005 in view of the inordinate delay of adjudication and absence of hearing or communication to the petitioner. - HELD THAT: - The Court found that the Show Cause Notice was issued on 16 September 2005, the petitioner filed a reply within four weeks, and thereafter no hearing or adjudication was communicated to the petitioner for about 16 years. The respondent did not establish that the petitioner was informed that the notice had been kept in a call book. Relying on the principle that a show-cause notice must be taken to a logical conclusion within a reasonable time, the Court held that prolonged inaction followed by belated adjudication offends fairness and natural justice. The Court adopted the reasoning in Parle International Ltd. that where revenue keeps a notice in a call book it must inform the party so that (a) the party is aware the notice remains alive and can safeguard evidence, and (b) the party can challenge the reasons for abeyance, thereby ensuring transparency. The Court also observed that it is not reasonable to expect an assessee to preserve evidence indefinitely; the duty to conclude proceedings in a timely manner rests on the revenue. Given the gross delay and absence of any communication that the notice was kept in call book, the Show Cause Notice could not be permitted to be proceeded with. [Paras 7, 8, 9, 10, 11]

The Show Cause Notice dated 16 September 2005 is quashed and set aside.

Final Conclusion: The writ petition is allowed; the impugned Show Cause Notice dated 16 September 2005 issued to the petitioner is quashed for inordinate delay and failure to inform the petitioner of its being kept in call book, such belated adjudication being held violative of natural justice.

Maintainability of writ challenging attachment order - challenge to attachment order conditional on challenge to underlying adjudication order by appeal - effect of failure to file statutory appeal due to expiry of limitation - no power to condone delay in filing appeal (Harshad Chiman Lal Modi principle)

Maintainability of writ challenging attachment order - challenge to attachment order conditional on challenge to underlying adjudication order by appeal - effect of failure to file statutory appeal due to expiry of limitation - Writ petition challenging the attachment order is not maintainable in the absence of an appeal against the adjudication order which is the foundation of the attachment. - HELD THAT: - The Court held that the attachment order dated 22-3-2021 stands on and flows from the earlier adjudication order dated 19-12-2017. The adjudication order was appealable but no appeal was filed, the petitioner relying on the expiry of limitation. In such circumstances the petitioner cannot circumvent the statutory appellate remedy by seeking relief through writ proceedings; the foundation of the attachment having remained unchallenged by way of appeal, the writ cannot be entertained to assail the consequential attachment. The Court treated the failure to prefer the available appeal as fatal to the maintainability of the writ challenge to the attachment. [Paras 1, 2, 3]

Writ petition dismissed insofar as it challenges the attachment order, because no appeal was filed against the underlying adjudication order.

No power to condone delay in filing appeal (Harshad Chiman Lal Modi principle) - effect of failure to file statutory appeal due to expiry of limitation - Delay in filing the statutory appeal could not be condoned and the petitioner could not rely on expiry of limitation as a ground to avoid filing the appeal. - HELD THAT: - The Court noted the petitioner's admission that, following the precedent in Harshad Chiman Lal Modi v. DLF Universal Ltd. & Anr., there is no power to condone delay in filing the appeal. Consequently, the excuse that an appeal was not maintainable due to the expiry of limitation did not provide any basis to permit a writ to challenge the attachment. The default in prosecuting the statutory appeal therefore could not be turned to the petitioner's advantage. [Paras 2, 3]

The petitioner's plea of limitation is not a ground to sustain the writ; delay in filing the appeal cannot be condoned.

Final Conclusion: The writ petition is dismissed: the attachment order cannot be challenged by writ in the absence of an appeal against the adjudication order which was appealable, and delay in preferring the appeal cannot be condoned under the cited precedent.

Pre-deposit for second appeal inclusive of first-appeal pre-deposit - entitlement to refund of pre-deposit paid - power to adjust sanctioned refund against departmental arrears - Section 11 as garnishee provision - Section 35F pre-deposit - supersession of departmental circular by judicial decision (Santani Sales)

Pre-deposit for second appeal inclusive of first-appeal pre-deposit - Section 35F pre-deposit - supersession of departmental circular by judicial decision (Santani Sales) - entitlement to refund of pre-deposit paid - Whether the mandatory pre-deposit for filing appeal before CESTAT is 10% inclusive of the 7.5% pre-deposit already made before Commissioner (Appeals), and whether the appellant was entitled to refund of the entire pre-deposit actually made. - HELD THAT: - The Tribunal applied the decision of the Hon'ble Delhi High Court in Santani Sales to hold that the 10% pre-deposit required for second appeals before the Tribunal is inclusive of the 7.5% pre-deposit made for the first appeal, leaving an effective additional deposit of 2.5% at the time of filing the second appeal. However, the appellant had, pursuant to the law and Circulars prevailing when the second appeal was filed, deposited a total of 17.5% (7.5% earlier and 10% for the second appeal). That deposit qualifies as a pre-deposit under Section 35F of the Central Excise Act. Because the Tribunal subsequently set aside the demand/penalty, the appellant is entitled to refund of the entire amount actually pre-deposited (i.e., 17.5%) together with interest, and the adjudicating authority erred in sanctioning refund only to the extent of 10%. [Paras 7, 8, 9]

The 10% pre-deposit for CESTAT is inclusive of the earlier 7.5% pre-deposit; the appellant, having deposited 17.5% under the law prevailing at the time, is entitled to refund of the entire pre-deposit with interest.

