TaxTMI Updates e-Newsletter
Mar 01,2022

Release of detained goods and conveyance on payment of tax and penalty - Detention under Section-129(1) of the CGST Act - Perishable goods consideration in detention - Right to challenge subsequent notice under Section-130 (Form GST-MOV-10)

Release of detained goods and conveyance on payment of tax and penalty - Perishable goods consideration in detention - Release of the goods and the conveyance where tax and penalty have been deposited and goods are perishable - HELD THAT: - The Court noted that the supplier had deposited the aggregate amount claimed by the Department towards tax and penalty. Given that the payment has been made and the consignment consists of Areca Nuts which are perishable in nature, the Court directed immediate release of the goods and the conveyance. The Court observed that further departmental inquiry may continue in accordance with law but that the deposited tax and penalty removed the ground for continued detention, and therefore ordered release by a specified date.

Goods and conveyance to be released forthwith (by 28th February, 2022) upon the position that tax and penalty have been deposited; Department free to continue inquiry in accordance with law.

Detention under Section-129(1) of the CGST Act - Right to challenge subsequent notice under Section-130 (Form GST-MOV-10) - Whether the detention order should be quashed at this stage - HELD THAT: - The Court declined to quash the detention order. It observed that the Department may issue further proceedings, including a notice under Section-130 in Form GST-MOV-10, and that the writ-applicant would remain at liberty to challenge any such notice or subsequent action before the appropriate forum in accordance with law. The refusal to quash was therefore without prejudice to the right of the parties to seek appropriate remedies against any future formal action by the Department.

Detention order not quashed; liberty granted to challenge any subsequent notice or action under Section-130 in accordance with law.

Final Conclusion: Writ petition disposed by directing release of the detained goods and conveyance on the basis that tax and penalty have been paid; detention order not quashed and parties permitted to contest any future departmental notice or action in the appropriate forum.

Restaurant service - supply of services - supply of goods - Input Tax Credit - cloud kitchens/central kitchens - mandatory rate with condition of no ITC - classification under Heading 9963

Supply - supply of services - clause (b) of entry 6 of Schedule II - restaurant service - Whether the supply of food and beverages by the applicant (Dine In, Take Away, Delivery) is a supply of goods or a supply of services. - HELD THAT: - On the facts the applicant operates a central kitchen with multiple eating joints, performs cooking (fully or partially) and supplies food to consumers by dine-in, takeaway and delivery. Clause (b) of entry 6 of Schedule II treats supply of food by way of, or as part of, any service as a supply of services. The explanatory notes classify activities performed by restaurants, cafes and similar eating facilities (including takeaway and door delivery) under services provided by restaurants. Applying these provisions and the factual matrix, the activity of the applicant falls within 'restaurant service' and thus is a supply of services.

The supply by the applicant for Dine In, Take Away and Delivery is a supply of 'restaurant service' (i.e., a supply of services).

Classification under Heading 9963 - mandatory rate with condition of no ITC - Notification No. 11/2017 - Central Tax (Rate) - The classification and applicable GST rate on the supply made by the applicant. - HELD THAT: - Given that the supplies qualify as 'restaurant service', they are classifiable under Heading 9963. Entry 7(ii) of the relevant rate notification specifically covers 'restaurant service' other than at 'specified premises' and prescribes the rate applicable to such services. The entry, read with the explanatory provisions and the relevant circular clarifying coverage of cloud/central kitchens, leads to classification under SI. No. 7(ii) of the notification and taxation at the prescribed lower rate subject to the stated condition.

Supplies are classifiable under Heading 9963 at SI. No. 7(ii) of the rate notification and are taxable at 5% (2.5% CGST + 2.5% SGST) as provided therein.

Input Tax Credit - mandatory rate with condition of no ITC - restaurant service - If the supply were treated as supply of goods, whether Input Tax Credit would be available to the applicant. - HELD THAT: - The notification prescribes a specific rate for 'restaurant service' subject to the condition that credit of input tax charged on goods and services used in supplying the service has not been taken. The notification prescribes a single rate for the covered entry with that mandatory condition; no alternative rate 'with ITC' is provided for this entry. Consequently, even if the hypothetical alternative characterization as goods were considered, the notified rate for the actual covered service carries the no ITC condition, and the applicant cannot claim ITC in respect of supplies falling under the notified entry.

ITC is not available; the prescribed 5% rate is subject to the condition that input tax credit on goods and services used in supplying the service has not been taken.

Input Tax Credit - restaurant service - mandatory rate with condition of no ITC - If the supply is treated as supply of services, whether Input Tax Credit will be available to the applicant. - HELD THAT: - The supply has been held to be 'restaurant service' and is covered by SI. No. 7(ii) which explicitly conditions the 5% rate on non-availability of input tax credit for goods and services used in supplying the service. The rate notification and the circular clarify that this condition is mandatory and no alternate rate with ITC is available for the covered entry. Therefore the applicant is precluded from availing ITC for inputs used in supplying these services.

As a supply of services falling under 'restaurant service', the applicant cannot avail Input Tax Credit; the supply attracts 5% GST subject to the condition that ITC has not been taken.

Final Conclusion: The Authority rules that the applicant's supplies (dine-in, takeaway and delivery) are supplies of 'restaurant service', classifiable under Heading 9963 at SI. No. 7(ii) of the rate notification and taxable at 5% (2.5% CGST + 2.5% SGST). The prescribed rate is subject to the mandatory condition that input tax credit on goods and services used in supplying the service has not been taken; consequently the applicant is not entitled to claim ITC for such supplies.

Exemption under entry 80 of Notification No. 12/2017-Central Tax (Rate) - services by way of training or coaching in recreational activities relating to arts or culture - condition of registration under section 12AA of the Income-tax Act - classification as physical well being services including health club and fitness centre (service code 999723) - applicability of circular No. 66/40/2018 GST - taxability under entry 35 of Notification No. 11/2017 CT(R) (physical well being services)

Exemption under entry 80 of Notification No. 12/2017-Central Tax (Rate) - services by way of training or coaching in recreational activities relating to arts or culture - condition of registration under section 12AA of the Income tax Act - applicability of circular No. 66/40/2018 GST - Whether the applicant's services of educating and training physical, mental and spiritual practices of Yoga are exempt under entry 80 of Notification No. 12/2017 CT (Rate) dated 28.06.2017 - HELD THAT: - The Authority examined the nature of the applicant's supply - paid courses of Yoga delivered physically and virtually - and held that such activity constitutes 'supply' for consideration. Entry 80 exempts "services by way of training or coaching in recreational activities relating to (a) arts or culture, or (b) sports by charitable entities registered under section 12AA". The Authority analysed the phrase 'recreational activities' and compared relevant entries and the scheme of notifications. It relied upon the scheme in Notification No. 11/2017 CT(R) (service classification) and circular No. 66/40/2018 GST which confines exemption for advancement of religion, spirituality or yoga to entities registered under section 12AA. On this matrix the Authority concluded that the applicant's paid yoga training is not within the scope of entry 80 as a recreational activity provided by an arts/culture charitable entity, and that the intention of the exemption is to limit benefit to entities qualifying under section 12AA as reinforced by the circular. Accordingly the exemption under entry 80 does not apply to the applicant. [Paras 3, 4, 5, 6, 8]

The applicant's yoga training services are not exempt under entry 80 of Notification No. 12/2017 CT (Rate); the exemption is not available to the applicant.

Classification as physical well being services including health club and fitness centre (service code 999723) - taxability under entry 35 of Notification No. 11/2017 CT(R) - Whether the applicant's services are otherwise classifiable and taxable under the GST Tariff - HELD THAT: - Having held that entry 80 does not cover the applicant, the Authority considered the classification under Notification No. 11/2017 CT(R). Entry 711 (service code 999723) describes "physical well being services including health club and fitness centre." The Authority found that the applicant's paid training/coaching in Yoga more appropriately falls within the description of physical well being services rather than 'recreational activities' covered by entry 80. Consequently the service is classifiable under service code 999723 and is taxable under entry 35 of Notification No. 11/2017 CT(R). The Authority applied this classification to determine the applicable GST rate. [Paras 4, 5, 7, 8]

The services are classifiable as "physical well being including health club and fitness centre" (service code 999723) and attract GST as per entry 35 of Notification No. 11/2017 CT(R).

Final Conclusion: The Advance Ruling holds that the applicant's paid services of educating and training in Yoga are not exempt under entry 80 of Notification No. 12/2017 CT (Rate) and are classifiable as physical well being services (service code 999723), attracting GST as per entry 35 of Notification No. 11/2017 CT(R).

Classification of goods - by-product versus residue - classification under Heading 2303 (brewing or distilling dregs and waste) - classification under Heading 2309 (cattle feed, poultry feed, feed supplements) - Explanatory Notes to the HSN - trade parlance and end use in classification

By-product versus residue - trade parlance and end use in classification - Whether DWGS (Distillers Wet Grain Solubles) produced by the applicant is a by product or a residue - HELD THAT: - The Authority examined the manufacturing process and the nature of outputs from the distillation of grain. While the applicant contended that DWGS (wet cake) is a by product used and sold as cattle/poultry feed, the Authority observed that DWGS arises from the brewing/distilling process as part of the residues, dregs and waste produced when the starch portion is extracted. Relying on the characterisation of outputs from brewing/distilling and the explanatory HSN notes describing dregs resulting from distillation, the Authority concluded that DWGS is in the nature of brewing or distilling dregs and waste rather than an independent by product for classification purposes. [Paras 11, 12, 13, 14]

DWGS is a kind of brewing or distilling dregs and waste.

Classification under Heading 2303 (brewing or distilling dregs and waste) - Explanatory Notes to the HSN - Whether DWGS is classifiable under Tariff Entry 2303 of the GST Tariff - HELD THAT: - The Authority analysed the descriptions in the notifications and the Explanatory Notes to the HSN. Heading 2303 expressly covers residues of starch manufacture and similar residues, and brewing or distilling dregs and waste, including dregs of cereals obtained in the manufacture of beer and dregs resulting from distillation of spirits. Applying these descriptive elements to the facts-starch extraction in the distillation process and the consequent production of DWGS-the Authority held that DWGS falls within the scope of brewing or distilling dregs and waste and therefore is classifiable under Heading/Entry 2303. [Paras 13, 14]

DWGS is classifiable under Chapter/Heading/Sub heading/Tariff item 2303 of the GST Tariff.

Classification under Heading 2309 (cattle feed, poultry feed, feed supplements) - trade parlance and end use in classification - Whether DWGS sold as cattle feed in trade is classifiable under Tariff Entry 2309 - HELD THAT: - Although the applicant emphasised commercial use and machinery investment to produce marketable wet cake used as animal feed and relied on trade parlance and authorities about popular meaning and end use, the Authority found that mere marketability, end use or investment in separation equipment does not displace the descriptive scope of the tariff entries. Entry 2309 covers feed and related items, but the Authority concluded that the specific character of DWGS as arising from the brewing/distilling process brings it within the 2303 description. Consequently, DWGS cannot be treated as falling under Entry 2309 for classification purposes in the present facts. [Paras 8, 14]

DWGS is not classifiable under Tariff Entry 2309; it is to be classified under Tariff Entry 2303.

Final Conclusion: The Authority ruled that DWGS (Distillers Wet Grain Solubles / wet cake) produced by the applicant is a form of brewing or distilling dregs and waste and is classifiable under Chapter/Heading/Sub heading/Tariff item 2303 of the GST Tariff; it is not classifiable under Entry 2309.

Deduction under Section 80IB(5) of the Income Tax Act - manufacture for tax purposes - disallowance under Section 14A read with Rule 8D of the Income Tax Rules - application of Rule 8D limited to investments yielding exempt income in the relevant year

Deduction under Section 80IB(5) of the Income Tax Act - manufacture for tax purposes - Whether the process of producing poultry feed undertaken by the assessee amounts to manufacture and thereby qualifies for deduction under Section 80IB(5). - HELD THAT: - The Court accepted the factual findings of the CIT(A) and Tribunal recording the manufacturing process adopted by the assessee: mixing followed by steam cooking, conditioning (including gelatinisation of starch), pelleting, cooling, crumbling, sieving and quality control. The process involved a boiler generating steam at high pressure with pressure reduction and multiple conditioning steps resulting in a product which attains specific temperature and microbial destruction, and which cannot be reversed to its original raw materials. The Court rejected the revenue's contention that the activity was merely mixing of individually identifiable ingredients; it held that inability to restore inputs to their original form and the distinct identity and characteristics of the end product are determinative of manufacture. Precedents dealing with poultry feed and like products were applied, and the decision in V.N. Enterprises was distinguished on its facts and statutory context. On this basis the Tribunal was upheld in allowing the deduction under Section 80IB(5).

Tribunal's confirmation of CIT(A)'s allowance of deduction under Section 80IB(5) was upheld; substantial question of law on this point decided against the revenue.

