TaxTMI Updates e-Newsletter
Mar 03,2020

Advance ruling admissibility - application inadmissible where question pending in departmental proceedings - suppression of material facts - void ab initio - DGGI investigation and intelligence proceedings - summons under Section 70 of the CGST Act - classification of flavoured milk

Advance ruling admissibility - application inadmissible where question pending in departmental proceedings - suppression of material facts - void ab initio - DGGI investigation and intelligence proceedings - summons under Section 70 of the CGST Act - The advance ruling obtained by the respondent is void ab initio because the application was hit by the proviso to Section 98(2) as proceedings on the same question were already pending before the DGGI and material facts about that investigation were suppressed. - HELD THAT: - The Appellate Authority found on the record that the DGGI had initiated enquiries into the classification of the respondent's flavoured milk prior to the filing of the advance ruling application: communications dated 7 January 2019, a summons dated 9 January 2019 issued under the statutory power to call persons to give evidence, and an incident report dated 17 January 2019 stating that an investigation was in progress. Section 98(2) bars admission of an advance ruling application where the question raised is already pending in any proceeding under the Act. By filing the application on 20 March 2019 while aware of the DGGI proceedings and not disclosing those facts to the Authority, the respondent sought and obtained a ruling in circumstances that rendered the application inadmissible. The authority therefore concluded that the impugned AAR order was vitiated by suppression of material facts and could not stand. [Paras 12, 13, 14, 15, 16]

The AAR order is declared void ab initio for being rendered in circumstances covered by the proviso to Section 98(2) and by suppression of material facts; the question of classification is not decided by this order.

Final Conclusion: The appeal is allowed. The Authority for Advance Ruling's order is declared void ab initio as vitiated by suppression of material facts and because the question was pending before the DGGI; no ruling on the classification of flavoured milk is given as the matter remains pending in departmental proceedings.

Principal-agent relationship - agent as defined under Section 2(5) of the CGST Act, 2017 - Auctioneer service - services by a commission agent for sale or purchase of agricultural produce - strict interpretation of exemption notification

Agent as defined under Section 2(5) of the CGST Act, 2017 - Auctioneer service - commission agent - Classification of the respondent's activities as 'commission agent' or as 'auctioneer service'. - HELD THAT: - The Authority and parties agreed that IFAB is an 'agent' under Section 2(5) of the CGST Act insofar as its activities are carried out on behalf of flower growers/sellers. The determinative question was whether those activities fall within the narrower category of a 'commission agent'. The Appellate Authority examined the nature and scope of IFAB's operations - receipt, inspection and cold storage of flowers, operation of the Dutch auction clock, billing and collection of sale proceeds, issuing delivery orders, payment to growers after deducting commission, and provision of extensive auction infrastructure including remote/online buying facilities. These functions go beyond merely causing a sale on behalf of a principal and include receipt of sale proceeds, billing and facilitating delivery. On this factual and functional analysis the services rendered by IFAB are more appropriately classifiable as 'Auctioneer service' rather than as that of a commission agent. [Paras 18, 19]

IFAB's activities constitute 'Auctioneer service' and not the narrower role of a 'commission agent'.

Services by a commission agent for sale or purchase of agricultural produce - strict interpretation of exemption notification - Whether the commission earned by IFAB from auctioning of flowers is exempt under entry 54(g) of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017. - HELD THAT: - Entry Sl. No. 54(g) grants exemption specifically to services provided by an Agricultural Produce Marketing Committee/Board or services provided by a commission agent for sale or purchase of agricultural produce. Exemption notifications must be strictly construed and applied according to the words used. Having held that IFAB performs 'Auctioneer service' and not the service of a 'commission agent' as contemplated by the notification, the Authority concluded that IFAB does not fall within the class of service providers entitled to the exemption. The appellate reasoning rejected the respondent's submission that 'auctioneer' and 'commission agent' are interchangeable and observed that reading the notification to cover all mercantile agents would impermissibly rewrite the exemption. [Paras 20, 22]

The commission earned from auctioning of flowers by IFAB is not eligible for exemption under entry 54(g) of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017.

Final Conclusion: The advance ruling of the Authority for Advance Ruling is set aside; IFAB's auctioning activity is taxable as 'Auctioneer service' and the commission earned is not exempt under entry 54(g) of Notification No. 12/2017 - Central Tax (Rate) dated 28.06.2017.

Summary order. The application for advance ruling by M/s. Enlivening Technologies Pvt. Ltd. is disposed of as withdrawn.

Exemption under Notification No. 12/2017 - Entry No. 69 - exemption under Notification No. 12/2017 - Entry No. 72 - taxability of sub-contracted training services where recipient is the main contractor - benefit of exemption not passing to subcontractor in absence of supply to Government

Exemption under Notification No. 12/2017 - Entry No. 69 - Whether the main contractor is entitled to exemption under Entry No. 69 of Notification No. 12/2017. - HELD THAT: - Entry No. 69 exempts services covered under specified service codes when provided by designated entities (NSDC, SSC approved by NSDC, assessment agency approved by SSC/NSDC, or a training partner approved by NSDC/SSC) in relation to specified NSDC-implemented schemes. The tender in question was called by the Maharashtra State Skill Development Society, which is neither NSDC nor an SSC. The applicant did not furnish evidence that the main contractor is an NSDC/SSC-approved training partner or otherwise covered by Entry No. 69. On these facts, the main contractor is not entitled to exemption under Entry No. 69 for the work in question. [Paras 5]

Main contractor not entitled to exemption under Entry No. 69.

Exemption under Notification No. 12/2017 - Entry No. 72 - Whether the main contractor is entitled to exemption under Entry No. 72 of Notification No. 12/2017. - HELD THAT: - Entry No. 72 exempts services (specified service code) provided to Central/State Governments or Union Territory Administrations under any training programme for which total expenditure is borne by the relevant government. The record indicates that the training (Recognition of Prior Learning for construction workers) is to be provided to the Government of Maharashtra and that the total expenditure for the programme is to be borne by the Government of Maharashtra. Subject to fulfillment of the entry's conditions, the main contractor, if engaged to provide the training to the State and the State bears the total expenditure, would be eligible for exemption under Entry No. 72. [Paras 5]

Main contractor would be eligible for exemption under Entry No. 72, subject to satisfaction of the entry's conditions.

Taxability of sub-contracted training services where recipient is the main contractor - benefit of exemption not passing to subcontractor in absence of supply to Government - Whether the applicant (subcontractor) is entitled to the Entry No. 72 exemption or is taxable on supplies to the main contractor, and the applicable rate. - HELD THAT: - The conditions for Entry No. 72 require that the services be provided to the Central/State Government and that the total expenditure for the training be borne by that government. In the present arrangement the applicant, as subcontractor, would supply services to the main contractor (the recipient on record), not directly to the State. Consequently, the statutory conditions for exemption are not satisfied in respect of the subcontractor's supplies. The Authority therefore held that the subcontracted services are not covered by Entry No. 72 and are taxable. [Paras 5]

Services provided by the applicant to the main contractor are not exempt and are taxable at 18% GST (IGST or 9% CGST and 9% KGST).

Final Conclusion: The Authority ruled that Entry No. 69 does not apply to the main contractor; Entry No. 72 would apply to the main contractor only if the services are provided to the State and the State bears total expenditure; the applicant as subcontractor does not satisfy those conditions and therefore its services are taxable at 18% GST.

Principal supply in composite supply - classification of supply as goods or services - printing service where content supplied by recipient - ownership of intangible inputs and its effect on nature of supply - application of TRU Circular No.11/11/2017-GST (paras 4 and 5) - service classification SAC 9989 - applicable GST rate for printing services (Entry No.27, Notification No.11/2017)

Classification of supply as goods or services - printing service where content supplied by recipient - principal supply in composite supply - ownership of intangible inputs and its effect on nature of supply - The transaction of printing content provided by the customer on PVC banners and supply of the printed material is a supply of service. - HELD THAT: - The Authority applied the guidance in TRU Circular No.11/11/2017-GST (paras 4 and 5) which distinguishes cases where printing is the principal supply (service) from those where the physical good remains predominant (goods). The circular shows that where the usage rights of intangible inputs are retained by the recipient and the physical input undergoes a change in nature by the printing process, the printing constitutes the principal supply. In the present case the content and specifications are supplied by the customer and the PVC material changes its nature into trade advertising material on account of the printing; the applicant does not retain ownership of the usage rights of the intangible inputs. On these facts the printing activity predominates and the transaction is a supply of service (printing) rather than supply of goods. [Paras 11]

Printing of customer-provided content on PVC banners and supply of the printed material is a service.

Service classification SAC 9989 - classification of supply as goods or services - The classification of the said supply is under SAC 9989. - HELD THAT: - Having concluded that the transaction is a supply of service because printing is the principal element, the Authority classifies the service under the scheme of classification of services applicable to printing services. The Authority expressly records that such supplies fall under SAC 9989. [Paras 11]

The printing service is classifiable under SAC 9989.

Applicable GST rate for printing services (Entry No.27, Notification No.11/2017) - The applicable GST rate on the supply of the printing service is 18% up to 30.10.2017 and 12% effective from 31.10.2017. - HELD THAT: - On classifying the transaction as a supply of service falling under SAC 9989, the Authority applied the relevant entries of Notification No.11/2017-Central Tax (Rate) (Entry No.27) to determine the tax rate. The Authority recorded the temporal applicability of rates as prescribed by the Notification, specifying the higher rate up to 30.10.2017 and the reduced rate effective from 31.10.2017. [Paras 11, 12]

GST is 18% up to 30.10.2017 and 12% effective from 31.10.2017 on the printing service.

Final Conclusion: The Authority rules that printing of customer-supplied content on PVC banners and supply of the printed material is a service (classifiable under SAC 9989) and attracts GST at 18% up to 30.10.2017 and 12% effective from 31.10.2017.

Confiscation under Section 130 - remedy of appeal under Section 107 - writ jurisdiction under Article 226 - interim release of goods and conveyance on compliance

Remedy of appeal under Section 107 - writ jurisdiction under Article 226 - Writ petition disposed by relegating the petitioner to prosecute statutory appeal against the final order in Form GST-MOV-11 under Section 107 of the CGST Act. - HELD THAT: - The Court observed that since a final order in Form GST-MOV-11 has been passed by respondent No.2, the appropriate statutory remedy lies in filing an appeal under Section 107 of the CGST Act. The writ-application was not adjudicated on merits with respect to the confiscation; instead the petitioner was directed to seek the prescribed appellate remedy, and the writ petition was disposed of accordingly.

Writ disposed; petitioner relegated to prefer an appeal under Section 107 against the final order in Form GST-MOV-11.

Interim release of goods and conveyance on compliance - confiscation under Section 130 - Earlier supervisory orders resulted in release of the goods and conveyance on payment and compliance; the petitioner obtained release subject to cooperation with authorities. - HELD THAT: - The Co-ordinate Bench had directed release of the conveyance and goods after the petitioner paid an amount exceeding the fine in lieu of confiscation and undertook to cooperate with the authorities and furnish required details. The present order records that the petitioner availed those orders and secured release of the goods and vehicle; the Court did not reopen the merits of the confiscation order in Form GST-MOV-11.

The petitioner obtained release of the goods and conveyance pursuant to the earlier directions, subject to cooperation and furnishing of information to the respondent authorities.

Final Conclusion: The writ petition is disposed of by directing the petitioner to pursue the statutory appeal under Section 107 against the final order in Form GST-MOV-11; the Court did not decide the merits of the confiscation, and earlier interim relief concerning release was recorded as availed by the petitioner.

Transitional input tax credit under Section 140 of the CGST Act - vested right to input tax credit - purposive construction of notification - IT Grievance Redressal Committee procedure - Nodal Officer's decision under Circular dated 03.12.2018 - opening of portal to enable filing of Form GST TRAN-1

Transitional input tax credit under Section 140 of the CGST Act - opening of portal to enable filing of Form GST TRAN-1 - Nodal Officer's decision under Circular dated 03.12.2018 - Disposal of the petition by directing administrative action to enable filing of Form GST TRAN-1 and consideration of the petitioner's representation for grant of transitional input tax credit, without adjudicating merits. - HELD THAT: - The Court recorded that the Nodal Officer has communicated that the writ applicant's claim to carry forward Cenvat credit is justifiable and has requested the portal authority to open the portal to enable filing of TRAN-1. Having placed that statement and letter on record, the Court declined further adjudication on merits and directed the respondents to undertake the administrative exercise to enable filing and decide the representation. The Court mandated that this exercise be completed at the earliest and in any event within two weeks from receipt of the writ of this order. The minutes of the IT Grievance Redressal Committee and the procedure under the Circular dated 03.12.2018 were noted as relevant to the process to be followed, but the Court did not resolve the substantive entitlement on merits and left the matter to the prescribed administrative procedure. [Paras 4, 5]

Petition disposed by directing respondents to open the portal to enable filing of Form GST TRAN-1 and to decide the petitioner's representation for transitional input tax credit in accordance with the prescribed procedure, to be completed within two weeks; no adjudication on merits.

Final Conclusion: The writ petition is disposed of by administrative direction: respondents to enable filing of Form GST TRAN-1 and decide the representation for transitional input tax credit in accordance with the applicable procedure, to be completed within two weeks; no substantive decision on entitlement was made by the Court.

Transitional credit under Section 140(3) of the CGST Act, 2017 - procedural nature of the time limit under Rule 117 of the CGST Rules, 2017 - technical glitches on the common portal as ground for relief - extension under Order No.01/2020GST dated 7th February 2020 - indefeasibility of CENVAT credit

Transitional credit under Section 140(3) of the CGST Act, 2017 - technical glitches on the common portal as ground for relief - indefeasibility of CENVAT credit - Petitioners entitled to carry forward CENVAT credit despite inability to upload FORM GST TRAN 1 on the portal due to technical glitches. - HELD THAT: - The Court held that where an assessees' right to CENVAT credit accrued under the pre GST regime and the assessees could not file TRAN 1 electronically owing to technical defects in the common portal, the failure to upload in such circumstances did not extinguish the entitlement to transitional credit under Section 140(3) of the CGST Act, 2017. The decision follows the reasoning of the Coordinate Bench in Siddharth Enterprises and related orders which treat the due date provision in Rule 117 as procedural in nature when non filing is attributable to portal malfunction, and it applies the principle that CENVAT credit, once accrued, is indefeasible and cannot be appropriated merely for non compliance where there is no fault of the claimant. The Court rejected the respondents' contention that mere non uploading would defeat the claim when non uploading resulted from technical glitches on the portal, and directed relief accordingly. [Paras 15, 16, 17]

Petitioners entitled to claim and carry forward the CENVAT balance as on 30th June 2017 despite non uploading of TRAN 1 due to technical glitches.

Extension under Order No.01/2020GST dated 7th February 2020 - procedural nature of the time limit under Rule 117 of the CGST Rules, 2017 - Respondents directed to permit filing of FORM GST TRAN 1 and to accept TRAN 1 within the extended period specified by the CBIC order. - HELD THAT: - Relying on Order No.01/2020GST dated 7th February 2020 which extended the period for submitting FORM GST TRAN 1 until 31st March 2020 for cases where filings could not be made owing to technical difficulties, the Court directed respondents to permit the petitioners to upload TRAN 1 and claim transitional credit. The Court ordered that the petitioners be allowed to avail the extended filing opportunity and mandated completion of the exercise within two weeks from receipt of the order, thereby giving effect to the procedural relief warranted by the portal failure. [Paras 12, 18, 19]

Respondents to permit upload of FORM GST TRAN 1 and accept the claim for transitional credit in accordance with Order No.01/2020GST; petitioners to be allowed to upload TRAN 1 before 31st March 2020 and complete the filing within two weeks of receipt of the order.

Final Conclusion: Writ petition allowed to the extent that petitioners are permitted to upload FORM GST TRAN 1 and claim transitional CENVAT credit as on 30th June 2017; respondents directed to facilitate upload in accordance with CBIC Order No.01/2020GST and to complete the exercise within two weeks from receipt of this order, petition disposed of accordingly.

Detention and release of goods and conveyances in transit under Section 129 - Confiscation and show cause notice under Section 130 - Provisional release upon payment of tax/penalty or furnishing security - Requirement of recording material/reasons for invoking confiscation at the threshold - Application of Synergy Fertichem observations on threshold for invoking Section 130

Detention and release of goods and conveyances in transit under Section 129 - Provisional release upon payment of tax/penalty or furnishing security - Release of the detained goods and conveyance subject to payment and undertaking as ordered by the Court. - HELD THAT: - The Court recorded and affirmed the interim measure previously passed by a co ordinate Bench directing release of the vehicle and goods on payment of the tax and penalty as computed by the authorities and upon filing a solemn undertaking to make good any deficit liability, together with identification documents. The writ applicant availed of that interim order and obtained release of the vehicle and goods on payment of the tax amount. The judgment records that the direction for provisional release pursuant to Section 129 was implemented by the petitioner and is not disturbed. [Paras 4, 5]

The vehicle and goods were to be released on the terms directed by the Court and the petitioner obtained release on payment of the tax amount.

Confiscation and show cause notice under Section 130 - Requirement of recording material/reasons for invoking confiscation at the threshold - Application of Synergy Fertichem observations on threshold for invoking Section 130 - Permissibility of issuing a notice of confiscation under Section 130 at the stage of detention and seizure and the petitioner's entitlement to rely on the court's observations in Synergy Fertichem. - HELD THAT: - The Court expressly permitted the writ applicant to rely upon the recent observations in Synergy Fertichem (paras 99-104) which caution that issuance of a confiscation notice under Section 130 at the threshold is not justified as a matter of routine and, where invoked at the stage of detention, requires a strong case and disclosure of the material upon which the authority's belief is formed. The present proceedings are, however, at the stage of a show cause notice under Section 130 and the Court did not decide the merits of that notice; instead the petitioner was left free to make good the case that the show cause notice deserves to be discharged by invoking the said observations. [Paras 6, 7]

Petitioner may rely on the Synergy Fertichem observations; the show cause proceedings under Section 130 shall proceed and it is open to the petitioner to challenge the notice on those grounds.

Final Conclusion: The writ application is disposed of; the interim directions for release (as already implemented) are recorded and the petitioner is permitted to challenge the show cause notice by relying on the identified observations in Synergy Fertichem; proceedings under Section 130 shall continue in accordance with law.

Maintainability of writ petition against a pending show-cause notice - Prematurity of judicial intervention - Complete code doctrine under indirect tax statutes - Obligation to adjudicate show-cause notice and grant personal hearing

Maintainability of writ petition against a pending show-cause notice - Prematurity of judicial intervention - Complete code doctrine under indirect tax statutes - Obligation to adjudicate show-cause notice and grant personal hearing - Writ petition challenging a show-cause notice issued under the GST regime is premature and not maintainable in the absence of a final adjudicatory order. - HELD THAT: - The Court noted that the Integrated Goods and Services Tax Act, 2017 read with the Central Goods and Services Tax Rules, 2017 constitutes a complete code for dealing with alleged tax evasion, providing the procedure for adjudication of show-cause notices. Since only a show-cause notice had been issued and the petitioner had filed a reply but no final order had been passed, judicial interference at this stage would be premature. The respondents remain entitled and obliged to proceed to adjudicate the notice in accordance with the statutory scheme, including consideration of the petitioner's replies and any request for personal hearing, in conformity with the CGST rules.

