TaxTMI Updates e-Newsletter
Feb 19,2026

Habeas Corpus - Power of arrest under CGST Act - Grounds of arrest - Reasons to believe - Compliance with departmental guidelines on arrest - Remand order illegality - Maintainability of writ petition under Article 226 - Applicability of Satendra Kumar Antil ratio to special statutes -

Maintainability of the writ petition - HELD THAT:- It has been vehemently argued by the learned counsel for respondent nos. 1 & 2 that the petition is not maintainable since petitioner has been arrested by following procedure of law as per Section 67/69 of CGST Act. We find that such a contention raised before this Court is not apparent from record. It is settled law that if the court finds that the order of remand passed by the Magistrate is not in accordance with law. The arrest of the accused in such a case becomes illegal and the this Court has jurisdiction to entertain the habeas corpus writ petition preferred under Article 226 of the Constitution of India. This view finds support from the paragraph no. 28 of the judgement of Apex Court in the case of V. Senthil Balaji Vs. State represented by Deputy Director and others [2024 (9) TMI 1497 - SUPREME COURT]

Reasons to believe - Power of arrest under CGST Act - HELD THAT:- As per the paragraph of the judgement of Apex Court in the case of Radhika Agrawal [2025 (2) TMI 1162 - SUPREME COURT (LB)] the court was required to ascertain whether the "reasons to believe" show that the arrest of petitioner has been made relying upon any credible evidence or it has been made only to investigate the suspicion against petitioner. Whether the power of arrest was used with circumspection and case was required to be ascertained by court before allowing remand application of respondents, which is not apparent from the remand order.

Compliance with departmental guidelines on arrest - Remand order illegality - HELD THAT:- After the considering the fact that there is serious factual dispute about actual service of "grounds of arrest" on the petitioner before affecting his arrest since in the remand order, there is no recital that the copy of "grounds of arrest" was provided to the petitioner at the time of his arrest and before producing him before the Remand Magistrate and finding of the remand order to be not in accordance with law and also keeping in view of the judgement of Apex Court in the case of Satendra Kumar Antil [2022 (8) TMI 152 - SUPREME COURT], we hold that the remand order suffers from legal infirmity and cannot be sustained. It is hereby set aside.

This writ petition is allowed.

Territorial jurisdiction under Article 226(2) - cause of action arising within territorial jurisdiction - debit-freezing of bank account - scope of summons power u/s 94 of the BNSS - seizure and attachment powers u/s 106 and Section 107 of the BNSS - requirement of magistrate order for attachment - quashing of unlawful police directions -

Invocation of jurisdiction of this Court - HELD THAT:- In the case at hand the act of debit freezing of the petitioner’s bank account is the main cause of action for the writ petition. The same has arisen within the territorial jurisdiction of this Court and therefore the test that the facts pleaded must form an integral part of the cause of action arising within the territorial limits of a given High Court for it to entertain a writ petition stands overwhelmingly answered.

This Court is cognizant of the fact that in Kusum Ingots & Alloys Ltd [2004 (4) TMI 342 - SUPREME COURT (LB)] the Hon’ble Supreme Court held that even if a small part of a cause of action arises within the territorial jurisdiction of the High Court, the same by itself may not be considered to be a determinative factor compelling the High Court to decide the matter on merits. In the case at hand, as has already been indicated hereinabove, the main part of cause of action for the present writ petition has arisen within the jurisdiction of this Court. Since the writ petition does not seek quashment either of the proceedings initiated by the CGST authorities or the investigation conducted by the police authorities and since it is only confined to the order of debit freezing of her Bank account, therefore, the writ petitioner would not be necessarily required to plead and prove the illegality of the investigation conducted by the respondent police authorities or the proceedings initiated by the CGST authorities for the purpose of the present writ petition.

In Nawal Kishore Sharma [2014 (8) TMI 994 - SUPREME COURT] the Hon’ble Supreme Court has clearly held that a writ petition can be maintained, if the petitioner can establish that a legal right, claimed by him, has been infringed by the respondents within the territorial limit of the Court’s jurisdiction. Paragraph 16 of the said judgement may be noticed: 16. Regard being had to the discussion made hereinabove, there cannot be any doubt that the question whether or not cause of action wholly or in part for filing a writ petition has arisen within the territorial limit of any High Court has to be decided in the light of the nature and character of the proceedings under Article 226 of the Constitution. In order to maintain a writ petition, the petitioner has to establish that a legal right claimed by him has been infringed by the respondents within the territorial limit of the Court's jurisdiction.

Thus, the petitioner has clearly made out a case of her right being infringed by the debit freezing of the petitioner’s bank account within the territorial limit of this Court’s jurisdiction. In such view of the matter, it cannot be said that this Court lacks territorial jurisdiction to entertain the writ petition.

Scope of summons power under Section 94 of the BNSS - Debit frozen on the basis of a notice - HELD THAT:- There is nothing on record to show that the concerned Investigating Officer has approached the jurisdictional Magistrate and any order of seizure or attachment has been passed or that the debit freezing has been reported to the jurisdictional Magistrate. A debit freeze of bank account cannot be continued indefinitely without any appropriate order of the jurisdictional Magistrate. In such view of the matter, the impugned notice dated January 06, 2025 issued by the mandating debit freezing of the petitioner’s bank account cannot be said to be in accordance with law and cannot directed to be continued. Accordingly, such part of the notice dated January 06, 2025 issued by the Officer-in-charge, Police Station Itanagar, Papumpare, Arunachal Pradesh to the Branch Manager, ICICI Bank, whereby the bank has been directed to debit freeze the petitioner’s bank account is set aside and quashed. The bank shall allow the petitioner to operate the petitioner’s bank account bearing No. 104905500535.

A report dated January 3, 2026 was filed by the learned Registrar General confirming that service had been effected on the said two respondents, however, none appeared on their behalf in the proceedings despite service. Accordingly, the matter has been decided in their absence.

Since by the order dated January 30, 2026, CAN 1 of 2026 had already been treated to be a part of the writ petition, the same should also be treated as having been disposed of.

Assignment of leasehold rights - scope of supply - Supply of services - transfer of benefits arising out of immovable property - long-term lease / leasehold ownership - HELD THAT:- Admittedly, the petitioner holds a lease for 95 years. Thus it is a long term lease and in that sense is a leasehold ownership property. The rights under the lease are transferable in terms of clause 2(u) of the lease executed between MIDC and the petitioner. Thus the rights are transferable. Accordingly, the petitioner has transferred the rights to Shri Rao Himanshu S/o Yashpal Arya with prior consent of MIDC.

This transaction on the face of record constitute transfer of immovable property by the petitioner to Shri Rao Himanshu S/o Yashpal Arya. The transaction pertains exclusively to transfer of benefits arising out of an immovable property and has no nexus whatsoever with the business of the petitioner company. Consequently, the essential element of supply of service in the course of business or in furtherance of business is completely absent.

The Gujarat High Court in the case of Commercial of Income-Tax, Vidarbha v. Smt. Godavari Devi Saraf [1977 (9) TMI 24 - BOMBAY HIGH COURT],held that assignment by sale and transfer of leasehold rights of the plot of land allotted by GIDC to the lessee in favour of third party-assignee for a consideration shall be assignment/sale/transfer of benefits arising out of “immovable property” by the lessee-assignor in favour of third party, assignee who would become lessee of GIDC in place of original allottee-lessee and in such circumstances, would not be subject to levy of GST in terms of provisions of the GST Act. We subscribe to this view for the reasons quoted is earlier part of our judgment so also because the view, is in consonance with the provisions of law on supply of services.

Further we subscribe to the finding of Gujarat High Court that the assignment by sale and a transfer of leasehold rights of the plot of land allotted by the Corporation like GIDC or MIDC to the lessee in favour of third party-assignee for a consideration shall be assignment/sale/transfer of benefits arising out of immovable property by the lessee-assignor in favour of third party and in such circumstances, the transaction would not be subject to levy of GST in terms of the GST Act.

The writ petition is accordingly allowed.

Classification of goods under tariff headings - Application of Chapter Notes and Harmonized System of Nomenclature - Effect of higher court decision on departmental adjudication - Remand for fresh adjudication in light of binding precedent - HELD THAT:- When the Show Cause Notice was issued, the issue relating to classification was pending before the Hon’ble Supreme Court at the behest of the Respondent in Civil Appeal in the case of Commissioner of Central Excise Salem Vs. M/s.Madhan Agro Industries (India) Private Limited [2024 (12) TMI 1022 - SUPREME COURT (LB)], Hon’ble Supreme Court which settles the dispute as far as the classification of ‘Coconut Oil’ is concerned reads as under:-

“48. On the above analysis, we are of the opinion that pure coconut oil sold in small quantities as ‘edible oil’ would be classifiable under Heading 1513 in Section III-Chapter 15 of the First Schedule to the Central Excise Tariff Act, 1985, unless the packaging thereof satisfies all the requirements set out in Chapter Note 3 in Section VI-Chapter 33 of the First Schedule to the Central Excise Tariff Act, 1985, read with the General / Explanatory Notes under the corresponding Chapter Note 3 in Chapter 33 of the Harmonized System of Nomenclature, whereupon it would be classifiable as ‘hair oil’ under Heading 3305 in Section VI-Chapter 33 thereof.”

Considering the same, the case is remitted back to the Respondent to pass a fresh order on merits taking note of the above decision of the Hon’ble Supreme Court and on the other issues in respect of which the impugned Show Cause Notice has been issued.

Ineligible Input Tax Credit - interest on late payment u/s 50 - penalty u/s 74 - pre-payment options with reduced penalty under Sections 74(5), 74(8) and 74(11) - assessment confirming tax demand - HELD THAT:-There is no scope for any interference in the impugned Assessment Order as the Petitioner has been asked to pay interest under Section 50(3) and penalty under Section 74 of the respective GST Enactments for late payment of tax.

It was open for the Petitioner to either pay the tax together with interest payable under Section 50 of the respective GST Enactments together with penalty equivalent to fifteen percent of such tax on the basis of his own ascertainment of such tax or the tax as ascertained by the proper officer in terms of Section 74(5) of the respective GST Enactments and inform the proper officer in writing of such payment.

In this case, the Petitioner has not opted for any of the alternatives provided under Sections 74(5), 74(8) or 74(11) of the respective GST Enactments. As such, there is no scope for interfering with the impugned Assessment Order passed by the Respondent, particularly when the Petitioner has admitted the tax liability and credited the same on 18.10.2024.

In view thereof, this Writ petition is liable to be dismissed and is accordingly dismissed.

Confirmation of demand under a show cause notice - quashing and remand for fresh adjudication - pre-deposit of disputed tax as condition for interim relief - lifting of provisional attachment upon compliance with pre-deposit - HELD THAT:- Considering the fact that the petitioner has agreed to deposit a sum of Rs. 2,62,872/- out of the total tax demand of Rs. 16,60,472/-, and having regard to the fact that the reply dated 23.03.2024 filed by the petitioner did not properly set out the defence of the petitioner, the impugned order is quashed and the case is remitted back to the respondent to pass a fresh order on merits, subject to the petitioner depositing fifty percent (50%) of the disputed tax within a period of thirty (30) days from the date of receipt of a copy of this order.

It is made clear that bank attachment shall be lifted subject to the Petitioner depositing 50% of the disputed tax as ordered above and the Petitioner not being in arrears of any other amount for any other tax period barring the amount demanded under the impugned Order.

Accordingly, this writ petition is disposed of with the above observations. No costs. Consequently, the connected W.M.Ps. are closed.

Right to travel abroad under Article 21 - Flight risk standard: tangible and real - Proportionality of conditions on liberty - Inherent jurisdiction to secure the ends of justice - Grant of limited travel permission subject to conditions - HELD THAT:- The law recognizes travel as an integral facet of human dignity. Mankind has always remained associated to travel as a part of their growth and progress. Registration of a case should not mean that his social existence needs to be clipped. The law does not sit over rights of individuals but aims to balance the rights and fears of parties so that interest of justice is secured but not at the cost of any person’s future.

The Supreme Court in the matter of M. Viswanathan vs. M/s. S.K. Tiles & Potteries P. Ltd. and others [2008 (11) TMI 757 - SUPREME COURT], has observed that the inherent powers of the High Court can be exercised to secure the ends of justice and rectify any wrongs that have crept in course of administration of justice.

The petitioner is an Indian citizen, holding an Indian passport. He holds property and business interests in India and is wanting to go abroad to expand his business in India. The object of travel is not about escaping. It is not the case of the respondent that no such business entity exists in Thailand or that the business proposal letter is fake. The petitioner is undisputedly a manufacturer in related field.

As such, this Court is of the considered opinion that the plea of petitioner being a flight risk is from overcautious approach. Moreover, denying him the right to travel abroad would have a truly detrimental effect on his family and his business interests as well as the foreign investments.