Disallowance under Section 14A read with Rule 8D of the Income Tax Rules - application of Rule 8D limited to investments yielding exempt income in the relevant year - Whether disallowance under Section 14A computed under Rule 8D must be applied to all investments or only to those investments which yielded exempt income in the relevant previous year. - HELD THAT: - The Tribunal applied the machinery of Rule 8D by directing computation of disallowance only in respect of shares which actually yielded dividend income in the year under consideration. The Court noted competing decisions but endorsed the principle that Rule 8D's application for computation of expenditure should be confined to those investments which produced exempt income in the relevant year. The Tribunal's approach of limiting the computation to shares that yielded dividend in the year was held to be legally correct and in consonance with authorities considered by the Tribunal.

Substantial question of law on disallowance under Section 14A/Rule 8D decided against the revenue; disallowance to be computed only in relation to investments yielding exempt income in the relevant year.

Assumption of jurisdiction under Section 153A/143(3) - Validity of the assessing officer's assumption of jurisdiction under Section 153A/143(3) (assessment year 2011-12). - HELD THAT: - The question of jurisdiction under Section 153A/143(3) for AY 2011-12 was not adjudicated on merits because the Court found the question academic in view of its adverse decisions on the substantive issues (deduction under Section 80IB(5) and disallowance under Section 14A/Rule 8D). The Court therefore declined to answer the substantial question of law on jurisdiction and left it open.

Substantial question of law on assumption of jurisdiction under Section 153A/143(3) left open (not decided).

Final Conclusion: The revenue's appeal is dismissed. Substantial questions of law relating to deduction under Section 80IB(5) and disallowance under Section 14A/Rule 8D are decided against the revenue for the assessment years 2011-12, 2012-13 and 2013-14; the question on assumption of jurisdiction under Section 153A/143(3) (AY 2011-12) is left open.

Discretion under Section 220(6) of the Income-tax Act - stay of demand - high-pitched assessment - prima facie case - balance of convenience - irreparable injury/financial stringency - CBDT Instruction No.1914 and its subsequent modifications - inherent power of the first appellate authority under Section 251

Discretion under Section 220(6) of the Income-tax Act - stay of demand - high-pitched assessment - prima facie case - balance of convenience - irreparable injury/financial stringency - CBDT Instruction No.1914 and its subsequent modifications - Validity of the orders of respondent No.2 refusing to waive or reduce the pre-deposit and directing 20% deposit as condition for stay of recovery in respect of assessments for A.Y.2010-11 to 2020-21. - HELD THAT: - The Court found that the power under Section 220(6) is discretionary but must be exercised judiciously, not mechanically or arbitrarily. While CBDT instructions (including Instruction No.1914 and its modifications) provide guidance and normally prescribe a standard pre-deposit (now 20%) when stay is sought at the first appeal stage, the authority retains discretion to increase or decrease the quantum after considering relevant factors. The Court identified the essential parameters to be considered: existence of a prima facie case, balance of convenience, irreparable injury or financial stringency to the assessee, and whether the assessee has come with clean hands. The Court held that the impugned order dated 17.12.2021 was non-speaking and mechanical - it dismissed the high pitched assessment contention by merely stating that the assessment was considered during proceedings without engaging with the merits - and therefore the exercise of discretion was flawed. Consequently the order was set aside and respondent No.2 was directed to reconsider the applications under Sections 220(3) and 220(6) afresh in conformity with CBDT instructions and the parameters stated by the Court, after giving opportunity of hearing and preferably within two weeks. [Paras 30, 31, 32, 45, 49]

Impugned orders set aside; respondent No.2 directed to reconsider stay/pre-deposit applications afresh in accordance with CBDT instructions and the Court's stated parameters, after giving opportunity of hearing.

Inherent power of the first appellate authority under Section 251 - stay of demand - Whether the Court should interfere with the stay petitions in the two other connected writ matters raising similar contentions. - HELD THAT: - Having regard to the quantum involved in the two other connected matters, the Court declined to exercise writ jurisdiction to interfere. The Court observed that powers to grant stay can be exercised by the First Appellate Authority and left the applicants in those matters free to seek appropriate relief before the CIT(A). The Court recognised that appellate authorities possess concurrent and superior powers under Section 251 to pass such orders as they deem fit, including stay-related relief. [Paras 50]

Interference declined in the two connected writ applications; applicants left free to apply to the First Appellate Authority (CIT(A)) for appropriate relief.

Final Conclusion: The lead writ petition is allowed: the orders of respondent No.2 refusing to waive/reduce the pre-deposit are set aside and respondent No.2 is directed to re-adjudicate the stay/pre-deposit applications afresh in accordance with CBDT instructions and the Court's articulated parameters after hearing the assessee, preferably within two weeks. The Court declines to interfere with the two other connected writ petitions but leaves the litigants free to seek appropriate relief before the CIT(A).

Revisionary jurisdiction under section 263 - Erroneous and prejudicial to the interests of revenue - Audi alteram partem - Requirement of formal inquiry into sources of income - Application of Malabar Industries principle regarding inquiry

Audi alteram partem - Revisionary jurisdiction under section 263 - Whether the principle of natural justice was violated in the course of section 263 revisionary proceedings. - HELD THAT: - The Tribunal found that the Principal Commissioner issued a show cause notice and the assessee responded, attending the notice and reiterating earlier submissions. The record establishes due service of the notice, a fair opportunity to be heard and an unbiased prima facie approach by the revisionary authority. The assessee's representative did not press a contention of violation of natural justice during the Tribunal hearing. On these facts the Tribunal held that there was no breach of the principle of audi alteram partem in the section 263 proceedings and dismissed the ground attacking natural justice. [Paras 6]

Ground assailing violation of audi alteram partem in the section 263 proceedings is dismissed.

Erroneous and prejudicial to the interests of revenue - Requirement of formal inquiry into sources of income - Application of Malabar Industries principle regarding inquiry - Whether the assessment order passed under section 143(3) was erroneous and prejudicial to the interests of revenue so as to warrant revision under section 263. - HELD THAT: - The Tribunal applied the Malabar Industries framework emphasising that an assessor must make explicit queries, receive direct replies, and conduct a detailed formal inquiry into the claimed sources before accepting entries. The AO had raised specific queries on cash deposits, the assessee replied disclosing three sources (professional receipts, withdrawals from partnership capital, and loan withdrawals), and the AO examined bank statements, capital and loan accounts, found discrepancies and brought the unexplained amount to tax as unexplained cash credit under section 68. The Tribunal held that inquiries into the declared sources had been made during assessment, discrepancies were verified and taxed, and the revisionary authority overlooked the inquiries already conducted by the AO. For these reasons the Tribunal concluded that the assessment was not erroneous or prejudicial to revenue and that the revisionary order under section 263 was unsustainable. [Paras 7, 8, 9, 10]

The section 263 revisionary order is quashed; the assessment under section 143(3) is not found to be erroneous or prejudicial to revenue.

Final Conclusion: The appeal is allowed: the Tribunal dismissed the challenge to natural justice compliance in the section 263 proceedings and quashed the Principal CIT's order under section 263, upholding the assessment framed under section 143(3) for AY 2015-2016.

Deduction under section 36(1)(va) - provision of section 43B - payment before due date of filing return - employees' contribution to provident fund - timing of deposit vis-a -vis statutory due date versus due date of filing return - construction of taxing statute in favour of the assessee

Deduction under section 36(1)(va) - provision of section 43B - payment before due date of filing return - employees' contribution to provident fund - timing of deposit vis-a -vis statutory due date versus due date of filing return - Whether employees' provident fund contributions remitted after the due date under the Provident Fund Act but before the due date of filing the income tax return are deductible and not exigible to disallowance under section 36(1)(va) read with section 43B. - HELD THAT: - The Tribunal recorded as an admitted fact that the employees' contributions were deposited after the due date prescribed under the Employees Provident Fund Act but prior to the due date for filing the return under section 139(1). Relying on precedent, including the decision of the Hon'ble Karnataka High Court in Essae Teraoka (P) Ltd. v. DCIT and consistent orders of coordinate benches, the Tribunal accepted the view that the term 'contribution' in the context of section 43B covers employees' contribution and that the protective rule in section 43B permits allowance of deduction where payment is made before the due date of filing the return. The Tribunal also applied the principle that, where two reasonable constructions of a taxing provision are possible, the construction favourable to the assessee should be preferred. Having considered contrary High Court decisions relied upon by the Department, the Tribunal followed its coordinate bench decisions on identical facts and found no ground to disturb the CIT(A)'s deletion of the addition. [Paras 9, 10]

The addition made by the Assessing Officer in respect of belated remittance of employees' provident fund contribution was deleted and the revenue's appeal dismissed.

Final Conclusion: Following the view of the Karnataka High Court and coordinate benches that employees' provident fund contributions paid after the statutory due date but before the due date of filing the return are allowable under section 43B/read with section 36(1)(va), the Tribunal upheld the order of the CIT(A) deleting the addition and dismissed the revenue's appeal.

Requirement of mode of acceptance of loans and deposits under section 269SS - Validity of penalty under section 271D for breach of section 269SS - Reasonable cause defence under section 273B - Bonafide or genuine transaction not by itself sufficient to avoid penalty under section 271D

Requirement of mode of acceptance of loans and deposits under section 269SS - Validity of penalty under section 271D for breach of section 269SS - Acceptance of cash trading advances in the facts of the case violated the statutory mandate of section 269SS and attracts penalty under section 271D. - HELD THAT: - The Tribunal examined the assessment and penalty records showing cash receipts totalling Rs.27,00,000 from five parties which were deposited in bank and later transferred to the principal. The court held that section 269SS mandates that loans, deposits or specified sums above the prescribed limit must be accepted by specified banking modes and that, except for the limited statutory exceptions, non-compliance with this mode is a breach of section 269SS. On the record the assessee failed to produce contemporaneous evidentiary material (such as invoices, delivery challans or vouchers) to establish the receipts as ordinary trading transactions or otherwise bring the transactions within any statutory exception. Having found a breach of section 269SS, the Tribunal held that imposition of penalty under section 271D followed inexorably, there being no established defence on the facts. [Paras 6, 10, 13]

Penalty under section 271D imposed for acceptance of cash advances in breach of section 269SS is sustained.

Reasonable cause defence under section 273B - Bonafide or genuine transaction not by itself sufficient to avoid penalty under section 271D - The assessee did not establish any reasonable cause or exception under section 273B to escape levy of penalty under section 271D. - HELD THAT: - The Tribunal applied settled law that the mere genuineness of a transaction does not automatically attract relief under section 273B; the assessee must demonstrably show a reasonable cause for not complying with the mandated mode of receipt. Citing the principle in ADI v Kum A B Shanti and consistent judicial precedent, the court noted that the assessee made only assertions without supporting material and failed to explain exigent circumstances or statutory exceptions justifying cash acceptance. In the absence of such proof, relief under section 273B was not available and the penalty could not be quashed. [Paras 9, 10, 11, 12]

No relief under section 273B; the defence of reasonable cause is rejected.

Final Conclusion: The Tribunal found no infirmity in the penalty order and dismissed the assessee's appeal; the penalty under section 271D for breach of section 269SS is upheld, with no order as to costs.

Registration simpliciter under section 12AA - genuineness of objects and activities of a trust/society - procedure for registration including inquiries and verification before registration - distinction between registration stage and assessment stage for application of funds under sections 11 and 12

Registration simpliciter under section 12AA - genuineness of objects and activities of a trust/society - procedure for registration including inquiries and verification before registration - Assessee's entitlement to registration under section 12AA of the Income Tax Act. - HELD THAT: - The Tribunal examined the scope of section 12A/12AA and held that the stage of registration requires an inquiry into the genuineness of the trust or society itself and its objects, not a detailed adjudication of application of funds or correctness of claims under sections 11 and 12 which arise at assessment. Section 12AA empowers the Commissioner to call for documents, make inquiries and be satisfied about genuineness of activities and compliance with other laws before granting or refusing registration. In the present case the Commissioner (Exemptions) refused registration solely on the ground that the assessee had claimed exemptions under section 11 for certain assessment years without having registration, without any finding that the society's objects or activities were not genuine and without directing or relying on any inquiry or verification into the society's activities. Relying on the statutory procedure and binding principles, the Tribunal found that the Commissioner had not applied the statutory tests or made any adverse finding on genuineness of objects or activities and therefore the refusal could not be sustained. The proper course, if doubts existed, was to conduct enquiries and decide on the basis of material so obtained; absent such material or findings, registration should not have been denied merely because earlier claims were made without registration. [Paras 6]

Impugned order refusing registration under section 12AA is set aside and the Commissioner is directed to grant registration in terms of section 12AA after taking steps, if necessary, in accordance with the procedure prescribed.

Final Conclusion: Appeal allowed; order of the Commissioner (Exemptions) refusing registration under section 12AA is set aside and registration is directed to be granted, the Commissioner being at liberty to make inquiries in accordance with section 12AA before finalising the formal registration.