Petition dismissed at admission stage as premature; no interference with pending adjudication, respondents to act in accordance with law.

Final Conclusion: The petition was declined for admission because the challenge to a pending show-cause notice under the GST statutory scheme is premature; respondents are to proceed with adjudication in accordance with the CGST Act and Rules, including consideration of the petitioner's replies and any request for personal hearing.

Summary order. Writ petition dismissed as withdrawn with liberty to the petitioner to pursue the alternative remedy of appeal and to press all pleas raised in the petition before the appellate authority in accordance with law.

Extension of time to file Form GST TRAN-1 - filing/revising Form GST TRAN-1 - claim to avail extended filing period pursuant to earlier common order

Extension of time to file Form GST TRAN-1 - filing/revising Form GST TRAN-1 - Petitioner entitled to file/revise Form GST TRAN-1 within the extended period granted by this Court's earlier order. - HELD THAT: - The Court held that the controversy is no longer res integra in view of this Court's order dated 19.11.2019 in W.P.No.33290/2019 and Connected Matters which extended the period for registered persons to file/revise Form GST TRAN-1 up to 31.12.2019. Applying that ruling, the petitioner is permitted to avail the extended period to file or revise the TRAN-1 return. No further adjudication was necessary; the petitioner may act in accordance with the extension granted by the earlier common order. [Paras 2, 3]

Writ petition disposed directing that the petitioner is entitled to avail the extended period to file/revise Form GST TRAN-1 up to 31.12.2019.

Final Conclusion: The petition is disposed by allowing the petitioner to file or revise Form GST TRAN-1 within the extended period granted by this Court's earlier order, namely up to 31.12.2019.

Regular bail - prima facie consideration - investigation concluded - nature and gravity of offence - conditions of bail - non-influence of preliminary observations at trial

Regular bail - prima facie consideration - investigation concluded - nature and gravity of offence - conditions of bail - non-influence of preliminary observations at trial - Enlargement of the applicants on regular bail in connection with the FIR registered on 30.08.2019. - HELD THAT: - The Court considered that the FIR was registered and the applicants have been in custody since 30.08.2019, and that investigation qua the applicants is complete with the complaint filed. The prosecution was unable to point to any special circumstances against the applicants. Without undertaking a detailed appraisal of evidence, and on a prima facie view having regard to the nature of allegations and the sentence that may be imposed, the Court held it appropriate to exercise its discretion in favour of bail. The Court directed release on execution of personal bond with one surety and imposed specific conditions to prevent misuse of liberty, to protect the integrity of the investigation, to restrict travel, to ensure presence for verification and to provide residential particulars. The Court clarified that its preliminary observations regarding evidence are not to influence the trial Court at the trial stage. [Paras 6, 7, 8, 9, 10]

Application allowed; applicants enlarged on regular bail on executing bonds and complying with the specified conditions; preliminary observations recorded shall not influence the trial.

Final Conclusion: The petition for regular bail is allowed; applicants are directed to be released on bail subject to execution of personal bond with one surety and compliance with enumerated conditions, and the trial Court is not to be influenced by the High Court's preliminary observations.

Refund of Input Tax Credit - consideration of refund application on merits - premature writ petitions - withdrawal without prejudice - time limit for processing refund applications

Refund of Input Tax Credit - consideration of refund application on merits - time limit for processing refund applications - Application dated 28.06.2018 for refund of Input Tax Credit under the TNVAT Act to be considered independently on merits by the respondents. - HELD THAT: - The Single Judge had dismissed the earlier writ petitions as premature while indicating that the appellant could seek appropriate relief by modifying prayers in the pending challenges to the statutory rules. The appellant has since withdrawn those challenges. In consequence, the High Court set aside the impugned order dated 12.11.2018 and directed the respondents to consider the appellant's refund application dated 28.06.2018 on its own merits and independently of the withdrawn constitutional challenges. The Court preserved the appellant's right to challenge the statutory provisions concerning the time limits for processing Input Tax Credit claims, but did not adjudicate the merits of the refund claim itself. The respondents were given a time-bound direction to decide the application within twelve weeks from receipt of the order.

Impugned order dated 12.11.2018 set aside; respondents directed to consider the refund application dated 28.06.2018 on merits within twelve weeks.

Premature writ petitions - withdrawal without prejudice - Withdrawal of the appellant's related writ petitions and effect of such withdrawal on subsequent consideration of the refund application. - HELD THAT: - The appellant withdrew W.P.(MD)Nos.18723 & 18724 of 2018. The Court recorded that the withdrawal was without prejudice to the appellant's right to have the refund application considered dehors the earlier challenges to the CGST and TNGST provisions. The High Court accordingly required the respondents to proceed afresh on the refund application rather than treating the prior dismissal as a bar to consideration.

Withdrawal accepted as without prejudice; respondents obliged to independently consider the refund application notwithstanding withdrawal of related writs.

Final Conclusion: Writ appeal allowed; the order dated 12.11.2018 is set aside and the respondents are directed to consider the appellant's refund application dated 28.06.2018 on its merits within twelve weeks; no order as to costs.

Summary order. Parties stated the issue will be resolved by the next hearing; matter posted on 26.02.2020 on top of the board and the Court warned it may pass a harsh order if not complied with.

Categorization of expenditure of non-compete fee - either capital or revenue - nature of expenditure - substantial questions of law are answered in favour of the assessee as the non compete payments to the former principals are revenue expenditure by HC [2017 (4) TMI 1387 - MADRAS HIGH COURT]

HELD THAT:- Revenue seeks permission to withdraw this special leave petition along with pending applications therein due to low tax effect.

Permission granted, subject to just exceptions.

The special leave petition and pending applications are dismissed as withdrawn, leaving question(s) of law open.

TDS u/s 194C OR 194J - TDS liability carriage fees, editing charges and dubbing charges - The appellate orders affirming that carriage/placement fees, subtitling (editing) charges and dubbing charges fall within the inclusive definition of "work" under the explanation to Section 194C and not within Section 194J are upheld by HC [2017 (11) TMI 915 - BOMBAY HIGH COURT]

HELD THAT:- Revenue seeks permission to withdraw this Special Leave Petition along with pending applications therein due to low tax effect.

Permission granted, subject to just exceptions. The special leave petition and pending applications dismissed as withdrawn, leaving question of law open.

Applicability of Section 115JB on banking Company - scope of rectification u/s 154 - Scope of amendment in 115JB by Finance Act, 2012 - as per HC [2019 (5) TMI 355 - BOMBAY HIGH COURT] sub-­section 115JB as it stood prior to its amendment by virtue of Finance Act, 2012, would not be applicable to a banking company - HELD THAT:- Delay condoned. Leave granted.

Assessment u/s 153C - additions made u/s 68 on account of share application money - absence of any incriminating material found during search - High Court [2019 (3) TMI 1731 - BOMBAY HIGH COURT] dismissed the Revenue's appeals and upheld the Tribunal's deletion of additions made under section 68, relying upon earlier High Court precedents that deletion is warranted where search proceedings produce no incriminating material to support the additions

HELD THAT:- Delay condoned. Leave granted.

Deductibility of business expenditure - Relevance of retracted statements recorded during search - Appreciation of evidence and concurrent findings - Market value for intra-group transfer for deduction under Section 80IA - as per HC [2019 (2) TMI 178 - BOMBAY HIGH COURT] revenue appeal are dismissed: the deletion of the disallowance relating to payments to Shri S.K. Gupta is upheld on concurrent factual appreciation, and the Tribunal's approach to valuing intra-group supply of electricity for Section 80IA purposes is affirmed in line with earlier Tribunal and High Court decisions.

HELD THAT:- Delay condoned. Leave granted.

Unexplained cash credit under Section 68 - identity, genuineness and creditworthiness of shareholders - assessee in default under Section 201 - tax deduction at source under Section 195 - grossing up under Section 195-A - exemption under Section 10(15A) for lease-related payments - fee for technical services / fee for included services - making technical knowledge available - DTAA Article 13(4)(c) test - remand for fresh decision on questions of fact and treaty interpretation - application of Section 43B to tax/duty payments - HELD THAT:- Leave granted.

Registration under Section 12AA - genuineness of the objects - genuineness of activities - prima facie satisfaction of the Commissioner - cancellation under Section 12AA(3)

Registration under Section 12AA - genuineness of the objects - genuineness of activities - prima facie satisfaction of the Commissioner - cancellation under Section 12AA(3) - Whether registration under Section 12AA can be granted to a newly formed trust on satisfaction as to its objects and prima facie genuineness of proposed activities without requiring proof of commenced activities. - HELD THAT: - The Court held that Section 12AA must be given a purposive construction: at the initial stage a trust formed and seeking registration may be registered if the Principal Commissioner is satisfied, on a prima facie basis, as to the trust's constitution, objects, trustees and the genuineness of its proposed activities. Requiring a trust to have already commenced substantial activities before registration would be impractical and frustrate the statutory purpose, because donors and trustees normally seek registration at inception to secure tax benefits which encourage donations and permit the trust to function. The Commissioner remains empowered to test actual genuineness of activities thereafter and, if activities are subsequently found not to be genuine, to cancel the registration under Section 12AA(3). The Revenue's contention that registration must await demonstrated prior activities was rejected as unrealistic and contrary to the scheme of the statute.

Registration may be granted to a newly formed trust based on satisfaction as to its objects and prima facie genuineness of proposed activities; prior commencement of activities is not a condition precedent to registration, and the Commissioner can cancel registration later if activities are not genuine.

Final Conclusion: The substantial question of law is answered in the negative against the Revenue; the tribunal's view that registration can be granted on satisfaction as to objects and prima facie genuineness of activities is upheld and the Revenue's appeal is dismissed.

Section 263 revisionary jurisdiction - when two views possible - non-speaking order - indexed cost of acquisition - capital gains computation

Section 263 revisionary jurisdiction - when two views possible - non-speaking order - indexed cost of acquisition - capital gains computation - Whether the Principal Commissioner was justified in invoking Section 263 to set aside the assessment order for assessment year 2014-2015 where the Assessing Officer had accepted the assessee's computation of indexed cost (based on revaluation recognised in an earlier year) and the AO's view was one of two plausible views. - HELD THAT: - The court found that the Assessing Officer had accepted the return and the computation based on the revalued amount (revaluation effected in Financial Year 2010-11) and that the earlier shareholders had paid capital gains tax corresponding to that revaluation. Although the AO's order was brief, acceptance of the return and the factual matrix (revaluation, share transfer, tax paid earlier) showed that the AO had adopted one plausible view. The scope of revision under Section 263 is narrow and does not permit the Commissioner to substitute his view where the Assessing Officer has taken a reasonable view; interference is permissible only if the AO's order is erroneous and prejudicial to the revenue or perverse. Applying these principles, and relying on precedent that when two views are possible the Commissioner should not set aside an order merely because he prefers a different view, the court held that the Tribunal was correct in setting aside the Section 263 order and restoring the assessment order for AY 2014-2015. The court also noted there was no allegation of tax-evasion or that the revaluation was not bona fide, and therefore no basis to treat the AO's acceptance as erroneous and prejudicial. [Paras 6, 7, 8, 10]

The Tribunal rightly set aside the Principal Commissioner's order under Section 263; the AO's acceptance of the assessee's indexed cost computation was a plausible view and did not warrant revision.

Final Conclusion: Tax Case Appeal dismissed; the Tribunal's decision setting aside the Section 263 order was upheld and the assessment order for AY 2014-2015 stands.

Applicability of Rule 6DD to disallowance under Section 40A(3) - Disallowance of unexplained credits under Section 68 - Appropriateness of writ relief under Article 226 in disputes requiring factual enquiry - Power of Commissioner (Appeals) to rehear and direct de novo assessment

Applicability of Rule 6DD to disallowance under Section 40A(3) - Disallowance for cash expenditure under Section 40A(3) - Whether the protection under Rule 6DD applies to the cash payments for purchase of fire wood disallowed under Section 40A(3), and whether writ relief is appropriate on that question. - HELD THAT: - The Court held that the question of applicability of Rule 6DD to cash purchases of fire wood involves disputed factual findings - notably the mode of purchase (open bidding) and whether sellers were cultivators/growers/producers entitled to the statutory exception. Because these matters require factual enquiry and evaluation of evidence, the High Court declined to entertain relief under Article 226 on merits. The matter is remitted for factual and legal consideration by the appropriate appellate authority; the Court directed that a proper enquiry be conducted into the veracity of the petitioner's claim that purchases fall within the exception in Rule 6DD and that any assessment be reopened and passed de novo after affording the petitioner an opportunity of hearing.

Writ relief declined; the question is remitted for fresh consideration and de novo assessment after hearing.

Disallowance of unexplained credits under Section 68 - Onus to prove identity, capacity and genuineness of loans/credits - Whether the credits in the petitioner's bank accounts can be sustained as loans from identified creditors under Section 68, and whether interference by writ court is appropriate. - HELD THAT: - The Court found that the challenge to the Assessing Officer's disbelief of the petitioner's explanation for the bank credits (treated as loans for medical treatment of a partner) raises questions of identity, capacity of the creditors and genuineness of the transactions, which are essentially factual. Accordingly, the Court refrained from adjudicating the merits under Article 226 and remitted the issue for enquiry by the Commissioner (Appeals) / Assessing Officer, observing that the appellate authority has co-terminus powers and should conduct a fresh enquiry into the explanations tendered and decide on merits in accordance with law.

Writ relief declined; matter remitted for fresh enquiry and adjudication by the appellate authority on merits.

Final Conclusion: Writ petition dismissed. Petitioner granted liberty to prefer first appeal to the Commissioner (Appeals) within three weeks; if filed, the appeal shall be taken on file and the assessment shall be decided on merits after a de novo enquiry and hearing within three months, with recovery of the disputed demand stayed until disposal of the appeal; if no appeal is filed in time, the impugned assessment order shall stand revived.

Income from other sources - income from application of money - profits and gains of business or profession - Section 80HHC deduction - set off of interest received against interest paid

Income from other sources - Section 80HHC deduction - set off of interest received against interest paid - income from application of money - profits and gains of business or profession - Whether lease income and interest earned on loans/advances to sister concerns, classified as income from other sources, are eligible for deduction under Section 80HHC and whether interest paid can be set off against such interest income for computing the deduction. - HELD THAT: - The Court accepted that the lease income and interest earned on loans/advances to sister concerns fall within the head income from other sources and are income from the application of money, not income under the head profits and gains of business or profession. Section 80HHC provides a deduction in respect of profits retained for export business and applies to profits and gains computed under the head of business income. Since the receipts in question are not includable in business profits, they are not eligible for deduction under Section 80HHC. Consequently, there is no scope for set off of interest received against interest paid in the computation of export profit deduction: interest paid, being directly linked to business, is accounted for in computing business income, whereas interest/lease receipts being income from application of money remain outside that head and cannot be netted with business interest for the purpose of Section 80HHC. The decision in M/s ACG Associated Capsules (P) Ltd. was considered distinguishable because that case addressed Clause (baa) of the Explanation to Section 80HHC and concerned receipts that are included in business profits; the present receipts are not so included.

Lease income and interest on advances to sister concerns, being income from other sources, are not eligible for deduction under Section 80HHC and interest paid cannot be set off against such receipts for computing that deduction.

Final Conclusion: Appeal dismissed; the Tribunal's rejection of the claim to treat lease and interest receipts as eligible for deduction under Section 80HHC, and the related claim for set off against interest paid, is upheld.

Unexplained income - onus on the assessee to explain - simultaneous receipt and remittance of funds - perversity in appellate fact-finding - remand for fresh determination

Unexplained income - onus on the assessee to explain - simultaneous receipt and remittance of funds - Whether the sum deposited in the assessee's bank account constituted unexplained income and whether the tribunal's conclusion absolving the assessee was justified. - HELD THAT: - The tribunal reversed the Assessing Officer and the Commissioner (Appeals) by accepting that the assessee's account had been 'mis-utilized by his employer to route the cash' and observed that the money 'came in and went out simultaneously.' The High Court held that the tribunal did not examine critical aspects: the source of the funds, the identity of recipients to whom the amount was transferred immediately after deposit, the manner of transfer, and the ultimate application of the transferred funds. Those matters are central because the statutory onus lies on the assessee to explain receipts; a mere speculative assertion about simultaneous inflow and outflow does not discharge that onus in the absence of substantial evidence establishing source and application. The Court further considered whether the tribunal's order was perverse and concluded that, given the absence of considered reasoning and factual inquiry on these determinative points, the tribunal's finding could not stand.

Tribunal's order on this issue set aside and matter remanded for fresh determination; tribunal directed to rehear and pronounce a reasoned decision within four months, with liberty to further remand to lower authorities.

Final Conclusion: The High Court set aside the tribunal's finding that the deposits were not unexplained income and remanded the matter for fresh, reasoned adjudication on source, transfer and application of the funds, directing the tribunal to rehear and decide within four months while permitting further remand if necessary.

Reopening of assessment under Section 148 - Scheme of arrangement / demerger and its effect on assessment - Liability of dissolved company / discontinuance of business - Assessing Officer's duty to consider objections and grant hearing - Remand for fresh consideration by Assessing Officer

Reopening of assessment under Section 148 - Assessing Officer's duty to consider objections and grant hearing - Remand for fresh consideration by Assessing Officer - Validity of the learned Single Judge's order remanding the matter to the Assessing Officer to consider objections to the notice dated 28.03.2007 issued under Section 148 and to pass final orders after hearing. - HELD THAT: - The High Court held that the learned Single Judge did not decide the controversy on merits but granted liberty to the appellant to raise further objections and directed the Assessing Officer to deal with them in accordance with law after giving opportunity of personal hearing. The Court observed that factual aspects relating to the affairs of the dissolved company required examination by the Assessing Officer and that a remand for such consideration was appropriate. The court noted relevant principles governing liability on dissolution and that the Assessing Officer must examine the materials (including the demerger/scheme documents) before concluding on reopening. In view of these considerations and the directions given for fresh consideration and hearing, there was no reason to interfere with the Single Judge's order. [Paras 7, 8, 10]

Order of the learned Single Judge remanding the matter to the Assessing Officer for fresh consideration of objections and directing a final decision after hearing is upheld; writ appeal dismissed.

Scheme of arrangement / demerger and its effect on assessment - Liability of dissolved company / discontinuance of business - Whether dissolution or demerger of the company precluded reopening of assessment or extinguished tax liability such that the notice under Section 148 should be quashed without further inquiry. - HELD THAT: - The High Court held that mere winding up, dissolution, or demerger does not automatically extinguish statutory liabilities and does not, by itself, negate the Assessing Officer's power to reopen assessments. The Court referred to statutory provisions dealing with liability on discontinuance/dissolution and observed that how such liabilities are to be dealt with must be examined by the Assessing Officer on the available material. Consequently, the contention that the demerger and dissolution rendered the notice invalid was not accepted as a ground for quashing the reopening without factual and legal examination by the Assessing Officer. [Paras 6, 8, 9]

Dissolution or demerger does not per se oust the jurisdiction to reopen assessments; the Assessing Officer must examine and decide the question of liability in accordance with law.