Power to adjust sanctioned refund against departmental arrears - Section 11 as garnishee provision - entitlement to refund of pre-deposit paid - Whether the sanctioning authority could adjust/set off the sanctioned refund against departmental arrears. - HELD THAT: - The Tribunal examined Section 11 as amended and concluded that the post-amendment provision operates as a garnishee mechanism enabling recovery from amounts owing to the assessee by third parties, but does not provide the adjudicating authority with a statutory power to unilaterally adjust or set off a sanctioned refund against departmental dues. In the absence of any specific statutory provision authorising adjustment of amounts due to the assessee against amounts due to the Department, it is improper for the Revenue to make such an adjustment; the correct course is to sanction and disburse the refund and, if necessary, pursue recovery of departmental dues by appropriate recovery proceedings. [Paras 10, 11]

The adjudicating authority had no power to adjust the sanctioned refund against departmental arrears; the adjustment of Rs. 2,43,608/- was erroneous and resulted in short disbursement.

Final Conclusion: The order under challenge is set aside: the appellant is entitled to refund of the entire pre-deposit actually made (17.5%) with interest, and the adjustment of sanctioned refund against departmental arrears is held improper; the appeal is allowed.

Precedential effect of tribunal orders pending challenge - binding precedential value of tribunal orders on subordinate appellate authorities - judicial discipline in the appellate hierarchy - excisability of incidental scrap not resulting from manufacture

Precedential effect of tribunal orders pending challenge - binding precedential value of tribunal orders on subordinate appellate authorities - judicial discipline in the appellate hierarchy - Whether the Commissioner (Appeals) was bound to follow the Tribunal's earlier decision in the appellant's own case on the excisability issue and whether refusal to treat that decision as precedent because the Department 'accepted' it on monetary grounds was permissible. - HELD THAT: - The Tribunal had earlier, in appeals by the appellant, held that the scrap materials did not emerge as a result of any manufacturing process and therefore were not excisable. The present appeal involved the same issue and the Commissioner (Appeals) admitted identity of issue but declined to treat the Tribunal's earlier order as precedent solely on the ground that the Department had accepted that Tribunal order on monetary limits. The Appellate Tribunal held that so long as the Tribunal's order had not been set aside by the High Court or the Supreme Court, it possessed precedential value and was binding on subordinate authorities, including the Commissioner (Appeals). The refusal to follow the Tribunal's decision on the basis that the Department had chosen to accept it on monetary grounds was contrary to the principles of judicial discipline and settled authorities which require subordinate authorities to give effect to directions of higher appellate fora unless those orders have been stayed or set aside. [Paras 11, 12, 13, 20, 21]

The Commissioner (Appeals) was bound to follow the Tribunal's earlier decision on the excisability issue; his refusal to treat that decision as precedent because the Department had accepted it on monetary grounds was incorrect.

Excisability of incidental scrap not resulting from manufacture - Whether the waste and scrap cleared by the appellant qualify as excisable goods. - HELD THAT: - The Tribunal's earlier reasoning, reproduced by the Appellate Tribunal, concluded that the various scrap items arose incidentally during the manufacture of the appellant's finished products and did not result from any manufacturing process that would render them excisable. The Tribunal relied on the principle that marketability alone does not convert an incidental emergence into a result of manufacture and noted that the onus lies on the Revenue to show that goods emerged due to manufacture. Applying that principle to the materials in question, the Tribunal held they were not liable to excise duty. [Paras 10]

The scrap and waste materials cleared by the appellant do not qualify as excisable goods.

Final Conclusion: The impugned order of the Commissioner (Appeals) is set aside; the appeal is allowed on the ground that the Commissioner (Appeals) should have followed the Tribunal's earlier decision that the scrap was not excisable, and therefore no duty was leviable on the scrap cleared during the stated period.

Personal penalty under Rule 15(1) of Cenvat Credit Rules, 2004 - liability of employee for wrongful availment of cenvat credit - validity of bill of entry as supporting document for cenvat credit - requirement of mens rea/fraud for imposition of personal penalty - effect of SVLDR settlement on departmental proceedings

Personal penalty under Rule 15(1) of Cenvat Credit Rules, 2004 - liability of employee for wrongful availment of cenvat credit - requirement of mens rea/fraud for imposition of personal penalty - validity of bill of entry as supporting document for cenvat credit - Whether personal penalty could be imposed on the appellant-employee for alleged wrongful availment of cenvat credit where credit was availed on a bill of entry in the name of another unit of the same entity and the bill of entry was not an invalid or forged document. - HELD THAT: - The Tribunal found that the company had availed cenvat credit on the strength of a bill of entry which was in the name of the company's other unit located at a different place. The bill of entry itself was not an invalid or forged document; the lapse consisted only in taking credit on a bill of entry not in the name of the particular unit. The main company's liability has been dealt with under SVLDR settlement, and that determination obviates further discussion as to the company's case. Considering the nature of the lapse, and that both units belong to the same entity and the availment did not result in double benefit, the Tribunal held that there was no evidence of intentional fraud or requisite mens rea on the part of the employee to attract a personal penalty. On these findings the Tribunal concluded that imposition of a personal penalty on the employee was not justified. [Paras 4, 5]

Penalty imposed on the appellant under Rule 15(1) read with Rule 26 is set aside and the appeal is allowed with consequential relief.