Accordingly, the present petition is disposed of. Order dated 15.07.2025 (Annexure P-5) passed by the Chief Judicial Magistrate, Rohtak is set aside.

Computation of period u/s 73(2) of the CGST/AGST Act - definition of "month" u/s 3(35) of the General Clauses Act, 1897 - Section 9 General Clauses Act rule of excluding the first day and including the last day - corresponding date rule for calendar months - application of Section 73(10) three year limitation from due date of annual return- HELD THAT:- From the plain and simple language of Section 9, it is discernible that if a particular time-period is given from a certain date within which an act, process or proceeding is to be done, the day on that date is to be excluded, meaning thereby, the period is to be calculated by excluding the day from which the period is to be reckoned.

In the case in hand, the end date [terminus ad que] is 28.02.2025. As per the interpretation for application of Section 9 of the General Clauses Act, the end date [terminus ad que] is to be included and therefore, the whole month of February, 2025 is to be included. The whole of the previous two months – December, 2025 and January, 2025 – are included to fulfill the parameter of actual three months, for the prescription contained in sub-section [2] of Section 73.

Every process/proceeding including a process of demand and recovery has a start point [terminus a quo] the process is set in motion with the issuance of a notice or show cause notice. The proceeding of demand and recovery contemplated in Section 73 of the CGST/AGST Act culminating in an order under Section 73[9] starts with the issuance of a show cause notice under Section 73[1], which is to be at least three months prior to the last date of passing of the order. In view of the statutory provision incorporated in Section 9 of the General Clauses Act, the date of issuance of the show cause notice being the first in the period of time is to be excluded for the purpose of calculating the three months period from the last date of passing of the order. The 28th day of February, 2025 is the last day of the month and also the end date [terminus ad quem] for passing of the order under Section 73[9], CGST/AGST Act. By virtue of Section 9, it is to be included for calculation a period of month. Therefore, the three months which are ‘at least’ to be available were [i] December, 2024; [ii] January, 2025; and [iii] February, 2025. In such a situation, a show cause notice issued on 30.11.2024, which day is to be excluded from consideration in terms of Rule 9 of the General Clauses Act, fulfills the third parameter. Therefore, any show cause notice issued either on 30.11.2024 or on any date prior to 30.11.2024 would satisfy the time-line prescribed under Section 73.

This Court holds that the Show Cause Notice issued on 29.11.2024 was within limitation and therefore, the assail made in that connection fails. Consequently, the writ petition is found unmerited and is liable to be dismissed. Accordingly, the same is dismissed.

Validity of reopening of assessment - reasons for issuing Notice u/s 143(2) are once communicated and Objections filed by the Assessee have not been considered - mandatory procedure not adhered - As decided by HC [2025 (2) TMI 1496 - KARNATAKA HIGH COURT] AO is bound to furnish reasons within a reasonable time. On receipt of reasons, the noticee is entitled to file objections to issuance of notice and the assessing officer is bound to dispose of the same by passing a speaking order. Decided against revenue - HELD THAT:- We are not inclined to interfere with the impugned judgment and order of the High Court; hence, the special leave petition is dismissed.

Demand raised in the intimation issued u/s 143 (1) - employer of the petitioners did not pay the Tax Deducted at Source from the salary of the petitioners -Directions to modify tax department software - Role of Assessing Officer in verifying TDS claims - HC held [2024 (11) TMI 88 - GUJARAT HIGH COURT] the employer of the petitioners deducted the Tax at Source from the salary income of the petitioners for two years but did not deposit the same with the Government. Thus, there is failure on the part of the employer to deposit tax deducted at source from the salary income income of the petitioners. Therefore, the respondent could not have raised any demand against the petitioners in view of the provisions of section 205 read with Instruction No. 275 dated 01.06.2015 - impugned intimation issued under section 143 (1) of the Act and consequential demand raised upon the petitioners are liable to be quashed and set aside

HELD THAT:- Petitioners fairly submitted that common order passed by the High Court [2024 (11) TMI 88 - GUJARAT HIGH COURT] was considered by this Court in Shantilal Doshi [2026 (1) TMI 996 - SC ORDER] and the same was disposed of by this Court’s order clarifying the directions given with reference to changes to be made in the software.

In view of the aforesaid directions already issued by this Court, no further order is required to be passed in the present petition. The Special Leave Petition is, accordingly, dismissed on delay as well as on merits.

Reopening of assessment u/s 147 - change of opinion - Period of limitation - income which has escaped assessment on the issue of incorrect allowance of share premium - notice u/s 148 on the basis of audit objections - HELD THAT:- Audit objection pointing out that there is no justification available in the file as to why the amounts were paid, cannot be said to be ‘information’ for the respondent to initiate reassessment proceedings, when the assessing officer was in possession of the information and necessary documents at the time of the assessment proceedings. As such, the impugned action of the respondents is unsustainable.

We may also refer to the plea that the assessing officer has not referred to any transaction, which has resulted in escapement of income represented in the form of expenditure. This plea is unmerited as there are transactions in the nature of the payments to the MD Mr. Amar Singh for Rs 8.90 crore and Rs 90.81 lakh to the shareholder Mr. Sandeep Kohli on account of joining bonus and legal & professional expenses. However, the stand of the Revenue that these payments have escaped assessment in the nature of expenditure also cannot be accepted in view of our findings above.

The first proviso to Section 147 of the Act mandates that when assessment under Section 143(3) of the Act has been made for the relevant assessment year, reassessment on the ground that income has escaped assessment is only possible up to four years from the end of the assessment year unless any income chargeable to tax has escaped for such assessment year by reason of the failure on the part of the assessee to make a return or to disclose fully and truly all material facts necessary for his assessment.

Suffice it to state, in the present case, the assessee had made a return of its income on 18.10.2016 for the relevant assessment year and had provided all necessary material for its assessment. As such, the extended period of six years for reopening the assessment would not be available to the Revenue under Section 147 of the Act as it existed prior to April 1, 2021. The period of limitation is thus, four years from the end of AY 2016-17. It is a matter of record that the notice under Section 148 has been issued on 31.03.2023, which is beyond the said period of four years. Therefore, in view of the first proviso to Section 149 of the Act, no notice could have been issued under Section 148, as no such notice could have been issued under the provisions that were in force prior to April 1, 2021. We hold that the notice dated 31.03.2023 and the subsequent proceedings are barred by limitation.

Benefit of the DTVSV Scheme, 2024, in respect of both the tax arrears and the penalty imposed - petitioner failed to comply with the mandate of the Act by not depositing the amount determined in the Form-3 - petitioner contends that this violation triggers the consequences under Section 4(6) of the Act of 2020, resulting in the automatic revival of his Revision Petitions - whether the Revision Petitions, withdrawn by the petitioner on 17.03.2021, were automatically revived upon his failure to comply with the mandate of Form-3?

HELD THAT:- Expression 'consequences under the Income Tax Act against the declarant' necessarily implies that any adverse orders previously passed against the declarant-assessee are also revived. This ensures that upon the failure of the declaration, the parties are restored to their original positions, including the petitioner’s right to pursue his challenge against such orders.

Accordingly, we are of the considered view that by virtue of Section 4(6) of the Act of 2020, once the petitioner failed to comply with the statutory mandate within the stipulated time, the Revision Petitions stood automatically revived by operation of law. The parties are, therefore, restored to the same legal position they occupied prior to the filing of the declaration.

Authorities administering a beneficial scheme designed for the resolution of tax disputes are expected to adopt a purposive approach that furthers its underlying objectives, particularly where an assessee demonstrates a clear intent to settle.

In the present case, we find that the respondents proceeded on the erroneous premise that the petitioner was ineligible under the DTVSV Scheme, 2024, on the ground that no Revision Petitions were pending on the relevant date. This conclusion was reached in complete disregard of the statutory mandate under Section 4(6) of the Act of 2020, which provides for the automatic revival of such proceedings upon a default. Consequently, the impugned order dated 10.01.2025 suffers from a manifest error of law and cannot be sustained. The respondents are correct in submitting that the petitioner in the Form-1 submitted to avail the benefit of DTVSV Scheme of 2024 has again committed the same mistake, which he committed while applying under the Act of 2020.

Thus, the impugned order is set aside. The petitioner shall approach the respondents within a period of thirty days from today for completion of all the requisite formalities for availing the benefit of the DTVSV Scheme, 2024, in respect of both the tax arrears and the penalty imposed. Upon such approach, the respondents shall permit the petitioner to do the needful within the aforesaid period.

Denying deduction u/s 80IC - duty drawback of the said amount, holding that the same is not derived from industrial undertaking - HELD THAT:- Question no. (i) is decided against the appellant in light of the judgment of Hon’ble the Supreme Court in Liberty India [2009 (8) TMI 63 - SUPREME COURT] as held duty drawback, DEPB benefits, rebates etc. cannot be credited against the cost of manufacture of goods debited in the Profit & Loss account for purposes of Sections 80-IA/80-IB as such remissions (credits) would constitute independent source of income beyond the first degree nexus between profits and the industrial undertaking.

Whether amount of excise and customs duties paid by the appellant-assessee while purchasing the raw materials is required to be subsumed from the excise and custom duties, which the appellant had paid at the time of export of the goods?- Matter is remanded back to the AO to subsume or deduct the amount of excise duty and custom duty, which the appellant had paid at the time of purchase of raw materials from the duty drawback and pass assessment order afresh in this regard.

Interest u/s 244A - refund of TDS processing was delayed - Lapse on the part of the assessee in claiming the same in its revised return of income - HELD THAT:- As in case some period or a part of the period is to be excluded from the period for the purpose of calculation of interest, this issue has to be decided by the authorities prescribed under sub-section (2) of Section 244A. AO himself cannot take onto himself power and deprive an assessee from the interest payable u/s 244A of the Act of 1961.

A perusal of the order shows that the AO had given shoddy reasons for denying the interest by merely writing a line that “the interest under Section 244A is not allowed in this case as there is a lapse on the part of the assessee in claiming the same in its revised return of income”.

According to us, having recorded assessee’s contention that the TDS was though reflected in the Form no.26AS of the respondent-assessee but was not reflected, when the revised return was filed, the AO ought not to have denied interest by saying that there was a lapse on the part of the assessee in claiming the same in its revised return of income.

According to us, the finding as recorded by AO was completely erroneous. CIT (A) has dealt with the facts of the case and given reasons and recorded a finding while accepting the assessee’s explanation and held that there was no lapse on part of the assessee.

Validity of assessment order passed - rejection of specific request for being afforded an opportunity of personal hearing - absolute right - violation of the principles of natural justice

HELD THAT:- Although oral hearing is not considered necessary in every case and may not be claimed as a matter of absolute right, yet when such right is available the same should not be permitted to be curtailed and clipped on technical grounds. In the case at hand it has not been demonstrated before this Court with any degree of certainty that without the assessee opting for the opportunity of personal hearing by following the mode indicated in the notice to show cause, the AO was powerless to grant opportunity of hearing and could not have granted hearing to the assessee at all.

In fact, in the case of M/s. Williams Lea India Private Limited [2022 (6) TMI 1473 - MADRAS HIGH COURT] rejected a similar contention on behalf of the Revenue Authorities that an opportunity of personal hearing can be availed of by the assessee only by clicking the seek video conferencing button available against the notice to show cause.

As in the case of Satish Kumar Bansal Hug [2024 (5) TMI 786 - ALLAHABAD HIGH COURT] held that opportunity of oral hearing must be given to the assessee before framing the assessment.

AO shall pass a fresh assessment order, in accordance with law after affording an opportunity of hearing to the petitioner through video conferencing in terms of the relevant provisions of the said Act of 1961 and the Rules and Scheme framed thereunder.

Penalty u/s 270A - upward TP adjustment as misreporting of income - claim of immunity for Section 270AA - ‘Underreporting” of income - HELD THAT:- The immunity contemplated under Section 270AA of the Income Tax Act, 1961 is available to an assessee only for “under-reporting of income” simplicitor.

No immunity from penalty is available to an assessee u/s 270AA of the Income Tax Act, 1961 where “under-reporting of income is as a consequence of misreporting of income” as is contemplated in Sub Section (8) and (9) to Section 270A of the Income Tax Act, 1961.

Situations for “Under-reporting of income is in consequence of any misreporting of income” has been stipulated under Sub Section (9) to Section 270A of the Income Tax Act, 1961.

“Under-reporting of income as a consequence of misreporting of income” would arise only if any of one or more of the ingredients mentioned in Sub Section (9) to Section 270A of the Income Tax Act, 1961 were present.

The entire basis for initiation of penalty proceedings is the transfer pricing adjustment proposed in the draft assessment order. Such adjustment, by its very nature, involves estimation and determination of arm’s length price and cannot, in law, be equated with either concealment or misrepresentation so as to attract the Clause (a) to Sub Section (9) to Section 270A.