Final Conclusion: The High Court dismissed the writ appeal and upheld the learned Single Judge's order directing the Assessing Officer to consider the appellant's objections to the notice under Section 148 for A.Y.2000-2001 and to pass a final order after affording a hearing, holding that dissolution/demerger does not automatically extinguish tax liability and requires factual and legal examination by the Assessing Officer.

Undisclosed income from property transactions - Reliability of loose sheets seized during search - Burden of proof on Revenue in concealment cases - Effect of deletion of addition in the hands of purchaser - Absence of corresponding addition against owner/seller - Framing of assessment under Section 153A

Reliability of loose sheets seized during search - Burden of proof on Revenue in concealment cases - Addition based on loose papers seized during search held unsustainable in absence of reliable corroboration. - HELD THAT: - The Tribunal and this Court accepted that the additions were founded on loose sheets seized from premises, which at best reflected tentative or projected figures and not conclusive proof of on-money transactions. There was no evidence that the seized documents were in the handwriting of the seller or purchaser, no statement of the seller admitting receipt of additional consideration, no unaccounted cash was traced, and the seized working pre-dated the registered sale deed. Applying the principle that the burden to establish concealment lies on the Revenue, the Court found the materials relied upon insufficient to establish undisclosed profit against the assessee. [Paras 6, 7, 8]

Addition founded on loose sheets seized during search cannot be sustained for want of reliable corroborative evidence and because the Revenue failed to discharge its burden of proof.

Effect of deletion of addition in the hands of purchaser - Absence of corresponding addition against owner/seller - Undisclosed income from property transactions - Deletion of addition in the hands of the purchaser and absence of any addition against the seller or owner undermines sustaining the addition solely against the intermediary/broker. - HELD THAT: - The Court noted that additions made on the buyer were deleted by the Tribunal on substantive grounds and that no addition was recorded against the seller or its managing director. Given the Revenue's case was that alleged extra consideration was shared between the buyer, the seller's managing director and the broker, the lack of findings or additions against the seller or managing director, and the deletion of buyer's addition, make it inappropriate to saddle only the intermediary with the disputed addition. The revenue's submission that deletion in buyer's case was technical was rejected as contrary to record and not plausible. [Paras 6, 8, 9]

In the factual matrix, sustaining the addition only in the hands of the broker is not appropriate; the appeals are allowed.

Framing of assessment under Section 153A - Assessment framed under Section 153A was considered in context but no specific infirmity in framing was relied upon to uphold the additions. - HELD THAT: - Although assessments were framed under Section 153A following search and seizure, the Court's determination turned on the insufficiency of seized loose papers and the comparative outcomes in the hands of buyer and seller rather than on any separate procedural infirmity in framing under Section 153A. The Court therefore disposed of the appeals on merits of the additions. [Paras 3, 9]

No separate procedural defect in framing under Section 153A was held to validate the additions; decision rests on merit.

Final Conclusion: Appeals allowed; additions of undisclosed profit based on seized loose papers and sustained only against the intermediary are unsustainable in the absence of reliable corroboration, relevant findings against buyer or seller, and where the Revenue has not discharged its burden of proof.

Speculative transaction v. business loss - proviso to Sub section (5) of Section 43 - eligible transaction not deemed speculative - time stamped contract note and unique client identity/PAN as conclusive indicia of eligible transaction - trading in derivatives on a recognised stock exchange

Maintainability under CBDT monetary limits and audit objection - Whether the appeal by the Revenue was maintainable despite the tax effect being below the monetary threshold specified in CBDT circulars. - HELD THAT: - The High Court noted the Revenue's contention that a Revenue audit objection brought the case within the exceptions in the CBDT circulars. The preliminary objection raised by the assessee that the appeal was not maintainable on monetary grounds was rejected on the basis that the Revenue relied on the audit objection falling under the specified exception and, therefore, the appeal was competent for adjudication. [Paras 4]

Preliminary objection rejected; appeal held maintainable on the basis of Revenue audit objection.

Speculative transaction v. business loss - proviso to Sub section (5) of Section 43 - eligible transaction not deemed speculative - time stamped contract note and unique client identity/PAN as conclusive indicia of eligible transaction - trading in derivatives on a recognised stock exchange - Whether the loss of Rs. 96,50,334/- claimed by the assessee in transactions of shares F&O was a speculation loss or an allowable business loss. - HELD THAT: - The Court recorded that the Revenue before the Tribunal conceded the addition was made due to confusion and accepted that the loss from shares and futures fell within clause (d) of the proviso to sub section (5) of Section 43 and was not a speculation loss. The Court reviewed the statutory test: transactions in derivatives carried out electronically on recognised exchanges and supported by time stamped contract notes indicating unique client identity and PAN qualify as "eligible transaction" and are not speculative. The CIT(A) had called for a remand report and examined contract notes produced by the assessee, notably those of the broker through whom the F&O trades were executed; those contract notes bore time stamps and the requisite unique client identity and PAN. The Court found no perversity or misappreciation in the concurrent findings of the CIT(A) and the Tribunal that the statutory conditions were satisfied and therefore the loss constituted business loss rather than speculation loss. [Paras 8, 11, 12, 13]

The loss is not a speculation loss but an allowable business loss; the substantial question of law is answered against the Revenue.

Final Conclusion: The appeal is dismissed. The High Court affirms the concurrent conclusion that the loss arising from the assessee's shares/F&O transactions qualifies as business loss (not speculative) for Assessment Year 2007-08, and the Revenue's challenge is rejected.

Eligibility for deduction under section 80P(2)(a)(i) - Co-operative societies registered under the Karnataka Souharda Sahakari Act, 1997 treated as co-operative societies within the statutory definition - Application of statutory definition of "co-operative society" (Sec.2(19) concept) to Souharda societies - Remand to Assessing Officer for examination of other statutory conditions for allowance of deduction

Eligibility for deduction under section 80P(2)(a)(i) - Co-operative societies registered under the Karnataka Souharda Sahakari Act, 1997 treated as co-operative societies within the statutory definition - Remand to Assessing Officer for examination of other statutory conditions for allowance of deduction - Assessee registered under the Karnataka Souharda Sahakari Act, 1997 cannot be denied deduction under Sec.80P(2)(a)(i) solely on the ground that it is a 'Souharda' society and not registered under the Karnataka Cooperative Societies Act, 1959; matter remitted for verification of other conditions for the deduction. - HELD THAT: - The Tribunal followed its earlier decision in the Sindhu Credit Souharda Sahakari Niyamita matter and held that the statutory definition of 'co-operative society' contemplates societies registered under any law in force in a State for registration of co-operative societies. Souharda cooperatives operate on cooperative principles and therefore cannot be treated as a distinct category excluded from the meaning of 'co-operative society' for the purposes of Sec.80P. Consequently, the Assessing Officer's disallowance based solely on the assessee's registration under the Karnataka Souharda Sahakari Act, 1997 was unsustainable. However, the Tribunal noted that the Assessing Officer had not examined other statutory conditions necessary for allowance of deduction under Sec.80P(2)(a)(i), and for that reason remitted the matter to the Assessing Officer for fresh adjudication limited to those unanswered conditions. [Paras 5, 6]

Appeal allowed for statistical purposes; order of CIT(A) set aside and matter remitted to the Assessing Officer to examine and decide, afresh, the allowability of deduction under Sec.80P(2)(a)(i) after verifying other conditions.

Final Conclusion: The Tribunal held that a society registered under the Karnataka Souharda Sahakari Act, 1997 falls within the statutory concept of a 'co-operative society' for the purpose of Sec.80P(2)(a)(i), set aside the CIT(A)'s order on that ground and remitted the case to the Assessing Officer for fresh examination of the remaining conditions for granting the deduction; appeal allowed for statistical purposes.

Regular bail under Section 439 Cr.P.C. - parity with co-accused - acceptance of bribe in a CBI trap and seizure with hand wash test - role of accused as mastermind and use of threats to extort - gravity and seriousness of allegations as a bar to bail

Regular bail under Section 439 Cr.P.C. - parity with co-accused - acceptance of bribe in a CBI trap and seizure with hand wash test - gravity and seriousness of allegations as a bar to bail - Whether the petitioner was entitled to grant of regular bail by parity with co-accused. - HELD THAT: - The Court examined the materials placed on record including the complaint, recorded conversations and WhatsApp chats, the pre trap and trap proceedings, recovery of the part bribe in presence of independent witnesses, and the hand wash test which registered the presence of the tainted substance. The petitioner, being the complainant's ex clearing agent, is alleged to have created fear in the complainant's mind about DRI/COFEPOSA action, introduced the complainant to co accused and laid the foundation for the extortion demand. Unlike the co accused who were granted bail, the petitioner was found to have received the part bribe himself and to have played a central role in threatening and harassing the complainant to extract the demand which was initially Rs. 3 Crores and later settled for a lesser sum. On this factual matrix the Court held that the petitioner was not on the same footing as the co accused; the allegations against him are grave and serious and the circumstances - including recovery of the bribe and the petitioner's alleged role as mastermind - disentitle him to parity based bail. [Paras 13, 14, 15, 16]

Bail application dismissed; petitioner not entitled to parity with co accused and therefore not granted regular bail.

Final Conclusion: The petition for regular bail is dismissed on merits because the petitioner, who allegedly received the recovered part bribe and is shown to have created fear and effected the extortion, cannot be equated with the co accused who were granted bail; nothing in this order expresses any opinion on the merits of the criminal case.

Penalty under Section 114AA - Penalty under Section 114 - Show cause notice - Scope of adjudication - Appellate jurisdiction of CESTAT - Substantial question of law

Penalty under Section 114AA - Penalty under Section 114 - Show cause notice - Whether the Tribunal was justified in refusing to permit the Revenue to contend that penalty ought to have been imposed under Section 114 when the show cause notice and original order related only to penalty under Section 114AA. - HELD THAT: - The Court noted that the original authority issued a show cause notice proposing imposition of penalty only under Section 114AA and the original order imposed penalty solely under that provision. Since the authority had not proposed or imposed penalty under Section 114 in the notice or order, the Tribunal correctly held that the Revenue could not, in the appeal, urge imposition of penalty under Section 114. If the original authority considered Section 114 to be applicable, it had the procedural means to take steps then; the appellate forum could not uphold a ground that was not the subject of the show cause notice or the adjudication. The Court found no illegality or impropriety in the Tribunal declining to grant the relief sought by Revenue on that basis and held that the contention could not be sustained as lawful. [Paras 3, 5]

The Tribunal was right to refuse the Revenue's contention that penalty ought to have been imposed under Section 114 when the show cause notice and original order dealt only with Section 114AA.

Scope of adjudication - Appellate jurisdiction of CESTAT - Substantial question of law - Whether the Tribunal's order is vitiated by being silent on certain contentions of the Revenue or is otherwise perverse, warranting interference by this Court. - HELD THAT: - The Court examined the Tribunal's reasoning and concluded that the Tribunal addressed the legal position germane to the appeal - namely, that no penalty under Section 114 had been proposed or imposed and therefore the Revenue's plea on that ground could not succeed. Given that the original adjudication and show cause notice confined the case to Section 114AA, the Tribunal's decision rejecting the Revenue's alternate contention did not amount to perversity or failure to answer relevant questions. The Court further observed that there was no substantial question of law arising from the Tribunal's order which would justify interference under Section 130 of the Act. [Paras 3, 5]

The Tribunal's order is not perverse or legally vulnerable; there is no substantial question of law requiring interference.

Final Conclusion: The customs appeal is dismissed; the Tribunal's order upholding imposition of penalty under Section 114AA and rejecting the Revenue's contention regarding Section 114 is affirmed, and no substantial question of law has been shown to warrant interference.

Duty Free Import Authorization (DFIA) - post-export DFIA - pre-export DFIA - Actual User condition - transferability of DFIA - Policy Relaxation Committee - remand for fresh consideration

Post-export DFIA - Actual User condition - transferability of DFIA - Policy Relaxation Committee - Whether the Policy Relaxation Committee misdirected itself by applying the Actual User condition (applicable to pre-export DFIAs) to a case of post-export DFIA, warranting fresh consideration. - HELD THAT: - The Committee's decision shows it treated the petitioner's authorization as one subject to the Actual User condition, a requirement that arises where goods are imported first (pre-export DFIA). The petitioner, however, sought relief in respect of a post-export DFIA, where imports are to be reckoned after exports and realisation of proceeds and different rules govern issuance and transferability. Because the Committee proceeded on the wrong premise, it did not address the core contention that the authorization was post-export and that the grant of transferability ought to be considered in that light. The error altered the complexion of the Committee's decision and deprived the petitioner of adjudication on the issue actually raised. The appropriate remedy is to set aside the impugned decision and remit the matter to the Policy Relaxation Committee for fresh consideration of transferability and related reliefs on the correct premise that the DFIA is post-export. [Paras 5, 6]

Impugned decision set aside and matter remanded to the Policy Relaxation Committee for fresh decision treating the DFIA as post-export and considering transferability accordingly.

Final Conclusion: Writ petition allowed; impugned order set aside and matter remitted to the Policy Relaxation Committee for fresh consideration on 4-11-2019, with directions to decide the petitioner's request in the context of a post-export DFIA.

Remand for adjudication to determine jurisdiction pending a higher court decision - power of appellate tribunal to decide merits notwithstanding a contested question of jurisdiction - binding effect of a higher court's ultimate decision on jurisdictional issue - suspension of coercive and prosecutorial action pending final adjudication of jurisdictional question

Remand for adjudication to determine jurisdiction pending a higher court decision - power of appellate tribunal to decide merits notwithstanding a contested question of jurisdiction - Whether the Tribunal was justified in remanding the matter to the Adjudicating Authority to first decide jurisdiction while awaiting final decision in Mangali Impex (supra), or whether the CESTAT should decide the merits of the appeal without being influenced by that decision. - HELD THAT: - The High Court held that, in the interest of expeditious disposal, remitting the matter back to the Adjudicating Authority to first decide jurisdiction would cause avoidable delay and duplication of proceedings. The Court adopted the approach taken in Davinder Singh (supra), setting aside the remand and directing the CESTAT to examine and decide the merits of the appeal, including questions of jurisdiction, without being influenced by the decision in Mangali Impex (supra). The Court noted that the ultimate decision of the Supreme Court in Mangali Impex (supra) will be binding on the parties on the jurisdictional issue and, if that decision favours the assessee, the appellate and other remedies for the Revenue would remain available. The Court regarded contrary remand-first approaches as non-preclusive but not preferable, and concluded that the Tribunal should proceed to decide the appeal on merits forthwith. [Paras 11, 12]

Impugned remand set aside; matter remitted to CESTAT to decide merits of the appeal without being influenced by Mangali Impex (supra).

Binding effect of a higher court's ultimate decision on jurisdictional issue - suspension of coercive and prosecutorial action pending final adjudication of jurisdictional question - Whether any coercive action or prosecution should be taken against the assessee pending the final decision in Mangali Impex (supra). - HELD THAT: - While directing the CESTAT to decide the merits, the Court also provided protective directions pending finality of the Supreme Court's decision in Mangali Impex (supra). The Court ruled that the final decision in Mangali Impex (supra) would bind the parties on the jurisdictional issue so that it need not be re-agitated thereafter. Further, the Court directed that no coercive action should be taken against the assessee nor should any prosecution be launched until the Supreme Court finally decides Mangali Impex (supra). These directions were granted to preserve the position of the parties until the higher court settles the jurisdictional question. [Paras 12]

Final decision in Mangali Impex (supra) to bind parties on jurisdiction; no coercive action or prosecution against the assessee until that decision is rendered.

Final Conclusion: The appeal is disposed by setting aside the remand to the Adjudicating Authority; the matter is remitted to the CESTAT to decide the merits without being influenced by Mangali Impex (supra), the Supreme Court's eventual decision on Mangali Impex (supra) will be binding on the jurisdictional issue, and no coercive or prosecutorial steps shall be taken against the assessee until that decision is rendered.

Redemption under Section 125 of the Customs Act - refund of sale proceeds where goods disposed by Revenue during pendency - non-enforceability of right to redeem when goods are sold - refund of duties and redemption fine where goods unavailable for redemption - limitation on penalty under Section 112(b) - release of seized accessories where principal relief granted - application of Shilps Impex principle

Redemption under Section 125 of the Customs Act - non-enforceability of right to redeem when goods are sold - refund of sale proceeds where goods disposed by Revenue during pendency - application of Shilps Impex principle - Effect of Revenue's disposal of seized goods during the limitation/appeal period on the assessee's right to redeem and entitlement to refund of sale proceeds. - HELD THAT: - The Tribunal held that Section 125 confers a right to redeem goods on payment of redemption fine. Where Revenue, during the period available for filing appeal, disposes of the seized goods so that they are no longer available for redemption, that right becomes non-enforceable. Applying the principle in Shilps Impex, when goods are not available for redemption because Revenue has sold them, the assessee is not required to pay redemption fine or duty for redemption and is entitled to refund of the sale proceeds (and duties/redemption fine paid if any). The Tribunal therefore directed refund of the sale proceeds to the appellant, deducting only the penalty finally levied, since redemption is impossible and redemption fine cannot be enforced. [Paras 7, 8]

Refund of sale proceeds ordered to appellant because goods were sold by Revenue during the pendency of proceedings; redemption fine and duty not insisted upon in view of unavailability of goods.

Refund of duties and redemption fine where goods unavailable for redemption - application of Shilps Impex principle - Whether the appellant is entitled to refund of amounts equivalent to duty and redemption fine where goods have been sold by Revenue and redemption is impossible. - HELD THAT: - Relying on the Supreme Court's decision in Shilps Impex as followed by later courts, the Tribunal recognised that where goods have been disposed of by Revenue and cannot be returned, any duties and redemption fine paid by the petitioner are recoverable and the assessee is entitled to the value of the goods realized on sale. The Tribunal noted that the appellant had not paid redemption fine or duty due to ongoing litigation, but held the principle applicable and directed refund of the sale proceeds, applying the rule that payment for redemption is not required when the goods cannot be returned. [Paras 7, 8]

Entitlement to refund extends to sale proceeds and, where paid, to duty and redemption fine; appellant need not be required to pay redemption fine/duty when goods are not available.

Limitation on penalty under Section 112(b) - release of seized accessories where principal relief granted - Validity and quantum of penalty under Section 112(b) and consequential release of seized baggage. - HELD THAT: - The Tribunal examined Section 112(b) and held that maximum penalty under that provision is 10% of the duty evaded; applying that statutory limit, the Tribunal reduced the penalty to the amount computed as 10% of duty evaded. Having found that the goods were sold and refund of sale proceeds was directed, the Tribunal also ordered release of the two trolley bags. The Tribunal directed refund of the sale proceeds less the reduced personal penalty and fixed a timeline for payment. [Paras 8]

Penalty under Section 112(b) reduced to the statutory maximum; refund to be paid after deducting the reduced penalty; two trolley bags ordered released.

Final Conclusion: Appeal partially allowed: since Revenue sold the seized gold during the pendency so redemption is impossible, appellant is entitled to refund of the sale proceeds (applicable duties/redemption fine not to be enforced), penalty under Section 112(b) reduced to the statutory maximum and the sale proceeds ordered refunded after deducting the reduced penalty; two trolley bags to be released.