Final Conclusion: The appeal succeeds: personal penalty on the employee quashed because the bill of entry was not invalid or forged, the lapse related to misnaming of unit within the same entity without evidence of fraud, and the main company's matter has been settled under SVLDR.

Obligations under Rule 6 of the Cenvat Credit Rules, 2004 - Option to maintain separate accounts or pay proportionate/revised amount under Rule 6(3) and Rule 6(3A) - Recovery of wrongly availed CENVAT credit under Rule 14 of the Cenvat Credit Rules, 2004 - Penalty for wrongful availing/utilisation of CENVAT credit under Rule 15 of the Cenvat Credit Rules, 2004 - Retrospective amendment to Rule 6 by Finance Act, 2010 and its procedural consequences - Principle that reversal of credit is equivalent to non availment of credit (Chanderpur Magnet Wires principle) - Requirement and scope of Chartered Accountant certificate for proportionate credit

Option to maintain separate accounts or pay proportionate/revised amount under Rule 6(3) and Rule 6(3A) - Recovery of wrongly availed CENVAT credit under Rule 14 of the Cenvat Credit Rules, 2004 - Sustainability of show cause notices demanding 10% of value of exempted goods under Rule 6(3) enforced through recovery under Rule 14 - HELD THAT: - The Tribunal held that Rule 6 offers alternatives to the manufacturer and does not empower Revenue to compel the assessee to adopt any particular option; if CENVAT credit is wrongly availed it is recoverable under Rule 14 but Rule 14 does not itself confer power to impose the choice under Rule 6(3). Therefore SCNs issued to recover an amount equivalent to 10% of value of exempted goods under Rule 6(3) by invoking Rule 14 lack legal basis. The Tribunal relied on the statutory scheme and supporting High Court authority to conclude that Revenue cannot make the choice for the assessee and that the impugned SCNs are unsustainable in law. [Paras 25, 29, 30]

SCNs seeking recovery of an amount equal to 10% under Rule 6(3) (via Rule 14) are not sustainable and cannot be confirmed.

Retrospective amendment to Rule 6 by Finance Act, 2010 and its procedural consequences - Scope of remand for adjudicating authority - Whether the Commissioner exceeded the scope of this Tribunal's remand by deciding compliance under Rule 6(2) instead of only applying Finance Act, 2010 - HELD THAT: - The Tribunal examined the terms of its earlier remand and found no restriction that confined the Adjudicating Authority to decide solely in the light of the retrospective amendment. The remands were open, prompted by the retrospective amendment, and did not curtail the Commissioner from examining compliance with the unamended Rule 6(2). Consequently, the Commissioner did not act beyond the scope of the remand in finding compliance with Rule 6(2). [Paras 26, 29, 30]

The Commissioner acted within the scope of the remand in examining and deciding compliance under Rule 6(2).

Obligations under Rule 6 of the Cenvat Credit Rules, 2004 - Principle that reversal of credit is equivalent to non availment of credit (Chanderpur Magnet Wires principle) - Requirement and scope of Chartered Accountant certificate for proportionate credit - Whether the respondent fulfilled obligations under Rule 6(2) by taking only 85% of credit on common inputs/input services - HELD THAT: - The Tribunal held that Rule 6(2) requires maintenance of separate accounts but prescribes no specific form; compliance can be achieved by various practical methods including procuring commonly and accounting proportionately or by taking credit and reversing the attributable portion. Applying the Chanderpur Magnet Wires principle, reversal or non availment is treated as compliance. The respondent produced Chartered Accountant certificates and evidence that exempted clearances never reached 15% while credit was limited to 85%. Revenue produced no contrary calculations or evidence. On the available record the Tribunal accepted the CA certificates and concluded that the respondent met the requirements of Rule 6(2). [Paras 28, 29, 30]

Respondent complied with Rule 6(2) by restricting credit to 85% and by producing Chartered Accountant certification; demands were rightly dropped.

Recovery of wrongly availed CENVAT credit under Rule 14 of the Cenvat Credit Rules, 2004 - Sustainability of demands framed invoking Rule 14 and extended limitation in the show cause notices - HELD THAT: - Having held that SCNs seeking to enforce Rule 6(3) via Rule 14 are without legal basis and that the respondent complied with Rule 6(2), the Tribunal concluded that the demands framed under Rule 14 are not sustainable. The statutory recovery provision (Rule 14) authorises recovery of wrongly taken credit, but it does not empower Revenue to impose an option under Rule 6(3); moreover, on facts the respondent had not wrongly availed the credit as certified. [Paras 25, 29, 30]

Demands under Rule 14 in the SCNs are not sustainable and cannot be upheld.

Penalty for wrongful availing/utilisation of CENVAT credit under Rule 15 of the Cenvat Credit Rules, 2004 - Whether penalty is imposable under Rule 15 - HELD THAT: - In view of the conclusions that the SCNs under Rule 6(3)/Rule 14 are not sustainable and that the respondent had complied with Rule 6(2) (having limited credit to 85% and produced CA certification), there is no basis for invoking penal provisions of Rule 15. The Tribunal thereby negated the factual and legal foundation for penalty liability under the rules. [Paras 29, 30]

No penalty is imposable under Rule 15.

Final Conclusion: All appeals filed by Revenue are rejected and the impugned orders of the Commissioner dropping the demands are upheld; cross objections are disposed of. The SCNs demanding 10% under Rule 6(3) (via Rule 14) are unsustainable, the Commissioner acted within the remand, the assessee complied with Rule 6(2) by limiting credit to 85% as evidenced by CA certificates, and no recovery or penalty under Rules 14 and 15 can be sustained.