Since the Petitioner had maintained information and documents as prescribed under Section 92D, and complied with all statutory requirements under Chapter X of the Income Tax Act, 1961.

Therefore, the case squarely falls within the exception carved out under Clause (d) to Sub Section (6) to Section 270A, which expressly excludes such cases from the ambit of under-reporting. In the facts of the case, it cannot be held that there was “under-reporting of income as a consequence of misreporting of Income” either to impose penalty under Section 270A(8) read with Section 270A(9) of the Income Tax Act, 1961 as the ingredients thereof are not satisfied.

Unless tax is a clear and categorical incriminating facts to infer deliberate and conscious concealment or furnishing of false particulars, it cannot be said that there was “under-reporting of income as a consequence of misreporting of income” which is completely absent in the present case.

In the present case, the income of under-reported was represented by addition made in conformity with the arm's length price determined by the Transfer Pricing Officer vide Order dated 30.03.2023 as modified vide Order dated 30.10.2023.

Petitioner had maintained information and documents as was prescribed under Section 92D and had declared the international transaction under Chapter X, and, disclosed all the material facts relating to the international transaction. Therefore, the Petitioner was entitled for immunity under Section 270AA of the Income Tax Act, 1961. WP allowed.

Validity of reopening of assessment - petitioner submits that the reason which formed the basis for initiating the reassessment proceedings u/s 148 and the reasons stated in the impugned order are at variance with each other - HELD THAT:- The impugned assessment order is liable to be set aside and remitted back to the respondents to pass a fresh orders on merits after affording another opportunity of hearing to the petitioner to file a detailed reply along with necessary documents to substantiate the case.

Accordingly, the impugned assessment order stands quashed and the case is remitted back to 2nd respondent to pass a fresh order on merits and in accordance with law as expeditiously as possible after hearing the petitioner.

The impugned Assessment order shall be treated as an addendum to the pre-assessment Show Cause Notice dated 04.05.2023. The petitioner shall keep the reply ready and transmit the same as and when the portal becomes available for uploading the reply.

Writ Petition stands disposed of with the above observations.

Order of CIT(A) in restoring the matter back to the file of AO in contravention of the provisions of Section 251 - HELD THAT:- We find that the assessment order in the instant case was admittedly framed under Section 143(3) of the Act and not u/s 144 of the Act. Therefore, the proviso to Section 251(1)(a) of the Act, even after its amendment, has no application to the facts of the present case. Consequently, in our view the CIT(A) lacked the statutory authority to set aside the assessment order and remand the matter to the file of the Assessing Officer.

We hold that the action of the Ld. CIT(A) in restoring/remanding the matter to the Assessing Officer suffers from a jurisdictional infirmity. As a result, the order passed by the Ld. CIT(A) is rendered null and void and is hereby quashed.

Validity of reopening of the assessment - Reasons to believe -additions in respect of share capital receipts - It is manifest that the additions in respect of share capital receipts from the said entities were already subjected to assessment in AY 2009-10. The same receipts were once again brought to tax in the impugned reassessment for AY 2008-09, leading to duplication of addition of the same income.

In view of the aforesaid undisputed factual position, we hold that the very foundation for initiation of reassessment proceedings is vitiated, as the reasons recorded for reopening do not demonstrate that any income chargeable to tax had escaped assessment. Therefore, we are of the view that when no income has, in fact, escaped assessment, the assumption of jurisdiction under Section 147 of the Act in the present set of facts is unsustainable in law.

Validity of sanction/approval granted u/s 151(2) of the Income-tax Act, 1961 for issuance of notice u/s 148 - The sanction/approval under section 151 of the Act, in the present case, had been granted without due application of mind. It is evident that the very same transactions, which had already formed the basis for reopening the assessment for AY 2009–10, were again treated as “reasons to believe” that income had escaped assessment for the impugned Assessment Year 2008–09 as well.

In the present case, the sanction had been accorded in a routine and mechanical manner. Despite the fact that the assessment for Assessment Year 2009–10 had already been reopened on the basis of the very same transactions, still the assessment for the impugned Assessment Year 2008–09 has again been reopened on identical reasons. Therefore, such approval, granted without independent application of mind, is in clear violation of the mandate of section 151(2) of the Act.

Accordingly, we hold that the sanction/approval granted for reopening the assessment in the present case is bad in law and the same is hereby quashed.

Addition u/s 68 - exemption of long term capital gain u/s. 10(38) denied - unexplained cash credit u/s 68 - onus on AO to establish sham transactions - HELD THAT:- The entire transaction was executed as per normal share trading procedure prescribed by the SEBI and/or BSE. The transaction of sale of shares of M/s HPC Biosciences Ltd. is duly evidenced by various documents/evidences viz. copy of contract notes for the sale of 19200 shares.

It is settled law that no addition can be made on the basis of doubts and suspicion, however, in the present case the purchase/sale of shares is duly support by the documentary evidences, STT is duly paid at the time of transaction of sale of shares and further the sale of shares was undertaken through recognized stock exchange.

AO failed to appreciate that, transaction carried out through Stock Exchange are without any physical interaction between buyer and seller, therefore no adverse inference is liable to be drawn in case parties who had purchased shares admitted to being entry operators. We note that AO failed to take cognizance of the fact that, in case of online trading unlike physical trading, there is no interaction between sellers and buyers of securities, hence no negative inference is liable to be drawn merely because the appellant could not provide any information in respect of the buyer of the said securities, as he himself did not have any information about the same.

Also the increase in the price of the scrip cannot be a valid reason to doubt the genuineness of the transactions and consider it as 'dubious' or “bogus”. AO cannot assess the income without analyzing the supporting evidences and simply cannot assume the transactions to be bogus merely on the basis of increase in price of share. It is observed that disinvestment of shares was duly supported by official quotation of Bombay Stock Exchange and the fact that the transaction were through demat account is in itself evidence to prove the genuineness of share transaction.

It is settled law that merely because the sale of shares fetched a handsome price, which price is supported by official quotation cannot be any reason to doubt the genuineness of the sale transaction of the shares, where assessee has clearly established genuineness of the share transaction and has sufficiently discharged the onus cast upon him, no addition is thus warranted.

We note that AO has referred and relied on the list of penny stocks of income tax department and the admissions of entry operators in the sworn statement recorded during the course of search and seizure operations., which were neither referred in the assessment order nor confronted or supplied to assessee during assessment proceedings and even the assessee was not given any opportunity to cross examine the said persons who have given their statements, which is against the spirit of settled law. Assessee appeal allowed.

Estimation of fair NP rate - Scope of provisions of section 44AD -assessee failed to file any return of income and also could not participate in the assessment proceedings - AO observing that TDS u/s. 194C has been deducted by the taxpayer applied Net Profit rate of 18% on the gross receipt treating it as Business turnover - HELD THAT:- Considering the fact that the assessee has not participated in the proceedings before the authorities nor has furnished any other relevant details exhibiting the calculation of total income, therefore, considering the provisions of section 44AD of the Act applicable for Presumptive Taxation, deem it appropriate to estimate the Net Profit at 8% of the gross receipts as against 18% estimated by the AO. Accordingly, income of the assessee is calculated at Rs. 13,34,400/- and the remaining amount of addition at R.16,68,000/- is hereby deleted. Grounds of appeal raised by the assessee are partly allowed.

Addition u/s 69B r.w.s. 115BBE - excess stock declared during the course of survey - assessee is engaged in the business of sale of gold and silvery jewellery - HELD THAT:- It has been held in various decisions that when the assessee surrenders income on account of excess stock found during the course of survey u/s 133A or search and no other activities other than the same business activities are carried on by the assessee during the year under consideration, then such income declared by the assessee shall be taxed under the head ‘business income’ only and not as undisclosed investment and the provisions of section 69B r.w.s.115BBE cannot be applied. Since the CIT(A) while deciding the issue has followed the decision of Bajrang Traders [2017 (11) TMI 388 - RAJASTHAN HIGH COURT] and Shri Balaji Ramchandra Ande [2025 (9) TMI 1182 - ITAT PUNE] therefore, in absence of any contrary material brought to our notice by the Revenue that the assessee in fact was having some other activities other than the business of trading in gold and silver jewellery, we do not find any infirmity in the order of the CIT(A) directing the Assessing Officer to treat such income as regular income instead of applying provisions of section 69B r.w.s. 115BBE of the Act.

Disallowance of expenses - absence of any supporting documentary evidence - Since the assessee did not provide satisfactory explanation, the AO had added the same as non-genuine expenditure. The order of the CIT(A) restricting the same to 10% of the expenses in our opinion is without any basis and not based on sound footing, especially in absence of any further documentary evidence filed before him. The vouchers earlier produced before the AO were rejected by him being self-made vouchers and all the expenses were incurred in cash. We, therefore, reverse the order of the Ld. CIT(A) on this issue and the order of the AO making addition is restored.

Disallowance of meal expenses - AO had given a categorical finding that the assessee has already booked the expenditure under the head ‘staff welfare expenses’ and again booked the expenses of Rs. 4,20,168/- under the head ‘meal expenses’. Since the assessee has claimed the expenditure twice, therefore, CIT(A) in our opinion is not justified in granting part relief to the assessee without any logic. We, therefore, set aside the order of the CIT(A) and the ground of appeal No.(iii) raised by the Revenue is allowed.

Disallowance of vehicle expenses - We find the assessee before the AO has accepted that he owns two motor cars and four motor cycles and the cars are used for personal purpose as well. The assessee had requested the AO to restrict the disallowance to 5% whereas the AO, in absence of any log book or any supporting evidence to prove that the vehicles are used for personal use only at 5% of the total use, disallowed at 15% of the expenses. CIT(A) without any sound reasoning has restricted the same to 10% which in our opinion is not justified under the facts and circumstances of the case. We, therefore, reverse the order of the Ld. CIT(A) and restore the order of the AO on this issue. Thus, the ground of appeal No.(iv) raised by the Revenue is allowed.

Addition of entire cash/credits in the bank account - Assessee submitted that the AO without considering the nature of credits and subsequent withdrawals from the bank account has made addition of the entire deposits which is not justified - HELD THAT:- A perusal of the bank account maintained with M/s. Renuka Mata Multi State Urban Co-operative Society Credit Ltd. shows that there are continuous deposits as well as withdrawals in the said account. There is some force in the submission of assessee that the Revenue has not found any such investment or lavish expenditure made by the assessee.

We find had the assessee earned an amount as alleged by the Revenue then the same would have been available in some form of assets or investment or lavish expenditure. There is no such finding by the Revenue. At the same time, the assessee is maintaining books of account and his accounts are audited and still the deposits and withdrawals in the said bank account were not disclosed.

We are of the considered opinion that adoption of 2% income on the deposit of Rs. 32,25,000/- instead of the entire deposit will meet the ends of justice. We, therefore, set aside the order of the CIT(A) / NFAC and direct the AO to adopt 2% income on deposit of Rs. 32,25,000/-. The grounds raised by the assessee are accordingly partly allowed.

Unexplained money u/s. 69A - Department had admitted in Section 154 proceedings that source of such cash deposits were from various retirement benefits and therefore, the income was revised and accepted at Rs. 3,02,680/- by the A.O - again CIT through his order passed u/s. 263 had directed the A.O to inquire into the said cash deposits and accordingly, made the addition - HELD THAT:- As in the original assessment when the amount was added as unexplained money u/s. 69A in the hands of the assessee and thereafter, in the rectification proceedings u/s. 154 Department itself has admitted the validity of the nature and source of such cash deposits i.e. various retirement benefits of the assessee which was deposited.

There cannot be any legal sustainability of any addition u/s. 69A of the Act in the hands of the assessee. Order of the CIT(Appeals)/NFAC is setaside and the AO is directed to delete the additions which had been sustained by the CIT(Appeals)/NFAC from the hands of the assessee while giving appeal effect of this order. Assessee appeal allowed.

Condonation of delay - Classification of imported goods - import of machines for Areca Nut Plant - HELD THAT:- Delay condoned.

However, we find no good ground and reason to interfere with the impugned judgment [2025 (7) TMI 359 - CESTAT NEW DELHI], passed by the Customs, Excise and Service Tax Appellate Tribunal, New Delhi, in Customs..

Appeal is, accordingly, dismissed.

Admissibility of confessions and statements u/s 108 of the Customs Act - Use of co-accused statements to convict - Principle that confession of a co-accused can only lend assurance and is not substantive proof - Evidentiary value of testimony recorded u/s 244(1) Cr.P.C. in subsequent stages - Section 33 Indian Evidence Act - relevancy of prior testimony when witness is unavailable - Section 32(2) Indian Evidence Act - statements in course of business as relevant facts - Whether there is any infirmity in the impugned judgment by which the trial court acquitted A2, discarding the testimony of PW1 and the statements of the co-accused u/s 108 of the Act. - HELD THAT:- As noticed earlier, A1 and A3 pleaded guilty and hence the trial court convicted and sentenced them. However, the records do not reveal what sentence was awarded to them. The trial court rejected the testimony of PW1 as far as A2 was concerned on the ground that the complainant had not made PW1 available for cross-examination, which is a right available to A2 under Section 246 (4) and 246 (5) Cr.P.C. According to the learned trial judge, as A2 was unable to exercise his valuable right of cross-examination of PW1, no value could be attached to the testimony of PW1 given under Section 244(1) Cr.P.C. The trial court also held that A2 could not be convicted based on the inculpatory statements made by the co-accused under Section 108 incriminating PW1 and hence proceeded to acquit A2.