Winding up on grounds of inability to pay debts - Acknowledgement and part payment as admission of liability - After-thought defence - Statutory notice and refusal of service - Financial substratum / insolvency - Appointment of Provisional Liquidator

Acknowledgement and part payment as admission of liability - Statutory notice and refusal of service - The respondent had admitted the debt and its part payments and failed to reply to the statutory demand. - HELD THAT: - The petitioner produced invoices and a statement of account and proved that the respondent made part payments after acknowledging liability. The statutory notice issued by the petitioner was refused by the respondent (postal endorsement on record) and no substantive reply to the notice was filed. The respondent's belated assertion of inferior quality was not raised prior to the petition and no contemporaneous record was produced to support that defence, indicating the respondent did not contest the debt when served. [Paras 2, 3, 4, 6, 8]

The Court treated the part payments and the absence of reply to the statutory notice as evidence of admission of liability and rejection of the belated quality-defence as an after-thought.

Financial substratum / insolvency - Winding up on grounds of inability to pay debts - The respondent company has lost its financial substratum and is unable to pay its debts, justifying a winding up order. - HELD THAT: - The respondent admitted it was not in operation and was facing proceedings under the SARFAESI Act; records before the Court showed consistent losses in 2012-2014 and dishonour of a cheque tendered as part payment. These facts, together with the admitted unpaid invoices and the respondent's inability to discharge the admitted liability, led the Court to conclude that the company is insolvent and cannot meet its debts. On these findings the petition under the Companies Act for winding up on the ground of inability to pay debts was found to be made out. [Paras 4, 5, 9]

The Court concluded that the respondent had lost its financial substratum and granted the petition for winding up.

Appointment of Provisional Liquidator - Appointment of the Official Liquidator as Provisional Liquidator and directions to take over assets for winding up. - HELD THAT: - Having allowed the winding up petition, the Court appointed the Official Liquidator attached to the Court as Provisional Liquidator. The Provisional Liquidator was directed to take possession of the respondent company's assets, including movable, immovable and bank accounts, and to perform functions necessary for winding up under the Act. [Paras 10]

The Official Liquidator was appointed as Provisional Liquidator with directions to take over assets and proceed with winding up.

Final Conclusion: The petition for winding up was allowed: the Court found that the respondent admitted the debt (part payments and no reply to statutory notice), had lost its financial substratum and was unable to pay its debts, ordered the respondent company to be wound up and appointed the Official Liquidator as Provisional Liquidator to take possession of assets and effect winding up.

Locus standi - person aggrieved - person concerned - Section 252 of the Companies Act, 2013 - intervention in a company petition - restoration of name in the Register of Companies - striking off under Section 248 of the Companies Act, 2013 - ubi jus ibi remedium

Intervention in a company petition - Section 252 of the Companies Act, 2013 - locus standi - Appeal against the order allowing restoration of the company's name is not maintainable by persons whose intervention application was rejected and who are not 'persons aggrieved' under Section 252. - HELD THAT: - The Tribunal rejected the Appellants' I.A. seeking intervention; once intervention was refused, the Appellants could not maintain an appeal against the subsequent order restoring the company's name insofar as they were not members, shareholders, directors, creditors or workmen within the scope of Section 252(3). The documentary record (arbitral awards and other material) established the Appellants' position as debtors, and a debtor does not suffer legal injury from the striking off of a company such as would render them an aggrieved person entitled to appeal under Section 252. Consequently the appeal insofar as it challenged the restoration order was dismissed for want of maintainability. [Paras 5]

Appeal challenging restoration order was not maintainable by the Appellants and is dismissed to that extent.

Person aggrieved - person concerned - ubi jus ibi remedium - restoration of name in the Register of Companies - striking off under Section 248 of the Companies Act, 2013 - Appellants had no locus to seek intervention in the Company Petition under the first proviso to Section 252(1); they were not 'persons concerned' or 'aggrieved persons'. - HELD THAT: - The Court examined the scope of the expression 'person concerned' in the proviso to Section 252(1) and held it refers to those whose legal rights are jeopardised by removal of a company's name - principally the company itself, its members, creditors and workmen. The jurisprudential principle 'ubi jus ibi remedium' requires a real infringement of a legal right to seek remedy; mere public interest or third party concerns do not suffice. On the facts the Appellants were debtors to the company, had adverse arbitral awards against them and pending recovery litigation; their asserted civil suit does not convert them into persons aggrieved whose rights are infringed by removal. The application to intervene was therefore without locus, filed with malafide intention to thwart enforcement, and rightly rejected. [Paras 6, 7, 8, 9, 10]

Intervention application was rightly dismissed; Appellants had no locus to intervene and were not 'persons aggrieved' under Section 252.

Final Conclusion: The appeal is dismissed. The Appellants lacked locus to intervene in the restoration petition and could not maintain the appeal against the restoration order; costs of Rs. 2,00,000 are imposed, with 50% of costs directed to be released to the restored company when realized.

Moratorium under Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016 - Meaning of "occupied by" as distinct from "possession" - License granted under a Joint Development Agreement as creating occupation - Primacy of the Insolvency and Bankruptcy Code where statutes conflict (Section 238) - Scope of "property" under the definition of "property" in the Code

Moratorium under Section 14(1)(d) of the Insolvency and Bankruptcy Code, 2016 - Meaning of "occupied by" as distinct from "possession" - License granted under a Joint Development Agreement as creating occupation - Section 14(1)(d) applies to recovery of property that is "occupied by" the corporate debtor and a licence under the Joint Development Agreement constituted such occupation, thereby attracting the moratorium. - HELD THAT: - The Court held that Section 14(1)(d) addresses the "recovery of any property by an owner or lessor where such property is occupied by or in the possession of the corporate debtor" and must be read distributively so that the phrase "occupied by" requires actual physical occupation or use distinct from legal or constructive possession. The Joint Development Agreement and its Deed of Modification expressly grant a licence to the developer to enter upon the land, demolish existing structures, construct new structures and allot tenements; such rights and actual entry/use amount to the property being "occupied by" the corporate debtor. Consequently, a recovery by the owner/lessor (MHADA) of property so occupied would be barred during the moratorium under Section 14(1)(d). The Court observed that this inquiry is separate from provisions concerning assets in Sections 18 and 36 and rests on the plain terms of Section 14(1)(d) and the established authorities distinguishing "occupy/occupation" from mere legal possession. [Paras 6, 7, 11, 15]

Section 14(1)(d) of the Code protects recovery of property that is "occupied by" the corporate debtor; the licence conferred by the Joint Development Agreement amounted to such occupation and therefore the moratorium applied to MHADA's attempted recovery.

Primacy of the Insolvency and Bankruptcy Code where statutes conflict (Section 238) - Scope of "property" under the definition of "property" in the Code - In the event of a conflict between the MHADA Act and the Code insofar as the moratorium is concerned, the Code prevails and its statutory freeze under Section 14 must be given effect subject to the Code's limited temporal scope. - HELD THAT: - The Court recognised the statutory functions and powers of MHADA under the MHADA Act but held that where there is a clash with the Code, Section 238 of the Code gives the Code primacy. The purpose of the moratorium is to create a time bound statutory status quo to allow the CIRP to proceed; this limited freeze operates from the insolvency commencement date until approval of a resolution plan or liquidation as provided under the Code. Prior decisions relied upon by MHADA (including the Municipal Corporation of Greater Mumbai decision) were distinguished on their facts, notably where a resolution plan had already been approved or where assets of the municipal authority were directly implicated. On the facts of this case, the Court found the NCLAT's conclusion contrary to the proper application of the Code and set aside the NCLAT order. [Paras 16, 18, 20]

The Insolvency and Bankruptcy Code prevails over conflicting provisions of the MHADA Act for the purpose of the moratorium; the NCLAT order was set aside and the appellants' contention under Section 14(1)(d) upheld.

Final Conclusion: The appeal is allowed; the NCLAT order is set aside on the grounds that the licence under the Joint Development Agreement constituted occupation by the corporate debtor attracting the moratorium under Section 14(1)(d) of the Code, and the Code prevails over conflicting statutory provisions. The matter is remitted to the NCLT to dispose of the resolution professional's application within six weeks.

Inherent powers of the Tribunal - recall of a Resolution Plan - alternate statutory remedy by appeal under Section 32 of the IBC - scope and limits of Rule 11 of the NCLT Rules - maintainability of petition under Article 227 against NCLT orders

Maintainability of petition under Article 227 against NCLT orders - alternate statutory remedy by appeal under Section 32 of the IBC - Whether the High Court in exercise of Article 227 can direct the NCLT to exercise its inherent powers to recall or set aside an approved Resolution Plan instead of resort to the statutory appellate remedy. - HELD THAT: - The Court held that it cannot issue a positive direction to the NCLT as to how it should exercise its inherent powers and that the petitioner, who in substance sought reversal/recall of the Resolution Plan, has an effective alternate remedy by way of appeal under Section 32 of the IBC. Reliance on conventional principles (including the distinction between lack of jurisdiction and wrongful exercise of jurisdiction) supports refusing to bypass the statutory appellate route. Permitting Article 227 revision in such circumstances would circumvent the scheme of the Code and open the floodgates to collateral challenges to approved plans. [Paras 18, 19, 20, 21]

The High Court will not entertain a petition under Article 227 to direct the NCLT to recall or reverse an approved Resolution Plan where a statutory appeal under Section 32 is available.

Scope and limits of Rule 11 of the NCLT Rules - inherent powers of the Tribunal - Whether the NCLT (Administrative Appellate Authority) erred in declining to exercise inherent powers under Rule 11 to recall the Resolution Plan or to review its earlier action. - HELD THAT: - The Tribunal correctly construed Rule 11 as preserving inherent powers but not as a licence to assume powers akin to those under the Companies Act to recall an approved Resolution Plan. The Tribunal observed that, even assuming a recall power exists, it is exercisable only where an order is passed without jurisdiction or is fraudulently obtained; neither circumstance was shown. In the absence of an express conferment of review jurisdiction, the Tribunal was not obliged to exercise a review/recall function on the facts presented. [Paras 9, 10, 14, 16]

The NCLT did not err in declining to exercise Rule 11 inherent powers to recall or review the Resolution Plan on the facts; recall is exceptional and confined to jurisdictional defect or fraud.

Alternate statutory remedy by appeal under Section 32 of the IBC - limitation and proviso to Section 61(2) of the IBC - Whether the petitioner's contention about limitation/proviso to Section 61(2) precluded the availability of the appellate remedy and justified the High Court's intervention. - HELD THAT: - The Court noted the petitioner's concern about limitation but treated it as a matter for the appellate forum to consider. On the material, the petitioner had been prosecuting proceedings and the court observed that it was for the petitioner to satisfy the NCLAT regarding limitation. The existence of a potential limitation issue did not displace the availability of the statutory appeal as the appropriate remedy. [Paras 22, 23]

The possibility of limitation does not oust the alternate remedy; the petitioner must seek relief before NCLAT and, if necessary, satisfy that forum on limitation.

Final Conclusion: Civil Revision Petition dismissed; the High Court declined to exercise Article 227 to direct NCLT to recall or review the approved Resolution Plan, holding the statutory appeal under Section 32 of the IBC to be the proper remedy and leaving any limitation issues to be addressed by the appellate forum.

Resolution plan contravening law (non-compliance with statutory requirement for plans) - as is where is and as is what is basis - legal competency to order eviction / limits of Adjudicating Authority's jurisdiction - Section 30(2)(e) of I&B Code - plan must not contravene law - preferential transactions under Section 43 of the I&B Code and remedies under Section 44 - liquidator's investigatory and supervisory jurisdiction under Section 35 - Committee of Creditors' commercial wisdom vis-a -vis judicial scrutiny

Resolution plan contravening law (non-compliance with statutory requirement for plans) - Section 30(2)(e) of I&B Code - plan must not contravene law - as is where is and as is what is basis - Validity of the resolution plan of K.L. Jute Products Pvt. Ltd. in light of conditions seeking eviction and other statutory waivers and whether the plan contravened law under Section 30(2)(e). - HELD THAT: - The Tribunal upheld the Adjudicating Authority's finding that the successful resolution applicant's plan was conditional on acts (notably eviction of the lessee and extinguishment/waivers of dues and proceedings) that effectively sought reliefs inconsistent with the published invitation on an "as is where is and as is what is basis" and that those conditions could not be treated as permissible contingencies. The CoC, although exercising commercial wisdom in approving the plan, cannot validate a plan that on its face contravenes provisions of law; Section 30(2)(e) requires that a resolution plan not contravene applicable law. The plan's conditionality and insistence on eviction and statutory waivers rendered it contrary to law and unsuitable for approval, justifying the rejection of the plan by the Adjudicating Authority. [Paras 62, 63, 64]

The resolution plan was held to contravene law (Section 30(2)(e)) and was rightly rejected.

Legal competency to order eviction / limits of Adjudicating Authority's jurisdiction - resolution plan contravening law (non-compliance with statutory requirement for plans) - Whether the Adjudicating Authority has jurisdiction to order eviction of a lessee (Daaksh Jute LLP) as a part of approval of a resolution plan. - HELD THAT: - Relying upon established principle that the Adjudicating Authority is not vested with omnipotent jurisdiction to decide or direct eviction where other fora have competence, the Tribunal agreed with the Adjudicating Authority that it could not pass an eviction order in aid of a resolution plan. A plan which makes implementation contingent on the Adjudicating Authority exercising jurisdiction to evict a lessee - a relief appropriately sought before competent civil or other fora - is impermissible. Consequently, approval of a plan predicated on such eviction would be ineffective and contrary to Section 30(2)(e). [Paras 26, 27, 65]

The Adjudicating Authority does not have jurisdiction to pass an eviction order as part of approving a resolution plan; the plan conditioned on such eviction was invalid.

Preferential transactions under Section 43 of the I&B Code and remedies under Section 44 - liquidator's investigatory and supervisory jurisdiction under Section 35 - Whether actions under Section 43 (preferential transactions) can be invoked during resolution or liquidation and whether a liquidator has jurisdiction to investigate such transactions. - HELD THAT: - The Tribunal held that Section 43 can be invoked during the pendency of the resolution process or liquidation if there are genuine grievances concerning preferential or undervalued transactions. A resolution professional or a liquidator may file applications under Section 44 seeking appropriate reliefs. Section 35 confers on the liquidator powers and duties to take custody of assets and to investigate the financial affairs of the corporate debtor, including determination of preferential or undervalued transactions, subject to supervision of the Adjudicating Authority. Thus, investigation and remedial applications in respect of preferential transactions are permissible and cognizable before the Adjudicating Authority during the CIRP or liquidation. [Paras 56, 57, 66]

Section 43 remedies can be invoked during resolution or liquidation; the liquidator has jurisdiction (under Section 35 and subject to Adjudicating Authority supervision) to investigate preferential transactions and seek reliefs under Section 44.

Committee of Creditors' commercial wisdom vis-a -vis judicial scrutiny - resolution plan contravening law (non-compliance with statutory requirement for plans) - Extent to which the Adjudicating Authority may examine the CoC's commercial decision in approving a resolution plan that contains conditions contrary to law. - HELD THAT: - While the commercial wisdom of the CoC is to be respected, the Adjudicating Authority has the statutory duty to apply its mind and ensure that an approved plan complies with statutory requirements. The Tribunal affirmed that the Adjudicating Authority may refuse approval where a plan, though accepted by the CoC, is in contravention of law - here because of conditions that could not lawfully be implemented by the Adjudicating Authority and which offended Section 30(2)(e). The CoC's approval did not cure the plan's legal infirmities. [Paras 63, 64, 69]

The Adjudicating Authority may and did decline to approve a CoC approved plan that contravened statutory requirements; CoC's commercial wisdom cannot validate an unlawful plan.

Appointment and replacement of liquidator - Adjudicating Authority's supervisory powers under liquidation provisions - Whether appointment of a liquidator (replacement of the RP) and order for liquidation as a going concern were legally sustainable. - HELD THAT: - Given the rejection of the resolution plan on grounds of non-compliance with Section 30(2)(e) and the expiry of the CIRP period which precluded recommittal of other plans, the Adjudicating Authority's alternative course was liquidation. The Tribunal found that, in the circumstances and exercising supervisory powers under the Code, the Adjudicating Authority properly ordered liquidation (as a going concern) and replaced the incumbent resolution professional as liquidator, observing that appointment of a fresh liquidator was appropriate where the RP had earlier failed to advise correctly or where appointment would better serve orderly liquidation. [Paras 28, 65, 69]

The Adjudicating Authority's order directing liquidation as a going concern and replacing the resolution professional with a liquidator was upheld as lawful.

Final Conclusion: The Tribunal dismissed the appeal and upheld the Adjudicating Authority's order rejecting the conditional resolution plan as contravening Section 30(2)(e) of the I&B Code, affirmed that the Adjudicating Authority cannot order eviction as part of plan approval, confirmed that preferential transaction remedies may be invoked during CIRP or liquidation with the liquidator empowered to investigate under Section 35, and sustained the order for liquidation and appointment of a liquidator.

Existence of debt and default - absence of pre existing dispute - demand notice under section 8 of the IBC - admission of section 9 petition under the IBC - initiation of Corporate Insolvency Resolution Process - moratorium under section 14 of the IBC - appointment of Interim Resolution Professional - public announcement of CIRP - deposit for CIRP expenses

Jurisdiction of Adjudicating Authority - Bench has jurisdiction to adjudicate the petition - HELD THAT: - The Corporate Debtor is a private company incorporated in Maharashtra with registered office details reflected in the MCA Company Master Data. On that basis the Tribunal records that it has territorial jurisdiction to deal with the petition filed under section 9 of the IBC. [Paras 2]

Jurisdiction of this Bench to entertain the petition is established.

Existence of debt and default - demand notice under section 8 of the IBC - absence of pre existing dispute - Operational debt due and default established and no pre existing dispute disclosed by the Corporate Debtor - HELD THAT: - The petition and annexed documents (purchase order, invoice and cheques) demonstrate supply of goods and an outstanding principal sum with date of default recorded. A legal notice under the Negotiable Instruments Act and a Demand Notice in Form 3 under section 8 of the IBC were served, and the Operational Creditor filed the affidavit under section 9(3)(b) stating no notice of dispute was received. Despite opportunity and service of court notice the Corporate Debtor filed no reply. The Tribunal therefore finds both the existence of the debt and the default, and that no pre existing dispute has been shown to bar admission. [Paras 7, 8, 9, 12, 13]

Debt and default are established and there is no pre existing dispute preventing admission.

Admission of section 9 petition under the IBC - initiation of Corporate Insolvency Resolution Process - Petition under section 9 is admitted and CIRP is ordered to be initiated - HELD THAT: - Having found that the petition is complete, that the default exceeds the statutory minimum amount, and that no dispute bars admission, the Adjudicating Authority concludes there is no reason to deny admission. The Tribunal therefore admits the petition and orders initiation of the Corporate Insolvency Resolution Process against the Corporate Debtor. [Paras 15, 16]

Petition admitted and CIRP ordered to commence.