Deduction under section 80IC for profits derived from an industrial/manufacturing undertaking - Nexus of miscellaneous receipts with manufacturing activity for purpose of eligible profits - Tax withholding obligation under section 195 and disallowance under section 40(a)(i) for payments to non-residents - Taxability of non-resident commission - accrual/arising in India and permanent establishment - Precedential effect of earlier appellate and ITAT orders in assessee's own case

Deduction under section 80IC for profits derived from an industrial/manufacturing undertaking - Nexus of miscellaneous receipts with manufacturing activity for purpose of eligible profits - Precedential effect of earlier appellate and ITAT orders in assessee's own case - Whether interest on electricity deposit, recoveries from transporters and sundry vendor balances written off formed part of profits of the manufacturing undertaking and were eligible for deduction under section 80IC. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the identified receipts had sufficient nexus with the manufacturing undertaking to be treated as profits derived from the eligible business. The CIT(A) had followed its earlier appellate findings for A.Y. 2012-13 and 2013-14, which were affirmed by the ITAT; those authorities held that (i) interest on electricity deposits is incidental to manufacturing where deposits are mandatory to secure power supply without which production cannot commence, (ii) recoveries from transporters reimbursing loss of material in transit are trading/business receipts directly connected to manufacturing operations, and (iii) sundry vendor balances written back (discounts/credits) reduce purchase cost and therefore affect eligible profits. No distinguishing facts or contrary higher authority were pointed out by Revenue; accordingly the Tribunal found no reason to interfere and dismissed the ground. The determinative reasoning is reliance on the established nexus test and on the coordinate appellate decisions in the assessee's own case affirmed by ITAT. [Paras 4, 5, 6, 7, 8]

Deduction under section 80IC allowed on interest on electricity deposit, recoveries from transporters and sundry vendor balances written back; Revenue's ground dismissed.

Tax withholding obligation under section 195 and disallowance under section 40(a)(i) for payments to non-residents - Taxability of non-resident commission - accrual/arising in India and permanent establishment - Precedential effect of earlier appellate and ITAT orders in assessee's own case - Whether foreign commission paid to non-resident agents required deduction of tax at source and whether the commission disallowance under section 40(a)(i) was sustainable. - HELD THAT: - The Tribunal agreed with the CIT(A)'s factual and legal examination that the assessee had furnished identity, contracts, export invoices, bank remittance proofs, Form 15CA/15CB certificates and evidence of non-existence of PE in India for the foreign agents. The CIT(A) had applied the legal principle that tax withholding under section 195 is required only where the payment contains an element of income taxable in India; following the Supreme Court authority relied upon (GE India Technology Centre) and the coordinate ITAT decisions in the assessee's earlier years, it was concluded that the commission payments did not accrue or arise in India and did not embed income taxable in India. The AO's dual grounds (lack of documentation and non-deduction of TDS) were addressed on facts and law: documentation was found to be on record and, as the payments were not taxable in India (and agents had no PE), there was no withholding obligation. Revenue failed to point to distinguishing facts or higher contrary authority. Consequently the disallowance under section 40(a)(i) was deleted and upheld on appeal. [Paras 11, 12, 16, 17, 18]

Disallowance of foreign commission under section 40(a)(i) deleted; no obligation to deduct TDS under section 195 as payments did not have element of income taxable in India - Revenue's ground dismissed.

Final Conclusion: The Revenue's appeal is dismissed in entirety: (i) the Tribunal affirmed allowance under section 80IC of specified receipts as profits of the manufacturing undertaking based on nexus and prior appellate/ITAT decisions, and (ii) the Tribunal upheld deletion of the disallowance of foreign commission payments for lack of withholding obligation where payments did not accrue or arise in India and sufficient evidence of payments and absence of PE was on record.

Deductibility of employee's contribution to PF/ESI where deposited after statutory due date but before filing of return under section 139(1) - application of amendment by Finance Act, 2021 to Section 36(1)(va) and Section 43B - prima facie adjustment under section 143(1)(a)(iv) of the Income-tax Act, 1961 - binding effect of decisions of the jurisdictional High Court

Deductibility of employee's contribution to PF/ESI where deposited after statutory due date but before filing of return under section 139(1) - prima facie adjustment under section 143(1)(a)(iv) of the Income-tax Act, 1961 - binding effect of decisions of the jurisdictional High Court - Whether amounts representing employees' contribution to PF/ESI, paid after the due date under the respective statutes but before the due date for filing return under section 139(1), can be disallowed by adjustment made under section 143(1) and disallowed under section 36(1)(va)/section 43B for AY 2018-19. - HELD THAT: - Admitted and undisputed facts show the employees' contributions were deposited before the due date for filing the return under section 139(1). The Tribunal followed the consistent decisions of the jurisdictional Rajasthan High Court, which hold that where such contributions are deposited before filing of the return, they cannot be disallowed under section 43B read with section 36(1)(va). Given the Assessing Officer and CIT(A) declined to follow the binding view of the Rajasthan High Court, the Tribunal held that the processing adjustment made by CPC under section 143(1)(a)(iv) could not be sustained in these circumstances and directed deletion of the addition. The Tribunal also relied on coordinate bench decisions reaching the same conclusion and applied them to the facts of the present appeals. [Paras 9, 10, 11, 14]

Addition made by CPC under section 143(1) in respect of delayed deposit of employees' contribution to ESI and PF (though paid before due date for filing return under section 139(1)) is deleted; appeal allowed on this ground.

Application of amendment by Finance Act, 2021 to Section 36(1)(va) and Section 43B - Whether the explanation/amendment introduced by the Finance Act, 2021 to Section 36(1)(va) and Section 43B applies retrospectively to assessment year 2018-19. - HELD THAT: - The Tribunal considered the explanatory memorandum to the Finance Act, 2021 which expressly states that the amendments take effect from 1 April 2021 and apply to assessment year 2021-22 and subsequent years. On that basis and consistent with coordinate bench decisions, the Tribunal held that the amendments are prospective and do not apply to AY 2018-19. Consequently, the post 2021 amendment could not be invoked to sustain the disallowance in the impugned assessment year. [Paras 9, 10]

The Finance Act, 2021 amendments to Section 36(1)(va) and Section 43B are prospective (effective from 1.4.2021) and do not apply to AY 2018-19; they cannot support the disallowance challenged in these appeals.

Interest under sections 234B and 234C - Whether interest under sections 234B and 234C requires separate adjudication after deletion of the additions. - HELD THAT: - The appellants had raised a ground challenging charging of interest under sections 234B and 234C. As the Tribunal has deleted the additions relating to PF/ESI, any contention on interest is consequential. The Tribunal therefore did not adjudicate the interest point separately. [Paras 13]

Interest grounds are consequential to the deletion of additions and do not require separate adjudication in these appeals.

Final Conclusion: Appeals allowed; additions made by CPC under section 143(1) for delayed deposit of employees' contribution to PF/ESI (but deposited before filing of return under section 139(1)) are deleted for AY 2018-19; Finance Act, 2021 amendments are prospective from 1.4.2021 and not applicable to the impugned year; interest contention is consequential and not decided.

Long Term Capital Gain exemption under section 10(38) (claim on sale of shares) - onus of proof under section 68 (initial burden to explain source of shares/consideration) - inadmissibility of reliance on investigation report without independent enquiry by Assessing Officer - relevance of SEBI/Investigation findings only if linked to specific assessee transactions - power to recall/rectify tribunal order on subsequent disclosure of material

Long Term Capital Gain exemption under section 10(38) (claim on sale of shares) - onus of proof under section 68 (initial burden to explain source of shares/consideration) - inadmissibility of reliance on investigation report without independent enquiry by Assessing Officer - Claim of long term capital gain exemption on sale of Esteem Bio shares for AY 2015-16 is to be accepted. - HELD THAT: - The Tribunal found that the assessee purchased shares in 2012, sold them in 2014 and had produced dematerialisation records, bank entries and sale documentation showing consideration routed through banking channels. The assessment and first appellate orders substantially relied on the Directorate of Investigation (Kolkata) and SEBI reports, but no material was placed on record linking those reports to the assessee's transactions. The Tribunal applied the principle that the Assessing Officer must conduct independent enquiry and corroborate any investigative statements before displacing the assessee's evidentiary onus under the statutory provisions governing unexplained credits/transactions. Given that the SEBI/Investigation documents post-dated the transactions and the Revenue failed to produce any AO report as directed by the Bench to demonstrate a specific link, the Tribunal held that the assessee had discharged the initial onus and directed acceptance of the declared long term capital gains and the exemption claimed. [Paras 8, 9, 10]

Declared long term capital gain and exemption under section 10(38) accepted; addition and related additions deleted.

Relevance of SEBI/Investigation findings only if linked to specific assessee transactions - inadmissibility of reliance on investigation report without independent enquiry by Assessing Officer - Assessing Officer's reliance on investigation/SEBI reports without establishing a link to the assessee's transactions is insufficient to displace the assessee's evidence. - HELD THAT: - The Tribunal recorded that the Directorate of Investigation's report and SEBI's order were dated after the assessee's purchase/sale dates and that the SEBI lists did not include the assessee or his brokers. It reiterated that statements or investigative material not gathered or tested in the assessment proceedings cannot be the sole basis for adverse findings; the AO ought to have undertaken independent enquiries, examined relevant parties or produced AO-level corroboration. Absent such linkage or enquiry, the investigative material could not be used to impugn the genuineness of the assessee's declared transactions. [Paras 9, 10]

Investigation/SEBI reports not a valid basis for addition where no specific link to assessee's transactions is demonstrated; AO required independent enquiry which was not done.

Power to recall/rectify tribunal order on subsequent disclosure of material - Revenue permitted liberty to apply for recall of the Tribunal's order if the Assessing Officer possesses information linking the assessee's transactions to the investigations. - HELD THAT: - While allowing the appeal, the Tribunal expressly protected the Revenue's interest by granting leave to file an appropriate application for recall of the order in accordance with law should the AO have (or subsequently obtain) material establishing a connection between the assessee's transactions and the Directorate/SEBI investigations. This preserves the Revenue's right to seek reopening or review under the statutory/processual remedies if fresh, relevant material exists. [Paras 11]

Revenue is at liberty to move the Tribunal for recall of its order upon production of AO-level material linking the assessee to the investigations.

Final Conclusion: The Tribunal allowed the appeal for AY 2015-16, directing acceptance of the declared long term capital gain and exemption under section 10(38), on the ground that the Revenue failed to demonstrate any link between the Directorate of Investigation/SEBI findings and the assessee's transactions and that the Assessing Officer had not conducted independent enquiries; the Revenue was, however, granted liberty to seek recall of the order if competent AO-level material establishing such a link is produced.

Tax deduction at source under Section 195 - royalty - application of DTAA Article 12 - definition of 'process' in treaty versus domestic law - retrospective amendment and treaty interpretation

Tax deduction at source under Section 195 - royalty - application of DTAA Article 12 - Whether transponder charges paid to non-resident satellite operators constitute "royalty" taxable in India and attract withholding under Section 195. - HELD THAT: - The Tribunal followed the coordinate-bench decision in the assessee's own cases and binding decisions of the jurisdictional High Court which held that payments for transponder services are not in the nature of "royalty". The Tribunal compared the definitions of "royalties" in the India-US, India-UK and India-Malaysia DTAAs (which include the phrase "secret formula or process") and noted that the High Court decisions (Asia Satellite; New Skies; Neo-Sports) had considered the statutory amendment and concluded that domestic amendments to Section 9(1)(vi) cannot be read into treaty provisions so as to convert transponder charges into treaty sourced royalty. Applying those precedents, the Tribunal held that the transponder charges paid by the assessee to the three foreign entities are not taxable in India and therefore no tax withholding under Section 195 is exigible. [Paras 10, 11, 12]

Transponder charges are not "royalty" within the relevant DTAAs and no deduction of tax at source under Section 195 is required.

Definition of 'process' in treaty versus domestic law - retrospective amendment and treaty interpretation - Whether Explanation 6 to Section 9(1)(vi) (defining "process" to include satellite transmission) can be imported into the DTAAs by virtue of Article 3(2) or otherwise be read into treaty definitions. - HELD THAT: - The Tribunal rejected the Revenue's contention that the undefined term "process" in Article 12 should adopt the meaning given by Explanation 6 to Section 9(1)(vi). It observed that the India-Malaysia treaty (and the other treaties considered) uses the compound expression "secret formula or process", so importing the domestic definition would render the qualifying word "secret" redundant. More fundamentally, the Tribunal followed the High Court precedents which held that domestic amendments cannot be read into international treaties without the treaty itself being amended. Accordingly, the Explanation cannot be used to alter the treaty meaning and cannot convert transponder charges into treaty royalties. [Paras 13]

Explanation 6 to Section 9(1)(vi) cannot be read into the DTAAs; the domestic definition of "process" is not incorporable into treaty Article 12.

Final Conclusion: The appeals filed by the Assessing Officer are dismissed; payments of transponder charges to the specified non-resident entities are not taxable as "royalty" under the cited DTAAs and no withholding under Section 195 is required, and Explanation 6 to Section 9(1)(vi) cannot be imported into the treaties to alter that result.