In light of the dictum in Bal Mukund [2009 (3) TMI 914 - SUPREME COURT], the argument that the statement of the co-accused under Section 108 of the Act is substantive evidence cannot be accepted. Therefore, as held by the Apex Court in Bal Mukund(supra), I shall first keep aside the confession/inculpatory statements of the co-accused under Section 108 of the Act and see whether there is other admissible evidence available against A2.

PW1, while examined under Section 244(1) Cr.P.C., deposed that he served summons to A2 pursuant to which A2 voluntarily gave a statement under Section 108 admitting that he had received the foreign currency from one Ishwar Singh and had then handed over the same to A3, who in turn gave it to A1. It was submitted by the learned counsel for A2/respondent that the latter had retracted his confession. However, the records do not reveal the same. No letter or other document has been produced to show that A2 had retracted from the statement given by him under Section 108 to PW1. Therefore, the argument that A2/respondent had retracted his statement does not appear to be correct.

Whether Section 108 of the Act statement of A2 stands proved. - evidentiary value of this testimony of PW1 - HELD THAT:- The testimony of PW1 recorded under Section 244(1) Cr.P.C. is certainly evidence given by a witness in a judicial proceeding. The stage under Section 246(4) and 246(5) can be stated to be a later stage of the same judicial proceeding. A2 did cross examine PW1 at the Section 244(1) Cr.P.C. stage. But there is yet another aspect that needs to be satisfied for the Section to apply that is, the evidence becomes relevant only when the witness is dead or cannot be found or is incapable of giving evidence or is kept out of the way by the adverse party or his presence cannot be obtained without an amount of delay or expense which, under the circumstances of the case, the court considers unreasonable. This aspect of the Section has not been satisfied by the complainant because it has not been shown that PW1 was unavailable or incapable of giving evidence or that had been kept out of the way by the adverse party or that his presence could not be obtained without an amount of delay or expense which the trial court, under the circumstances of the case considered unreasonable. Therefore, the testimony of PW1 cannot be made admissible under Section 33 of the Evidence Act.

If PW1 was not available for any of the reasons stated in Section 32, the complainant had still the option of proving the 108 statement of A2 recorded by the former by resorting to Section 32(2) read with Sections 47 and 67 of the Evidence Act (Prithichand v. State of H.P. [1989 (1) TMI 368 - SUPREME COURT], Kochu v. State [1978 (6) TMI 171 - KERALA HIGH COURT] and Kurien v State [2019 (10) TMI 1628 - KERALA HIGH COURT] However, the complainant has not chosen to establish the case either by resort to Section 33 or Section 32(2) read with Section 47 and 67 of the Evidence Act. That being the position, the trial court cannot be faulted for rejecting the materials on record as against A2.

In the result, the appeal, sans merit, is dismissed. Application(s), if any, pending, shall stand closed.

Customs valuation - rejection under Rule 12 and re-determination under Rule 9 - reasonable doubt about transaction value - appropriation of provisional duty against final assessment - confiscation u/s 111(f) - confiscation u/s 111(m) - redemption fine u/s 125 - penalty for use of false or incorrect material u/s 114AA - penalty u/s 112(a) - HELD THAT:- In this case, the dispute is regarding what was mentioned in the Bill of Lading and what was actually found in the container and also regarding the two different invoices which were produced by Gaurav for the same consignment before DRI during investigation for a lower value and another invoice for the same consignment for 5 times the value which was produced along with the Bill of Entry. This case is clearly not covered by section 111 (f) of the Act. Therefore, the confiscation of the goods under section 111 (f) deserves to be set aside. Consequently, the redemption fine imposed of Rs. 25,00,000/- imposed under section 125 in lieu of confiscation deserves to be set aside and is set aside.

In so far as the past five Bills of Entry are concerned, the re-assessment of the goods is based on the alleged misdeclaration of Glass Chatons as Glass Beads by Shivam in those Bills of Entry. These goods had already been cleared and the allegation of mis-declaration is only based on various statements. We find that these statements do not provide sufficient evidence to support the alleged mis-declaration of the goods and the consequential demand of differential duty. Accordingly, the demand of duty in respect of past five Bills of Entry deserves to be set aside and is set aside.

Confiscation of the goods under section 111 (f) and (m) - Evidently, unless the Bill of Entry has been filed and the goods which are actually being imported do match the description in the Bill of Entry section 111 (m) will not apply. In the absence of any Bill of Entry being even referred to in the impugned order, confiscation cannot be sustained under section 111 (m). As far as section 111 (f) is concerned, as already mentioned this would only apply to wrong declaration in the IGM by the master of the vessel and will not apply to any declaration by importer.

Thus, the confiscation of these goods and the consequential redemption fine cannot be sustained and need to be set aside.

Since, we have set aside the confiscation of the goods, we do not find any basis to uphold the penalties imposed on Shivam and Gaurav under section 112.

We find that insofar as Bill of Entry No. 549 dated 05.03.2015 is concerned, Gaurav produced two invoices – one for a lower value, which was downloaded by him and presented to DRI during investigation and another invoice for a higher value filed at the time of filing of Bill of Entry. The intentional fabrication for use of incorrect materials in the transaction of the business cannot be doubted. However, considering that we have already set aside the demand of duty in respect of past Bills of Entry and also the confiscation of the goods, we find that it would serve interest of justice if the penalty on Gaurav under section 114AA is reduced to Rs. 2,00,000/-.

Thus, the re-assessment of the Bill of Entry No. 549 is upheld and penalty on Gaurav under section 114AA is reduced to Rs. 2,00,000/-. Rest of the impugned order is set aside.

Transaction value as primary basis of valuation - rejection of declared value under Rule 12 - sequential redetermination under Rules 3 to 9 of CVR 2007 - burden of proof and shifting onus in valuation cases - presumption of innocence - admissibility of electronic records and account statements - provisional assessment and non-attraction of penal provisions - confiscation, fine and penalty in valuation disputes - precedential inapplicability of pre-2007 cases to post-2007 section 14 - HELD THAT:- The presumption of innocence is a background assumption of our legal system, unless the statutes states otherwise. Having said that, discharging the burden of proof is not a one step process, it happens during the many steps involved in the continuous shifting of onus of proof between the department and the importer/noticee. There is an essential distinction between burden of proof and onus of proof, which has been discussed in the recent Apex Court’s Judgment in MAHAKALI SUJATHA Vs THE BRANCH MANAGER, FUTURE GENERALI INDIA LIFE INSURANCE COMPANY LIMITED & ANOTHER [2024 (11) TMI 1 - SUPREME COURT]

It is the departments case that 4 live BE’s imported during October-November 2011 and 22 BE’s imported during March 2008 to November 2011, were undervalued. There are two stages in cases of redetermination of assessable value. The first stage involves the process of rejecting the declared value and the second stage involves determining the value by proceeding sequentially from rule 4 to 9 of CVR 2007.

We find that the present case does not involve assessments made in the normal course of trade. Departmental investigations have established a prima facie case of mis-declaration of value. Such clandestine activities are inherently conducted in secrecy, rendering direct evidence difficult to obtain.

The importer-appellant neither filed a reply to the show cause notice nor appeared for personal hearing despite four opportunities being granted. Consequently, the plea of denial of effective personal hearing is devoid of merit. The statements relied upon remain un-retracted; the authenticity of the emails has not been disputed. The appellant’s objection to reliance on the post-seizure email dated 30.11.2011, retrieved not from its storage in the appellants computer but from an external mail server, is unsupported by reasons or by citing any provision of law. No request for cross-examination of the witnesses whose statements were relied upon was made before the adjudicating authority.

This is a case where the dispute between the parties is not due to a difference of opinion on how goods should be valued, but is an outcome of an investigation into a fraud committed by the appellant in under valuing the goods to evade payment of duty. Further section 11A of the central Excise Act and section 28 of the Customs Act are not in pari materia. However we find that the appellant has relied upon the judgment of the Hon’ble Delhi High Court in International Computers India Manufacturers Vs UOI and Others [1981 (5) TMI 118 - DELHI HIGH COURT], which has held that section 28 of the Customs Act is not attracted in the case of provisional assessment. Again in Collector of Customs Vs Kussum Marodia [1994 (9) TMI 92 - HIGH COURT OF CALCUTTA], the Hon’ble Calcutta High Court held that unless the final assessment is made there is no scope for taking action under section 111(m) or 112(a) of the Customs Act.

We find that all the live BE’s in this case were assessed provisionally following the orders of the Hon’ble Madras High Court dated 04.11.2011 and the earlier BE’s were cleared after being assessed provisionally at the behest of the department.

Hence the penal provisions are not attracted, in the light of the ration of judgments cited above. However the issue of the SCN has not caused any prejudice to the appellant as he was given an opportunity to join the proceedings for finalisation of assessment but he neither gave a reply to the SCN nor did he or his authorised representative appear for a personal hearing in spite of four opportunities being given, attracting the doctrine of non-traversal.

Thus, we uphold the assessments made but set aside the confiscation of goods, fine and penalty imposed. The impugned order is modified to that extent. The appellant is eligible for consequential relief, if any, as per law. The appeal is disposed of accordingly.

Classification of "internally/externally threaded Elbows, Bends, Sleeves, Tees and Crosses made up of Stainless Steel/Copper/Brass/Bronze" - General Rules for the Interpretation of the Nomenclature (GIR) 1 and 3(a) - Specific tariff entry preferred over residuary entry - HSN Explanatory Notes as an aid to classification - Classification under the Customs Tariff - HELD THAT:- It is an established fact that in case of any doubt the HSN is a safe guide for ascertaining the true meaning of any expression used in the Tariff Act. The case of Commissioner of Customs & Central Excise vs Phil Corporation Ltd. [2008 (2) TMI 3 - SUPREME COURT] is directly relevant and applicable in the instant case of the applicant. In the judgement of the said case Hon'ble Supreme Court has held "29. "a number of cases, this Court has clearly enunciated that HSN is a safe guide for the purpose of deciding issues of classification".

In the present case, as per HSN explanatory notes the relevant entries CTI 73072200, 74121000, 74122019 and 74122090 employs the terms threaded Elbows, Bends, Sleeves, Tees and Crosses. The explanatory notes use the term 'elbows', 'bends', 'sleeves', 'tees', and 'crosses' and all such shapes are included in this CTH.

Based on the explanatory note mentioned above, find that the elbows, bends, sleeves, tees, and crosses are crucial components in plumbing, HVAC, and industrial piping for changing flow direction, branching, or connecting pipes without welding. They are classified primarily by whether their connection points have internal threads or external threads, which are usually tapered for a self-sealing joint.

It is also necessary to take note of the case laws that has dealt with similar questions. The Hon'ble CESTAT have given multiple rulings on the classification of similar products (Stainless steel tube fittings-couplings, tees, crosses) imported by different importers. In the case of M/s. Bombay Fluid System Components Private Limited Vs Air Cargo Complex (Import) Mumbai, Hon'ble CESTAT in its final order [2024 (1) TMI 49 - CESTAT MUMBAI], upheld the classification of similar goods under tariff item 7307 2200.

The Authority ruled that the applicant's internally/externally threaded elbows, bends, sleeves, tees and crosses are classifiable by material as follows: stainless steel under HS 7307 22 00; copper under HS 7412 10 00; brass under HS 7412 20 19; and bronze under HS 7412 20 90, applying GIR 1 and 3(a), HSN Explanatory Notes and the principle that specific tariff entries prevail over residuary entries.

Issue estoppel - Applicability of issue estoppel in criminal proceedings - framing of notice u/s 251 Cr.P.C. - complaint u/s 108 read with Section 629A of the Companies Act, 1956 - distinction between issue estoppel and autrefois acquit - Whether this Complaint bearing No.589/2004 of ROC is barred by principle of issue estoppel. - HELD THAT:- The principle of issue estoppel is not precluded, in criminal trials. As discussed, the law which gives effect to issue estoppels is not concerned with the correctness or incorrectness of the finding which amounts to an estoppel, still less with the process of reasoning by which the finding was reached in fact. It is enough that an issue or issues have been distinctly raised or found. Once that is done, then, so long as the finding stands, if there be any subsequent litigation between the same parties, no allegations legally inconsistent with the finding may be made by one of them against the other.