Moratorium under section 14 of the IBC - Moratorium under section 14 is imposed from the date of the order till completion of CIRP or further order - HELD THAT: - On admission of the section 9 petition, the Tribunal imposes the statutory moratorium with the specified prohibitions on institution or continuation of suits and on transfer or disposal of assets, subject to the exceptions recognised in the Code and regulations. The moratorium period is tied to completion of the CIRP or approval of a resolution plan or order for liquidation. [Paras 16]

Statutory moratorium under section 14 is imposed with the stated exceptions and duration.

Appointment of Interim Resolution Professional - public announcement of CIRP - deposit for CIRP expenses - IRP appointed; public announcement directed; Operational Creditor to deposit funds for CIRP expenses - HELD THAT: - The Operational Creditor proposed a registered insolvency professional who furnished the requisite Form 2 communication and registration certificate. The Tribunal appoints him as Interim Resolution Professional to perform duties under the Code, directs immediate public announcement of the CIRP as per statutory regulation, and requires the Operational Creditor to deposit a specified sum with the IRP to meet initial CIRP costs subject to CoC approval. [Paras 14, 16]

Interim Resolution Professional appointed; public announcement to be made; Operational Creditor directed to deposit funds for CIRP expenses.

Final Conclusion: The Adjudicating Authority, having found jurisdiction, existence of an operational debt and default, and absence of any pre existing dispute, admits the section 9 petition and initiates the Corporate Insolvency Resolution Process. A moratorium is imposed, an Interim Resolution Professional is appointed, public announcement is directed, and initial expenses are ordered to be deposited by the Operational Creditor.

Corporate Insolvency Resolution Process - Financial debt - default - acceptance of financial debt - payment prior to admission - application under section 7 of Insolvency and Bankruptcy Code, 2016 - dishonour of cheque and proceedings under Section 138 of the Negotiable Instruments Act, 1881

Payment prior to admission - default - Financial debt - Whether payment made by the Corporate Debtor to the Financial Creditor prior to admission of the section 7 application extinguished the alleged default. - HELD THAT: - The Tribunal examined documentary evidence including demand drafts, cheques and bank statements and found that payments totalling the claimed amounts had been made to the Financial Creditor before the Adjudicating Authority admitted the section 7 application. The court accepted the chart and supporting bank instruments as proof of payment and noted that the Financial Creditor did not deny receipt of the amounts. In view of Section 3(11) and Section 3(12) of the IBC, 'default' requires non payment of a debt that is due and payable. Having found that the debt was discharged before admission, the Tribunal concluded there was no continuing default and that the claim could not be treated as an outstanding financial debt for the purpose of initiating CIRP under section 7. [Paras 14, 15, 18]

No default existed as the Corporate Debtor had paid the claimed amounts prior to admission; the alleged financial debt stood extinguished for the purpose of the section 7 proceeding.

Corporate Insolvency Resolution Process - application under section 7 of Insolvency and Bankruptcy Code, 2016 - IRP fees and CIRP costs - Consequences of the finding of no default on the admission order and incidental costs and management. - HELD THAT: - Because the Tribunal held there was no default at the time of admission, it quashed and set aside the Adjudicating Authority's order admitting the section 7 application and directed that the Corporate Debtor be released from the rigour of the CIRP. The Interim Resolution Professional/Resolution Professional was directed to hand over management, assets and records to the Corporate Debtor's board. Further, the Tribunal held the Financial Creditor liable to pay the CIRP costs and the fees of the Interim Resolution Professional/Resolution Professional and directed the IRP/ RP to file a report before the Adjudicating Authority for recovery of those amounts from the Financial Creditor. [Paras 18, 19]

The admission order dated 03.05.2019 was quashed and set aside; the Corporate Debtor was released from CIRP, management restored to its Board, and the Financial Creditor directed to bear CIRP costs and IRP/RP fees.

Final Conclusion: The appeal is allowed; the Adjudicating Authority's order admitting the section 7 application is quashed for want of default since the debt was paid prior to admission, the Corporate Debtor is released from CIRP and management restored, and the Financial Creditor is directed to pay CIRP costs and the IRP/RP's fees.

Operational debt - default - operational creditor - admission under Section 9(5)(i) of the Code - moratorium under Section 14 of the Code - appointment of interim resolution professional - service complete and ex parte hearing - absence of a bona fide dispute

Operational debt - default - operational creditor - absence of a bona fide dispute - Existence of operational debt and occurrence of default and whether the application is complete for admission under Section 9 - HELD THAT: - The Adjudicating Authority examined the records and documentary evidence and found that the petitioner is an operational creditor and has established the existence of debt and occurrence of default. The respondent did not file any reply and no dispute was shown on record. On the material before it the Authority concluded that the application is complete and the conditions for admission under the Code are satisfied. [Paras 23, 24]

The Section 9 application is maintainable and the debt and default are established; the application is complete.

Service complete and ex parte hearing - Effect of non-appearance of the corporate debtor and service by paper publication - HELD THAT: - The record shows that the matter was notified on multiple dates and the respondent did not appear or file a reply. The Adjudicating Authority recorded that service is complete and proceeded to hear and decide the matter in the absence of the corporate debtor. [Paras 21]

Hearing and decision were validly conducted in the absence of the corporate debtor since service was complete.

Appointment of interim resolution professional - Appointment of an interim resolution professional where the operational creditor had not proposed a name - HELD THAT: - As the applicant had not proposed a name for the interim resolution professional, the Adjudicating Authority exercised its power under the Code to appoint an interim resolution professional from the IBBI panel and recorded the name and registration details of the appointee. [Paras 25]

Shri Sunil Kumar Agarwal was appointed as Interim Resolution Professional.

Moratorium under Section 14 of the Code - admission under Section 9(5)(i) of the Code - Consequences of admission of the Section 9 petition, including declaration of moratorium - HELD THAT: - On admitting the Section 9 petition the Adjudicating Authority held that it is a fit case to initiate corporate insolvency resolution process and accordingly declared the moratorium. The order specifies the prohibitions on institution or continuation of suits, transfer or disposal of assets, enforcement of security interests and recovery of property, and preserves supply of essential goods and services subject to statutory exceptions. The moratorium is to operate from receipt of authenticated copy until completion of the process or approval of a resolution plan or order of liquidation. [Paras 26, 27, 28, 29]

The petition is admitted; moratorium is declared with the stated prohibitions and exceptions for the period of the insolvency resolution process.

Final Conclusion: The Tribunal admitted the Section 9 petition filed by the operational creditor, found debt and default and absence of any dispute, validly proceeded in the corporate debtor's absence after service was complete, appointed an Interim Resolution Professional, declared the moratorium under the Code and directed communication of the order to concerned authorities.

Service of statutory demand notice - existence of dispute under Section 8(2)(a) of the Code - admission under Section 9(5)(i) of the Code - declaration of moratorium under Section 14 of the Code - appointment of Interim Resolution Professional and vesting of management under Section 17

Service of statutory demand notice - The demand notice in Form No. 3 dated 17.12.2018 was duly served on the corporate debtor. - HELD THAT: - The record shows the demand notice was sent to the registered office address as per the corporate debtor's master data and postal receipts with tracking reports demonstrating successful delivery are annexed. On this basis the Tribunal found the statutory requirement of delivery of the notice to be satisfied. [Paras 12]

Demand notice dated 17.12.2018 was duly delivered to the corporate debtor.

Existence of dispute under Section 8(2)(a) of the Code - admission in reply and ledger acknowledgement - There was no valid dispute between the operational creditor and the corporate debtor in respect of the claimed operational debt. - HELD THAT: - The corporate debtor, in its reply, admitted the liability by certifying and providing the ledger account showing the debt of Rs. 22,78,708/-. The respondent only objected to the calculation of interest, which did not constitute a bona fide dispute as contemplated by the jurisprudence requiring a plausible dispute over existence of debt. The Tribunal applied the Mobilox principle to distinguish spurious or unsupported contentions from a true dispute and held no notice of dispute under Section 8(2)(a) was placed on record. [Paras 10, 13, 16]

No notice or record of a bona fide dispute existed; liability was admitted by the corporate debtor.

Admission under Section 9(5)(i) of the Code - proof of default and completeness of application - The application under Section 9 was complete, the operational debt was unpaid, notice was delivered, no dispute existed, and the petition was therefore admissible. - HELD THAT: - The Tribunal examined the Form 5 application and supporting documents including the ledger account, agreement between parties and statutory affidavit stating no notice of dispute had been given by the corporate debtor. Finding the application complete and the conditions of Section 9(5)(i) satisfied (no payment, notice delivered, no dispute), and having regard to the admitted ledger entries and dishonoured cheques, the Tribunal concluded that debt and default were proved and the statutory threshold for admission was met. [Paras 16, 17, 18, 19]

Petition under Section 9 admitted and corporate insolvency resolution process initiated.

Declaration of moratorium under Section 14 of the Code - A moratorium under Section 14 was declared from the date of the order for the duration of the CIRP. - HELD THAT: - Upon admission of the Section 9 application, the Tribunal invoked the moratorium provisions. It set out the prohibitions on institution or continuation of suits, transfer or disposal of assets, enforcement of security and recovery of property occupied by the corporate debtor, and clarified exceptions and duration in accordance with the Code. [Paras 20, 21, 22]

Moratorium declared with effect from the date of the order until completion of CIRP or as otherwise provided by the Code.

Appointment of Interim Resolution Professional and vesting of management under Section 17 - An Interim Resolution Professional (IRP) was appointed from the IBBI panel and management powers were vested in the IRP in accordance with the Code. - HELD THAT: - As the operational creditor did not propose an IRP, the Tribunal referred to the Board's panel and selected Mr. Divyanshu Mishra from the approved list. The Tribunal verified there was no adverse record against him and appointed him with directions that his term shall be as per the Code, that management powers under Section 17 will vest in him, that he shall prepare inventory, publish public announcement, constitute the Committee of Creditors after collating claims and file periodic progress reports. [Paras 23, 24, 25, 26]

Mr. Divyanshu Mishra appointed as Interim Resolution Professional and vested with management and statutory duties under the Code.

Final Conclusion: The Tribunal admitted the Section 9 petition after finding proper service of the demand notice, absence of any bona fide dispute, and proof of default; accordingly it initiated CIRP, declared a moratorium and appointed an Interim Resolution Professional with directions for management, public announcement, constitution of the Committee of Creditors and reporting.

Corporate Insolvency Resolution Process initiation - default of operational debt - admission under section 9 of the IBC - jurisdiction to admit petition - moratorium - restriction on suits and enforcement - essential supplies exception - public announcement of CIRP - Interim Resolution Professional appointment - management vesting in IRP

Default of operational debt - admission under section 9 of the IBC - jurisdiction to admit petition - The petition under section 9 of the IBC was admissible as there was a debt due and payable, the default was established and within limitation, and this Bench had jurisdiction to entertain the petition. - HELD THAT: - The Tribunal recorded that the Operational Creditor furnished invoices, Air Waybills and a running ledger evidencing supply of freight forwarding services and an acknowledgment of liability. The date of default was recorded as 22.09.2017 and the claimed debt exceeded the statutory monetary threshold, thereby satisfying the requirements for admission under section 9. The Corporate Debtor was incorporated in Maharashtra and had its registered office within the territorial jurisdiction of this Bench, which therefore had competence to deal with the petition. In view of these facts and the absence of any defence or representation by the Corporate Debtor, the Tribunal found no reason to deny admission. [Paras 2, 3, 4, 8]

Petition admitted and initiation of CIRP ordered against the Corporate Debtor.

Moratorium - restriction on suits and enforcement - essential supplies exception - A moratorium under the IBC was ordered with specified scope and duration, restraining suits, transfer or enforcement actions against the Corporate Debtor, subject to limited exceptions. - HELD THAT: - Upon admission of the petition, the Tribunal directed the statutory moratorium to operate from the date of the order until completion of the CIRP or until approval of a resolution plan or an order for liquidation. The moratorium prohibits institution or continuation of suits or execution of decrees, transfer or disposal of assets, enforcement of security including action under the SARFAESI Act, and recovery of property occupied by the Corporate Debtor. The order also clarified that supply of essential goods or services, if continuing, shall not be interrupted, and that transactions notified by the Central Government in consultation with sectoral regulators are excluded from the operation of the moratorium. [Paras 9]

Statutory moratorium ordered with the stated scope and exceptions, effective from the date of the order until completion of CIRP or further order.

Public announcement of CIRP - Interim Resolution Professional appointment - management vesting in IRP - Procedural directions were given for public announcement, appointment of an IRP by the Adjudicating Authority, vesting of management in the IRP, and deposit to meet CIRP notice expenses. - HELD THAT: - The Tribunal directed immediate public announcement of the CIRP as per the IBC and the IBBI Regulations. As the Operational Creditor had not proposed an IRP, the Adjudicating Authority reserved the appointment of the IRP to be made by separate order; the IRP's fees and functions were to comply with applicable Regulations, Circulars and Directions. The management of the Corporate Debtor was ordered to vest with the IRP for the CIRP period and officers were directed to furnish documents and information to the IRP within one week. The Operational Creditor was directed to deposit a sum to meet public notice and claim-inviting expenses, subject to CoC approval. [Paras 9]

Directions issued for public announcement, appointment and functions of the IRP, vesting of management in the IRP, and deposit by the Operational Creditor to meet CIRP expenses.

Final Conclusion: The Tribunal admitted the section 9 petition, initiated CIRP against the Corporate Debtor, imposed the statutory moratorium with specified exceptions, directed procedural steps including public announcement and appointment of an IRP, and gave ancillary directions for management vesting and deposit to meet CIRP expenses.

Corporate Insolvency Resolution Process - Moratorium - Violation of moratorium and duty to hand over assets and records - Power and duties of Resolution Professional - Exclusion of financial service provider from "corporate person" - Contempt and proceedings under Chapter VII of the I&B Code

Violation of moratorium and duty to hand over assets and records - Power and duties of Resolution Professional - Validity of the Adjudicating Authority's interim directions (24th August 2018) directing refund/recall of funds transferred by the corporate debtor after declaration of moratorium and empowering the Resolution Professional to demand and recover such funds. - HELD THAT: - The Appellate Tribunal upheld the interim relief granted by the Adjudicating Authority which found that transfers made by the corporate debtor subsequent to the declaration of moratorium were illegal and in contravention of the provisions relating to Moratorium and the duties of the Resolution Professional. The Tribunal observed that, in absence of challenge to the admission order initiating CIRP, the Appellant could not dispute the consequences of the moratorium or the interim directions issued for safeguarding the corporate debtor's assets and ensuring continuity of the CIRP. The Tribunal therefore dismissed the appeals impugning the combined interlocutory order and left in place the directions requiring creditors (except employees and auditor) to refund amounts received and permitting the RP to issue demands and take steps for recovery so as to enable uninterrupted continuation of the CIRP. [Paras 27, 28, 29]

Appeals dismissed and the Adjudicating Authority's interim order of 24th August 2018 directing refund/recall of funds and empowering the Resolution Professional is maintained.

Exclusion of financial service provider from "corporate person" - Interpretation of whether a non-banking financial company is a "financial service provider" under the I&B Code - Whether the alleged corporate debtor is a financial service provider and thus excluded from the definition of "corporate person" under the I&B Code was not adjudicated in these appeals. - HELD THAT: - Although the Appellant contended that the corporate debtor is engaged in financial services and therefore excluded from CIRP, the Tribunal recorded that this challenge to the status of the corporate debtor was not raised by the corporate debtor at the time of admission and, in any event, the Appellant has not challenged the admission order dated 15th January 2018. Consequently, the Tribunal expressly refrained from deciding the question whether the entity falls within the exclusion for "financial service provider" and did not set aside or modify the admission. The factual and documentary disputes as to activities carried on by the corporate debtor were noted in the record, but the point was left undetermined for the reason stated. [Paras 24, 25, 26, 27]

The question of whether the corporate debtor is a "financial service provider" excluded from the definition of "corporate person" is not determined in these appeals and remains open for consideration where properly challenged.

Contempt and proceedings under Chapter VII of the I&B Code - Availability of proceedings for alleged violation of the I&B Code and moratorium by promoters/directors despite dismissal of these appeals. - HELD THAT: - The Tribunal observed that if the Appellant (promoters/directors) is liable for violation of provisions of the I&B Code, including the moratorium, the appropriate remedies remain available to the Adjudicating Authority. The Tribunal dismissed the appeals but granted liberty to the Adjudicating Authority to initiate contempt proceedings or proceed under the penal and remedial provisions of Chapter VII of the I&B Code (including sections dealing with offences and penalties) against those alleged to have violated the orders and provisions of the Code. [Paras 28, 29]

Liberty granted to the Adjudicating Authority to initiate contempt or Chapter VII proceedings against the promoters/directors for alleged violations; no interference by this Tribunal with such enforcement.

Final Conclusion: The appeals are dismissed; the Adjudicating Authority's interim directions of 24th August 2018 for refund/recall of funds and for the Resolution Professional to demand and recover amounts stand undisturbed, the question whether the corporate debtor is a "financial service provider" excluded from CIRP is not decided in these appeals, and the Adjudicating Authority is permitted to initiate contempt or Chapter VII proceedings for alleged violations.

Time-barred debt - Operational debt under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Limitation and its application to petitions under the Insolvency and Bankruptcy Code - Existence of a pre-existing dispute and maintainability under the doctrine in Mobilox Innovations - Abuse of insolvency process where intention is recovery and not corporate resolution

Time-barred debt - Limitation and its application to petitions under the Insolvency and Bankruptcy Code - Petition under Section 9 dismissed as time-barred. - HELD THAT: - The Tribunal examined the dates of supply and the dates of default recorded in the invoices (03.10.2011, 11.10.2011; defaults 02.11.2011 & 10.11.2011) and the balance-sheet material relied upon by the Operational Creditor. The Tribunal found that the balance-sheet as of 31.03.2015 did not show outstanding payable to the Operational Creditor and that limitation for filing the IBC petition, as claimed by the Operational Creditor on the basis of the balance-sheet position, expired on 31.03.2016. The petition was filed on 28.03.2018, beyond the period available, and therefore the claim was held to be time-barred and not maintainable under the Code. [Paras 12, 13]

Petition dismissed as time-barred.

Existence of a pre-existing dispute and maintainability under the doctrine in Mobilox Innovations - Abuse of insolvency process where intention is recovery and not corporate resolution - Petition was not maintainable because of pre-existing dispute and impermissible intention to pursue recovery rather than corporate resolution. - HELD THAT: - The Tribunal found material suggesting pre-existing contentious issues between the parties, including allegations of collusion, contested cheque authenticity and alternate ledgers/entries indicating payments to other parties. Relying on the principle in Mobilox Innovations that a petition under the Code is not maintainable where there exists a bona fide dispute, the Tribunal concluded that the present petition appeared to be driven by an intention for recovery and to force insolvency rather than to effect corporate resolution. Those disputed factual contentions were matters for a civil forum to adjudicate and precluded maintainability under Section 9. [Paras 12, 13]

Petition dismissed for being brought for recovery (abuse) and on account of pre-existing dispute, hence not maintainable under Section 9.