Penalty for avoidance or evasion of tax under Section 61 of the RVAT Act, 2003 - Liability where forged or fake declaration forms are used to evade tax - Mens rea not essential for imposition of civil penalty for contravention of statutory obligations - Requirement of recording cogent findings before setting aside a penalty

Penalty for avoidance or evasion of tax under Section 61 of the RVAT Act, 2003 - Liability where forged or fake declaration forms are used to evade tax - Requirement of recording cogent findings before setting aside a penalty - Whether the Tax Board erred in setting aside the penalty imposed under Section 61 of the RVAT Act, 2003 where Forms C submitted by the assessee were found to be forged and fake and tax and interest were upheld - HELD THAT: - The High Court held that the Assessing Officer and the Appellate Authority both concurrently found that the Forms C submitted by the assessee were not genuine, and that the assessee failed to prove bonafides before any authority (paras 10-11). Section 61 penalises concealment or deliberate furnishing of inaccurate particulars or concealment of transactions in the records and therefore caters to cases of active concealment or deliberate misinformation; those statutory ingredients were present on the material (para 16). The court observed that the Tax Board exonerated the assessee from penalty without recording cogent findings on merits or considering the statutory scheme and the provisions of Section 61, despite the proved fact of forged Forms C used to avoid payment of tax (para 18). Relying on the principle that civil penalties enacted to protect revenue do not necessarily require mens rea, the court reinforced that contravention of statutory obligations attracts penalty irrespective of subjective intent where the statutory tests are satisfied (paras 13-15, citing the reasoning distilled from precedent). Coordinate decisions relied upon by the assessee were held inapplicable or not binding in the facts of the present case (para 17). Given these conclusions, the court found the Tax Board's liberal approach unjustified and reinstated the penalty levied by the Assessing Authority (paras 18-19). [Paras 10, 11, 16, 18, 19]

The Tax Board's order setting aside the penalty was quashed and set aside; the assessee is liable to pay the penalty as directed in the assessment order dated 31.03.2010.

Final Conclusion: The petition is allowed; the order dated 09.05.2017 of the Rajasthan Tax Board is quashed and set aside and the penalty imposed by the Assessing Authority under Section 61 of the RVAT Act, 2003 is reinstated.

Admission of additional evidence under Section 12B on the ground that evidence could not be produced despite due diligence - deduction for goods returned within six months under Explanation-II Clause (ii) of Section 2(i) read with Rule 44A(b) - impermissibility of drawing adverse conclusions based on conjecture or suspicion without enquiry or verification - obligation of revenue to verify and account for tax deposits made by an assessee and to adjust verified deposits against demand

Admission of additional evidence under Section 12B on the ground that evidence could not be produced despite due diligence - Whether the Tribunal was justified in rejecting the assessee's application to admit two belatedly-obtained forms III-B where those forms were not issued by the purchasing dealer in time despite the assessee's pursuit. - HELD THAT: - The Court held that Section 12B contemplates admission of additional evidence where such evidence could not be produced despite due diligence. The assessee demonstrated that the purchasing dealer delayed issuance and that the two forms III-B were obtained before the amendment of the Rules and were therefore valid. The Tribunal erred by refusing to consider the third situation under Section 12B and by rejecting the application without regard to the explanation and material showing pursuit of the purchasing dealer. The Court relied on analogous authority and concluded the Tribunal's refusal was erroneous.

Application to admit the two forms III-B is to be allowed for verification; Tribunal's rejection set aside.

Deduction for goods returned within six months under Explanation-II Clause (ii) of Section 2(i) read with Rule 44A(b) - Whether the assessee was entitled to deduction for goods returned within six months where the claim was supported by debit notes reconciled with excise gate passes and the Assessing Authority had recorded inconsistent findings. - HELD THAT: - The Court found that the statutory scheme and Rule 44A(b) permit deduction for goods returned within six months. The assessment order contained internally inconsistent findings-initial acceptance of the goods-return claim followed by unexplained rejection. In the absence of rebuttal to the debit note and excise gate pass reconciliation, and given the finding that returns occurred within two months, the appellate and tribunal authorities erred in not correcting the assesssing authority's inconsistent conclusion. The assessee was therefore entitled to the deduction.

Deduction for goods returned within the statutory period is allowed and the demand relating to that turnover is to be deleted.

Impermissibility of drawing adverse conclusions based on conjecture or suspicion without enquiry or verification - Whether the Tribunal and lower authorities were justified in treating sales of CI castings as machinery parts by imposing on the assessee a negative burden to prove absence of machining facilities or machining operations. - HELD THAT: - The Court held that it is impermissible to saddle the assessee with a negative burden to prove non-existence of machining or lack of machining tools. Where suspicion arises from inconsistent bill descriptions, the proper course would have been for the Assessing Authority to make enquiries from purchasing dealers or to carry out a survey of the assessee's premises. In the absence of any such enquiry, the findings treating the castings as machined and sustaining demand were based on conjecture and thus perverse and contrary to law.

Findings treating sales as machinery parts are set aside; demand on that basis is deleted.

Obligation of revenue to verify and account for tax deposits made by an assessee and to adjust verified deposits against demand - Whether the Tribunal was justified in refusing the assessee an exercise of verification in respect of taxes the assessee claimed to have deposited after the assessment order. - HELD THAT: - The Court observed that once the assessee claimed deposits, the Assessing Authority was obliged to verify such payments because the State accounts for receipts and must account for every deposit. Non-inclusion of such deposits in original returns does not absolve the revenue of the duty to verify and adjust any verified payments against the outstanding demand. The Tribunal erred in refusing the verification exercise.