Applying the principle of issue estoppel to the facts in hand, it emerges that it is evident that Ravi Mittal had written Letters dated 16.08.2002 and 27.09.2002, against Sanjay Mittal in regard to alleged transfer of Shares of M/S Delhi Cold Storage Pvt. Ltd., to ROC. One Complaint No. 589/2004 got filed by ROC, and on the same allegations, Ravi Mittal also filed his Complaint Case No 657/2004, which was finally dismissed on 10.11. 2016, by Ld. ASJ by observing that it was essentially a civil dispute and the Complaint under Section 108 read with Section 629 of the Companies Act was not maintainable.

The present Complaint 589/2004 of ROC, is based on same Letters dated 16.08.2002 and 27.09.2002, of Ravi Mittal on similar facts. Once the earlier Complaint has been decided on merits, the present second Complaint No. 589/2004 on same facts, is clearly barred by principle of issue estoppel.

Accordingly, Complaint 589/2004 and all proceedings emanating therefrom, including Orders dated 01.12.2017 and 08.12.2017, are hereby, quashed.

Petition along with pending Applications is disposed of.

Overriding effect of the Insolvency and Bankruptcy Code, 2016 - waterfall mechanism under the Insolvency and Bankruptcy Code, 2016 - clean slate doctrine in insolvency and liquidation - operational debt includes municipal/statutory dues - auction purchaser immunity from pre sale statutory liabilities in liquidation - requirement to lodge claims with the liquidator for participation in liquidation distribution - municipal authority cannot independently enforce pre liquidation dues outside IBC process - retrospective revaluation and assessment not enforceable against purchaser for pre purchase periods -

Overriding effect of the Insolvency and Bankruptcy Code, 2016 - HELD THAT:- Indian Courts and Tribunals have consistently recognized the supremacy of the Insolvency and Bankruptcy Code, 2016 in matters of insolvency and liquidation. It has been held that Insolvency and Bankruptcy Code, 2016 is a special law with a non-obstante clause and, therefore, prevails over general laws in case of inconsistency. It is now well-settled that once liquidation is ordered under the Insolvency and Bankruptcy Code, 2016, the process must strictly follow the Code and the Regulations framed thereunder, reinforcing that Insolvency and Bankruptcy Code, 2016 is a complete and exhaustive Code on the subject.

The overriding effect of the Code is all pervasive, throughout all the existing statutes, including municipal laws under which property tax or other local dues are claimed. Once liquidation proceedings are initiated under the Insolvency and Bankruptcy Code, 2016 claims of municipal authority must be dealt with strictly in accordance with the Code, particularly the priority mechanism prescribed under Section 53 of the Code.

The overreaching principle across all the judgments as relied on by the writ petitioners, is the supremacy of Insolvency and Bankruptcy Code, 2016 and the ‘clean slate theory’. Once a resolution plan is approved by the NCLT, all prior claims, debts and liabilities of the corporate debtor are extinguished and creditors must adhere to the ‘waterfall mechanism’ under Section 53 of the Insolvency and Bankruptcy Code, 2016 for asset distribution. Auction purchasers and Successful Resolution Applicants (SRAs) are not liable for past dues or liabilities incurring before the sale or resolution plan approval.

Therefore, in the liquidation of company, the Insolvency and Bankruptcy Code, 2016 has an overriding effect over municipal laws, under which property tax is claimed. Municipal dues are treated as operational debts and must be submitted to the liquidator and satisfied strictly, in accordance with Section 53 of the Insolvency and Bankruptcy Code, 2016, as it is held by the NCLAT – New Delhi in Bhatpara Municipality case [2021 (11) TMI 791 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, PRINCIPAL BENCH, NEW DELHI]. Any priority, charge or recovery mechanism provided under the municipal legislation stands overridden by virtue of Section 238 of the Insolvency and Bankruptcy Code, 2016.

Contractual clause override protection under the IBC 2016 - HELD THAT:- In the present factual matrix, no quantified arrear demand existed at sale, the respondent did not lodge any claim before the liquidator, but retrospective revaluation was initiated at a later stage post completion of liquidation sale. Thus, there were no crystalized encumbrances to pass on to the new purchasers/writ petitioners under the contractual clauses “as is where is” and “whatever there is”. Any municipal due under the statute does not survive as an independently enforceable right outside the IBC mechanism, when the concerned property has been dealt with under the insolvency law. Contractual clauses like “as is where is” and “whatever there is” cannot elevate or preserve a municipal charge which stands subordinated or extinguished under sections 53 and 238 IBC.

In liquidation, there is no resolution plan. Therefore section 31 IBC does not operate. Instead, section 53 IBC governs the distribution. The clean slate doctrine in liquidation does not flow from section 31 IBC, it must be derived differently. The key statutory provisions are under section 33 IBC which provides for liquidation order, section 35 IBC which provides for powers of liquidator, section 52 IBC which enumerates secured creditors’ rights, the waterfall principle as provided under section 53 IBC and the overriding clause as per section 238 IBC. If a municipal law creates a “first charge” on property, liquidation does not automatically wipe it out, but it depends on characterization and participation. Under IBC a “secured creditor” is one in whose favour a “security interest” is created. A statutory “first charge” may qualify as a “security interest” due to operation of law and render the authority as the “secured creditor”.

All these are subject to furnishing claim by the statutory authority before the liquidator without which its claim may not participate in distribution. Not furnishing a claim before the Liquidator risks the authority losing its rights of enforcement and the authority cannot continue independent recovery proceeding. The settled principle of law is to apply clean slate approach in liquidation in the context of provisions under sections 238 and 53 IBC and not as per section 31 (in case of resolution plan).

It is evident in this case that on either of these dates there were no proposed/declared and/or claimed tax which has remained unpaid and due, so far as the said asset is concerned. Hence, also there is no question of any direct or constructive knowledge of the petitioners regarding any due tax, to be existing on the said relevant date/s. It is necessary to mention here that the respondent authority has never filed any claim of it with respect to the concerned property, before the learned liquidator, in the resolution process, for the period as mentioned in the notice dated July 28, 2022.

The petitioners cannot be held responsible for payment of any tax with respect to the property, for a period when they have been only strangers to the same. That too, since the original owner Company being in liquidation and the petitioners being purchasers of the property, the tax amount due for the previous period if any, could only be recovered through the process as prescribed under the Insolvency and Bankruptcy Code, 2016 and not otherwise.

It has been found that the impugned notice dated July 28, 2022 of the respondent and its order of assessment dated August 23, 2022 and the property tax bill for 2024-25 issued to the writ petitioners are not legally sustainable. The respondent authority has unauthorisedly and illegally issued the same and those are liable to be set aside. In view thereof the Court finds it unnecessary to discuss in detail the other points argued by the petitioners, challenging these as mentioned above. The writ petition should succeed.

Existence of debt and default as the determinative test for admission u/s 7 - barred by limitation - Threshold u/s 4 of the Insolvency and Bankruptcy Code - Dispute as to quantum of debt not to be gone into at the admission stage - Effect of acknowledgment in balance-sheet u/s 18 of the Limitation Act - Exclusion of limitation period for the COVID-19 period by the Supreme Court - Interpretation of contractual delayed payment charges and interest for computation of outstanding -Whether the claim filed u/s 7 of the code is below threshold or not. -

Issue of Threshold - HELD THAT:- We observe that it was a cryptic reply without any supportive ledgers and calculations, which didn’t justify his arguments. However, at the appellate stage the Appellant has submitted detailed calculations to justify that the threshold is not met by the financial creditor while filing Section 7 application.

We also observe that both sides have provided differing calculations at different stages of the case to put forth their claims and counter claims. Since their is a keen contest for determination of the threshold, we have gone through the calculations provided by both sides and it is evident from the calculations provided by FC that the Financial Debt owed to the Financial Creditor exceeds the threshold limit of Rs. 1,00,00,000/- (Rs. One Crore) as envisaged under Section 4 of the Code. Hence, the contention of the Appellant that the Corporate Debtor has acknowledged a lesser amount in its balance sheets is devoid of any merit.

We also observe that at the time of admission of a Section 7 petition Adjudicating Authority is only required to ascertain the existence of a debt and default. Debt and default are sine qua non and only condition for admitting an application under Section 7 of the Code. The Hon’ble Supreme Court in the matter of Innoventive Industries Ltd. v. ICICI Bank [2017 (9) TMI 58 - SUPREME COURT] observed that for the initiation of the Corporate Resolution process by Financial Creditor under sub-section (4) of Section 7 of the Code, 2016, the Adjudicating Authority on receipt of Application under sub-section (2) is required to ascertain existence of default from the records of Information Utility or on the basis of other evidence furnished by the financial creditor under sub-section (3). Under Section 7, the Adjudicating Authority is required to satisfy (a) Whether a default has occurred, (b) Whether an application is complete and (c) Whether any disciplinary proceedings against the proposed insolvency Resolution Professional. Once satisfied, it is required to admit the petition. In the instant case, the record establishes that there is a ‘debt’ and a ‘default’ and the Application is complete and thus the Adjudicating Authority has rightly admitted the Application under Section 7 of the Code.

We also note that this position was also reaffirmed by the Hon’ble Supreme Court in the matter of M Suresh Kumar Reddy vs Canara Bank [2023 (5) TMI 570 - SUPREME COURT] that once the Adjudicating Authority is satisfied that a default has occurred, there is little discretion left for the Adjudicating Authority to refuse admission of the Application under Section 7 of the Code. Hence, the Adjudicating authority was bound to admit the petition on account of the default of the Corporate Debtor and as such there is no infirmity in the Impugned Order.

Therefore, we observe that once the threshold was crossed, it was not for the Adjudicating Authority to decide the exact ‘Quantum of Debt’, but what had to be examined was whether there was a ‘Debt’ and ‘Default’. Therefore, the Appeal deserves to be rejected on this count that the petition doesn’t meet the threshold of one crore. Furthermore, we note the Appellant had neither before the NCLT nor before this Appellate Tribunal filed any ledger account to establish the amount in default as on 15.06.2022.

Application barred by Limitation - HELD THAT:- We observe that the loan facility was sanctioned by L&T Finance Limited to the Corporate Debtor on 17.07.2013. The date of default of the Corporate Debtor is 24.04.2017. Accordingly, the period of limitation will run from the date of default i.e., 24.04.2017. It was the case of the Appellant that the repayment under the facility agreement was to be completed within a period of 90 days from the date of disbursement. The period of 90 days from the last disbursement on 09.09.2015 expired on 08.12.2015 and as such the Appellant claims that the correct date of default ought to be 08.12.2015 and limitation would expire on 07.12.2015.

Therefore, in terms of Section 18 of the Limitation Act, the acknowledgment of liability in respect of the present loan will extend the limitation period and a fresh period of limitation shall begin from the date of acknowledgement.

We also note that the Hon’ble Supreme Court in March 2020 took suo moto cognizance of the difficulties faced during the COVID-19 pandemic and directed in Suo Motto WP(C) 3 of 2020 that the period from 15.03.2020 till 28.02.2022 shall stand excluded in computing the limitation period. Accordingly, limitation period will start running from 01.03.2022. Therefore, the we find that the petition under Section 7 of the Code was within the period of Limitation.

Negligent conduct of the Appellant - HELD THAT:- We find that the Corporate Debtor had been continuously delaying the proceedings by not appearing before the Adjudicating Authority. Thus, we observe that the conduct of the Appellant has been nothing short of negligent at all stages.

Basis above analysis we conclude that the appeal is devoid of any merit and is accordingly dismissed. All related IA's are also disposed of. No orders as to costs.

Admissibility of statements recorded under the Customs Act in FEMA proceedings - presumption as to documents seized under FEMA - retracted confessional statements and requirement of corroboration - adverse inference for non-cooperation with investigation - penalty u/s 42 of FEMA - contravention of Section 3(b) / Section 3(4) of FEMA -

Retracted confessional statements and requirement of corroboration - HELD THAT:- The Hon’ble Supreme Court in the case of Vinod Solanki Vs Union of India [2008 (12) TMI 31 - SUPREME COURT] has laid down the situations where the retracted statement of the Noticee can be relied upon.

In K.T.M.S Mohamed Vs. Union of India [1992 (4) TMI 6 - SUPREME COURT] the Hon’ble Supreme Court held that merely because statement is retracted, it cannot be regarded as involuntary or unlawfully obtained.

We find that the Impugned Order is well reasoned and due application of mind has been made. The rejection of the retractions made by the two Appellants is after due consideration of the facts and circumstances of the present case.