Addition under Section 68 (unexplained cash credit) - burden of proof regarding identity, creditworthiness and genuineness of creditors - reliance on third party statement from search proceedings as sole basis for additions - treatment of unsecured loans/accommodation entries where loans are repaid

Addition under Section 68 (unexplained cash credit) - burden of proof regarding identity, creditworthiness and genuineness of creditors - reliance on third party statement from search proceedings as sole basis for additions - Deletion of addition made by AO treating unsecured loans from PKJ group as unexplained cash credit under Section 68. - HELD THAT: - The Tribunal accepted the view taken by the CIT(A) and followed coordinate decisions dealing with transactions involving the PKJ group. The assessee furnished account confirmations, audited financial statements, bank accounts, ITR acknowledgements and affidavits of the lender companies; the loans were routed by account payee cheques through banking channels, interest was paid and TDS deducted. The AO based the addition primarily on statements and findings from search proceedings against PKJ but did not make further enquiries or produce cogent material linking the lender companies' funds to undisclosed sources of the assessee. The Tribunal held that where the assessee discharges initial onus by producing credible documents establishing identity, creditworthiness and genuineness, the AO must rebut that evidence with cogent and convincing material; the sole statement of PKJ was not held to be sufficient to sustain the addition. Following those findings, the Tribunal dismissed Revenue's grounds challenging the deletion. [Paras 11, 12]

Addition under Section 68 deleting unsecured loan related addition upheld in favour of the assessee; Revenue's challenge dismissed.

Treatment of unsecured loans/accommodation entries where loans are repaid - reliance on third party statement from search proceedings as sole basis for additions - Deletion of disallowance of interest on the unsecured loans which was made by the AO. - HELD THAT: - The Tribunal applied the same reasoning as to the principal addition: since the genuineness and creditworthiness of the lenders were supported by documents and the AO did not produce cogent rebuttal or conduct further enquiries, the CIT(A)'s deletion of the disallowance of interest was sustained. The fact that the unsecured loans were repaid during the assessment year or subsequent years was noted and the coordinate authority's precedent treating similar facts was followed. Consequently the challenge to the deletion of interest disallowance was dismissed. [Paras 11, 12]

Deletion of the interest disallowance sustained; Revenue's ground dismissed.

Final Conclusion: All appeals filed by the Revenue for the assessed years 2012-13, 2013-14 and 2014-15 are dismissed; the Tribunal affirms the CIT(A)'s deletions concerning additions under Section 68 and related interest disallowance, following coordinate decisions and on the basis that the AO did not rebut the documents produced by the assessees with cogent material.

Unexplained cash credit under section 68 - burden of proof on assessee to establish identity, creditworthiness and genuineness of shareholder - investigation under section 131 and inquiry under section 133(6) - set off of brought forward business losses and unabsorbed depreciation against non-business additions

Unexplained cash credit under section 68 - burden of proof on assessee to establish identity, creditworthiness and genuineness of shareholder - investigation under section 131 and inquiry under section 133(6) - Validity of addition of Rs. 78,600,000 as unexplained cash credit under section 68 - HELD THAT: - The Tribunal affirmed the findings of the Assessing Officer and the Commissioner (Appeals) that the assessee failed to discharge the initial onus to establish identity, creditworthiness and genuineness of the shareholder who subscribed to preference shares. Notices under section 133(6) remained unserved, local investigation under commission issued under section 131 reported non existence at the given addresses, and the assessee did not produce the alleged investor for verification or furnish corroborative evidence beyond its own records (income tax returns, share certificate and ledgers). The authorities also noted indicia of an entry provider (nil fixed assets, funds routed as loans/advances and investments in unlisted entities), absence of terms of preferential shares and fragmented investments. In these circumstances, and having regard to the material on record and the assessee's non cooperation/absence, the addition under section 68 was held to be justified and confirmed. [Paras 10]

Addition of Rs. 78,600,000 as unexplained cash credit under section 68 confirmed; ground No. 1 dismissed.

Set off of brought forward business losses and unabsorbed depreciation against non-business additions - distinction between business income and addition under section 68 - Whether brought forward business losses and unabsorbed depreciation could be set off against the addition under section 68 - HELD THAT: - The Tribunal agreed with the CIT(A) that provisions permitting set off of brought forward business losses and unabsorbed depreciation apply to business income. An addition made under section 68 does not constitute business income for the purposes of set off under section 72 or allowance of depreciation under section 32. Consequently, the claim for adjusting brought forward business losses and unabsorbed depreciation against the addition was not permissible and the disallowance was sustained. [Paras 11]

Claim for set off of current year's loss, brought forward business losses and unabsorbed depreciation against the section 68 addition disallowed; ground No. 2 dismissed.

Final Conclusion: The appeal is dismissed: the addition of Rs. 78,600,000 as unexplained cash credit under section 68 for AY 2014 15 is confirmed and the claim to set off brought forward business losses and unabsorbed depreciation against that addition is rejected.

Retention money - accrual of income - order giving effect - principle of consistency - restoration to the file of Assessing Officer

Retention money - accrual of income - order giving effect - principle of consistency - Deletion of addition of Rs. 1.85 crores on account of retention money for AY 2011-12 by the Commissioner (Appeals) - HELD THAT: - The Tribunal examined whether the Assessing Officer was justified in adding back the retention money to the assessee's income for AY 2011-12. The record showed that identical additions for earlier assessment years had been considered by the Tribunal, which directed the Assessing Officer to decide the issue in light of binding precedent; the Assessing Officer, by orders giving effect dated 19.12.2016 and 31.10.2017, accepted the assessee's contention and made no addition in those years. The Commissioner (Appeals) therefore deleted the addition for AY 2011-12 on the basis that there was no justification to sustain the addition when the Assessing Officer himself had accepted the contention in earlier years and given effect accordingly. The Revenue's contention that the matter should be restored to the Assessing Officer under the principle of consistency was considered, but the Tribunal found it untenable because the Assessing Officer had already accepted the assessee's claim in the related years and had given effect to that acceptance; consequently there was no reason to remit the issue for fresh adjudication. The Tribunal therefore upheld the deletion by the Commissioner (Appeals). [Paras 9, 10, 11]

Deletion of the addition on account of retention money for AY 2011-12 upheld and Revenue's appeal dismissed.

Final Conclusion: The Tribunal affirmed the order of the Commissioner (Appeals) deleting the addition of retention money for AY 2011-12, holding that the Assessing Officer had accepted the assessee's contention in earlier years and given effect accordingly, and that there was no justification to restore the matter to the Assessing Officer; Revenue's appeal is dismissed.

Estimation of agricultural income and presumptive deduction for agricultural expenses - Burden of proof and requirement of verifiable documentary evidence for claim of agricultural receipts and expenses - Treatment of bank credits from co-operative societies and classification as agricultural receipts - Admissibility of revised returns and affidavits filed during scrutiny proceedings as afterthoughts - Judicial reliance on precedents for fixing a reasonable percentage disallowance in absence of precise evidence

Estimation of agricultural income and presumptive deduction for agricultural expenses - Burden of proof and requirement of verifiable documentary evidence for claim of agricultural receipts and expenses - Treatment of bank credits from co-operative societies and classification as agricultural receipts - Judicial reliance on precedents for fixing a reasonable percentage disallowance in absence of precise evidence - Whether the additions made by the Assessing Officer for AY 2014-15 in respect of claimed agricultural income and estimated agricultural expenses were justified and whether the CIT(A)'s restriction of the addition to 30% was sustainable. - HELD THAT: - The Tribunal examined the material placed before the authorities and the remand report. The AO treated amounts credited from co-operative sugar entities in the assessee's bank account as agricultural receipts and, in absence of supporting vouchers and justification for the balance claimed agricultural income, made additions by treating unexplained receipts as income and estimating agricultural expenses at 40%. The CIT(A) reviewed submissions, considered additional material produced and the AO's remand report (which did not properly record certain verification replies), and applied precedents permitting a reasonable percentage disallowance where net agricultural income is not supported by verifiable documentary evidence. On that basis CIT(A) restricted the total addition by treating 30% of the declared agricultural receipts as disallowance and allowing 70% as net agricultural income. The Tribunal found that CIT(A) had passed a reasoned order after considering evidence and remand report and declined to interfere with CIT(A)'s exercise of discretion to restrict the addition to 30%, noting the assessee had failed to produce cogent documentary proof to substantiate the full net agricultural income claimed. [Paras 9]

The order of the CIT(A) restricting the AO's additions for AY 2014-15 by disallowing 30% of the declared agricultural income is upheld and the assessee's grounds are dismissed.

Admissibility of revised returns and affidavits filed during scrutiny proceedings as afterthoughts - Burden of proof and requirement of verifiable documentary evidence for claim of agricultural receipts and expenses - Judicial reliance on precedents for fixing a reasonable percentage disallowance in absence of precise evidence - Whether the CIT(A) was justified in upholding the addition for AY 2015-16 by allowing only a 70% acceptance of declared agricultural receipts (i.e., disallowing 30%) and in rejecting the assessee's revised returns and late affidavit reducing declared agricultural income. - HELD THAT: - The Tribunal reviewed the sequence of revised returns and the affidavit filed contemporaneously with the assessment order and found the revisions to be self-serving and filed as an afterthought during scrutiny. The assessee failed to furnish cogent documentary evidence to explain the large variations in declared agricultural receipts and to substantiate the reduced figures claimed later. CIT(A) applied consistent reasoning with established decisions permitting a reasonable percentage (30%) to be treated as expense/disallowance where precise evidence is lacking and thereby restricted the addition to that percentage. The Tribunal agreed that the assessee's conduct of filing revised returns and affidavit during scrutiny undermined the reliability of the revised claims and that CIT(A)'s order giving partial relief by adopting a 30% disallowance was a reasonable exercise of discretion. [Paras 13]

The CIT(A)'s conclusions for AY 2015-16, including rejection of the revised/late claims as afterthoughts and restriction of the addition by treating 30% as disallowance, are approved and the appeal is dismissed.

Final Conclusion: Both appeals for AY 2014-15 and AY 2015-16 are dismissed; the Tribunal upholds the CIT(A)'s reasoned orders that, in absence of verifiable documentary evidence and in light of the assessee's revised claims filed during scrutiny, a reasonable presumptive disallowance (30%) of declared agricultural receipts is appropriate, and declines to interfere with the CIT(A)'s exercise of discretion.

Invalid assumption of jurisdiction due to absence of sanction under section 151 - Validity of notice issued under section 148 - Quashing of reassessment framed under section 147 for want of jurisdiction

Invalid assumption of jurisdiction due to absence of sanction under section 151 - Validity of notice issued under section 148 - Quashing of reassessment framed under section 147 for want of jurisdiction - Whether the reassessment framed by the Assessing Officer, ITO Ward-1(3), Bathinda, could be sustained where no material was on record to show that he had obtained the requisite sanction under section 151 prior to issuing the notice under section 148. - HELD THAT: - The Tribunal examined the chronology and records relating to the reasons recorded, the notices issued and the approvals purportedly obtained. The record establishes that ITO Ward-II(1) recorded reasons and obtained sanction on 29.03.2017 and issued notice dated 29.03.2017, and that files were subsequently transferred to ITO Ward-1(3). ITO Ward-1(3) recorded separate reasons dated 14.03.2017 and issued a notice dated 24.03.2017. The assessment order of ITO Ward-1(3) refers to an approval dated 29.03.2017, but the assessment records produced before the Tribunal contained no material showing that ITO Ward-1(3) himself obtained the sanction contemplated by section 151 in respect of his own reasons. Two possible inferences were identified: (i) ITO Ward-1(3) did not obtain any sanction for his reasons and proceeded without the statutory approval; or (ii) he purported to rely on the sanction obtained by ITO Ward-II(1) in respect of different reasons and notice, thereby dispensing with the statutory requirement. In either event the assumption of jurisdiction by ITO Ward-1(3) in issuing notice under section 148 and framing reassessment under section 147 was held to be legally untenable because the statutory sanction required by section 151 was not shown to have been obtained by the officer who initiated the reassessment that resulted in the assessment order impugned. [Paras 8, 9, 10]

Notice dated 24.03.2017 issued by ITO Ward-1(3) is invalid for want of the requisite sanction under section 151 and the assessment order dated 22.11.2017 framed under section 143(3) read with section 147 is quashed.

Sustainability of additions on merits - Objections regarding identity of person/characterisation of property and estimation of cost - Whether the other factual and substantive contentions raised by the assessee regarding the nature of the property, estimation of cost, HUF claim and quantification of capital gain were finally adjudicated. - HELD THAT: - Having quashed the reassessment for want of jurisdiction, the Tribunal declined to adjudicate the remaining contentions on merits or questions of fact and procedural objections which had been raised before it and before the lower authorities. Those factual and substantive issues were therefore not decided and remain open for consideration in any fresh proceedings lawfully initiated. [Paras 11]

Other contentions as to the sustainability of the addition, characterisation of the land, estimation of cost and related objections are left open and were not decided by the Tribunal.