Final Conclusion: The Section 9 petition is dismissed: the claim is time-barred and, independently, the petition is not maintainable because it is motivated by recovery and there exists a pre-existing dispute between the parties; CP(IB) No.171/9/NCLT/AHM/2018 disposed of with no costs.

Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - operational debt and default - pre-existing dispute - initiation of Corporate Insolvency Resolution Process - moratorium - appointment of Interim Resolution Professional - continuation of supply of essential goods or services during moratorium

Application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - operational debt and default - The Operational Creditor fulfilled the statutory requirements for admission of the Section 9 application and the Corporate Debtor committed default. - HELD THAT: - The Tribunal examined the contract document signed on 18.03.2017 with annexed terms, delivery records for multiple consignments, invoices and the statement of account showing the closing balance. An affidavit under the statutory requirement was filed. The Corporate Debtor's conduct after receipt of the Section 8 notice and the account records supported non-payment. On the material on record, the Bench was satisfied that the Operational Creditor met the requirements of law under Section 9 and that the Corporate Debtor had defaulted in payment of the claimed operational debt. [Paras 3, 7]

Application under Section 9 was admitted and CIRP ordered as the Corporate Debtor committed default.

Pre-existing dispute - operational debt and default - The plea of a pre-existing dispute raised by the Corporate Debtor was rejected as not substantiated. - HELD THAT: - The Corporate Debtor disputed the claim on grounds of alleged non-conforming/unused material, shortfall and alleged misuse of cheques. The Tribunal noted the contract clause that allowed inspection at delivery and that thereafter no complaint would be entertained, the admitted use and continued possession of material by the Corporate Debtor, absence of documentary evidence substantiating the alleged defects or shortfall, and the Corporate Debtor's admission of lapse in failing to seek terms and conditions at signing. The Bench found the defence to be spurious and an afterthought and therefore not a bar to admission of the Section 9 application. [Paras 5, 6]

The contention of a pre-existing dispute was rejected and held insufficient to bar admission.

Appointment of Interim Resolution Professional - An Interim Resolution Professional was appointed by the Tribunal. - HELD THAT: - The Operational Creditor did not propose an IRP. The Tribunal appointed a named registered insolvency professional after satisfying itself as to the professional's eligibility and absence of disciplinary proceedings, and directed immediate taking of charge and compliance with statutory duties including public announcement and calling for claims. [Paras 10, 11]

Mr. Bharat Chaufla was appointed as Interim Resolution Professional and directed to assume charge and perform statutory functions.

Moratorium - continuation of supply of essential goods or services during moratorium - Moratorium under Section 14 was declared and its scope specified, with a non-derogation for supply of essential goods/services as provided by statute. - HELD THAT: - The Tribunal declared moratorium operative from the date of the order until completion of CIRP and prohibited institution or continuation of suits, transfer or disposal of assets, enforcement of security interest and recovery of property in possession of the Corporate Debtor. The Bench also observed that supply of essential goods or services could not be terminated or suspended during moratorium as required by the Code and applicable notifications. [Paras 8, 9]

A moratorium was declared with the statutory prohibitions and the limited exception for continuation of essential supplies preserved.

Final Conclusion: The Section 9 application was admitted; CIRP of the Corporate Debtor was initiated, moratorium declared, and an Interim Resolution Professional appointed to take charge and carry out the statutory processes.

Admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Existence of default - Financial creditor's entitlement to initiate CIRP without consent of other consortium lenders - Appointment of Interim Resolution Professional - Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - Duties and powers of the Interim Resolution Professional - Public announcement and updating of Registrar of Companies' records upon admission

Admission of application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Existence of default - The petition filed by the financial creditor under Section 7 of the Code is admitted on satisfaction that default has occurred and the application is complete. - HELD THAT: - The Tribunal evaluated the requirements of sub-section (5)(a) of Section 7 and recorded that the financial creditor has demonstrated default and submitted a complete application including the name and consent (Form 2) of the proposed resolution professional. Having found sufficient evidence of default and completeness of the application, the Tribunal concluded that the statutory threshold for admission under Section 7 is met and the petition is therefore admitted. [Paras 13, 14]

Petition admitted as the conditions for admission under Section 7 are satisfied.

Financial creditor's entitlement to initiate CIRP without consent of other consortium lenders - A financial creditor holding majority exposure in consortium financing is entitled to approach the Adjudicating Authority under Section 7 without obtaining consent of other lenders. - HELD THAT: - The Tribunal noted that where most of the exposure to the corporate debtor is by way of consortium finance, there is no bar to the applicant financial creditor initiating the insolvency resolution process on its own behalf. The observation clarifies that the applicant bank need not seek prior concurrence of other consortium members to file the Section 7 application. [Paras 12]

Applicant bank permitted to file the Section 7 petition notwithstanding consortium financing.

Appointment of Interim Resolution Professional - Mr. Mahesh Bansal is appointed as Interim Resolution Professional (IRP) upon admission of the petition. - HELD THAT: - On admission, the Tribunal appointed the proposed resolution professional whose consent and Form 2 were before it. The appointment includes specification of contact details and registration number, thereby formalising the IRP's role to take charge of the corporate insolvency resolution process from the date of admission. [Paras 15]

Mr. Mahesh Bansal appointed as Interim Resolution Professional.

Moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - A moratorium under Section 14 is declared upon admission, imposing the statutory prohibitions on suits, asset disposition, enforcement of security and recovery of property occupied by the corporate debtor. - HELD THAT: - Pursuant to admission, the Tribunal directed the IRP to make the public announcement and declared the moratorium. It expressly applied the prohibitions listed in Section 14(1)(a)-(d), restraining institution or continuation of suits, transfer or encumbrance of assets by the corporate debtor, actions to enforce security interests (including under SARFAESI Act), and recovery of property in possession of the corporate debtor. The Tribunal also clarified exceptions where transactions may be notified by the Central Government and that supplies of essential goods/services are not to be terminated as provided in the Insolvency Regulations. [Paras 16, 17]

Statutory moratorium declared with specified prohibitions and recognised exceptions.

Duties and powers of the Interim Resolution Professional - Public announcement and updating of Registrar of Companies' records upon admission - The IRP is directed to perform statutory functions, make the public announcement, preserve assets, and the Registry/ROC are directed to communicate and update records; the financial creditor must deposit funds towards IRP's immediate expenses. - HELD THAT: - The Tribunal reiterated the IRP's obligations under Sections 15, 17-21 of the Code to manage the corporate debtor's affairs, protect and preserve its assets, and to act independently and with integrity. The IRP was ordered to make the public announcement immediately. The Tribunal directed the financial creditor to deposit a specified sum towards the IRP's immediate expenses to be accounted for and later sanctioned by the committee of creditors. Finally, the registry was instructed to furnish the order to relevant parties and to ensure the Registrar of Companies updates the corporate debtor's status on its website. [Paras 16, 18, 19, 20]

IRP directed to discharge statutory duties and make public announcement; financial creditor to deposit funds; registry and ROC to communicate and update records.

Final Conclusion: The Section 7 petition by the State Bank of India is admitted on proof of default and completeness; Mr. Mahesh Bansal is appointed as Interim Resolution Professional, statutory moratorium under Section 14 is declared, the IRP is directed to make public announcement and perform statutory duties, the financial creditor is directed to deposit funds for immediate IRP expenses, and the registry/ROC are directed to communicate the order and update records.

Financial debt - default - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - limitation and acknowledgment of debt - pre-existing dispute - validity of authority of authorised signatory - appointment of interim resolution professional - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016

Limitation and acknowledgment of debt - The petition is not barred by limitation in view of acknowledgements of debt by the corporate debtor. - HELD THAT: - The record contains balance confirmation letters issued by the corporate debtor on various dates between 02.04.2013 and 31.03.2017, stamped and signed by the corporate debtor, which constitute admissions of liability. On that basis the Adjudicating Authority held that the application filed on 01.04.2019 is not time-barred and the limitation objection raised by the respondent is rejected. [Paras 9, 15]

Limitation objection overruled; petition not barred by limitation.

Financial debt - default - There exists a financial debt owing to the financial creditor and the corporate debtor has committed default. - HELD THAT: - The financial creditor produced sanction letters, loan agreements, demand promissory note, hypothecation and related documents together with statements of account and other records. Those documents, along with balance confirmations and notices issued by the bank, were held sufficient to establish that a financial debt exists and that the corporate debtor defaulted in repayment. The Authority applied the settled principle that at the admission stage it need only be satisfied from records that a default has occurred. [Paras 6, 10, 14, 16, 17]

Debt established and default found; the requirements for a Section 7 application are satisfied.

Pre-existing dispute - The plea of a pre-existing dispute and denial of having availed the loan is rejected as not supported by cogent evidence. - HELD THAT: - The respondent's contentions that there was a pre-existing dispute and denial of availing credit were considered. In view of the substantial documentary evidence produced by the financial creditor-bearing the corporate debtor's stamp and signature-and the absence of cogent contrary evidence, the objections were treated as vague or unsustainable and were not accepted. [Paras 10, 13]

Pre-existing dispute and denial of loan are rejected; objections not sufficient to defeat admission.

Validity of authority of authorised signatory - appointment of interim resolution professional - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - moratorium under Section 14 of the Insolvency and Bankruptcy Code, 2016 - The application is complete and admitted under Section 7; the authorised signatory's authority is valid; an interim resolution professional is appointed and moratorium is declared. - HELD THAT: - The Authority found the letter of authority dated 04.08.2018 authorising the Chief Manager's signatory to be proper and valid. The application in Form 1 was complete and the prescribed fee paid. Having been satisfied that a debt exists and default has occurred, the Adjudicating Authority admitted the petition under Section 7, appointed the proposed interim resolution professional (Form 2 placed on record and no disciplinary proceedings pending), and declared the moratorium in terms of Section 14, restraining institution or continuation of suits, disposition of assets, enforcement of security, and related actions for the moratorium period. [Paras 18, 19, 21, 22, 23]

Petition admitted under Section 7; IRP appointed; moratorium declared; petition disposed of.

Final Conclusion: The Adjudicating Authority admitted the Section 7 petition filed by the financial creditor, having found a valid authority for filing, established financial debt and default, rejected limitation and dispute objections, appointed the interim resolution professional, declared moratorium under Section 14, and disposed of the petition with no order as to costs.

Grant of bail under Section 439 Cr.P.C. - medical grounds for bail - proviso clause of Section 45 of the Prevention of Money Laundering Act, 2002 - monetary threshold notification under the PMLA - parity in grant of bail - role of a debenture trustee in money laundering allegations - framing of charge and expeditious trial under Section 309 Cr.P.C. - judicial direction to provide medical treatment to an accused in custody

Grant of bail under Section 439 Cr.P.C. - medical grounds for bail - parity in grant of bail - role of a debenture trustee in money laundering allegations - proviso clause of Section 45 of the Prevention of Money Laundering Act, 2002 - monetary threshold notification under the PMLA - Whether the petitioner should be enlarged on bail having regard to his medical condition, parity with co accused on bail and the nature of allegations against him under the PMLA. - HELD THAT: - The Court examined the petitioner's long custody, his medical history and the submissions regarding parity with other accused who have been released. The Court noted that the petitioner is arraigned as a Debenture Trustee and that the charge sheet alleges his active role in designing schemes to mobilise deposits and laundering large sums, facts which prima facie sustain serious allegations. The Court observed that the petitioner's medical records pre dated the earlier refusal of bail and that the Enforcement Directorate has offered to meet medical expenses and facilitate specialised treatment through the Superintendent of the Presidency Correctional Home. The Court further took into account the subsistence of the notification and amendments affecting the monetary threshold under the PMLA. Having balanced the gravity of the allegations, the stage of proceedings and the availability of medical arrangements while in custody, the Court found no sufficient ground to enlarge the petitioner on bail on medical or parity grounds.

Application for bail under Section 439 Cr.P.C. is rejected.

Framing of charge and expeditious trial under Section 309 Cr.P.C. - Directions as to the conduct of trial and framing of charges in the underlying M.L. Case. - HELD THAT: - The Court recorded the trial Court's report detailing procedural steps taken and applications filed by various accused which have delayed framing of charges. The Court emphasised that framing of charge can be based on the final report/charge sheet and that interlocutory applications should be disposed of so that trial can proceed. The Court directed the trial Court to frame charge on the fixed date and to undertake trial adhering to the mandate of Section 309 Cr.P.C., without granting unnecessary adjournments to the parties, and to endeavour to dispose of the case expeditiously. The Enforcement Directorate was directed to produce its witnesses in accordance with the schedule the trial Court frames.

Trial Court directed to frame charge on the date fixed and conduct trial expeditiously under Section 309 Cr.P.C.; Enforcement Directorate directed to produce witnesses as per the trial Court's schedule.

Judicial direction to provide medical treatment to an accused in custody - Provision of medical treatment to the petitioner while in custody. - HELD THAT: - While refusing bail, the Court accepted the Enforcement Directorate's undertaking to meet the cost of necessary specialised medical treatment and noted that the Presidency Correctional Home can arrange urgent treatment through super speciality hospitals in West Bengal in accordance with jail rules. The Court directed the Superintendent of the Presidency Correctional Home to ensure that the petitioner is rendered necessary medical treatment in emergencies at the cost of the Enforcement Directorate.

Presidency Correctional Home directed to ensure the accused receives required medical treatment from a super speciality hospital at the cost of the Enforcement Directorate.

Final Conclusion: Bail application dismissed; trial Court directed to frame charge and proceed expeditiously under Section 309 Cr.P.C.; Enforcement Directorate directed to produce witnesses per schedule; Presidency Correctional Home directed to facilitate and ensure urgent specialised medical treatment for the petitioner at the cost of the Enforcement Directorate.

Bail under Section 439 Cr.P.C. - release of undertrial under Section 436A Cr.P.C. - proviso to Section 436A - power to continue detention after hearing Public Prosecutor for reasons recorded - offence of money laundering under Section 3 read with Section 4 of PMLA - predicate or scheduled offence and proceeds of crime - delay in trial and effect of dilatory tactics by accused - direction to trial court to frame charge and conclude trial expeditiously under Section 309 Cr.P.C.

Release of undertrial under Section 436A Cr.P.C. - proviso to Section 436A - power to continue detention after hearing Public Prosecutor for reasons recorded - Whether the petitioner, having undergone detention exceeding one half of the maximum sentence for the offence alleged, is entitled to release under Section 436A Cr.P.C. - HELD THAT: - The Court examined Section 436A Cr.P.C., including its proviso which permits continued detention after hearing the Public Prosecutor and for reasons to be recorded in writing, and noted that the proviso and the ''provided further'' clause place an outer limit on detention equal to the maximum sentence for the offence. Applying these provisions to the facts, the Court held that mere completion of one half of the maximum punishment is not an automatic entitlement to release where the Court, after hearing the prosecution and for recorded reasons, finds continued detention justified. The Court emphasised the gravity of the alleged economic offences under PMLA and the social ramifications, and concluded that the trial Judge did not err in refusing release under Section 436A given the considerations recorded by him and the statutory proviso permitting continued detention in appropriate cases.

Prayer for release under Section 436A Cr.P.C. refused on merits having regard to the proviso to Section 436A and the seriousness of the offences alleged.

Delay in trial and effect of dilatory tactics by accused - offence of money laundering under Section 3 read with Section 4 of PMLA - Whether the delay in framing of charge and in proceeding with trial was attributable to the petitioner or other accused persons and whether such delay disentitles the petitioner to relief. - HELD THAT: - The Court considered the prosecution's affidavit and the record of numerous interlocutory applications, bail petitions, discharge petitions and other filings by the accused which had repeatedly occupied the trial calendar. On the material before it, the Court found that various accused, including the petitioner, had engaged in dilatory tactics that impeded proceedings. In that factual backdrop, the Court accepted the trial Judge's conclusion that delay caused by accused persons justified continued custody and was a valid ground to refuse bail under the proviso to Section 436A. The Court reiterated that if delay is occasioned intentionally by any accused, the benefit of Section 436A would not follow.

Delay in trial was, on the record, substantially caused by applications and tactics of the accused; such delay justified continued detention and disentitled the petitioner to immediate release.

Direction to trial court to frame charge and conclude trial expeditiously under Section 309 Cr.P.C. - liberty to renew bail if prosecution fails to produce witnesses - What directions, if any, should be given to ensure expeditious disposal of the trial and what remedy is available to the petitioner if the prosecution itself causes delay in concluding the trial? - HELD THAT: - Although refusing bail, the Court directed the trial Court to frame charge on the date fixed and to endeavour to conclude the trial as per Section 309 Cr.P.C. without granting unnecessary adjournments. The Enforcement Directorate was directed to produce its witnesses as per the time schedule framed by the trial Court. The Court provided that if the prosecution fails to produce witnesses causing delay in conclusion of the trial, the petitioner would have liberty to renew his application for release under Section 436A Cr.P.C. The Court made clear that this liberty would not be available where delays are occasioned intentionally by any of the accused persons.

Trial Court directed to frame charge and proceed expeditiously; petitioner granted liberty to renew bail if prosecution's failure to produce witnesses causes delay.

Final Conclusion: The petition for bail is dismissed. The High Court upheld the trial Judge's refusal to release the petitioner under Section 436A Cr.P.C. after finding the seriousness of the alleged PMLA offences and that delay was in substantial part caused by the accused; however, the trial Court was directed to frame charge without further delay and conclude the trial expeditiously under Section 309 Cr.P.C., and the petitioner was given liberty to renew his bail application if the prosecution's failure to produce witnesses causes further delay.

Summary order. Writ petition disposed with a direction to the Commissioner of CGST, Central Excise & Service Tax, Ranchi to decide the petitioner's representation dated 22.7.2019 by a speaking order within four weeks from receipt.

Reverse charge mechanism on goods transport agency services - admissibility of Cenvat Credit for general insurance and repair and maintenance services post amendment to Rule 2(l) of the Cenvat Credit Rules, 2004 - penalty and interest on inadmissible Cenvat Credit - lessee's entitlement to input service credit for fleet management services - voluntary payment does not validate tax liability under Article 265 of the Constitution

Reverse charge mechanism on goods transport agency services - voluntary payment does not validate tax liability under Article 265 of the Constitution - Liability of the appellant to discharge service tax under reverse charge for goods transport agency (GTA) services in respect of consignments sent on to-pay basis. - HELD THAT: - The Tribunal found that the adjudicating authority's confirmation of service-tax liability under reverse charge was unsustainable. Acceptance by the assessee of the audit report and subsequent payment cannot, by itself, render a tax liability legally tenable in the absence of a proper legal foundation. Where goods are dispatched on to-pay basis and transportation is optional for the buyer, the purchaser (receiver) of the goods is the recipient of GTA services and not the seller; therefore no liability arises on the appellant to pay service tax under the reverse charge mechanism in such cases. The authority relied upon by the department, which applies where transportation is mandatorily effected by the seller, did not apply to the facts here. [Paras 6]

Demand of service tax under reverse charge on GTA services as confirmed by the lower authorities was set aside.