Revenue to verify the payments claimed and to adjust any verified deposits against the demand.

Final Conclusion: Revision allowed. The Tribunal's order is set aside to the extent indicated: the two forms III-B are to be admitted for verification; the deduction for goods returned within six months and deletion of demand on CI castings are confirmed in favour of the assessee; and the revenue is directed to verify and adjust the tax deposits claimed by the assessee.

Entitlement to refund where tax collected from ultimate consumer - issuance of 'C' forms for inter-state purchases used in manufacture/power/mining - principle of unjust enrichment - interim order directing issuance of 'C' forms and effect on refund claim - refund notwithstanding absence of dealer registration in the State of collection

Entitlement to refund where tax collected from ultimate consumer - principle of unjust enrichment - issuance of 'C' forms for inter-state purchases used in manufacture/power/mining - The writ applicant is entitled to refund of the tax amount collected from it under the C.S.T. Act and deposited by the seller. - HELD THAT: - The Court accepted the writ applicant's contention that it bore the ultimate burden of tax and relied upon earlier High Court decisions (including the Bombay High Court order directing issuance of 'C' forms) and this Court's precedent in J. K. Cement Ltd. The reasoning applied the principle that refund lies in favour of the person who bore the tax and that issuance of 'C' forms for inter state purchases used in manufacturing/power/mining supports the claim. The Court also noted that the Supreme Court refused special leave against the precedent relied upon by the applicant, thereby reinforcing the entitlement to refund. On these grounds the petition succeeds and refund was directed. [Paras 3, 6, 7, 8]

Writ allowed and respondents directed to forthwith refund the tax amount collected from the writ applicant under the C.S.T. Act.

Refund notwithstanding absence of dealer registration in the State of collection - interim order directing issuance of 'C' forms and effect on refund claim - Objections that the applicant was not registered in Gujarat and that the Bombay High Court order was interim are not tenable to deny refund. - HELD THAT: - The Court considered the respondents' two fold objections and held them unsustainable in law. Relying on this Court's earlier decision in J. K. Cement Ltd., the court observed that where the purchaser has borne the tax and C forms have been issued (even pursuant to interim directions), a hyper technical objection based on absence of registration in the State of collection cannot defeat the refund claim. The Court further recorded that the Bombay High Court had directed issuance of C forms and that the Supreme Court had declined special leave in related proceedings, which undercut the respondents' reliance on the interim character of that order. [Paras 5, 6, 7]

Respondents' objections rejected; directed to process and pay the refund despite the asserted lack of Gujarat registration and the interim nature of the earlier order.

Final Conclusion: The writ petition is allowed: respondents are directed to refund the tax collected from the petitioner under the C.S.T. Act (the amount claimed) forthwith, such exercise to be completed within four weeks from receipt of this order.

Rebuttable presumption under Section 118(a) of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act as to holder receiving cheque for discharge of liability - rebuttal by preponderance of probabilities - burden of proof shifts to complainant after successful rebuttal of statutory presumptions - appellate interference in judgments of acquittal - double presumption and scope of review

Rebuttable presumption under Section 118(a) of the Negotiable Instruments Act - presumption under Section 139 of the Negotiable Instruments Act as to holder receiving cheque for discharge of liability - rebuttal by preponderance of probabilities - Whether the presumptions under Section 118(a) and Section 139 of the Negotiable Instruments Act stood rebutted on the materials produced by the accused, thereby vitiating the inference of liability against the 1st respondent. - HELD THAT: - The Court examined the evidence of DW1 and documents Exts.D1 to D8 in light of the statutory presumptions. While Section 118(a) and Section 139 raise rebuttable presumptions that a negotiable instrument is made for consideration and that the holder received the cheque for discharge of liability, the accused need only advance a probable case on a preponderance of probabilities to rebut them. The 1st respondent consistently maintained that the cheque in question (No.06361) and two other cheques were delivered as blank cheques to a chitty-conductor (Joy Orathel) in 1997 and were subsequently misused; he filed complaints and procured FIRs to that effect (Exts.D1-D8). Those materials, viewed together with his deposition, furnished overwhelming and consistent evidence to raise a probable and plausible explanation for the cheque's possession by the complainant. In these circumstances the statutory presumptions were held to be rebutted and did not operate to establish the offence against the 1st respondent. [Paras 9]

The presumptions under Section 118(a) and Section 139 were rebutted on the materials produced by the 1st respondent.

Burden of proof shifts to complainant after successful rebuttal of statutory presumptions - appellate interference in judgments of acquittal - double presumption and scope of review - Whether, after the presumptions were rebutted, the appellant had discharged the burden to prove the offence and whether the appellate court ought to disturb the magistrate's order of acquittal. - HELD THAT: - Once the statutory presumptions were held rebutted, the onus reverted to the complainant to prove the transaction and delivery of the cheque. The record contains no independent evidence-no witnesses to the alleged payment, no documents evidencing the loan or payment to the 1st respondent, and no credible explanation as to how the cheque reached the complainant apart from the 1st respondent's consistent account. The learned Magistrate, having evaluated demeanour and evidence, concluded that the complainant failed to prove execution and delivery. Applying the guidelines for appellate review of acquittals (including recognition of the double presumption in favour of the accused and the limited scope for disturbing concurrent reasonable conclusions), the High Court found no basis to interfere with the acquittal. [Paras 10, 11, 12]

The appellant failed to prove the offence after rebuttal of presumptions, and the appellate court declined to disturb the trial court's acquittal.