Final Conclusion: The reassessment notice issued by ITO Ward-1(3) and the assessment order dated 22.11.2017 are quashed for want of valid assumption of jurisdiction due to absence of sanction under section 151; other substantive and factual contentions were not adjudicated and remain open for fresh consideration.

Provisional release of seized goods - execution of bond as condition for release - bank guarantee for safeguarding recovery - perishable goods and necessity for timely release - abeyance of refund or incentive claims during pendency - locus to intervene in writ proceedings

Provisional release of seized goods - execution of bond as condition for release - bank guarantee for safeguarding recovery - perishable goods and necessity for timely release - Whether the goods detained by the DRI may be provisionally released and on what conditions. - HELD THAT: - The Court accepted that the detained goods are high value tobacco products of a perishable nature and that samples had already been withdrawn, so prolonged detention would deteriorate quality. While the Petition is admitted and proceedings are pending, the Assistant Commissioner had earlier allowed provisional release subject to two conditions. The Applicant did not object to executing a bond for the full FOB value as a pre condition. The Court found the originally demanded bank guarantee to be excessive and, balancing the interests of the revenue and the perishable nature of the goods, reduced the bank guarantee to a specified lower sum while keeping the export subject to the outcome of the writ. The Court therefore modified the provisional release order and prescribed specific timelines and the duration for which the bank guarantee must be kept alive, making compliance a condition precedent to release, and providing that non compliance would vacate the relief without further reference. [Paras 5, 6, 11, 12, 13]

Provisional release granted on execution of bond for full FOB value and on furnishing a reduced bank guarantee for a limited period; release to follow upon compliance within the specified timeline, subject to the writ's ultimate outcome.

Locus to intervene in writ proceedings - Whether the intervenor M/s. Golden Tobacco Limited may intervene in the writ petition concerning the detained consignments. - HELD THAT: - The Court examined the intervenor's claim based on contractual and arbitration proceedings elsewhere and noted that those rights are the subject matter of ongoing arbitration before other courts. The Division Bench and Single Judge orders from the Delhi High Court relevant to the arbitration were considered; the Court held that the intervenor's rights under its agreement are matters for the arbitration and do not confer locus to intervene in this writ petition concerning provisional release of goods. Accordingly, intervention was not permitted. [Paras 8, 9, 10]

Intervention application by M/s. Golden Tobacco Limited rejected for want of locus in the writ petition.

Abeyance of refund or incentive claims during pendency - bank guarantee for safeguarding recovery - Whether the Applicant may pursue refund or other export incentives in respect of the consignments during the pendency of the writ petition. - HELD THAT: - To mitigate risk to the revenue while permitting export, the Court ruled that although the Applicant remains entitled to lodge claims for refund or other incentives arising from the exports effected under the shipping bills, the Applicant shall not press such claims during the pendency of the writ petition. Any such claims may be lodged but must remain pending and kept in abeyance by the department until final disposal of the writ, thereby ensuring that recovery concerns are addressed while the provisional release is allowed under security. [Paras 12, 13]

Applicant may not press refund or incentive claims during the pendency of the petition; such claims to remain in abeyance and subject to final order.

Final Conclusion: The Court allowed provisional release of the seized consignments subject to the Applicant executing a bond for the full FOB value and furnishing a reduced bank guarantee for a limited period, rejected the intervenor's application for want of locus, and directed that any refund or incentive claims arising from the exports remain in abeyance during the pendency of the writ petition.

Confiscation for non-production of Mill Test Certificate - assessment as secondary in absence of Mill Test Certificate - licensing note allowing free import above minimum c.i.f. value - restriction under the Foreign Trade Policy / Notification No.63/2008 - redeemable confiscation under Section 125

Mill Test Certificate - Public Notice No. 92/2009 - confiscation for non-production of Mill Test Certificate - assessment as secondary in absence of Mill Test Certificate - Whether non-production of Mill Test Certificate (MTC) under Public Notice No.92/2009 justified confiscation of the imported goods. - HELD THAT: - The Tribunal found that Public Notice No.92/2009 prescribes that where an MTC is not produced the consignment may be treated as Secondary/Defective/Seconds for purposes of assessment and, if required, referred for testing or investigation. The Commissioner, however, had himself held on the facts that the goods were prime and had a contemporaneous CIF value corresponding to prime material. Once the goods were found to be prime, non-production of the MTC could not be treated as a contravention attracting confiscation; the public notice does not convert non-production of MTC into an automatic ground for confiscation. The Tribunal therefore held that the Commissioner could not sustain confiscation on the sole ground of failure to produce the MTC, particularly after recording that the goods were prime. [Paras 4]

Confiscation could not be sustained merely for non-production of MTC where the Commissioner himself found the goods to be prime; the public notice prescribes assessment consequences, not mandatory confiscation.

Restriction under the Foreign Trade Policy / Notification No.63/2008 - licensing note allowing free import above minimum c.i.f. value - classification under ITC(HS) code and applicability of licensing note - Whether the impugned MS plates were restricted under Notification No.63/2008 notwithstanding Licensing Note 3 of the Foreign Trade Policy which exempts prime plates above the specified c.i.f. value. - HELD THAT: - The Tribunal noted that Licensing Note 3 expressly permits import of specified prime steel items freely where the c.i.f. value exceeds the minimum figure stated for the item. The impugned goods were classifiable under ITC(HS) heading 7208 and the declared CIF value was US$425 per tonne, which is above the minimum US$370 per tonne specified in Licensing Note 3 for plates. Having recorded that the goods were prime and that the declared CIF exceeded the threshold, the Tribunal concluded that the goods fell within the exception in Licensing Note 3 and therefore could not be treated as restricted under Notification No.63/2008. The order of confiscation predicated on restriction under Notification No.63/2008 was thus unsustainable. [Paras 4]

Goods held to be freely importable under Licensing Note 3 (CIF above the threshold) and therefore not liable to confiscation on the ground of being restricted by Notification No.63/2008.

Final Conclusion: The Tribunal set aside the adjudicating order of confiscation, redemption fine and penalty: non-production of MTC did not justify confiscation where the goods were found to be prime, and the impugned plates were freely importable under Licensing Note 3 because the declared CIF exceeded the prescribed threshold; the appeal is allowed and the impugned order is quashed.

Rectification of register of members - Tribunal's power to direct rectification of register and records - Maintainability of company petition under Section 59 - Cancellation of excess shares and rectification of share capital records - No-objection of shareholder to rectification

Rectification of register of members - Maintainability of company petition under Section 59 - Tribunal's power to direct rectification of register and records - Whether the Company Petition under Section 59 was maintainable before the Tribunal despite the appellant not first approaching the Registrar of Companies, and whether the Tribunal has power to order cancellation of excess shares and rectification of the register. - HELD THAT: - The Tribunal examined Section 59 and concluded that an aggrieved person may appeal to the Tribunal for rectification of the register and that the Tribunal has power to either dismiss the appeal or direct registration, rectification of records of the depository or register and, where appropriate, direct payment of damages. The NCLT erred in holding the petition non-maintainable on the ground that the appellant had not approached the Registrar of Companies. The appellant had promptly informed regulators of the inadvertent conversion error, obtained the shareholder's no-objection and board resolution for cancellation, and sought RBI's guidance which advised approaching the ROC for procedural steps while acknowledging the RBI would record documentary evidence after rectification. On these facts the Tribunal found a prima facie case made out and held that the NCLT failed to exercise its jurisdiction under Section 59. [Paras 21, 22, 23, 24, 25]

The NCLT's observation that the petition was not maintainable for failure to approach the ROC was erroneous; the Tribunal set aside the impugned order and restored the Company Petition for adjudication on merits.

Cancellation of excess shares and rectification of share capital records - Tribunal's power to direct rectification of register and records - No-objection of shareholder to rectification - Whether the excess 51,889 equity shares allotted on erroneous conversion should be considered for cancellation and whether the NCLT should be directed to order ROC to rectify records. - HELD THAT: - Having found that the petition was maintainable and that the appellant had made out a prima facie case-including informing RBI, obtaining the shareholder's no-objection and board resolution-the Tribunal directed that the NCLT consider cancellation of the excess shares and to direct the ROC to effect necessary rectification of records relating to share capital and securities premium. The Tribunal remitted the matter to the NCLT for consideration of cancellation and consequential record changes. [Paras 24, 25]

The petition was remitted to the NCLT with directions to consider cancellation of the excess shares and to direct the ROC to carry out necessary rectification of records.

Procedural filing and amendment before Tribunal - Whether the appellant should be permitted to file additional affidavits and supporting documents before the NCLT relating to change in financial years and statutory filings. - HELD THAT: - The Tribunal allowed the appellant leave to file an additional affidavit regarding change in financial years and changes in statutory filings/forms, and directed the NCLT to consider such material in the resumed proceedings and to dispose of the petition expeditiously after affording opportunity to the appellant. [Paras 25]

The appellant is permitted to file additional affidavit and the NCLT is directed to consider the same and dispose of the petition expeditiously.

Final Conclusion: The appeal is allowed; the impugned NCLT order dated 05.02.2021 is set aside, the Company Petition is restored and remitted to the NCLT to consider cancellation of the excess shares and direct the ROC to rectify records; the appellant may file additional affidavits; no order as to costs.

Sale of corporate debtor as a going concern - effect on pre liquidation liabilities - Distribution of liquidation proceeds under Section 53 of the IBC - Liquidator's power to sell as a going concern under Regulation 32A of the Liquidation Process Regulations - Admission of claims by the Liquidator and proof of claim procedure - Priority of secured creditor where security is relinquished

Sale of corporate debtor as a going concern - effect on pre liquidation liabilities - Liquidator's power to sell as a going concern under Regulation 32A of the Liquidation Process Regulations - Sale of the corporate debtor as a going concern did not render the purchaser liable for the corporate debtor's pre liquidation liabilities. - HELD THAT: - The Tribunal held that the e auction/going concern sale was conducted under the Liquidation Process Regulations and the terms 'going concern' read with 'as is where is whatever there is' signify transfer of assets and not pre existing liabilities. Relying on established authorities and the wording of the e auction notice, the Tribunal observed it would be unreasonable to impose prior liabilities on a purchaser who bought on an 'as is where is' basis without being informed of such liabilities before bidding. Consequently, purchase as a going concern gave the buyer a clean slate with respect to pre liquidation liabilities, and the purchaser was not liable to meet the appellant's claimed dues. [Paras 25]

Purchase as a going concern did not import liability for prior claims; sale transferred assets, not liabilities.

Distribution of liquidation proceeds under Section 53 of the IBC - Admission of claims by the Liquidator and proof of claim procedure - Priority of secured creditor where security is relinquished - The impugned order approving closure of liquidation and distribution of sale proceeds was proper and the appellant (an operational creditor) was not entitled to payment from the proceeds that were distributed in accordance with Section 53. - HELD THAT: - The Tribunal recorded admitted facts: the appellant had filed and got his claim admitted, the company was liquidated, an e auction resulted in sale proceeds which were distributed in accordance with Section 53. The sole secured creditor (Oriental Bank of Commerce) had relinquished its security and the sale proceeds were applied as per the statutory waterfall, leaving no distributable amount for operational creditors. In these circumstances the Adjudicating Authority correctly dismissed the prayer for directions against the purchaser and approved closure of the liquidation process; there was no illegality in distribution of proceeds under the Code. [Paras 25, 26]

Impugned order affirming closure of liquidation and distribution under Section 53 is upheld; appellant is not entitled to payment from the distributed sale proceeds.

Final Conclusion: The impugned order dated 18.05.2020 of the Adjudicating Authority approving closure of the liquidation process and distribution of proceeds was affirmed; the appeal is dismissed.

Threshold limit for initiation of CIRP - pecuniary jurisdiction - date of initiation of CIRP (application date) - prospective operation of notification raising threshold

Threshold limit for initiation of CIRP - prospective operation of notification raising threshold - Whether the notification dated 24.03.2020 raising the minimum default threshold to Rs. 1,00,00,000/- applies to the present application - HELD THAT: - The Tribunal examined the notification dated 24.03.2020 which raised the minimum pecuniary threshold for entertaining applications under Sections 7, 9 and 10. Having regard to the amendment and the facts that the application was filed on 12.03.2021 (after the notification) and the sum claimed in the application was below the enhanced threshold, the Tribunal held that the increased threshold applies. The court noted the statutory purpose of Section 4 and the notification increasing the minimum limit and treated the increased limit as the operative measure for applications filed on or after 24.03.2020. [Paras 24, 28, 29]

The notification dated 24.03.2020 raising the threshold to Rs. 1,00,00,000/- applies to the present application filed on 12.03.2021, and the claimed sum being below that limit is insufficient.

Date of initiation of CIRP (application date) - pecuniary jurisdiction - Whether the relevant date for applying the threshold is the date of default or the date of filing the application - HELD THAT: - Relying on the statutory scheme and the distinction between initiation and commencement of CIRP, the Tribunal held that the date of initiation is the date on which an application is made and that the date of default is relevant only for limitation calculation. Consequently, the pecuniary threshold in force on the date of filing governs maintainability of the application. [Paras 25, 26]

The date of filing the application (initiation date), and not the date of default, determines the applicable pecuniary threshold for maintainability.