Requirement under the provisions of FEMA, as are statutorily provided under the Customs Act, 1962 - HELD THAT:- It is on record that in the statements under the Customs Act, 1962, the Appellants have admitted transferring funds either to the representatives of the overseas supplier who would visit them to collect the differential amounts or the same was paid from foreign banks to the supplier account. It is also on record that the Appellant Shri Dhiraj Gupta had formed an intermediary Company in Singapore. Shri Dhiraj Gupta is on record to have stated before the DRI Authorities of how the intermediary Company at Singapore was utilized for routing these kinds of transactions. The recovery of the slip pads on 17.07.2009 at the residential premises of Shri Dhiraj Gupta corroborated payment made through other banking channels. It is important to appreciate that the digital evidences which were recovered during the searches conducted by DRI were examined by GEQD, Hyderabad. The reports of GEQD, Hyderabad corroborate instances of payments through money changer and also issuance of debit notes raised by the overseas supplier evidencing transactions of value higher than the value declared by the Appellants before the Customs Authorities. We take note of the Table prepared and relied upon in paragraph 7.6 of the Impugned Order, which clearly brings out specific instances of payments having been made through non-banking channels as well as in cash with respect to certain Bills of Entries. These transactions corroborate the statements made under the Customs Act as to the differential amount that had been paid for the goods imported by the Appellants.

Admissibility of the reports of GEQD - HELD THAT:- We find that there are two Annexures A and B to the Complaint and to the SCN. The Appellants have challenged the Annexure B, as being the same as Annexure II of the SCN of DRI. For the consignments listed in Annexure B, they have contended that no evidence could be produced. We find that in paragraph 7.9 of the Impugned Order it has been noted that Annexure A refers to 41 consignments imported during the period from May, 2007 to July, 2009 and Annexure B refers to 49 consignments imported during the period from August, 2007 to June, 2009. Thus, the two Annexures are covering the same period of time between May, 2007 and July, 2009.

In view of the statements made by the Appellants, we agree with the Impugned Order that from the details recovered from the reports of GEQD, Hyderabad, similar treatment to consignments of the same period is logical and acceptable interpolations.

Penalty under Section 42 of FEMA - HELD THAT:- It is on record, that Appellants Smt. Mamta Gupta and Shri S Gowrishankar were partners of M/s Shami Impex on paper only and for the namesake. The affairs of M/s Shami Impex were in control of the Appellants S/Shri Kamlesh Gupta and Dhiraj Gupta, who at the relevant time were responsible and in-charge for the conduct of the affairs of the Firm. It is also on record that the two Appellants S/Shri Kamlesh Gupta and Dhiraj Gupta have accepted the said position with respect to Smt. Mamta Gupta and Shri S Gowrishankar. We therefore find that the penalty of Rs. 1,00,000/- each imposed on the Appellants Smt. Mamta Gupta and Shri S Gowrishankar is unwarranted even in terms of Section 42 of FEMA.

We uphold the Impugned Order, in so far as the penalty of Rs. 3,00,000/- Rs. 15,00,000/- and Rs. 15,00,000/- has been imposed on the Appellants M/s Shami Impex, Shri Dhiraj Gupta and Shri Kamlesh Gupta, respectively are concerned for the contravention of Section 3(4) of FEMA. The penalty amounts of Rs. 1,00,000/- each upon the Appellants Shri S Gowrishankar and Smt. Mamta Gupta are set aside.

The appeals are partly allowed.

Abuse of dominant position by National Stock Exchange (NSE) - indulging in practice of granting preferential market access to select brokers on account of manipulation of Co-Location Facilities - prima-facie opinion - unfair advantages to selected brokers having Co- Location Facilities, restricting market access to others Trading Member - equal, fair and transparent access - load balancer and randomiser - rule of reason - violation of Section 4(2)(a)(i), 4(2)(b)(ii) and 4(2)(c)(iii) of the Competition Act - HELD THAT:- It is the case of the Appellant that the NSE deliberately created flawed architecture in order to favour select few brokers and further the NSE also allowed advantage to select few brokers by providing arbitrarily market access through use of its secondary server which was less crowded than the primary server. The Appellant also tried to impress us during hearing that selected few brokers had always access to secondary servers which was provided to them in connivance with the employees and management of the NSE and thus, the NSE was responsible for denying fair market access to large number of brokers and investors.

Appellant filed an information under Section 19(1) of the Competition Act, but the CCI after examining the relevant facts and giving opportunity of being heard to the concerned parties as well as after examining the submissions made by the parties, the CCI formed an opinion that no prima-facie case existed and thus, passed the Impugned Order communicating to all parties including the Appellant.

Prima-facie case does not mean a case proved to be to the finality but means a case which is set to be established if the evidence which is furnished by the informant like the Appellant herein lead to support the same. In such cases, a summary enquiry is done by the CCI by taking evident of the concerned stakeholders including written submission as deemed to be adequate for summary enquiry. We note that the CCI in the present case, based on the allegations of the Appellant, indeed called the NSE, who submitted all the required information to the CCI. We further take into consideration that the CCI, evaluated such evidence and the documents furnished by the NSE before concluding that prima-facie did not exist.

It is the case of the NSE that to establish a Section 4 violation, the impugned conduct and the anti-competitive harm must emanate from an "overt act" by the dominant enterprise, the NSE herein and not by misconduct by a third-party like its employees, if at all Section 4(2)(a)(i) violation necessitates an element of compulsion by the dominant enterprise. It is also the case of the NSE that section 4 violation, even prima-facie, cannot be established without evidence of anti- competitive harm, and prior to directing an investigation and therefore, the CCI needs to ensure that all elements of a Section 3/4 violation have been satisfied. On this issue, it is the case of the Appellant that no overt act on the part of the NSE was needed. All evidence, documents, information submitted by the Appellant to the CCI, were more than adequate to form prima-facie opinion by the CCI for causing further investigation.

We note that the Appellant could not make any concrete case as what harm Co-Location Facilities or even the access to secondary servers caused to the investors or consumers. At the cost of repetition, it may be reiterated that Co- Location Facilities was exclusively meant for Trading Members of the NSE and not for investors. Hence, we do not find in any merit in the Appellant’s argument that Co-Location Services harmed the interest of the consumers. The CCI correctly assumed the situation and passed reasoned the Impugned Order. We do not find any error in the Impugned Order.

We hold that while the CCI and SEBI (‘act’) in their own domain, in accordance with the applicable laws to them i.e., Competition Act and SEBI Act, respectively, however, one cannot ignore the fact that SEBI is sectoral regulator with requisite expertise to look into such matter. The CCI therefore, was correct in taking help of SEBI order, to the extent needed, to form its prima-facie opinion.

Hon’ble Supreme Court of India in the case of Competition Commission of India vs. Bharti Airtel Limited & Ors. [2018 (12) TMI 1683 - SUPREME COURT] found that the CCI was correct in placing reliance on the Sectoral Regulator’s factual and technical aspects while considering the Appellant’s Information.

No error in the Impugned Order on this aspect especially since the CCI formed its opinion in accordance with Section 3, 4 and 19 of the Competition Act, albeit, taking into consideration various information, reports, documents including SEBI/SAT order. We find this was right approach adopted by the CCI in the present case especially keeping in view the ratio of Bharti Airtel, provided by the Hon’ble Supreme Court of India.

Upon consideration of the record, we hold that the CCI was justified in passing the impugned order and in declining to direct an inquiry against the NSE under Section 19(1) of the Competition Act, 2002.

The CCI rightly examined the issues relating to co-location facilities and correctly concluded that no case was made out by the Appellant regarding denial of market access or grant of preferential access to select trading members. The allegations concerning the absence of a load balancer and randomiser were also found to be not established.

We hold that the CCI is not required to order an investigation by the Director General unless a prima facie case is made out. In the present case, the CCI formed its opinion after hearing the parties and considering the SEBI order and various expert reports, including those of SEBI TAC, Deloitte, Ernst & Young, and ISB. We do not find any error in the Impugned Order or approach of the CCI.

Thus, we find that the impugned order warrants no interference. The appeal is devoid of merit and is dismissed.

Provisional attachment u/s 5 and adjudication u/s 8 of the PMLA - proceeds of crime -involvement in money laundering - possession by a person not named as accused - property of equivalent value - confirmation of provisional attachment by the Adjudicating Authority -HELD THAT:- We find that mere challenge to the prosecution complaint does not effect the proceedings herein when the case is still pending before the Court, mere challenge to Prosecution Complaint by the appellants does not make out a case for interference in the impugned order.

No document has been produced for it and even if the statement of the appellants is accepted, there exists another FIR. The counsel was fair enough to state that quashing of the scheduled offence is only in respect of one FIR and since, scheduled offence subsists in the other case, the proceedings under the Act of 2002 would continue.

It was submitted that the appellant companies have not been named as an accused, rather the Provisional Attachment Order has been caused against the appellant company being the recipient of the proceeds of crime. It is not necessary to be an accused for causing Provisional Attachment Order. It can be against the person who is in possession of proceeds of crime as given under Sections 5 & 8 of the Act of 2002.

In the case of Vijay Madanlal Choudhary and Others v. Union of India & Ors. [2022 (7) TMI 1316 - SUPREME COURT (LB)] therein, even the last issue raised by the appellants cannot be accepted when the respondents have produced the material to show receipt of the proceeds of crime by the appellants from the accused. As per Section 5(1)(a) of the Act of 2002, the provisional attachment can be caused against the person in possession of the proceeds of crime which fact has been alleged.

Thus, we do not find merit in the argument raised by the appellants. Accordingly, the appeals fail and are dismissed. No other argument than the one discussed above was raised by the appellants despite an opportunity and has been discussed by us accordingly.

Binding effect of an approved resolution plan - extinguishment of claims not part of the resolution plan - statutory dues as operational debt within CIRP - effect of moratorium under the Insolvency and Bankruptcy Code - tribunal losing jurisdiction / becoming functus officio once resolution plan is approved - primacy of the Insolvency and Bankruptcy Code over other statutes -

ORDER - AJAYAN T.V. Member (Judicial) - HELD THAT:- Once the Resolution Plan is approved by the Adjudicating Authority under Section 31 (1) of Insolvency and Bankruptcy Code 2016 (IBC), then “no person will be entitled to initiate or continue any proceedings in respect to a claim which is not part of the resolution plan’’. We make it clear that neither side has informed us as to whether or not the statutory dues owed to the Central Government, under contest in this appeal before us, are part of the said resolution plan or not. Be that as it may, as the conclusions of the Apex Court has also elucidated that all the dues including the statutory dues owed to the Central Government, any State Government or any local authority, if not part of the resolution plan, shall stand extinguished and no proceedings in respect of such dues for the period prior to the date on which the Adjudicating Authority grants their approval under Section 31 could be continued, to our mind, it is clear that, in any event, the present proceedings in this appeal cannot be continued before us. Ordered accordingly.

ORDER - M. AJIT KUMAR Member (Technical) - HELD THAT:- Immediately after the resolution plan is approved by the NCLT under Section 31(1) of the IBC, it becomes binding on all stakeholders. The fate of the pending tax appeal depends on the contents of the approved resolution plan. If the approved plan expressly permits continuation of the tax appeal, the appellate proceedings may continue. Otherwise, the Appellate Tribunal loses jurisdiction to proceed further and becomes functus officio. (one whose duty has ceased)

As per Section 35C of the Central Excise Act, 1944 which is also applicable to Service Tax matters, “The Appellate Tribunal may, after giving the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit, confirming, modifying or annulling the decision or order appealed against or may refer the case back to the authority which passed such decision or order. .”

The Central Excise Act, 1944/ The Customs Act, 1962 and the IBC operate in distinct statutory spheres, and the Tribunal must respect the primacy of the IBC process once insolvency proceedings are admitted and concluded.

In fine, the IBC temporarily halts the processing of the tax appeals filed before this Tribunal involving a corporate debtor once the insolvency resolution process has commenced and permanently concludes them when the resolution plan is approved by the NCLT. With this the Tribunal loses its jurisdiction to proceed further - unless the approved resolution plan specifically allows the continuation of the appeal.

We find that the appellant has drawn our attention to a Coordinate Bench decision of this Tribunalin the case of Aircel Limited, Coimbatore [2025 (6) TMI 1729 - CESTAT CHENNAI], where in a similar issue the Bench after finding that the Resolution Plan had been approved by the Adjudicating Authority under section 31(1) of the IBC had held that the appeals stand closed/disposed of accordingly.

Considering the facts of this case, since the resolution plan does not specifically provide for continuation of the appeal pending before us, it stands concluded by the operation of law as stated in the IBC and is disposed of accordingly.

Consideration in non-monetary form u/s 67(1)(ii) - service tax on free residential accommodation - cost of free supplies by service recipient not includable in assessable value - nexus between amount charged and service provided - issue no longer res-integra - HELD THAT:- Appellant submits that these expenses are not required to be subjected to service tax as these were provided to the appellant free of cost and there was no nexus between the amount charged and the service provided. Therefore, the cost of free supply provided by the service recipient to the service provider is neither an amount charged nor any reasons with service provided by the service provider. She is relying on the judgment of Hon’ble Supreme Court in the case of Commissioner of Service Tax Vs Bhayana Builders P Ltd.,[2018 (2) TMI 1325 - SUPREME COURT] and also on the judgment of the Hon’ble Supreme Court in the case of Union of India Vs Intercontinental Consultants and Technocrats Pvt Ltd.[2018 (3) TMI 357 - SUPREME COURT]. She further informs that for the same appellant for the earlier period on the same issue, this Bench has already decided in favour of the appellant videCISF Vs Commissioner of Central Tax [2024 (5) TMI 565 - CESTAT HYDERABAD]. She is also relying on various other judgments of the Co-ordinate Benches, wherein, it was held that the charges for accommodation, medical expenses, vehicle running and maintenance, telephone, dog squad etc., were not includable in the assessable value for the payment of service tax.