Final Conclusion: The appeal is dismissed; the acquittal of the 1st respondent in C.C. No.4/2005 is confirmed on the grounds that the presumption under Sections 118(a) and 139 was rebutted and the complainant thereafter failed to establish the offence, and there is no valid basis to reverse the trial court's finding of acquittal.

Compounding of offence under the Negotiable Instruments Act - inherent jurisdiction under Section 482 of the Code of Criminal Procedure, 1973 - application of Damodar S. Prabhu guidelines on compounding - quashing of conviction on amicable settlement between parties - condition of deposit with State Legal Services Authority as requirement for compounding (15% at High Court/revision/appeal stage)

Compounding of offence under the Negotiable Instruments Act - inherent jurisdiction under Section 482 of the Code of Criminal Procedure, 1973 - quashing of conviction on amicable settlement between parties - Impugned conviction under Section 138 of the Negotiable Instruments Act to be quashed in view of an amicable settlement and exercise of inherent jurisdiction. - HELD THAT: - The Court found that the parties had amicably settled the dispute and the complainant filed an affidavit expressing no objection to quashing the conviction. The Court applied its earlier reasoning in Khokhar Iliyas Bismilla Khan (as cited) and the guiding principles in Damodar S. Prabhu to conclude that, given the private nature of the transaction and absence of prejudice to the State, the inherent powers under Section 482 could be exercised to avoid relegating parties to appellate remedy and to bring finality. On these bases the Court allowed the application and quashed the judgment and order of conviction and all consequential proceedings. [Paras 5, 6, 8]

Impugned judgment and order of conviction dated 18.02.2021 and consequential proceedings are quashed and set aside.

Application of Damodar S. Prabhu guidelines on compounding - condition of deposit with State Legal Services Authority as requirement for compounding (15% at High Court/revision/appeal stage) - Condition that the accused must deposit 15% of the cheque amount with the Gujarat State Legal Services Authority as a prerequisite for giving effect to the quashing order. - HELD THAT: - Relying on the guidelines in Damodar S. Prabhu, the Court held that compounding at the High Court/revision/appeal level is permissible subject to payment by the accused of 15% of the cheque amount as costs to be deposited with the appropriate Legal Services Authority. The complainant's affidavit and settlement enabled allowing compounding, but the Court directed the applicant to deposit the specified sum within four weeks and to produce the receipt before the order is given effect. [Paras 7, 9]

Applicant directed to deposit 15% of the cheque amount with the Gujarat State Legal Services Authority within four weeks; on production of receipt the quashing order shall take effect.

Final Conclusion: The petition under Section 482 CrPC is allowed: the conviction under Section 138 NI Act is quashed and set aside in view of an amicable settlement, subject to the applicant depositing 15% of the cheque amount with the Gujarat State Legal Services Authority within the time directed, upon production of which the order will be given effect.

Presumption under Section 118 of the Negotiable Instruments Act - cheque issued as security versus cheque issued for consideration - Order 41 Rule 23A CPC - remand for retrial - production of additional evidence on appeal - best evidence rule and adverse inference under Section 114 Evidence Act

Presumption under Section 118 of the Negotiable Instruments Act - cheque issued as security versus cheque issued for consideration - Whether the plaintiff had proved execution of Ext. A1 cheque and the existence of a legally enforceable debt such that the presumption under Section 118 would arise and whether the defendant had rebutted that presumption by setting up a probable defence - HELD THAT: - The appellate court examined the oral and documentary evidence adduced at trial. PW2's bank statement and parts of PW3's testimony probabilise transfers from the plaintiff; PW3's evidence was, however, inconsistent and unreliable and the trial court declined to rely on it. The trial court also drew attention to the plaintiff's non-production of other available documentary evidence which, in the view of that court, rendered the plaintiff's case suspect and entitled the court to draw an adverse inference under the best-evidence principle. The defendant's pleaded case that the cheques were given only as security was supported by the fact that two earlier cheques (Exts. B1 and B2) were returned to him after alleged completion of supplies, and by the improbability of Kerala cheques being used for Dubai transactions. At the same time, documentary material (Ext. A17) contained an entry suggesting a substantial payment to a person with a name similar to the defendant, which the trial court rejected for want of specific pleading and explanation in evidence. Balancing these factors, the High Court did not finally decide the substantive question on the merits but held that sufficient doubt and lacunae in the trial evidence existed to justify a fresh adjudication. The court applied the principles governing the presumption under Section 118 - that once execution and signature are established a presumption of consideration arises but is rebuttable on preponderance of probabilities - and observed that the drawer must set up a probable defence; it also considered the impact of non-production of best evidence under Section 114 of the Evidence Act. Given the state of the record and the existence of potentially material documents not fully explained or tested at trial, the court concluded that a retrial was necessary to enable complete adjudication of whether the cheque represented a legally recoverable debt or was merely a security. [Paras 10, 11, 19, 21]

The question of whether Ext. A1 represented a legally enforceable debt and whether the presumption under Section 118 was rebutted was not finally determined on merits; the matter is remanded for fresh disposal so that the plaintiff may adduce additional evidence and the defendant may rebut the same.