Pecuniary jurisdiction - threshold limit for initiation of CIRP - Whether dismissal of the application for lack of pecuniary jurisdiction was legally sustainable - HELD THAT: - Applying the conclusions that the enhanced threshold of Rs. 1 crore applied to applications filed after 24.03.2020 and that the present application filed on 12.03.2021 claimed an amount below that limit, the Tribunal concurred with the Adjudicating Authority's finding that it lacked pecuniary jurisdiction to entertain the petition. The Tribunal found no legal infirmity in the Adjudicating Authority's order and rejected the appellant's contentions, including the plea that the notification should not be applied. [Paras 28, 29]

The Adjudicating Authority was correct in dismissing the application for want of pecuniary jurisdiction; the dismissal is upheld.

Final Conclusion: The Tribunal upholds the Adjudicating Authority's dismissal of CP/IB/23/CHE/2021 for lack of pecuniary jurisdiction because the application was filed after the notification of 24.03.2020 raising the minimum threshold to Rs. 1,00,00,000/-, and the appeal is dismissed.

Ineligibility under Section 29A - Regulation 2B of the IBBI (Liquidation Process) Regulations, 2016 - scheme of compromise or arrangement under Section 230 of the Companies Act, 2013 during liquidation - application of Section 35(1)(f) and parity of disqualification in liquidation - preferential transaction under Section 43 of the IBC, 2016

Ineligibility under Section 29A - Regulation 2B of the IBBI (Liquidation Process) Regulations, 2016 - scheme of compromise or arrangement under Section 230 of the Companies Act, 2013 during liquidation - Whether the appellant, being found guilty of a preferential transaction, was disqualified from participating in or placing a scheme under Sections 230-232 of the Companies Act, 2013 during liquidation and whether the Adjudicating Authority erred in dismissing the interlocutory application. - HELD THAT: - The Tribunal applied the combined effect of Section 29A(g) of the IBC and the proviso to Regulation 2B(1) of the IBBI (Liquidation Process) Regulations, 2016 to conclude that a person ineligible under Section 29A is also precluded from being a party to a scheme of compromise or arrangement under Section 230 where the company is under liquidation. The Tribunal relied on the reasoning in Arun Kumar Jagatramka v. Jindal Steel and Power Ltd., wherein the Supreme Court held that the disqualifications in Section 29A and Section 35(1)(f) attach to schemes proposed under Section 230 in the liquidation context and upheld Regulation 2B as clarificatory and constitutionally valid. Noting that the Adjudicating Authority had earlier held the appellant guilty of a preferential transaction under Section 43 and that no stay of that order had been granted, the Tribunal found that the statutory bar under Regulation 2B read with Section 29A(g) applied and that the Adjudicating Authority did not commit any material irregularity or patent illegality in dismissing the interlocutory application seeking reconvening of the creditors' meeting to consider the appellant's scheme. The Tribunal considered the appellant's contentions about procedural irregularities in convening the creditors' meeting and previous liberty granted to advance a proposal, but held that those contentions do not negate the disqualification arising from the finding of a preferential transaction and the statutory-regulatory scheme that disentitles such person from participating in a compromise under Section 230 during liquidation. [Paras 9, 20, 21, 22]

The appellant is ineligible to place a scheme under Sections 230-232 in view of Section 29A(g) and Regulation 2B(1); the Adjudicating Authority's dismissal of the interlocutory application does not suffer from material irregularity or patent illegality and the appeal is dismissed.

Final Conclusion: The Company Appeal is dismissed; the Tribunal affirms that a person found guilty of preferential transaction under the IBC is disqualified from participating in or being a party to a scheme of compromise under Section 230 during liquidation by virtue of Section 29A(g) read with Regulation 2B(1), and no interference with the Adjudicating Authority's order is warranted.

Enforceability of pre-existing powers of attorney after amalgamation - vesting of rights and powers under an amalgamation scheme - effect of clause preserving contracts, deeds and instruments on transfer - authority of authorised signatory post-merger

Enforceability of pre-existing powers of attorney after amalgamation - authority of authorised signatory post-merger - Whether a Power of Attorney executed in favour of an employee of the Transferor Bank prior to the amalgamation remained valid and enforceable by the Transferee Bank and whether the authorised signatory required a fresh Power of Attorney from the Transferee Bank to initiate the present proceedings. - HELD THAT: - The Tribunal examined the amalgamation scheme notification and its Clause-8 which preserves all contracts, deeds, agreements, powers of attorney and other instruments subsisting immediately before the commencement of the scheme in favour of the Transferor Bank and makes them of full force and effect against or in favour of the Transferee Bank. Applying that provision, the Tribunal held that instruments, including a Power of Attorney executed in favour of an employee of the Transferor Bank before the scheme, operate as if they had been issued in favour of the Transferee Bank and need not be re-executed or separately consented to by third parties. Consequentially, where the employee became an employee of the Transferee Bank by virtue of the amalgamation, the existing Power of Attorney constituted sufficient authorization for that signatory to initiate the proceedings on behalf of the Transferee Bank without a fresh Power of Attorney.

The Power of Attorney executed in favour of the Transferor Bank's employee prior to amalgamation remained valid and enforceable by the Transferee Bank, and no fresh Power of Attorney was necessary; the application challenging enforcement of the Power of Attorney was dismissed.

Final Conclusion: The Tribunal dismissed the application and held that, by virtue of the amalgamation scheme's preservation clause, the pre-existing Power of Attorney in favour of the Transferor Bank's employee continued to be valid and enforceable by the Transferee Bank and authorized the signatory to institute the proceedings.

Anticipatory bail - Section 45 of PMLA 2002 - non-bailable and cognizable offences; bail fetters applicable to anticipatory bail - first proviso to Section 45(1) - exception for women/sick/infirm/under sixteen - Section 44 of PMLA 2002 - supplementary complaint - attachment under Section 5 of PMLA 2002 - civil nature of proceedings

Section 44 of PMLA 2002 - supplementary complaint - Validity of filing a supplementary complaint under Section 44 of PMLA 2002 and the omission to array the petitioner in the original complaint. - HELD THAT: - The Court held that Section 44 expressly permits filing of a supplementary complaint against persons not named in the original complaint where further evidence emerges. The omission to array the petitioner in the complaint dated 22.12.2017 was attributable to the limited time available to the investigating agency to file that complaint to avoid default bail of arrested co-accused, and the original complaint expressly recorded that investigation was continuing and that supplementary complaints might follow. Consequently, the exercise of powers under Section 44 to file a supplementary complaint against the petitioner was lawful and the contention of misuse was rejected. [Paras 11]

Filing of the supplementary complaint against the petitioner under Section 44 was lawful; omission to array her earlier was not illegal.

Attachment under Section 5 of PMLA 2002 - civil nature of proceedings - Whether setting aside of provisional attachment under Section 5 of PMLA 2002 operates to bar or negate criminal proceedings against the petitioner. - HELD THAT: - The Court explained that attachment and forfeiture proceedings under Section 5 (and Section 8) of PMLA are civil in nature and independent of criminal prosecution; findings in adjudicatory attachment proceedings do not prove guilt nor are they a step in aid to conviction. The Division Bench order setting aside attachment was on civil grounds (absence of reasons and prior purchase of property) and did not express any determination on the veracity of criminal allegations. Therefore, setting aside of attachment did not bar initiation or continuation of criminal proceedings. [Paras 12, 13]

Setting aside of attachment proceedings does not affect continuation of criminal proceedings against the petitioner.

Section 45 of PMLA 2002 - non-bailable and cognizable offences; bail fetters applicable to anticipatory bail - first proviso to Section 45(1) - exception for women/sick/infirm/under sixteen - anticipatory bail - Whether the fetters in Section 45 apply to an application for anticipatory bail and whether, applying Section 45 and its proviso, the petitioner (a 61 year old woman) was entitled to anticipatory bail. - HELD THAT: - Relying on the Supreme Court precedent cited in the judgment, the Court held that the rigours of Section 45 apply to applications for anticipatory bail under Section 438 Cr.P.C.; the High Court must satisfy itself on the Section 45 tests before grant of bail. However, the first proviso to Section 45(1) carves out an exception permitting release on bail of a woman (among others) if the Special Court so directs. Applying these principles to the facts - the petitioner being a 61 year old woman, having cooperated with investigation, no requirement for custodial interrogation, absence of material suggesting likelihood of absconding, and completion of investigation with a supplementary complaint filed - the Court concluded that custodial detention was unnecessary and the petitioner fell within the proviso's scope. [Paras 16, 18, 19, 20]

Section 45's limitations apply to anticipatory bail applications, but on facts the petitioner qualifies under the first proviso to Section 45(1); anticipatory bail granted subject to personal and surety bonds and trial court conditions.

Final Conclusion: The petition for anticipatory bail is allowed: the Court upheld the lawfulness of the supplementary complaint, held that setting aside of attachment does not bar criminal proceedings, and-applying Section 45 of PMLA 2002 and its proviso-directed that the petitioner, a 61 year old woman, if arrested, be released on bail on furnishing bonds and surety, subject to such conditions as the trial Court may impose.

Rectification of typographical/clerical errors in appellate orders - remand for correction to first appellate authority - duty of appellate authority to act responsively and correct manifest errors - tribunal's jurisdiction to entertain limited reliefs despite not being a rectification forum - compliance with section 35B of the Central Excise Act, 1944 - imposition of departmental costs for dereliction of duty

Rectification of typographical/clerical errors in appellate orders - remand for correction to first appellate authority - tribunal's jurisdiction to entertain limited reliefs despite not being a rectification forum - Appellant entitled to have manifest typographical/clerical errors in the first appellate authority's order corrected and the matter remitted for that purpose. - HELD THAT: - The Tribunal acknowledged that it is not primarily entrusted with rectification of typographical or clerical errors in orders of lower authorities but held that it cannot turn away an appellant who otherwise complies with statutory prescriptions. The first appellate authority's order re-determined eligibility for refund but reflected an apparent arithmetical/typographical discrepancy in the quantum recorded (stating a lesser amount than that found to be allowable). Given that the appellant sought correction and the discrepancy had practical consequences for disbursement, the Tribunal remanded the matter to the first appellate authority to correct such errors as are to be rectified so that the intent and effect of its findings are properly reflected and implemented. [Paras 1, 2, 3, 5]

Remitted to the first appellate authority for correction of the typographical/clerical errors and for consequent action to ensure the correct amount is treated as allowed.

Duty of appellate authority to act responsively and correct manifest errors - imposition of departmental costs for dereliction of duty - Failure of the first appellate authority to correct a manifest error despite a request warranted imposition of costs on the responsible officer. - HELD THAT: - The Tribunal criticised the appellate authority's refusal to rectify an apparent clerical error and its suggestion that the appellant pursue fresh appellate remedy, observing that such conduct by a senior statutory functionary was indefensible and prejudicial to public interest. To deter similar upward delegation and dereliction, the Tribunal directed imposition of costs of Rs. 5,000 to be paid into the Maharashtra Legal Aid Services Authority, and directed the Commissioner of Customs (Appeals) to identify the officer concerned after due inquiry to fix responsibility. [Paras 4]

Cost of Rs. 5,000 imposed on the officer to be identified by the Commissioner of Customs (Appeals) after inquiry; direction to fix responsibility for the lapse.

Final Conclusion: The appeal was disposed by remanding the matter to the first appellate authority for correction of the identified typographical/clerical errors so that the correct refund entitlement is given effect to; a departmental cost was imposed on the officer responsible for failing to rectify the manifest error.

Confiscation without statutory backing - effect of omission of a rule on pending proceedings - saving provisions and inapplicability of Section 6 General Clauses Act to omission of rules - Section 38A - saving on repeal/amendment subject to legislative intent - distinction between confiscation of "goods" and confiscation of immovable property - priority of secured creditor under SARFAESI Act vis-a -vis Crown debts - nonobstante effect of SARFAESI Act (Section 35) - Section 11E (post-facto first charge) subject to SARFAESI Act

Confiscation without statutory backing - effect of omission of a rule on pending proceedings - Section 38A - saving on repeal/amendment subject to legislative intent - saving provisions and inapplicability of Section 6 General Clauses Act to omission of rules - distinction between confiscation of "goods" and confiscation of immovable property - Validity of confiscation orders dated 26.03.2007 and 29.03.2007 under Rule 173Q(2) of the Central Excise Rules, 1944 when that sub rule had been omitted w.e.f. 12.05.2000. - HELD THAT: - The Court held that proceedings founded on sub rule (2) of Rule 173Q(2) could not be continued or validated after that sub rule had been omitted from the statute book. Reliance on Section 38A of the Central Excise Act and Section 6 of the General Clauses Act to save the confiscation orders was rejected. A Constitution Bench in Kolhapur Canesugar establishes that Section 6 does not operate to save proceedings where a "rule" (as distinct from a Central Act or Regulation) is omitted. Section 38A only operates "unless a different intention appears": here the legislature's later rules (Rule 28 of the successor Rules) and the textual change from vesting of "anything" to vesting of "goods" demonstrate a contrary legislative intention not to revive or validate confiscation of land, buildings, plant and machinery. On these bases the confiscation orders were held to lack statutory backing and to have been passed without jurisdiction. [Paras 35, 36, 37, 45, 47]

Confiscation orders dated 26.03.2007 and 29.03.2007, being founded on Rule 173Q(2) which had been omitted, were without jurisdiction and are quashed.