Admissibility of Cenvat Credit for general insurance and repair and maintenance services post amendment to Rule 2(l) of the Cenvat Credit Rules, 2004 - lessee's entitlement to input service credit for fleet management services - penalty and interest on inadmissible Cenvat Credit - Validity of denial of Cenvat Credit taken on general insurance and repair & maintenance in respect of leased vehicles and the imposition/appropriation of interest and penalty thereon. - HELD THAT: - The Tribunal examined the scope of the amended exclusion in Rule 2(l) and the nature of services actually availed. The appellant produced the fleet-management agreement demonstrating that it was a lessee and that the services availed comprised comprehensive fleet management (acquisition, insurance, registration, lease rental and management), not merely repair and maintenance. The Tribunal held that credits taken or utilised before the amendment and utilisation after amendment do not automatically attract interest and penalty, absent a finding that credits were inadmissible. Applying the Tribunal's earlier decision (Nagpur Nagrik Sahakari Bank Ltd.), the demand, interest and penalty on the credits were found unsustainable on the facts and record produced by the appellant. Consequently no penalty could be sustained on these counts. [Paras 7]

Denial of Cenvat Credit and the consequent interest and penalty as confirmed by the lower authorities were set aside.

Final Conclusion: The appeal is allowed; Order-in-Appeal No. SM/CGST & CX/Bhiwandi/APP-56/17-18 dated 3-4-2018 is set aside, with consequential relief to the appellant.

Business Auxiliary Service - show cause notice specificity requirement - consideration for taxable service - reimbursement/subsidy not taxable absent nexus with service

Show cause notice specificity requirement - Business Auxiliary Service - Whether the show cause notice and adjudication validly invoked service tax by identifying the particular clause of Business Auxiliary Service under which the subsidy was taxable. - HELD THAT: - The Tribunal held that the show cause notice reproduced the seven clauses of the definition of Business Auxiliary Service but did not indicate which specific sub clause was attracted. Prior Tribunal decisions require that a notice proposing demand under BAS must identify the precise sub clause so that the noticee is aware of the exact liability. The Court applied that principle and concluded that, on this ground alone, the impugned order could be set aside because the noticee was not informed which particular BAS activity was alleged to have been performed. [Paras 24, 25, 26, 29]

The demand is unsustainable because the show cause notice failed to specify which sub clause of Business Auxiliary Service was alleged to have been provided by the appellant; the impugned order is set aside on this ground.

Consideration for taxable service - reimbursement/subsidy not taxable absent nexus with service - Whether the subsidy/reimbursement paid by Tata Tele Services to the appellant on sale of handsets was a consideration for a taxable service under section 67(1) and thus chargeable to service tax as BAS. - HELD THAT: - On the merits the Court found that the distributorship agreement entitled the appellant to a fixed commission for marketing telecom services and did not provide for payment of subsidies for selling handsets at a loss. The subsidy was paid to compensate the appellant for a lower handset sale price and had no nexus with promotion or marketing services rendered to Tata Tele Services. Relying on the principle that valuation requires a nexus between amount charged and the taxable service, and on precedents distinguishing compensatory reimbursements from consideration for services, the Court concluded the subsidy was merely a compensation/pass through and not consideration for any BAS. Consequently service tax could not be levied on that amount. [Paras 34, 35, 36, 37, 38]

The subsidy/reimbursement is not a consideration for a taxable service under Business Auxiliary Service and therefore is not chargeable to service tax; the demand cannot be sustained on merits.

Final Conclusion: The impugned order confirming service tax and penalty on the subsidy is set aside and the appeal is allowed: the show cause notice did not specify the precise BAS sub clause relied upon and, on merits, the subsidy was a compensatory reimbursement lacking nexus with any taxable service and thus not exigible to service tax.

CENVAT Credit on Group Medical Insurance Policy for employees and their dependants - input service nexus with manufacture or clearance of final products - ineligible input service - distribution of credit through ISD (Input Service Distributor)

CENVAT Credit on Group Medical Insurance Policy for employees and their dependants - input service nexus with manufacture or clearance of final products - Admissibility of CENVAT credit on group medical insurance policy covering employees and their dependants - HELD THAT: - The Tribunal considered the question of whether CENVAT credit availed on group medical insurance for employees and their dependants was admissible. Reliance was placed on the decision of the High Court of Judicature at Madras in M/s. Ganesan Builders Ltd., which has been followed by this Bench in a prior Tribunal decision. Applying those authorities, the Tribunal held that denial of CENVAT credit on group medical insurance covering dependants of employees is not sustainable. The adjudicating authority's confirmation of demand in respect of this service was therefore set aside. No other substantive arguments were advanced by the appellant in support of additional credits, and the appeal was allowed on this ground.

Impugned order confirming demand in respect of CENVAT credit on group medical insurance for employees and their dependants set aside; appeal allowed on this ground.

Final Conclusion: Appeal allowed insofar as denial of CENVAT credit on group medical insurance for employees and their dependants is concerned; impugned order set aside in respect of that demand.

Cenvat credit denial for procedural/clerical discrepancies - Receipt and use of inputs as condition for Cenvat credit - Remand for verification of documentary co-relation - Time-bar of credit claims - Penalty under Rule 26(2)(ii) of the Central Excise Rules, 2002

Cenvat credit denial for procedural/clerical discrepancies - Receipt and use of inputs as condition for Cenvat credit - Cenvat credit cannot be denied solely on account of procedural or clerical discrepancies where receipt of goods under the Bill of Entry and use of inputs in manufacture is established. - HELD THAT: - The appellant provided a detailed chart and supporting documents co-relating each Bill of Entry with transport and warehouse documents. The Tribunal found that these co-relations established receipt of the inputs at the factory and their use in manufacture. The adjudicating authority had not verified the co-relation submitted by the appellant and therefore disallowed credit only for procedural lapses without establishing non-receipt or non-use. In such circumstances mere discrepancies in numbers, weights or invoice particulars do not justify denial of Cenvat credit where the substantive fact of receipt and use is neither alleged nor proved by the revenue. The Tribunal, while accepting the appellant's explanation, directed reconsideration by the adjudicating authority to verify the documentary co-relation. [Paras 6]

Appeal allowed in part; Cenvat credit should not have been disallowed solely for procedural/clerical lapses and the matter is remanded to the adjudicating authority for verification of the documentary co-relation.

Remand for verification of documentary co-relation - Time-bar of credit claims - Adjudicating authority to reconsider disallowance after verification of co-related documents; question of time-bar left open for fresh consideration. - HELD THAT: - Although the Tribunal accepted that the appellant had furnished explanations and supporting documents demonstrating receipt and use, it noted that the adjudicating authority had not verified those co-relations. Consequently, the Tribunal remanded the matter for fresh consideration limited to verification of the documents and co-relations submitted. The Tribunal expressly kept open the separate question of whether the availment of credit was time-barred, directing the adjudicating authority to consider that issue on reassessment. [Paras 6, 7]

Matter remanded to the adjudicating authority for verification of the documentary co-relation; time-bar issue to be considered afresh by the authority.

Penalty under Rule 26(2)(ii) of the Central Excise Rules, 2002 - Penalty imposed on the employee (authorized signatory) was set aside. - HELD THAT: - The record showed that the alleged wrongful availment of credit occurred in 2008-09 while the employee penalized joined the company in 2011. The Tribunal found no basis to attribute the earlier act to the employee or to infer mala fide intent; the disallowance arose from documentary discrepancies rather than deliberate evasion. On these findings, the Tribunal concluded that imposition of penalty under Rule 26(2) on the employee was not justified. [Paras 6, 7]

Appeal by the employee allowed; penalty under Rule 26(2)(ii) set aside.

Final Conclusion: The appeal by the manufacturer is allowed by way of remand to the adjudicating authority to verify the documentary co-relations and reconsider disallowance and the time-bar question; the appeal by the employee is allowed and the penalty imposed under Rule 26(2)(ii) is set aside.

Admissibility of statements recorded during search under Section 14 - Mandatory compliance of Section 9D before admitting investigation statements - Admissibility of private/computer-generated documents recovered during search - Requirement of verification under Section 36B for computer records - Burden of proof on Revenue to establish clandestine manufacture and removal - Payment during investigation treated as deposit under protest not admission

Admissibility of statements recorded during search under Section 14 - Mandatory compliance of Section 9D before admitting investigation statements - Statements recorded under Section 14 during search cannot be admitted as evidence unless the adjudicating authority complies with the procedure in Section 9D. - HELD THAT: - The Tribunal applied the ratio of Hi Tech Abrasives Ltd. (Chhattisgarh High Court) holding that Section 9D is mandatory. In the present matter the statements of the V.P. (Commercial) recorded on 20.08.2013 and 20.09.2013 were relied upon by the authorities below despite no compliance with Section 9D; consequently those statements could not be treated as admissible evidence. The Tribunal held that mere recording of a statement during investigation is insufficient and the adjudicating authority must examine the person and form the statutory opinion before admitting such statements in evidence. [Paras 6, 7]

Statements recorded under Section 14 are to be eschewed from evidence in the absence of compliance with Section 9D; the authorities' reliance on such statements is impermissible.

Admissibility of private/computer-generated documents recovered during search - Requirement of verification under Section 36B for computer records - Private handwritten records and unverified computer printouts recovered during search cannot be admitted as conclusive evidence of clandestine manufacture and removal without statutory/forensic verification and corroborative material. - HELD THAT: - The Tribunal found no indication that the appellant maintained computerized records or that other computer records were traced and verified; there was no compliance with the verification requirements (as articulated in Anwar P.V. and related authorities). Relying solely on unverified private documents and computer printouts is inadequate. The Tribunal emphasised that such records require corroboration by independent, investigatory material (for example, stock/raw material records, power consumption, dispatch/transport evidence, realization of sale proceeds) to sustain a finding of clandestine removal. [Paras 6, 8]

Private and computer-generated records seized during search, absent verification and corroboration, do not constitute legally admissible evidence to confirm clandestine manufacture or removal.

Burden of proof on Revenue to establish clandestine manufacture and removal - The Revenue must discharge a heavy burden by producing clinching and corroborative evidence to establish clandestine manufacture and removal; failure to investigate key facets defeats the demand. - HELD THAT: - Relying on authorities (including Continental Cement and others), the Tribunal reiterated that allegations of clandestine sale require detailed investigation into excess production, purchase of raw materials, dispatch particulars, realization of sale proceeds, consumption of power and related material. In the present case the department did not conduct such investigations and hence failed to discharge the burden of proof. [Paras 8, 10]

In absence of clinching corroborative evidence and requisite investigations, the demand for duty based on clandestine manufacture/removal cannot be sustained.

Payment during investigation treated as deposit under protest not admission - Deposits/payments made by the assessee during investigation cannot be treated as admission of guilt; such payments are to be regarded as deposits under protest. - HELD THAT: - The Tribunal followed precedents holding that payment of money at the time of investigation does not amount to acceptance of the department's allegations and is to be treated as a deposit under protest. Reliance on such payment as an admission is legally unwarranted. [Paras 9]

Payments made during investigation do not constitute admission and cannot be relied upon as proof of clandestine removal.

Final Conclusion: The Tribunal set aside the adjudication and appellate orders confirming duty, interest and penalty because the authorities relied on statements and private/computer records without compliance with statutory safeguards (Section 9D and verification principles) and without requisite corroborative investigation; the appeal is allowed with consequential relief as per law.

Admissibility of cenvat credit on inputs used in production - cenvat credit on railway track materials and wagons used as material handling system - integral and inseparable part of the manufacturing process - incidental use does not defeat eligibility for input credit - application of the test laid down in M/s. J.K. Cotton Spinning & Weaving Mills Co. Ltd. and followed in Jayaswal Neco Ltd.

Cenvat credit on railway track materials and wagons used as material handling system - integral and inseparable part of the manufacturing process - incidental use does not defeat eligibility for input credit - Cenvat credit claimed on wagons and railway track materials used within the factory premises for transportation/handling of raw materials, processed material and finished goods is admissible. - HELD THAT: - The Tribunal applied the test affirmed by the Hon'ble Supreme Court in Jayaswal Neco Ltd., observing that where railway tracks and associated equipment are installed within the plant as a handling system for transporting hot metal, raw materials and finished products, such infrastructure is related to and forms part of the production process. The fact that the railway tracks may be used incidentally for other innocuous purposes does not strip them of their character as an integral and inseparable part of manufacturing. The lower authority's refusal, based on incidental or additional uses, was therefore contrary to the legal principle that inputs forming part of the material-handling system integral to production qualify for cenvat credit. The Tribunal accordingly followed the precedents cited and allowed the claim.

Appeal allowed; cenvat credit on wagons and railway track materials used within the plant for material handling granted.

Final Conclusion: The appeal was allowed by applying the Supreme Court's test that railway tracks and wagons installed within the plant as a material-handling system form an integral part of the manufacturing process, and incidental additional uses do not defeat entitlement to cenvat credit.

Transportation without valid road permit - penalty for evasion of tax - generation of road permit after apprehension - absence of mens rea / intention to evade tax

Transportation without valid road permit - penalty for evasion of tax - absence of mens rea / intention to evade tax - generation of road permit after apprehension - Whether the penalty imposed for transporting goods without a valid road permit is sustainable despite the petitioner's plea of an unforeseen fire and absence of intention to evade tax. - HELD THAT: - The Tribunal and this Court found that the consignment was transported on 10.12.2012 under a road permit which had expired on 09.10.2012 and that the sale transaction between the petitioner and the selling dealer occurred on 03.12.2012, well after the earlier fire incident. The petitioner's contention that the permit expired because of an unforeseen fire at the seller's premises was examined and rejected on the basis that the fire occurred on 05.09.2012 but the transaction took place about three months later, so the permit was already expired at the relevant time. The Court noted that generation or production of a permit after apprehension does not negate the fact that the goods were being carried without a valid permit at the time of transportation. Having considered the record and the Tribunal's reasoning, the Court found no illegality in the Tribunal's dismissal of the revision against the penalty orders imposed by the Revenue Authorities. [Paras 8, 9]

Petitioner's plea rejected; penalty for transporting goods without a valid road permit upheld and writ dismissed.

Final Conclusion: The Tribunal's judgment affirming the penalty imposed for transportation of goods without a valid road permit is upheld; the writ petition is dismissed.

Deletion of goods from CST registration - penalty under Section 10-A of the Central Sales Tax Act - appellate adjudication of co terminous issues - stay of operation pending disposal of appeal - writ jurisdiction and inadmissibility of resolving disputed questions of fact

Appellate adjudication of co terminous issues - deletion of goods from CST registration - The question of deletion of 'High Speed Diesel' from the petitioners' CST registration is to be considered and adjudicated by the Appellate Authority along with the appeals against the penalty. - HELD THAT: - The Court observed that the petitioners have appeals pending before the Appellate Authority against the penalty imposed under Section 10 A and that the challenge to deletion of 'High Speed Diesel' was not pursued in those appeals but is the subject of the present writ petitions. In the exercise of supervisory jurisdiction the High Court refrained from deciding the merits of deletion and directed that the Appellate Authority shall consider the question of deletion on its merits while adjudicating the pending appeals, permitting both parties to place all necessary facts and submissions before that forum. The matter was remitted for adjudication to enable a full factual and legal determination by the competent appellate forum rather than by the writ court. [Paras 7, 8]

Remitted to the Appellate Authority to decide the deletion issue on merits while disposing of the pending appeals.

Stay of operation pending disposal of appeal - The interim protection granted by the High Court (stay of deletion) shall continue until final disposal of the appeals. - HELD THAT: - The Court recorded that an ad interim stay against deletion of 'High Speed Diesel' from CST registration was earlier granted on 10 August 2016. Having directed remand of the deletion issue to the Appellate Authority, the High Court ordered that the protection previously granted will remain in force until the appeals are finally disposed of, and directed the Appellate Authority to decide the appeals expeditiously. [Paras 6, 9]

Continuation of the interim stay until final disposal of the appeals and direction for expeditious adjudication by the Appellate Authority.

Writ jurisdiction and inadmissibility of resolving disputed questions of fact - The writ court will not adjudicate disputed questions of fact (such as whether notice for deletion was served); such factual disputes are for the appropriate authority to decide. - HELD THAT: - The State's counter affidavit asserted that notices for deletion were given; petitioners disputed service but did not make the specific factual denial in rejoinder. The High Court held that challenges to service and related factual disputes are contentious matters of fact which should be resolved by the appropriate statutory authority (i.e., the Appellate Authority) in the appeals, and are not suitable for resolution in writ proceedings at this stage. [Paras 5]

Disputed factual questions regarding notice and service are unsuitable for determination in the writ petitions and are to be considered by the Appellate Authority.

Final Conclusion: Writ petitions disposed by directing the Appellate Authority to consider and adjudicate the deletion of 'High Speed Diesel' from CST registration along with the pending appeals against the penalty; the interim stay granted earlier shall continue until final disposal and the Appellate Authority is directed to decide the matters expeditiously.

Deduction under section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948 - prescribed declaration in Form ST-XXII and proof at assessment under Rule 26 - content and scope of registration certificate (Form S.T.IV) as to goods for use in manufacture - distinction between registration for resale/trading and registration for manufacture-only

Deduction under section 5(2)(a)(ii) of the Punjab General Sales Tax Act, 1948 - prescribed declaration in Form ST-XXII and proof at assessment under Rule 26 - content and scope of registration certificate (Form S.T.IV) as to goods for use in manufacture - distinction between registration for resale/trading and registration for manufacture-only - Whether the petitioner was entitled to deduction under section 5(2)(a)(ii) where purchasing dealers' registration certificates did not specify the goods and many declaration forms did not indicate the purpose of purchase. - HELD THAT: - Section 5(2)(a)(ii) permits deduction from gross turnover for sales to a registered dealer of goods intended for resale or of goods specified in the purchaser's registration certificate for use in manufacture. Rule 26 prescribes obtaining and producing a prescribed declaration (Form ST-XXII) and proving the claim at assessment. Form S.T.IV (registration certificate) by its Clause 4 records goods which a dealer may purchase for use in manufacture; it does not furnish an exhaustive list of goods intended for resale. Where the purchaser is a dealer registered for resale/trading, the statutory scheme contemplates deduction for sales to such registered dealers even if the specific goods are not enumerated in the registration certificate. Consequently, non-specification of goods in the registration certificate is not a ground to disallow deduction in cases where the purchasing dealer is registered for resale/trading and declarations are otherwise in place. By contrast, if the dealer is registered only for manufacture (not for trading/resale), then purchases are confined to goods specified in the registration certificate; in that scenario, absence of the appropriate purpose or specification would preclude the deduction. The requirement of producing the declaration under Rule 26 remains, but the absence of goods' specification in Form S.T.IV does not automatically defeat a resale deduction when the purchaser is a trading dealer.

Deduction under section 5(2)(a)(ii) cannot be disallowed solely because the goods are not specified in the purchasing dealer's registration certificate where the purchasing dealer is registered for resale/trading; however, if the dealer is registered only for manufacture, only goods specified in the certificate qualify for purchase and deduction.

Final Conclusion: The reference is answered in favour of the petitioner: sales to registered dealers who are registered for resale/trading qualify for deduction under section 5(2)(a)(ii) despite non specification of goods in the registration certificate; the position differs where the dealer is registered only for manufacture.