Order 41 Rule 23A CPC - remand for retrial - production of additional evidence on appeal - best evidence rule and adverse inference under Section 114 Evidence Act - Whether the appeal court should admit additional evidence or remit the suit to the trial court for fresh disposal under Order 41 R. 23A CPC - HELD THAT: - The court recalled that admission of additional evidence on appeal is exceptional and governed by Order 41 Rules 23/23A/27 CPC. The High Court reviewed authorities cautioning against remand as a routine exercise and recognised the conjunctive conditions for invoking Rule 23A: (i) that the appellate court, on analysis, should find the decree liable to be reversed; and (ii) that a retrial is essential for complete adjudication. Applying these principles to the record - including gaps in the plaintiff's evidence, the existence of documents not explained at trial (notably Ext. A17), and the serious factual dispute on whether the cheques were security or payment instruments - the court exercised its discretion to remand. The court concluded that, in the interest of justice and given the high stake and evidentiary lacunae, a remand was warranted to allow the plaintiff to produce additional documents and to enable the defendant to meet such evidence, while also directing that the trial court shall take into account the evidence already on record along with any new evidence and endeavour to dispose of the suit expeditiously. [Paras 14, 16, 19, 21]

Appeal allowed in part; impugned judgment and decree set aside and the suit remanded to the trial court for fresh disposal permitting production of additional evidence and retrial limited to adjudication on the existing and newly adduced evidence.

Final Conclusion: Appeal allowed; the decree of the trial court is set aside and the suit is remanded for fresh disposal under Order 41 R. 23A CPC, permitting the plaintiff to adduce additional evidence and the defendant to rebut the same, with directions to the trial court to consider both the evidence already on record and the newly produced material and to dispose of the suit at the earliest.

Section 37 NDPS Act - non bailable nature and embargo in commercial quantity cases - custodial statement under Section 67 NDPS Act and admissibility - Tofan Singh principle on involuntariness of statements obtained in custody - parity with co accused in grant of bail - weight of circumstantial evidence - consignment note, CDR/Whatsapp data and witness statements

Section 37 NDPS Act - non bailable nature and embargo in commercial quantity cases - weight of circumstantial evidence - consignment note, CDR/Whatsapp data and witness statements - Grant of regular bail to the petitioner despite allegations of offence involving commercial quantity under the NDPS Act and the embargo in Section 37. - HELD THAT: - The Court considered the statutory embargo in Section 37 requiring the court, when the Public Prosecutor opposes bail, to be satisfied that there are reasonable grounds to believe the accused is not guilty and will not commit an offence while on bail. Applying that test to the materials on record, the Court noted absence of direct recovery from the petitioner, infirmities in the prosecution case on origin and handling of the consignment (discrepancies regarding consignment slip and absence of record in seizure memo), absence of corroborative testimony from the Apex Courier employee Danish who allegedly received the parcel, and that the only direct link purportedly against the petitioner included his own statement under Section 67 and the reference to his car number in Satpal's statement. The Court found these materials insufficient to satisfy the stringent Section 37 test and, having regard to the petitioner's prolonged custody since January 2019 and the state of evidence, deemed it fit to grant regular bail subject to conditions. [Paras 16, 17, 18]

Petitioner granted regular bail on furnishing bond and sureties and subject to conditions including non departure from the country and intimation of change of address/mobile.

Custodial statement under Section 67 NDPS Act and admissibility - Tofan Singh principle on involuntariness of statements obtained in custody - Reliance on the petitioner's statement under Section 67 for conviction or denial of bail was rejected as inadmissible/unreliable in view of the Supreme Court decision in Tofan Singh and attendant facts. - HELD THAT: - The Court observed that the petitioner's statement under Section 67 was recorded after continuous custody with NCB officials and was retracted at the earliest opportunity. Relying on the principle in Tofan Singh, the Court held that the statement could not be relied upon for the purposes of denying bail. In the absence of admissible, independent evidence corroborating the contents of that statement - notably no statement from Danish to establish actual handover of parcels by the petitioner - the Court treated the Section 67 statement as inadmissible/unreliable for deciding the bail application. [Paras 2, 13, 14]

The petitioner's statement under Section 67 is not a reliable or admissible basis to refuse bail and was not relied upon to oppose release.

Parity with co accused in grant of bail - weight of circumstantial evidence - consignment note, CDR/Whatsapp data and witness statements - Parity with co accused who were earlier granted bail did not automatically entitle or disentitle the petitioner, but comparative roles and evidentiary differences were considered in exercising discretion. - HELD THAT: - The Court noted earlier orders granting regular bail to co accused Mohan Kumar and Birpal and examined whether the petitioner's role was materially different. While the prosecution urged lack of parity, alleging the petitioner and Brij Bhushan Bansal were principally involved, the Court found that the material relied upon to distinguish roles (consignment origin, CDR/Whatsapp links and courier handling) did not sufficiently establish the petitioner's active complicity: the consignment note showed origin and destination inconsistently in the record, CDR/Whatsapp material offered by the prosecution did not, in the absence of corroboration, conclusively link the petitioner to receipt or delivery of the contraband, and witnesses who could directly identify handover were not examined. Therefore, parity considerations did not prevent the Court from granting bail in the present circumstances. [Paras 2, 5, 12, 18]

Differences in roles alleged by the prosecution were not shown by sufficiently cogent evidence to deny bail; parity with co accused was considered but did not preclude release.