Priority of secured creditor under SARFAESI Act vis-a -vis Crown debts - nonobstante effect of SARFAESI Act (Section 35) - Section 11E (post-facto first charge) subject to SARFAESI Act - secured debt v. Crown debt; first charge requires explicit statutory provision - Whether the secured creditor (the bank) has priority over Central Excise dues in respect of mortgaged/hypothecated immovable and movable secured assets (pre insertion of Section 11E). - HELD THAT: - The Court held that, prior to insertion of Section 11E (w.e.f. 08.04.2011), the Central Excise Act did not create a statutory first charge on the property of the assessee. Established principles and precedents recognise that Crown or State debts enjoy priority over ordinary unsecured creditors but do not prevail over bona fide secured creditors who hold a security interest unless a statute creates a specific first charge. The SARFAESI Act defines secured assets and secured creditors and, by its nonobstante clause (Section 35), has overriding effect over inconsistent enactments. Consequently, a secured creditor enforcing rights under SARFAESI enjoys priority in relation to secured assets vis a vis excise dues; even Section 11E, as enacted later, is subject to SARFAESI. The Court affirmed earlier decisions to the effect that secured creditors' rights prevail where no specific first charge is created by the revenue statute. [Paras 41, 42, 43, 44, 47]

The secured creditor (bank) has priority over Central Excise dues in respect of the secured assets in the circumstances of this case; SARFAESI provisions prevail and Section 11E (post 2011) is subject to SARFAESI.

Final Conclusion: The appeal is allowed: the confiscation orders of 26.03.2007 and 29.03.2007 are quashed as being without jurisdiction, and the Appellant bank's rights as a secured creditor in relation to the secured assets are recognised to have priority over Central Excise dues in the circumstances disclosed.

Refund of service tax paid by mistake - limitation under section 11B of the Central Excise Act as applied to service tax refund claims - maintainability of writ against rejection of refund as time barred - inapplicability of appellate provisions governing excise tribunal appeals to mistaken payment refunds - remand to 'Call Book' and duty of appellate authority to adjudicate promptly

Refund of service tax paid by mistake - limitation under section 11B of the Central Excise Act as applied to service tax refund claims - maintainability of writ against rejection of refund as time barred - Whether a refund claim of service tax paid by mistake is liable to be dismissed as time barred under section 11B of the Central Excise Act, 1944, and whether a writ petition against such a time barred rejection is maintainable. - HELD THAT: - The Court considered the correctness of applying the limitation mechanism in section 11B to refund claims where the tax was paid by mistake (of law or fact). Reliance was placed on the Karnataka High Court decision in Commissioner of Central Excise (Appeals), Bangalore v. KVR Construction and the subsequent dismissal by the Supreme Court of the challenge thereto, which held that payment accepted by the Department does not convert a mistaken payment into a regularized duty such that section 11B would operate to bar a refund claim. The High Court accepted that principle and held that a writ petition against an appellate order rejecting a refund as time barred is maintainable in such circumstances, because the payment was not a genuine liability and therefore the limitation under section 11B is not appropriately attracted to bar the refund claim. The Court accordingly answered the admitted issue in favour of the petitioner and directed further adjudication on merits by the appellate authority.

Answered in favour of the petitioner: section 11B limitation does not operate to bar a refund of service tax paid by mistake; a writ against rejection as time barred is maintainable.

Remand to 'Call Book' and duty of appellate authority to adjudicate promptly - inapplicability of appellate provisions governing excise tribunal appeals to mistaken payment refunds - Whether the Commissioner of Central Tax (Appeals) could retain the appeal in the 'Call Book' pending the outcome of similar cases, and what procedural directions should follow. - HELD THAT: - The Court found no justifiable ground for the Commissioner (Appeals) to keep the petitioner's appeal in the 'Call Book' pending the outcome of another case, particularly in light of the Supreme Court confirmation of the legal principle on limitation in the KVR Construction matter. The appellate authority was directed to remove the file from the 'Call Book', take up the appeal immediately and dispose of it within two months from communication of this order. The direction reflects the Court's view that pendency of other cases should not indefinitely forestall adjudication where the legal position on limitation has been authoritatively settled.

The Commissioner of Central Tax (Appeals) is directed to withdraw the matter from the 'Call Book', take up the appeal immediately and decide it within two months.

Final Conclusion: Petition allowed. The writ succeeds on the limited legal question pressed: refund of service tax paid by mistake is not to be rejected as time barred under section 11B; the Commissioner (Appeals) must take the appeal out of the 'Call Book' and decide it within two months.

Scope of remand - reopening concluded issue on remand - rebate of duty on inputs for exported goods - requirement that inputs be received and used in manufacture/export - evidentiary value of statements not produced for cross-examination - reliance on inspection reports and MVAT findings - consequential personal penalties

Scope of remand - reopening concluded issue on remand - Whether the adjudicating authority exceeded the scope of the Tribunal's remand by re-opening and deciding a concluded issue - HELD THAT: - The Tribunal's earlier orders had recorded and left intact the Commissioner's categorical finding that the duty-paid inputs were received by the appellant, sent to job-workers, manufactured into final products and received back by the appellant. The remand was limited to rectifying the error of confirming the show-cause notice on a new ground not contained in the SCN. The Commissioner, however, proceeded to decide the previously concluded factual issue against the appellant on a new ground which was not part of the SCN. Held that in re-adjudication upon remand the adjudicating authority cannot re-open or travel beyond the concluded issue; the impugned order therefore traversed beyond the scope of remand and was liable to be set aside on that ground alone. [Paras 4]

Impugned order set aside insofar as it re-opened a concluded issue and exceeded the scope of the remand.

Rebate of duty on inputs for exported goods - requirement that inputs be received and used in manufacture/export - reliance on inspection reports and MVAT findings - Whether the appellant had received the duty-paid inputs, used them in manufacture (including at job-workers) and exported the final products, thereby entitling them to rebate - HELD THAT: - On de novo consideration the Commissioner had earlier (in OIO dated 13.03.2018) accepted documentary evidence, inspection reports and cross-examination outcomes to find that inputs were procured, transported, delivered to the appellant and job-workers, manufacturing was carried out and goods exported. The Tribunal's subsequent clarification left that factual finding undisturbed. The adjudicating authority's own record contained inspection reports of range officers and MVAT reports showing delivery to the appellant or job-workers, evidence of machinery and electricity consumption at job-workers, CONCOR verification of vehicle numbers matching export documents, hypothecation/insurance of raw and finished goods and transport documents referencing the appellant's factory. On balance of these materials the department's allegation of non-receipt and diversion failed. Held that the appellant had established receipt, use and export of goods and was entitled to the rebate claimed. [Paras 4, 5]

Appellant entitled to rebate; departmental case of non-receipt/diversion of inputs is baseless.

Evidentiary value of statements not produced for cross-examination - Whether statements recorded by investigating agency (DGCEI) which were retracted in cross-examination or where the witness was not produced for cross-examination could be relied upon to confirm demand - HELD THAT: - The Tribunal and the adjudicating authority recognised that several transporters' and suppliers' statements recorded by DGCEI were contradicted by statements recorded by MVAT authorities and that some witnesses when made available either retracted earlier inculpatory statements or were not produced for cross-examination. The adjudicatory practice and settled law require that reliance cannot be placed on departmental statements if the persons are not produced for cross-examination or if they resile in cross-examination. The range inspection reports and MVAT findings supported delivery and manufacture. Accordingly the statements not subjected to cross-examination or retracted lost evidential value and could not sustain the demand. [Paras 4]

Statements retracted in cross-examination or of witnesses not produced for cross-examination have no evidential value and cannot be relied upon to confirm the demand.

Consequential personal penalties - Whether the penalties imposed on the individuals (director and agent) survive where the foundational allegation of wrong availment of rebate against the company fails - HELD THAT: - The personal penalties were consequential to the allegation that the company wrongly availed rebate. Since the departmental case of wrong availment did not survive and the company was held entitled to rebate, the personal penalties imposed on Shri Deepak Agarwal and Shri Sharad Gupta being consequent upon the primary allegation also do not survive. [Paras 5]

Personal penalties consequential to the failed allegation do not survive.

Final Conclusion: The Tribunal set aside the impugned order, held that the appellant had received and used the duty-paid inputs and exported the final products and was therefore entitled to the rebate; evidentiary reliance on departmental statements not subjected to cross-examination was rejected; consequential personal penalties were vacated; appeals allowed with consequential relief.

Refund of duty paid under protest - refund by way of cash versus refund by credit to CENVAT account - Section 142(3) and Section 142(6)(a) of the Central Goods and Services Tax Act, 2017 - appointed day - Section 11B and Section 11BB of the Central Excise Act, 1944 - entitlement of Export Oriented Unit to cash refund under existing law - colourable device / tax avoidance by reversal of credit and subsequent appeal

Refund by way of cash versus refund by credit to CENVAT account - Section 142(3) and Section 142(6)(a) of the Central Goods and Services Tax Act, 2017 - appointed day - entitlement of Export Oriented Unit to cash refund under existing law - colourable device / tax avoidance by reversal of credit and subsequent appeal - Appellant is not entitled to have the refund paid in cash under Section 142(3)/142(6)(a) CGST where the refund claim was filed and adjudicated under pre-GST law and allowed by way of credit, and the appeal was filed after the appointed day following the appellant's voluntary reversal of credit. - HELD THAT: - The appellant filed the refund claim under the pre-GST regime (Section 11B CEA, 1944) on 09.02.2017 and the original authority allowed the refund on 05.05.2017 by credit to the appellant's CENVAT account. The CGST Act's appointed day was notified as 22.06.2017. The appeal to Commissioner (Appeals) was filed on 11.07.2017, i.e., after the appointed day. Section 142(3)/(6)(a) applies to claims or proceedings before, on or after the appointed day but provides that amounts eventually accruing shall be paid in cash. The Tribunal found that the appellant had availed the CENVAT credit on 24.05.2017 and thereby settled the position, but subsequently on 01.06.2017 reversed that credit and filed the appeal after the appointed day with the apparent purpose of converting the allowed credit into a cash refund. Treating that sequence as a colourable device to obtain a benefit not due, the Tribunal declined to allow the appellant to rely on Section 142 to convert the already-availed credit into cash. The reasoning draws on established doctrine that devices to obtain tax benefit cannot be sanctioned and that a party should not be allowed to profit from its own wrongful act. The Tribunal therefore upheld the finding that the refund would not be converted to cash in these facts and declined to entertain the appellant's reliance on authorities concerning EOUs or Rule 5 CCR, 2004 which were not factually comparable. [Paras 4]

Benefit of Section 142(3)/142(6)(a) was not available to the appellant; refund remains by way of credit and appellant's appeal seeking cash refund is disallowed.

Section 11B and Section 11BB of the Central Excise Act, 1944 - interest on refund - Appellant is not entitled to interest on the refund under Section 11BB of the Central Excise Act, 1944. - HELD THAT: - The refund claim was adjudicated in favour of the appellant on 05.05.2017 and allowed by credit to the CENVAT account. Section 11BB provides for interest where refund is not made within three months from date of receipt of application. Both original and appellate authorities applied Section 11BB and found that the three-month period had not expired at the relevant time; accordingly interest was not payable. The Tribunal agreed that interest claim was properly rejected on this statutory basis and that the authorities had considered and applied Section 11BB correctly. [Paras 4]

Claim for interest under Section 11BB is not admissible and is rejected.

Final Conclusion: The appeal is dismissed: the Tribunal upholds that the refund allowed under pre-GST law and taken as CENVAT credit cannot be converted into a cash refund by filing an appeal after the CGST appointed day (such conduct being treated as a colourable device), and the claim for interest under Section 11BB CEA is not maintainable.

Cenvat credit - Clandestine removal - Third party evidence - Burden of proof on Revenue - Corroborative evidence

Cenvat credit - Third party evidence - Corroborative evidence - Burden of proof on Revenue - Whether the CENVAT credit availed by the appellant on the impugned invoices can be disallowed on the basis of third party records and the Panchnama of the supplier without independent corroborative evidence. - HELD THAT: - The Tribunal found that the only material adverse to the appellant was the Panchnama and statements recorded in the search of the supplier and other third party testimony; no search was conducted at the appellant's premises and no material was seized from the appellant. The appellant had placed before the authorities purchase orders, supplier invoices, gate registers, goods received records (GRRs) and ledger entries showing vehicle numbers and receipt of copper material. The Department did not investigate or verify crucial aspects such as transporters/drivers, dispatch particulars, excess production/raw material usage, power consumption, sale proceeds or receipt of finished goods from regular dealers, which would be necessary to establish clandestine manufacture or removals. In these circumstances the Tribunal applied the established principle that findings of clandestine removal cannot be sustained solely on the basis of third party documents and oral testimony unless supported by clinching corroborative evidence. The Tribunal noted the decision rendered in the appeal of M/s. Trishul Metal Industries on similar facts and observed no distinguishing features in the present case. Weighing the documentary trail produced by the appellant against the lacunae in the Department's investigation, the Tribunal concluded that the benefit of doubt must be given to the appellant and that the impugned invoices were cenvatable.