We find that issue is no longer res-integra and therefore the demand for Service Tax on free Residential accommodation and others will not sustain. Accordingly, the impugned order is set aside. Since the order has been set aside on merit itself, the interest and penalty will also not sustain.

Appeal allowed.

Admissibility of CENVAT credit on various inputs and input services used in the construction of commercial property, which was later given on rent - renting of immovable property service treated as output - nexus between inputs and output service - precedential application of judicial decisions - HELD THAT:- We find that in appellant’s own case for the year 2005-06 to 2008-09, this issue has been considered by this Tribunal [2024 (6) TMI 186 - CESTAT BANGALORE] by following the judgment of Hon’ble Karnataka High Court in the case of Commissioner of Service Tax vs. Golflinks Software Park Pvt. Ltd. [[2022 (12) TMI 472 - KARNATAKA HIGH COURT] wherein it is held that cenvat credit is admissible on the inputs used in the construction of the commercial property which is later given on rent. Similar view has also been emphasised by the Tribunal in the case of Bharati Realty Ltd. vs. CCE, Delhi [2022 (5) TMI 569 - CESTAT NEW DELHI] Following the said precedents, we set aside the impugned order and allow the appeal with consequential relief, if any, as per law. Appeal is allowed.

Deemed infructuous- effect of filing declaration under SVLDRS-2019 on appellate proceedings - pendency of writ petition as bar to appellate proceedings - restoration/revival of appeal - HELD THAT:- Learned Advocate has relied upon the decision ofM/s Navbharat Engineering Works Vs. Commissioner of CGST [2024 (4) TMI 863 - CESTAT ALLAHABAD], in which the coordinate Bench has decided that the matter can still be considered on merits. Tribunal has in a number of cases restored the appeal filed by the Appellant, which were dismissed taking note of declaration filed in form SVLDRS-1, when the matter was not finally settled under the said Scheme and SVLDRS-IV issued.

Considering the statutory provisions of SVLDRS-2019, we are of the view that the appeal may be treated as infructuous as at the moment, the Hon’ble High Court of Gujarat is seized of the matter. In case they do not succeed before Hon’ble High Court and SVLDRS-4 is eventually not issued to them, they may if deem fit, approach the Tribunal for restoring the appeal and deciding on merits.

Thus, the appeal is liable to be considered as deemed infructuous - no bar for the appellant to prefer and revive their appeal in case, Hon’ble High Court of Gujarat decides the case against them or as per SVLDRS-2019, certificate is eventually not issued to them.

Appeal dismissed as infructuous.

Clandestine manufacture and removal of excisable goods - admissibility of computer-generated evidence u/s 36B(2) and 36B(4) - incidence of excise duty on removal - cogent corroborative evidence for clandestine transactions - appellate interference limited to perversity in findings of fact - HELD THAT:- It is evident that, based on an intelligence report, a search was conducted at the manufacturing unit of the respondent as well as at the residential premises of its Managing Director. The Revenue has sought to make out a case that, during the course of the search, it was found that the respondent was engaged in clandestine manufacture and removal of excisable goods without payment of excise duty.

With regard to the computer printouts seized during the search, the Tribunal held that the same were not admissible in evidence in view of non-compliance with the requirements of Section 36B(2) read with Section 36B(4) of the Act.

The Tribunal finally held that there was no commercial production of detergent cakes and that the goods found at the premises were manufactured during trial production and were loaded in the vehicle in that context. It was also held that excise duty becomes payable on removal of the goods in terms of Rule 4 and Rule 8 of the Central Excise Rules, 2002 (“the Rules”). The Tribunal noticed that the seized goods were provisionally released upon payment of excise duty. The Tribunal further held that the monthly ER-1 return submitted for the month of February 2011 confirmed that there was no production or clearance of detergent cakes and detergent powder up to February 2011.

If, in fact, raw materials had been procured in an unaccounted manner and finished goods had been manufactured and sold without payment of duty, it was incumbent upon the Revenue to establish such transactions by cogent evidence. The Revenue has failed to do so, and no material has been brought on record in that regard. Mere statements of certain alleged suppliers or purchasing dealers admitting to unaccounted transactions with the respondent, unless corroborated by independent and reliable evidence, cannot, by themselves, be relied upon to sustain the charge of clandestine manufacture and removal of excisable goods.

A scrutiny of the order passed by the Tribunal indicates that the findings recorded therein are based on the material available on record and the facts of the case. No evidence has been placed to contradict the findings so recorded or to demonstrate any perversity therein.

As the findings recorded by the Tribunal are purely findings of fact, they do not give rise to any substantial question of law, unless perversity is specifically pleaded and established. In the present case, no perversity is either pleaded or made out.

Thus, we hold that no substantial question of law arises for consideration in this appeal. Accordingly, the appeal stands dismissed.

CENVAT Credit admissibility - input service - freight/transportation up to the place of removal - F.O.R. / FOR contract sales - remand for factual verification and quantification - penalty not leviable for interpretational issues -

CENVAT Credit admissibility - input service - HELD THAT:-We find that the services in question i.e. Insurance Services, Taxi Services, Courier Services and Installation and Commission Services, the appellants could successfully demonstrate that the said services are used in the business of the assessee and therefore, credit is admissible. We also find that the cases relied upon by the appellants also support the contention of the appellants. Therefore, we don’t find any valid reason to deny the credit on the same to the appellants. Accordingly, we find that the appeal filed by M/s ELTEK SGS Pvt Ltd is maintainable.

Admissibility of CENVAT credit on the freight services - HELD THAT:- We have no hesitation in holding that the appellants are eligible for the credit of service tax paid on transportation up to the place of removal. We find that the appellant submits that the credit of the “cargo services” they availed is in fact on account of freight as is be evidenced by the invoices. They also submit that it is incorrect to take a ground that as there was no contract it cannot be ascertained whether the appellants were obliged to transport the goods till the consignee premises and that invoice itself can be seen as a contract. Though we are in agreement with the submission of the appellants, we find that Learned Commissioner has not given any reasons as to how he came to a conclusion and to that extent we find that there is merit in the appeal of the Revenue as far as the verification of the facts and documents is concerned.

Therefore, we are of the considered opinion that the matter should go back to the adjudicating authority to ascertain the quantity of credit admissible to the appellants on the service tax paid on freight was in respect of clearances where place of removal was at the consignee/customer premises. The appellants are required to satisfy the adjudicating authority about their claim that they were obligated to deliver the goods at the consignee/customer premises; the adjudicating authority requires to go through the documents like invoices and Chartered Accountant’s certificate before quantifying the admissible credit.

Fabrication of folding cot steel frame by cutting, bending and welding of MS pipe -Manufacture within the meaning of Section 2(f) of the Central Excise Act, 1944 - includibility of value of bought-out/traded items in assessable value - optional accessories versus integral parts in valuation - SSI exemption benefit - penalty and extended period provisions - interest on confirmed duty - HELD THAT:- We find that the process undertaken by the appellant has resulted in a distinct and a new product, which is marketable as ‘folding cot’. Therefore, we take the view that the ‘folding cots’ get manufactured at the end of the appellant and the same would be exigible to payment of Excise Duty.

Hence, we hold that folding cots are manufactured products in terms of Section 2(f) of the CEA 1944 and the duty liability worked out to Rs.58,59,681 is required to be paid along with interest.

As rightly submitted by the appellant, the Plywood Tops cannot be delivered fitted with the Folding Cot as the Plywood board would be broken. It is seen that Folding Cot can be used by Cotton Tape and therefore the use of Plywood Board by the user is purely optional. Therefore, we have come to a considered decision that the value of the bought-out Plywood Tops, which are traded goods of the appellant, cannot be added to the value of the Floding cots. The demand on this count is set aside.

Appellant has admitted the duty liability on Folding Cot [as a manufactured good], which is payable after allowing the benefit of SSI exemption. It is seen that the appellant is a SSI unit undertaking the DGS&D Rate contract of Government of India and has supplied the goods to the Indian para military forces. From the sales Invoice reproduced above, there is nothing to indicate that the Excise Duty element has been charged on the Indian Military. The copy of the Contract also clarifies that no Excise Duty element has been shown to be paid to the appellant. This shows that the appellant had entertained a bonafide belief that in case of folding cots, no manufacturing takes place. Hence, they have neither charged Excise Duty, nor remitted the same to the exchequer.

Prima facie no specific case has been made out against the appellant to invoke the extended period provisions of the CEA 1944. However, it is also on record that the appellant has agreed to pay the Excise Duty of Rs.58,59,681 for the entire period of demand, without contesting the same on account of time bar. Therefore, we do not find any necessity to impose the penalty equal to the Excise Duty in terms of Section 11 AC of the CEA 1944. Accordingly, we hold that even in respect of confirmed Excise Duty amount of Rs.58,59,681, no penalty is imposable against the appellant firm. In view of our findings that in respect of on plywood top supplied, their value is not includible, the Excise Duty thereon along with interest and penalty imposed stand fully set aside in respect of the appellant firm.

The major portion of the confirmed demand amounting to about Rs.2.74 crores [on account of value addition in respect of plywood tops supplied by the appellant], has been held as not legally sustainable and has been set aside along with interest and penalty thereon by us as per the detailed discussions above. In respect of the balance confirmed demand of Rs.58.59 lacs, the same has been admitted as payable by the appellant firm, the same has not been charged on their buyer.

Therefore, considering these facts and also the fact that the penalty against the appellant firm has been set aside, we also set aside the penalty imposed on the appellant Sri Goldi Sethi.

Condonation of delay - proof of delivery - service by Registered Post/Speed Post with acknowledgement due - benefit of doubt on non-receipt - cost for condonation of delay - Section 37C of the Central Excise Act, 1944 made applicable to service tax matters - recovery proceedings by freezing of bank accounts - HELD THAT:- On perusal of the records of the case, more particularly the above table appended to the letter dated 24.09.2025 addressed by the office of the adjudicating authority to the departmental representative in the Tribunal, we find that pursuant to the letter dated 17.10.2023 addressed by the department to various banks for freezing the applicant’s bank account under Section 87 of the Finance Act, 1994 read with Section 174 of the CGST Act, 2017, the Axis Bank vide its letter dated 19.10.2023 had confirmed that the recovery action directed in the letter dated 17.10.2023 had already been complied with and the copies of the letters dated 17.10.2023 and 19.10.2023 have also been forwarded to the applicant. Further, receipt of such letter of the banker was also acknowledged by the applicant, which would be evident from the applicant’s letter dated 23.07.2024, requesting withdrawal of letters issued to their customers and for extending the facility of payment of the adjudged dues in instalments.

Considering the overall facts and circumstances of the case, especially the period of delay in filing the appeal before the Tribunal, we are of the view that ends of justice would be met, if the applicant is directed to deposit a cost for condoning such inordinate delay in filing of appeal. Therefore, bearing in mind the stake involved in this case and inordinate delay caused in filing this appeal, without explaining sufficient cause, the applicant is directed to deposit an amount of Rs.1,00,000/- (Rupees one lakh only) into the “Prime Minister's National Relief Fund (PMNRF)” as cost, within a period of six weeks from the date of receipt of this order. The matter is listed for reporting compliance of such deposit, before the Deputy Registrar (Judicial) of this Tribunal on 31.03.2026. It is made clear that non-compliance of this order would result in closure of the case file for all practical and statistical purposes, without any intimation to the applicant. The Deputy Registrar (Judicial), Mumbai is directed to furnish the compliance report before this Bench on 01.04.2026. On showing due compliance of this order, the appeal filed by the applicant would be assigned with the appeal number and the case would be taken up for hearing by the Tribunal in due course.

Proof of delivery - service by Registered Post/Speed Post with acknowledgement due - HELD THAT:- Since, obtaining the ‘acknowledgment due’ of the Postal Department is a statutory requirement, there is a need for the department to have the document in the form of AD card, duly signed by the recipient or the Speed Post Tracking record, indicating actual receipt of the order by the addressee. As the aforesaid document alone would fulfill the statutory requirement for evidencing the ‘proof of delivery’, and in its’ absence, any evidence produced by the party, claiming that either the order has not been received by them, or copy of the order received at a later date from the officials of the department, had to be accepted by the Tribunal under compulsion, having left with no other option.