Final Conclusion: The petition was allowed and regular bail was granted to the petitioner on furnishing a personal bond and two sureties subject to conditions (including not leaving the country without permission and intimating change of address/mobile); observations in the order are confined to the bail petition and shall not affect the trial on merits.

Offence under Section 138 of the Negotiable Instruments Act - Interpolation in negotiable instrument - Admission of signature and its evidentiary effect - Presumption of service by registered post - Re-appreciation of evidence in revision jurisdiction

Interpolation in negotiable instrument - Admission of signature and its evidentiary effect - Interpolation alleged in Ex. P.2 and contention that cheque was originally for a lesser amount - HELD THAT: - The trial Court considered the suggestion that the figure '11' was inserted behind '5' but found no material on record to establish that the cheque was originally for Rs. 5,000/-. Ex. P.2 bears the amount in words and figures as Rs. 1,15,000/-. The petitioner admitted his signature on the cheque and did not dispute the amount written in words. The Court held that once the signature is admitted, the contention that the cheque was filled up by someone else is insufficient to negate liability in the absence of supporting evidence or steps taken (such as instructing the bank to stop payment). The appellate Court did not err in upholding these findings. [Paras 8, 9]

The allegation of interpolation is rejected and the finding of the courts below that Ex. P.2 is for Rs. 1,15,000/- and is valid stands.

Presumption of service by registered post - Offence under Section 138 of the Negotiable Instruments Act - Validity of service of demand notice (Ex. P.4) relied upon for Section 138 prosecution - HELD THAT: - Postal acknowledgment (Ex. P.5) was produced and the petitioner did not dispute the address on the postal cover; the signature on the acknowledgment was in Hindi. The Court applied the principle in C.C. Alavi Haji that where a notice is sent by registered post correctly addressed to the drawer, service is deemed effected. The Court further noted that after receipt of summons the accused had the opportunity to make payment within the statutory period, reinforcing that service was properly established for proceeding under Section 138. [Paras 10]

Service of the demand notice is held to be effective and sufficient for the Section 138 prosecution.

Re-appreciation of evidence in revision jurisdiction - Whether this Court should re-appreciate evidence afresh in revision - HELD THAT: - The Court examined the record and the findings of the trial and appellate Courts and found that both courts had properly appreciated the oral and documentary evidence. There was no material or legal error warranting interference by way of revision. The petitioner's challenges did not demonstrate infirmity in the concurrent findings of fact. [Paras 11]

No re-appreciation in revision is warranted; the revision petition is dismissed.

Final Conclusion: Concurrent findings of the trial and appellate Courts upholding conviction under Section 138 of the Negotiable Instruments Act are affirmed: the allegation of interpolation is rejected, service of the demand notice is held to be effective, and there is no scope for re-appreciation in revision; the revision petition is dismissed.

Exemption from electricity duty - Strict interpretation of taxing statutes and exemption clauses - Literal construction where statutory language is clear and unambiguous - Comparative repeal and effect of the Maharashtra Electricity Duty Act, 2016 - Doctrine of last antecedent (rejected) - Absurdity and Article 14 argument insufficient to override plain statutory text

Exemption from electricity duty - Comparative repeal and effect of the Maharashtra Electricity Duty Act, 2016 - Literal construction where statutory language is clear and unambiguous - Strict interpretation of taxing statutes and exemption clauses - Whether charitable educational institutions registered under the Societies Registration Act and the Maharashtra Public Trusts Act are exempt from payment of electricity duty under the Maharashtra Electricity Duty Act, 2016 - HELD THAT: - The Court compared Section 3(2) of the Maharashtra Electricity Duty Act, 1958 (which contained an explicit exemption for charitable institutions registered under the Bombay Public Trusts Act) with Section 3(2) of the 2016 Act and found that the specific exemption (Section 3(2)(iiia) of the 1958 Act) is conspicuously absent in the 2016 Act. The 2016 Act expressly exempts consumption by State and Central Government (excluding public undertakings) and exempts uses run by local bodies; it does not extend exemption to charitable educational institutions. Applying this Court's settled principles, exemption provisions in a taxing statute must be construed by the clear wording of the provision and cannot be enlarged by implication or purposive construction where the language is plain. Reliance on precedents such as Dilip Kumar & Co. and related authorities establishes that charging provisions are to be strictly interpreted and that exemption clauses must be given effect according to their terms. The submission that a literal reading produces absurdity or discriminatory classification was considered and rejected: accepting the respondents' construction would lead to unintended and wide exemptions (including private profit-making hospitals), and Article 14 or the doctrine of purposive interpretation cannot be used to override clear statutory language. The Court also declined to apply the doctrine of last antecedent to import an exemption for charitable institutions into the 2016 Act. Consequently, the 2016 Act governs post-enactment levies and does not preserve the specific pre-2016 exemption for charitable education institutions. [Paras 11, 12, 13, 14, 15]

Charitable education institutions registered under the Societies Registration Act and the Maharashtra Public Trusts Act are not exempt from levy/payment of electricity duty under the Maharashtra Electricity Duty Act, 2016; the High Court's order setting aside such levy is quashed.

Final Conclusion: The appeal is allowed; the High Court judgment dated 28.02.2019 is quashed and set aside and it is held that charitable education institutions registered under the Societies Registration Act and the Maharashtra Public Trusts Act are not exempt from payment of electricity duty under the Maharashtra Electricity Duty Act, 2016 (with no order as to costs).