Findings of clandestine removal based on Panchnama and third party statements without corroboration are not sustainable; the CENVAT credit in respect of the impugned invoices is held to have been rightly availed.

Final Conclusion: Both appeals are allowed; the Order in Original and the Order in Appeal disallowing the CENVAT credit on the impugned invoices are set aside and the credits are confirmed in favour of the appellant.

Refund to the ultimate payer - unjust enrichment - C Form declarations - processing of refund claim within stipulated period - compliance with earlier High Court direction

Refund to the ultimate payer - unjust enrichment - C Form declarations - processing of refund claim within stipulated period - compliance with earlier High Court direction - Entitlement of the purchaser to direct refund of tax collected by the seller and deposited with tax authorities once C Form declarations are furnished and direction of the Rajasthan High Court exists, notwithstanding that the purchaser is not registered as a dealer in the State where tax was deposited. - HELD THAT: - The petitioner's claim for refund is governed by the principle that only the person who ultimately bore the burden of the tax is entitled to its refund; a seller who merely collected and deposited tax cannot be permitted to recover a refund where that would result in unjust enrichment. The court noted that the Rajasthan authorities had wrongly refused C Form declarations after GST, causing the seller to charge tax at full rate and deposit it; subsequently the Rajasthan High Court directed issuance of C Forms and entitlement to refund. Reliance (the seller) acknowledged that buyers would seek refund and provided buyer-wise details, indicating the buyers bore the incidence. Processing the refund through the seller would be legally untenable (as the seller would be barred by unjust enrichment) and practically unworkable (assessment proceedings of the seller may delay or extinguish the buyers' claim). In these circumstances the respondents were bound to process the purchaser's refund claim directly on receipt of requisite documents, in compliance with the earlier High Court direction, within a stipulated short period. The court therefore directed immediate processing and payment of the refund to the purchaser within eight weeks. [Paras 5, 6]

Writ allowed; respondents directed to process and grant refund of the tax amount collected from the petitioners and deposited by the seller in accordance with law within eight weeks of receipt of a copy of this judgment.

Final Conclusion: The petition is allowed: the State authorities must process and pay the refund directly to the purchaser (who bore the tax) upon production of requisite documents, within eight weeks, complying with the Rajasthan High Court's earlier direction; the seller shall not be entitled to claim such refund.

Personal liability of directors for company tax dues - separate legal entity of a company - lifting the corporate veil - attachment of director's personal bank account for recovery of company dues - writ relief under Article 226

Attachment of director's personal bank account for recovery of company dues - personal liability of directors for company tax dues - Whether the department could lawfully attach and freeze the writ applicant's personal bank account to recover VAT dues assessed against the company. - HELD THAT: - The Court held that the company is the taxable entity and that, unlike the Income-tax Act provision under Section 179, there is no provision in the Sales Tax / VAT enactment which fastens the company's tax liability upon its directors so as to permit recovery from their personal properties or bank accounts. The Division Bench relied on its prior decisions and reasoning in Paras Shantilal Savla and the authorities cited therein to conclude that absent specific statutory empowerment or a factual foundation for lifting the corporate veil, authorities are not entitled to proceed against directors' personal properties to recover company dues. Applying that principle to the present facts - where the company alone was assessed for 2008-09 and no specific order or statutory basis was shown to fasten liability on the director - the attachment of the writ applicant's personal bank account was unsustainable. [Paras 9, 10]

Attachment of the writ applicant's bank account is unlawful and ordered to be lifted; the bank shall permit operation of the account.

Separate legal entity of a company - lifting the corporate veil - Whether the corporate veil could be lifted to fasten the company's VAT liability on the director in the absence of statutory provision or strong factual foundation. - HELD THAT: - The Court reiterated that the corporate veil is not to be lifted lightly and may be pierced only upon a strong factual foundation. The judgment notes there was no specific statutory provision in the Sales Tax / VAT law imposing personal liability on directors for company tax dues and no material was placed before the Court to justify lifting the corporate veil in this case. Reliance was placed on earlier Division Bench reasoning rejecting the imposition of personal liability in similar circumstances and distinguishing criminal liability provisions (which do not create civil recovery liability). Consequently, the doctrine of piercing the corporate veil was held inapplicable on the facts before the Court. [Paras 11, 12, 13]

Corporate veil will not be lifted; directors' personal properties/accounts cannot be proceeded against for the company's VAT dues in absence of statutory basis or strong factual foundation.

Final Conclusion: Writ allowed: attachment on the petitioner's personal bank account is lifted and the account shall be made operable; the department remains free to pursue recovery from the company in accordance with law, but may not proceed against the director's personal assets or bank account without statutory authority or a proper factual basis to lift the corporate veil.

Input tax credit - Verification of registration status - Findings of fact by the Tribunal - Reliance on bank transaction records and official departmental website - Remand by first appellate authority

Input tax credit - Verification of registration status - Reliance on bank transaction records and official departmental website - Findings of fact by the Tribunal - Whether the Tribunal was legally justified in allowing the dealer's claim of input tax credit where the Assessing Authority had disbelieved purchases as being from unregistered dealers based on information from the Special Investigation Officer. - HELD THAT: - The Assessing Authority rejected the input tax credit claim on the basis of information from the Special Investigation Officer treating the purchases as from unregistered dealers. The first appellate authority remanded the matter instead of verifying that information. On second appeal the Tribunal examined and recorded factual findings after verifying that the parties from whom purchases were shown were registered on the official departmental website and that payments were made through bank accounts and duly accounted for. Those factual findings were not disputed by the revisionist. The High Court, considering its earlier decisions on identical facts and the Tribunal's factual conclusions based on verifiable records, found no reason to interfere with the Tribunal's acceptance of the input tax credit claim.

Tribunal's factual finding that purchases were from registered dealers and payments were through bank accepted; input tax credit allowed and State's revision dismissed.

Final Conclusion: The revision is dismissed; the Tribunal's factual finding permitting the claimed input tax credit, supported by verification from the official website and bank records, is upheld.

Territorial jurisdiction under the amended provisions of the Negotiable Instruments Act - presentation/delivery for collection deemed at the branch where payee maintains account (Explanation to Section 142(2)(a)) - service of demand notice and statutory presumption of service - postponement of prosecution till failure to pay within 15 days of receipt of demand notice - scope of inherent power under Section 482 Cr.P.C. to quash complaints under the Negotiable Instruments Act

Territorial jurisdiction under the amended provisions of the Negotiable Instruments Act - presentation/delivery for collection deemed at the branch where payee maintains account (Explanation to Section 142(2)(a)) - effect of Section 142A and the non-obstante clause on prior judicial precedents - Whether the Trial Court at Imphal West has territorial jurisdiction to try the complaint under Section 138 of the Negotiable Instruments Act in view of the amended Section 142(2)(a) and Section 142A. - HELD THAT: - The Court analysed the post 2015 statutory scheme and relevant Supreme Court precedents, observing that the amended Section 142(2)(a) and the Explanation thereto treat delivery for collection as occurring at the branch where the payee actually maintains the account, irrespective of the branch at which the cheque was physically presented. Reliance was placed on Bridgestone India Pvt. Ltd. and subsequent authority construing Sections 142(2) and 142A to mean that territorial jurisdiction for initiation of proceedings under Section 138 is determined by the branch of the payee's bank where the payee's account is maintained. The date of opening of the payee's account or physical presentation at another branch does not defeat jurisdiction. Applying these principles to the facts, the Court held that because the payee maintained an account at the Yes Bank branch in Thangal Bazar, Imphal-the account to which the cheque was to be credited-the Trial Court has territorial jurisdiction to entertain and try the complaint under Section 138 as amended. [Paras 16, 17]

The Trial Court, being within the local jurisdiction of the branch where the payee maintains her account, has territorial jurisdiction to entertain and try the complaint.

Service of demand notice and statutory presumption of service - postponement of prosecution till failure to pay within 15 days of receipt of demand notice - scope of inherent power under Section 482 Cr.P.C. to quash complaints under the Negotiable Instruments Act - Whether the complaint should be quashed for alleged non service of the demand notices and whether the statutory presumptions as to service defeat prosecution at the threshold. - HELD THAT: - The Court reviewed binding authority on proof of service of the demand notice, including the principles in D. Vinod Shivappa, C.C. Alavi Haji and related decisions. It observed that where a demand notice is sent correctly by registered post to the drawer's address shown in the cause title, a legal presumption of service arises (supplemented by the General Clauses Act and Section 114 evidentiary presumptions), and the question of whether service was in fact evaded is primarily a matter of evidence for trial. The petitioner had not positively averred non receipt in the complaint but only pointed out lack of an express date of receipt; there was no established return of the notice or evidence negativing service. In these circumstances, and bearing in mind that premature quashing under Section 482 Cr.P.C. is inappropriate where disputed questions of fact remain as to service and evasion, the Court held that the statutory presumption stood unless rebutted at trial and that non service was not a ground to quash the proceedings at the threshold. [Paras 18, 21]

Service of the demand notice is presumed in law where sent to the correct address; absence of conclusive proof of non service is not a ground for quashing the complaint and the matter is one of evidence for trial.

Final Conclusion: The petition under Section 482 Cr.P.C. is dismissed. The Trial Court at Imphal West has territorial jurisdiction to try the complaint and there is no ground to quash the proceedings for alleged non service of the demand notice; the interim order is vacated.

Offence under Section 138 of the Negotiable Instruments Act - Quashing of criminal complaint - Cheque drawn for discharge of liability (full or part) - Factual disputes to be adjudicated at trial, not on quash petition - Statutory presumption and its rebuttal in cheque cases

Quashing of criminal complaint - Cheque drawn for discharge of liability (full or part) - Factual disputes to be adjudicated at trial, not on quash petition - Whether the private complaint under the Negotiable Instruments Act could be quashed on the ground that the cheque presented was for a higher amount than the admitted liability. - HELD THAT: - The Court held that the contention that the cheque amount exceeded the admitted liability raises factual questions which cannot be finally decided in a petition to quash the complaint. Reliance on authorities concerning the statutory presumption in cheque cases was noted, but the Court observed that disputes as to the amount due, payments admitted by the parties, or other factual aspects must be examined during the trial; such contentions are not a ground for summary quashing where material facts and evidence require adjudication. Consequently, the petition for quashment was not entertained. The Court clarified that its observations were only for disposing of the petition and directed the trial Court to proceed uninfluenced and decide the matter on merits. [Paras 4, 5]

Petition to quash dismissed; factual disputes regarding the cheque amount to be decided at trial; trial Court directed to conclude trial within three months.

Final Conclusion: The Criminal Original Petition seeking quashing of the private complaint under the Negotiable Instruments Act is dismissed; the trial Court was directed to conclude the trial within three months from receipt of a copy of this order, and the observations in the order are not to influence the trial on merits.

Vicarious liability - in charge of and responsible for the conduct of the business of the company - specific averments in complaint - section 141 of the Negotiable Instruments Act - summoning order under Section 138 of the Negotiable Instruments Act

Vicarious liability - specific averments in complaint - in charge of and responsible for the conduct of the business of the company - summoning order under Section 138 of the Negotiable Instruments Act - Whether the impugned order summoning the petitioner, a Finance Head who was neither signatory nor Managing Director, could be sustained in absence of specific averments making him in charge of and responsible for the company's conduct so as to attract vicarious liability under Section 141. - HELD THAT: - The complaint contained only a generic averment that the "remaining accused persons were directly responsible for day to day affairs of the Accused No.1 Company" and did not plead any specific role, conduct, act or omission attributable to the petitioner. Jurisprudence requires that to fasten vicarious liability under Section 141 a complaint must specifically aver that the person, at the relevant time, was in charge of and responsible for the conduct of the business of the company; mere designation or a bare statement is insufficient. Where the person is neither a Managing Director nor a signatory to the cheque, specific factual averments are necessary to enable the Magistrate to issue process and to inform the accused of the case he has to meet. Applying these principles to the case, the petitioner's mere description as "Finance Head" and the generalized allegation in paragraph 3 do not satisfy the requirements for imposing vicarious liability or for sustaining the summoning order under Section 138 read with Section 141. Consequently, the summoning of the petitioner could not be maintained and the impugned order had to be set aside. [Paras 9, 10, 12, 13]

Impugned order summoning the petitioner is set aside for want of specific averments to fasten vicarious liability.

Final Conclusion: The petition is allowed; the Metropolitan Magistrate's order dated 10th May 2019 summoning the petitioner is quashed and the petition is disposed of.