Deemed assessment - Section 11 E deemed assessment power - scope of Rule 1(2) - cases pending for assessment upto year 1994 95 - notification dated 9.7.1999 and Rule 33 B procedure - appellate proceedings as continuation of original proceedings

Deemed assessment - Section 11 E deemed assessment power - notification dated 9.7.1999 and Rule 33 B procedure - Whether the petitioner was entitled to be deemed assessed under the notification dated 9.7.1999 (Section 11 E read with Rule 33 B) despite an earlier assessment order having been passed. - HELD THAT: - Section 11 E enables the State to notify that assessment for any class of dealers for prescribed periods shall be deemed to have been made as per returns, subject to prescribed conditions. The impugned notification of 9.7.1999 inserted Rule 33 B and, by Rule 1(2) of the amendment, was made applicable to cases pending for assessment up to year 1994 95, including those in which assessment proceedings had been initiated. A plain reading of Rule 1(2) excludes cases where an assessment has already been finalised. In the petitioner's case the assessment order was passed in 1996, prior to the notification; therefore the matter did not fall within the class of cases to which the deemed assessment provision applied. Merely that an appeal was pending did not bring the case within Rule 1(2) or the notification's scope.

The petitioner is not entitled to deemed assessment under the notification dated 9.7.1999 and Rule 33 B where the assessment had been finalised prior to the notification.

Appellate proceedings as continuation of original proceedings - scope of Rule 1(2) - cases pending for assessment upto year 1994 95 - Whether the pendency of appeal converts the assessment into a case 'pending for assessment' so as to attract the notification dated 9.7.1999. - HELD THAT: - The petitioner relied on the principle that an appeal is in continuance of the original proceedings (as in Ghanshyamdas), but that principle was applied by the Supreme Court in the context of construction of 'escaped assessment' and continuity of assessment proceedings until final assessment order is made. The determinative question is whether the factual situation falls within the phrase 'pending for assessment' as used in Rule 1(2). Where an assessment order has been passed (as here in 1996), the assessment proceedings had culminated and thus the case does not remain within 'pending for assessment' despite an appeal being pending. Therefore pendency of appeal did not make the petitioner eligible under the notification.

Pendency of appeal did not convert a finalized assessment into a case 'pending for assessment' within the meaning of the notification and Rule 1(2).

Final Conclusion: Both reference questions are answered against the petitioner: the notification dated 9.7.1999 (Rule 33 B under Section 11 E) does not apply to assessments finalised prior to the notification, and the pendency of an appeal does not render such finalized assessments 'pending for assessment' under Rule 1(2).

Applicability of exemption under Rule 28A despite insertion of Rule 28B - proviso extending Rule 28A benefits subject to fulfillment of prescribed conditions - effective steps requirement (land purchase, building plans/civil works, machinery booking) - negative list under Rule 28B - verification by departmental report

Applicability of exemption under Rule 28A despite insertion of Rule 28B - proviso extending Rule 28A benefits subject to fulfillment of prescribed conditions - negative list under Rule 28B - Exemption under Rule 28A was rightly allowed notwithstanding the subsequent insertion of Rule 28B, where the proviso to Rule 28B extended Rule 28A benefits upon fulfillment of prescribed conditions. - HELD THAT: - The Court held that mere insertion of Rule 28B (made effective from 1.8.1997) did not automatically attract Rule 28B to an application if the proviso to Rule 28B preserved applicability of Rule 28A for units which had taken the specified effective steps. If any one of the three conditions in the proviso were not met, the application would fall to be considered under Rule 28B and the negative list would become relevant. However, where the three conditions were satisfied, the proviso operated to permit assessment of the claim under Rule 28A. Accordingly the Appellate Authority did not err in considering the exemption under Rule 28A and allowing the appeal.

Allowance of exemption under Rule 28A sustained; Rule 28B's negative list not applicable where proviso conditions are fulfilled.

Effective steps requirement (land purchase, building plans/civil works, machinery booking) - verification by departmental report - The required effective steps for benefit under the proviso to Rule 28B were held to have been fulfilled, in particular the land purchase condition. - HELD THAT: - On the material before the authorities, including the concession by the departmental representative before the Appellate Authority and the DETC report stating the land was purchased (noted in the record), the Court found no basis to hold that the unit had not satisfied the proviso conditions. The Appellate Authority's finding that the land was purchased, building plans approved and requisite payments for civil works made, was unchallenged by departmental evidence and therefore liable to be upheld.

Findings that the three proviso conditions were fulfilled are upheld; entitlement to benefit under Rule 28A affirmed.

Final Conclusion: Writ petition dismissed; impugned orders allowing exemption under Rule 28A and rejecting the department's review are sustained as the proviso to Rule 28B applied on the facts and the required effective steps were established.

Deemed sale in works contract - application of Article 286 restrictions to deemed sales - residuary rate vs. specific scheduled rates - loss of identity of goods does not prevent them from being goods - State power to prescribe uniform rate for goods in works contracts

Deemed sale in works contract - residuary rate vs. specific scheduled rates - loss of identity of goods does not prevent them from being goods - application of Article 286 restrictions to deemed sales - Whether 'hot mix material' transferred in a works contract is taxable at rates applicable to its constituent goods as specified in the Schedules or at the general residuary rate under the Act. - HELD THAT: - The Court held that materials transferred in the execution of a works contract constitute a deemed sale in works contract and attract the incidents of sale for purposes of levy. The deeming fiction introduced by Article 366(29-A)(b) brings transfers of property in goods involved in works contracts within the ambit of taxation, and the restrictions of Article 286 apply to such deemed sales. Consequently, where constituent materials of a composite product (such as cement, bitumen, rori used in 'hot mix material') are covered by specific entries and rates in the Schedules to the Act, they must be taxed at those prescribed rates; the residuary/general rate applies only to goods not covered by any Schedule. The Court rejected the State's contention that loss of identity on incorporation of ingredients into a new product prevents treatment of those ingredients as goods for taxation; loss of identity does not negate the deeming fiction. The Court further noted that although a State may, by express enactment, prescribe a uniform rate for goods involved in works contracts, the mere existence of a residuary entry in the Act does not, by itself, authorise taxing scheduled goods at the general rate. Reliance was placed on the settled principles in Builders Association of India, Gannon Dunkerley, Larsen & Toubro and later authority rejecting the view that the residuary entry alone supplies a uniform rate for scheduled goods, and the Court applied those principles to conclude that 'hot mix material' constituents are taxable at their scheduled rates.

Goods constituting the 'hot mix material' transferred in the works contract are taxable at the rates prescribed for their constituents in the Schedules to the Act; the residuary/general rate applies only to goods not covered by any Schedule.

Final Conclusion: The appeal is allowed: the deemed sale of materials forming the 'hot mix material' in the works contract must be taxed at the specific rates applicable to those constituent goods under the Act and not at the general residuary rate.

Penalty for suppression of turnover - deemed assessment by filing returns - failure to maintain correct accounts and to furnish correct returns - imposition of penalty notwithstanding disclosure in books of account

Penalty for suppression of turnover - imposition of penalty notwithstanding disclosure in books of account - failure to maintain correct accounts and to furnish correct returns - Whether penalty under the Act for suppression of turnover can be sustained when the turnover was reflected in the books of account but not disclosed in returns and assessments. - HELD THAT: - The Court held that Section 38 of the Act applies not only to maintenance of false or incorrect accounts but also to filing incorrect or false returns. Even if the transactions appeared in the books of account, suppression in the quarterly returns and failure to disclose the turnover during assessment amounted to furnishing returns false or incorrect in a material particular. The appellant charged tax from purchasers but retained the tax and filed nil returns for the relevant quarters; the suppressed turnover was not disclosed during the assessment under Section 15(3) and came to light only from third party information. The tribunal correctly rejected the contention that the omission was the act of an authorised representative and not the appellant, observing that any saving of tax benefited the appellant and that, for a public limited company, it was implausible that the return would not be verified. Reliance on authorities where sales were shown or where the disputed item was a matter of classification was distinguished. On these facts, imposition and upholding of penalty for suppression of turnover was justified.

Penalty under Section 38 sustained despite turnover appearing in books because returns and assessment materially suppressed the turnover and tax charged was retained.

Final Conclusion: Appeals dismissed; the Tribunal's sustaining of penalty for suppression of turnover is upheld because concealment in returns and assessment, and retention of tax charged, justified penalty under the Act.

Form F declarations - inter-state sale - movement of goods in pursuance of contract - proof of transportation documents - assessment under the Central Sales Tax Act

Form F declarations - inter-state sale - movement of goods in pursuance of contract - proof of transportation documents - Whether the Tribunal correctly found that the assessee's production of Form F and transportation documents defeated the Department's claim of a taxable inter state sale premised on a pre existing contract, and whether that finding of fact is not open to interference in the writ petition. - HELD THAT: - The Tribunal recorded that the Department failed to establish any discrepancy in the Form F declarations or in the contemporaneous transportation records and did not demonstrate that the goods moved pursuant to a pre existing contract with a buyer so as to attract tax under the Central Sales Tax Act. The Tribunal relied on the sale pattials, Forms (transportation documents), and other contemporaneous records to conclude that there was no material to support the Assessing Officer's deductions (including presumed pre existing contracts or movement contrary to the declared documents). The High Court, applying settled principle that the condition precedent for invoking the CST levy is movement of goods pursuant to a contract with the purchaser, noted that the Department had not shown that the transfers were other than branch/stock transfers evidenced by Form F and related documents and agreed with earlier coordinate bench reasoning that timing of resale by an agent shortly after receipt does not of itself establish a pre existing contract rendering the transfer taxable. As the Tribunal's conclusions were findings of fact based on the documentary material and not shown to be perverse or illegal, they were held not to warrant interference in the writ petition. [Paras 3]

The Tribunal's factual finding that Form F and attendant transportation documents established the nature of the transfers and that the Department failed to prove movement pursuant to a pre existing contract is sustainable; the writ petition by the Revenue is dismissed.

Final Conclusion: The High Court dismissed the Revenue's writ petition, upholding the Tribunal's factual conclusion that the assessee's Form F declarations and transportation documents negated the Department's claim of inter state sales under the Central Sales Tax Act and thus did not warrant interference.

Compounding of offences under Negotiable Instruments Act - Section 138 of the Negotiable Instruments Act - criminal liability for dishonour of cheque - Presentability versus maintainability of revision/appeal petitions - Non-surrender does not render revision petition non-maintainable - Deposit of costs pursuant to Damodar S. Prabhu

Compounding of offences under Negotiable Instruments Act - Section 138 of the Negotiable Instruments Act - criminal liability for dishonour of cheque - Whether the conviction under Section 138 of the N.I. Act could be set aside and the accused acquitted in view of the compromise between the parties and the compounding provision of the Act. - HELD THAT: - The Court noted that Section 147 of the Negotiable Instruments Act declares that offences under the Act are compoundable. The parties produced evidence of a compromise reached on 17.1.2020 and verification by counsel for the complainant confirmed that the due amount had been paid by the petitioner. Applying the statutory compounding regime and the settlement between the parties, the Court found that the impugned convictions could be set aside and the accused acquitted. The order therefore allowed the criminal revision, set aside the trial and appellate court orders, and acquitted the petitioner of the offence under Section 138 of the N.I. Act.

Impugned orders set aside and petitioner acquitted of the offence under Section 138 of the N.I. Act pursuant to the compromise and the compounding provision.

Presentability versus maintainability of revision/appeal petitions - Non-surrender does not render revision petition non-maintainable - Whether the revision petition was maintainable despite the petitioner not having surrendered pursuant to the impugned convictions. - HELD THAT: - Relying on a coordinate-bench decision in Vishnu Teli, the Court distinguished 'presentability' before the registry from 'maintainability' in law. The absence of a certificate or non-surrender affects presentability (registry acceptance) but does not automatically render a revision petition non-maintainable. The Court overruled the office objection premised on non-surrender and proceeded to hear the revision on merits.

Office objections on grounds of non-surrender overruled; the revision petition held maintainable and proceeded to consideration on merits.

Deposit of costs pursuant to Damodar S. Prabhu - Whether any costs should be directed despite acquittal on compounding and settlement. - HELD THAT: - While allowing the revision and acquitting the petitioner, the Court applied the principle in Damodar S. Prabhu and directed the petitioner to deposit 15% of the cheque amount by way of costs with the Legal Services Authority, Udaipur within fifteen days. The Court ordered that failure to deposit should be communicated to the Court by the Legal Services Authority.

Petitioner directed to deposit 15% of the cheque amount as costs with Legal Services Authority, Udaipur within 15 days; non-deposit to be reported to the Court.

Final Conclusion: Criminal revision allowed; trial and appellate court orders upheld earlier are set aside and the petitioner is acquitted of the offence under Section 138 N.I. Act in view of the compromise and statutory compounding; petitioner ordered to deposit 15% of the cheque amount as costs with the Legal Services Authority, Udaipur within fifteen days.

Specific performance - partition - dissolution of partnership - non-recognition of family settlement contrary to title under the Prohibition of Benami Property Transactions Act, 1988 - rendition of accounts - jointness and coparcenary - distinction between partnership under the Partnership Act, 1932 and Joint Hindu Family business

Partition - non-recognition of family settlement contrary to title under the Prohibition of Benami Property Transactions Act, 1988 - jointness and coparcenary - Whether the plaintiffs can maintain a suit for partition of properties on the basis of the Agreement/Family Settlement dated 11th March, 2014 notwithstanding that title to the properties is held by others. - HELD THAT: - The Court held that merely because parties have executed a family settlement declaring properties to be joint and agreeing to partition, that does not convert legal title or make the properties jointly owned in law where title stands in the name of others. The Prohibition of Benami Property Transactions Act, 1988 bars recognition of an agreement seeking to alter legal estate contrary to registered title unless exceptions such as trust are pleaded and established. The law recognises jointness in the context of coparcenary only if such status is pleaded; no coparcenary was pleaded here. Consequently plaintiffs who allege that the assets were already partitioned under the family settlement cannot pursue a fresh remedy of partition against persons in whose name title stands; their remedy lies in enforcing the agreement or claiming rights admissible in law against title holders where properly pleaded.

Plaintiffs cannot maintain a suit for partition on the basis of the family settlement where title is in others and no coparcenary or trust has been pleaded; they must seek enforcement of the agreement or other legally available reliefs.

Dissolution of partnership - rendition of accounts - distinction between partnership under the Partnership Act, 1932 and Joint Hindu Family business - Whether the plaintiffs can seek dissolution of partnership firms and other consequential reliefs when, according to the plaint, the firms have already been dissolved or assets divided under the Agreement/Family Settlement dated 11th March, 2014. - HELD THAT: - The Court observed that if the partnership firms have already been dissolved or assets partitioned in accordance with the family settlement, plaintiffs cannot re-initiate a claim for dissolution; their available reliefs, if any, are limited to claiming accounts, recovery of shares, or enforcement of specific obligations arising from the dissolution or settlement. The Court also noted the legal distinction between a firm under the Partnership Act and a Joint Hindu Family business, the latter not being governed by the Partnership Act; no facts establishing partnership rights in the plaintiffs were pleaded.

Relief of dissolution cannot be repeatedly sought where dissolution/partition has already been effected; plaintiffs' proper remedies are for rendition of accounts and recovery or for specific enforcement as applicable.

Specific performance - rendition of accounts - What pleadings and reliefs the plaintiffs must pursue instead of the present partition/dissolution claims. - HELD THAT: - The Court required the plaintiffs to elect and proceed with reliefs consistent with the Agreement/Family Settlement - specifically to sue for specific performance of unfulfilled obligations under the settlement or for recovery of possession or monies due, or to seek rendition of accounts and recovery of the plaintiffs' share from the partnership firm where pleaded. The Court emphasised that the plaint requires substantial overhaul to reflect the chosen cause of action and relief, rather than piecemeal amendment.

Plaintiffs should pursue specific performance or recovery and/or rendition of accounts as appropriate, and must plead those claims plainly in any fresh proceedings.

Procedural dismissal with liberty to sue - Disposition of the present suit and the consequences for court fees. - HELD THAT: - The Court declined to grant adjournment for the overhaul of the plaint, noted that the plaintiffs had already paid court fees, and directed that the present suit and pending applications be dismissed as withdrawn. Liberty was granted to institute fresh proceedings to enforce obligations under the family settlement, provided the plaintiffs file copies of the plaint in the present suit and this order and prominently plead that aspect in any fresh plaint. The Court further directed issuance of a certificate entitling the plaintiffs to refund of court fees paid less a specified amount retained.

Suit dismissed as withdrawn with liberty to sue for enforcement of obligations under the Agreement/Family Settlement dated 11th March, 2014; certificate for partial refund of court fees to be issued.

Final Conclusion: The Court dismissed the suit as withdrawn, granted liberty to sue afresh for enforcement of obligations under the Agreement/Family Settlement dated 11th March, 2014 (with directions as to pleading and filing copies of the present plaint and order), and ordered issuance of a certificate for refund of court fees paid less a retained amount.

Proclamation under Sections 82/83 Cr.P.C. - Service at ordinary place of residence - Bona fide cause for non-appearance - Section 138 of the Negotiable Instruments Act - Compromise and withdrawal of complaint - Criminal proceedings under Section 174-A IPC - Abuse of process of law

Proclamation under Sections 82/83 Cr.P.C. - Service at ordinary place of residence - Bona fide cause for non-appearance - Validity of the trial Court's order declaring the petitioners as proclaimed persons where service was effected by affixation and the petitioners did not receive ordinary service and had a pending insolvency proceeding. - HELD THAT: - The Court found that service as recorded was not effected at the petitioners' ordinary place of residence but by affixation at a place where the company premises were allegedly closed. Petitioners had an asserted bona fide cause for non-appearance, having instituted proceedings before the National Company Law Tribunal where an Interim Resolution Professional was appointed. In these circumstances and having regard to the record of service, the declaration of the petitioners as proclaimed persons was held to be vitiated for non-compliance with the procedure contemplated by Sections 82/83 Cr.P.C. The court accepted that on becoming aware of the order the petitioners appeared and sought interim bail and thereafter worked towards settlement.

Impugned order dated 02.02.2019 declaring the petitioners as proclaimed persons is quashed.

Section 138 of the Negotiable Instruments Act - Compromise and withdrawal of complaint - Criminal proceedings under Section 174-A IPC - Abuse of process of law - Whether the FIR registered under Section 174-A IPC and consequent proceedings could be continued after the complaint under Section 138 of the N.I. Act was amicably settled and withdrawn. - HELD THAT: - The Court observed that the FIR was registered pursuant to the impugned proclamation order and that subsequently the complaint under Section 138 of the N.I. Act was compromised and formally withdrawn. Relying on earlier decisions of this Court in analogous circumstances, the Court held that continuation of criminal proceedings under Section 174-A IPC after withdrawal of the Section 138 complaint amounted to an abuse of the process of law. The factual position that the complaint stood withdrawn and that the petitioners had appeared and obtained interim relief weighed in favour of quashing the FIR and connected proceedings.

FIR No.94 dated 20.03.2019 registered under Section 174-A IPC and all subsequent proceedings arising therefrom are quashed.

Final Conclusion: The petition is allowed: the order declaring the petitioners as proclaimed persons and the FIR registered pursuant thereto, together with all consequential proceedings, are quashed in view of defective service, the petitioners' bona fide cause for non-appearance and the compromise and withdrawal of the Section 138 complaint.