Under the above circumstances, it would be highly appreciable, if the department adopts a permanent mechanism to systematically maintain the register, showing the date of actual receipt of the order/communication, so that frivolous appeals filed by the parties, can be avoided at the admission stage of the appeal itself by the Tribunal. For ensuring the date of actual communication of the orders passed by the Commissioners as the adjudicating authority or the Commissioner (Appeals) as the first appellate authority, the Department may take up the issue with the concerned authority in the Department of Posts for timely obtaining of Speed Post Tracking status/AD Card as ‘proof of delivery’ of the order/communication sent by the department to the parties concerned and should keep them on record as an ‘evidence of proof of delivery’, for onward submission before Tribunal, as and when required.

Therefore, we consider it necessary that a copy of this order be sent to the Chairman, Central Board of Indirect Taxes and Customs (CBIC), for enabling CBIC to initiate necessary action, in ensuring a permanent solution to the issue discussed herein above. Accordingly, Registry is directed to forward a copy of this order to the Chairman, CBIC, Ministry of Finance, New Delhi.

Entitlement to avail Cenvat credit of service tax paid on GTA service used for outward transportation of finished goods from the factory gate up to the customer's premises - Place of removal - FOR destination sale / Freight on Road basis - Input service under Rule 2(l) of the Cenvat Credit Rules, 2004 - Ownership and risk remaining with the seller till delivery - HELD THAT:- Identical issue came up for consideration before the Larger Bench of the Tribunal in M/s. The Ramco Cements Ltd. vs. CCE, Puducherry [2023 (12) TMI 1332 - CESTAT CHENNAI-LB], wherein the Larger Bench, after detailed examination of the statutory provisions and the decisions on the issue of admissibility of Cenvat credit on GTA service i.e. outward transportation of finished goods upto the place of delivery including the Judgement in Ultra Tech Cement Ltd. [2018 (2) TMI 117 - SUPREME COURT] and the circulars issued by CBEC from time to time, has held that ‘in a case where clearance of goods are against FOR contract basis, the authority needs to ascertain the ‘place of removal’ by applying the judgments of the Supreme Court in Emco [2015 (8) TMI 200 - SUPREME COURT] and Roofit Industries [2015 (4) TMI 857 - SUPREME COURT] the decision of Karnataka High Court in Bharat Fritz Werner [[2022 (7) TMI 352 - KARNATAKA HIGH COURT] and the Circular dated 08.06.2018 of the Board to determine the admissibility of Cenvat Credit on the GTA service upto the place of removal’.

In a more recent decision in M/s Varroc Lighting System Pvt Ltd. & Anr. vs. CCE & ST, Pune [2026 (2) TMI 229 - CESTAT MUMBAI], Cenvat credit on GTA services availed for outward transportation of finished goods upto the customers’ premises was again upheld by this Tribunal.

No material has been placed on record by Revenue to show that the decisions have been stayed or set aside by any higher judicial forum.

In the instant appeals FOR destination basis sale has not been disputed by Revenue. The inclusion of freight in the assessable value and payment of excise duty on such value, is also not been disputed. The freight charges borne by the appellant has also not been denied.

In view of the foregoing discussions and settled legal position and also in the facts of these appeals, customers’ premises constitute the ‘place of removal’. Accordingly, in these Appeals the GTA service availed for outward transportation of finished goods up to the customer’s premises qualify as ‘input service’ under Rule 2(l) ibid and the credit availed by the Appellant is admissible.

Accordingly, the impugned orders are set aside by allowing the appeals with consequential relief if any, in accordance with law.

Excisability of recovered/spent solvents - sale/clearance of recovered mixture of spent solvents arising during the manufacture of bulk drugs -manufacture u/s 2(f) of the Central Excise Act, 1944 - marketability and definition of excisable goods u/s 2(d) of the Central Excise Act, 1944 - HELD THAT:- The issue, has been dealt with by the Tribunal in the case of the appellants for the earlier period, i.e. September 2006 to December 2012 and January 2013 to September 2013. The Tribunal had allowed the appeal in favour of the appellant, holding that the resultant product of recovered mixture of spent solvents should not be considered as excisable commodity and as such, no duty liability can be fastened on removal of such goods from the factory premises.

Thus, we do not find any merits in the impugned order, insofar as it has upheld confirmation of the adjudged demands on the appellants. Therefore, the impugned order is set aside and the appeal is allowed in favour of the appellants.

Cenvat credit - Input Service Distributor (ISD) - procedural lapse versus substantive right - revenue neutrality - mandatory proportionate distribution from 01.04.2016 - liability of recipient of ISD credit - extended period of limitation and suppression - recovery/reversal of credit distributed in excess - Whether the appellant is liable to reverse Cenvat credit distributed in excess by the ISD unit. -

Demand of cenvat credit - HELD THAT:- We find that in this case the period involved is from April 2015 to January 2017 therefore a part period was before the introduction of mandatory proportionate distribution of cenvat credit by the ISD to their manufacturing units.

It is not the case of the department that the total cenvat credit distributed by the ISD to all its units is in excess of the distributable cenvat credit and also that the proportionate credit available to the other manufacturing units has also been distributed to such units, in the absence of any such allegation, we find that the distribution of cenvat credit by the appellant's ISD unit more than the proportionate eligibility to the appellant for the period prior to the introduction of mandatory proportional distribution of cenvat credit with effect from 01.04.2016 is untenable and the recovery of such distribution of cenvat credit by the ISD to the appellant is unsustainable.

Therefore we find that the impugned order confirming the demand/recovery of cenvat credit for the period prior to 01.01,.2016 is unsustainable and liable to be set aside.

Limitation - HELD THAT:- Since the information about availment of cenvat credit on distribution by the ISD to the appellant is in the knowledge of the department and there is no suppression of facts with an intention to evade payment of tax. Therefore the impugned order is not sustainable both on limitation and merits for the period prior to 01.04.2016. We find that for the period post 01.04.2016, even though the appellant's ISD had distributed cenvat credit more than the proportional distributable amount it is not for the appellant to verify the correctness of the amount distributed by the ISD before availing the same. We find that no action has been taken on the ISD for such incorrect distribution, therefore the confirmation of demand of such amount on the appellant, who is the recipient of the cenvat credit distributed by the ISD is not sustainable, hence liable to be set aside.

Thus, the impugned order is set aside. and the appeal is allowed with consequential relief, if any, as per law.

Extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act, 1944 - suppression of facts with intent to evade duty - transaction value and price not being the sole consideration - Import Parity Price (IPP) as basis for assessable value -HELD THAT:- We find that the issue whether the Central Excise duty is liable to be paid on petroleum products cleared under Oil Exchange Agreement to other oil marketing companies at Import Parity Price has been allegedly resulted in short payment of duty under section 11A along with interest under section 11AB and penalty under section 11AC of the Central Excise Act, 1944 is tenable or not and the period involved in this case is from 01.04.2002 to 30.09.2004, whereas show cause notice has been issued on 30.03.2007. The said issue has been decided by the Hon’ble Apex Court in the case of Bharat Petroleum Corporation Ltd. v. Commissioner of Central Excise, Nashik Commissionerate [2025 (1) TMI 989 - SUPREME COURT].

Admittedly, in this case the show cause notice has been issued by invoking the extended period of limitation, therefore, following the decision of the Hon’ble Apex Court in the case of Bharat Petroleum Corporation Ltd. (supra), we hold that whole of the demand is barred by limitation. Accordingly, no demand is sustainable against the appellant.

Includability of freight in assessable value of excisable goods - valuation u/s 4 of the Central Excise Act, 1944 - sale at factory gate - recovery of interest u/s 11AA - penalty u/s 11AC - HELD THAT:- We find that the issue is no more res-integra and has been decided by this Tribunal in the appellant’s own case in [2024 (12) TMI 403 - CESTAT AHMEDABAD], Agreeing with the decision, we hold that in this case goods were sold at the factory gate and therefore, recovery of freight from the buyer does not attract excise duty. We therefore, hold that the demand is unsustainable and accordingly, the appeal is allowable. Same is allowed with consequent relief, if any.

Appeal allowed.

Remand for fresh consideration - jurisdiction to re-adjudicate after subsequent events - administrative adjudication on compliance with agreement - scope of writ court's remit in remanding matters - HELD THAT:- The learned Senior Counsel drew the attention of this Court about the letter addressed to the Deputy Commissioner (CT-1), LTU, Chennai on 08.01.2017 by the appellant. The said letter would indicate that the appellant has already fulfilled the obligation under the deed of agreement dated 27.05.2004. Therefore, no further adjudication needs to be undertaken. The appellant is at liberty to submit the said letter to the authority, who in turn may consider the same.

Accordingly, the Writ Appeal stands dismissed.

Quashing of complaint u/s 138 of the Negotiable Instruments Act - Dishonour of cheque and discharge by subsequent payment - Inherent jurisdiction u/s 528 BNSS (formerly Section 482 Cr.P.C.) - Misdescription of party name and locus to file complaint - Abuse of process - HELD THAT:- Having received Rs.15 lakhs from the Accused Company in lieu of the cheque dated 18.05.2023, it is evident that there was no legally enforceable liability surviving in respect of the cheque in question.

The assertion that this Cheque was towards part damages, has emerged for the first time in the Complaint under Section 138 NI Act, which is belied by the Legal Notice, itself. Moreover, no such contentions of the Respondent found mention either in the Civil Suit or in the litigation before the High Court of Judicature at Allahabad.

The Respondent may have his claim to seek damages for the expenditure incurred by him in the renovation of tenanted premises, but there is nothing to show that the Rs.15 lakhs credited to its account through RTGS, was a compensation for the alleged damages, or that it was not for return of security deposit.

From the admissions of the Complainant in its Complaint itself and in other ancillary proceedings, it is evident that there was no legally enforceable liability underlining the cheque, as it stood discharged on payment of Rs.15 lakhs through RTGS.

The Criminal Complaint under Section 138 NI Act is, therefore, not sustainable, and the same is hereby, quashed along with all the proceedings emanating therefrom, including the Summoning Order dated 25.04.2024.

Petition is accordingly, disposed of.

Maintaining criminal quash petition through power of attorney - Personal attendance of accused in criminal proceedings and appearance by pleader - Quasi civil yet punitive and in personam nature of proceedings u/s 138 of the Negotiable Instruments Act - Vicarious liability of directors where a person was in charge of and responsible for conduct of company business - Director cannot alone seek quashment of company originated criminal proceedings where company is the primary offender - HELD THAT:- The applicants/Accused Nos. 2 to 4 and 9 have not denied that they are not Directors of the accused No. 1/Company and not managing regular course of business and they are not liable for the decisions taken on behalf of the accused No. 1/Company. Though the applicant No. 7 claimed that, he is an independent non executive director of the Applicant No. 1 / Company and he does not have control over the day to day affairs of it, the applicants have not produced on record the copy of reply issued to the statutory notice stating the said defense.

Section 34 of the Companies Act, provides that, where an offence under this act has been committed by a company, every person who at the time of offence was committed, was in charge of, and was responsible to the company for the conduct of the business of the company, as well as the company shall be deemed to be guilty of the offence and shall be liable to be proceeded against and punished accordingly.

The vicarious liability of a person for being prosecuted for an offence committed under the Act by a Company arises, if at the material time he was in charge and was also responsible to the company for the conduct of its business. Therefore, the company i.e. applicant no. 1 CLC Industry Ltd., is considered the primary offender for the offence punishable u/s 138 of N.I. Act and as such the present application u/s 482 of Cri.P.C. is dismissed as against the Company, therefore, in my considered view the application for quashment of the complaints for the offence u/s 138 of NI Act as well as challenge to the orders of issuance of process, is not maintainable at the behest of Directors only.

In Nilesh Agrawal V. Income Tax Office [2025 (10) TMI 665 - DELHI HIGH COURT] the Delhi High Court held that, the Directors generally cannot challenge an order of issuance of summons in a Criminal complaint without impleading the company, as the company is considered the primary offender in corporate crimes and that prosecuting directors without the company is an abuse process of law.

It is matter of record that, as per the order dated 09.02.2026, these applications are dismissed as against applicant Nos.1, 5, 6 and 8. Since the applicants are questioned legality and validity of orders of issuance of process dated 31.01.2019, 12.02.2019 and 08.03.2019 passed in Summary Criminal Case Nos. 10855 of 2018, 9286 of 2018 and 10854 of 2018 and prayed for quashment of proceedings, but the applications u/s 482 of Cri. P. C. are dismissed in respect of the main applicant/Accused No.1 Company who issued the cheques in question for discharging legal liabilities. The applicants are being Directors of the applicant/Accused No. 1 Company, therefore, the applicants Director of the said Company cannot alone challenge order of issuance of process and seeks quashment of proceeding in absence of the applicant No.1. Therefore, the present applications are not tenable in eyes of law at the behest of these applicants/accused. Accordingly, all these Criminal Applications are dismissed.

The trial of the complaint be expedited.