TaxTMI Updates e-Newsletter
Mar 03,2022

Challenge to an appealable order - availability of statutory remedy of appeal under Section 107 of the GST Act - provisional release under Sub-section (6) of Section 67 of the Act - expedited consideration of provisional release applications

Challenge to an appealable order - availability of statutory remedy of appeal under Section 107 of the GST Act - Maintainability of writ challenging the order passed in Form GST MOV - 11 - HELD THAT: - The Court declined to entertain the writ petition because the impugned order passed by the State Tax Officer in Form GST MOV - 11 is an appealable order and the petitioner has an adequate statutory remedy by way of appeal under Section 107 of the GST Act. In these circumstances, the appropriate course is to proceed by way of the statutory appeal rather than by writ. The petitioner was granted liberty to file the appeal before the appellate authority. [Paras 2, 3]

Writ petition not entertained on merits; petitioner advised to avail statutory appeal under Section 107 of the GST Act and liberty granted to file such appeal.

Provisional release under Sub-section (6) of Section 67 of the Act - expedited consideration of provisional release applications - Interim remedy for provisional release of detained goods and directions for expeditious disposal - HELD THAT: - The Court recognised the perishable nature of the goods (arecanut) and directed that, if the goods and conveyance remain under detention, the petitioner may file an application under Sub-section (6) of Section 67 of the Act before the appellate authority for provisional release. The appellate authority was directed to consider any such application at the earliest and, where the petitioner files the appeal within the eight day period stipulated by the Court and an accompanying Section 67(6) application, to take up the application immediately and pass an appropriate order within one week thereafter. [Paras 3, 4]

Petitioner permitted to seek provisional release under Section 67(6); appellate authority directed to hear such application forthwith and decide within one week.

Final Conclusion: Writ petition disposed of as not maintainable since the impugned order is appealable; petitioner permitted to file an appeal under Section 107 within eight days and, if necessary, an application for provisional release under Section 67(6), which the appellate authority is directed to decide urgently (within one week).

Section 140 transitional credit - transitional credit in GSTR-3B - liberty to file belated claim subject to verification - technical portal failure

Section 140 transitional credit - transitional credit in GSTR-3B - liberty to file belated claim subject to verification - Petitioner permitted to claim transitional credit by filing individual entries in GSTR-3B for February 2022 (to be filed in March 2022) even though the claim could not be uploaded earlier. - HELD THAT: - The Court, relying on the judgment in MAT 552 of 2020 (Nodal Officer, Jt. Commissioner, IT Grievance, GST Bhawan Vs. M/s. Das Auto Centre & Ors.), granted the petitioner the same relief of liberty to claim individual transitional tax credit in the GSTR-3B return for the specified month. The order recognises the petitioner's inability to avail transitional credit earlier on account of a technical problem in uploading on the GST portal, and, in line with the cited decision, allowed filing in the subsequent return subject to usual verification. The concerned authority/Assessing Officer is expressly left free to verify the genuineness of the claimed transitional credit when the claim is made in the GSTR-3B for February 2022.

Liberty granted to the petitioner to file individual transitional tax credit in GSTR-3B for February 2022, subject to verification by the concerned authority.

Technical portal failure - liberty to file belated claim subject to verification - Relief confined to the petitioner alone; the authority may investigate claims filed under the liberty granted. - HELD THAT: - The Court limited the operative benefit of its order to the petitioner by specifying that the clarification applies to the petitioner only. While the petitioner's asserted technical inability to upload was recorded, the Court did not foreclose verification; rather it authorised the assessing authority to examine the genuineness of the belated transitional credit claim filed in GSTR-3B for February 2022. The decision thus balances allowing remedial filing against permitting scrutiny by revenue authorities.

Order applicable only to the petitioner; authorities are permitted to verify the genuineness of the claim filed pursuant to this liberty.

Final Conclusion: Writ petition disposed by granting the petitioner liberty to claim transitional credit by filing individual entries in GSTR-3B for February 2022 (to be filed in March 2022) in view of Section 140 and the precedent in MAT 552 of 2020, subject to verification by the concerned authority; benefit limited to the petitioner.

Interim protection - stay on coercive recovery - writ jurisdiction - service of notice by registered post and official email

Writ jurisdiction - Dispute between the petitioner and the respondents is amenable to the writ jurisdiction of the High Court. - HELD THAT: - Having considered the nature of the grievance - challenge to departmental demands and recovery proceedings raised against the petitioner and the contention that the recipient (a State entity) bears liability under the tender/purchase order - the Court recorded that both respondents are State authorities and that the dispute is amenable to writ jurisdiction. This finding was recorded to justify the exercise of the Court's supervisory powers and interlocutory relief in the present proceedings. [Paras 7]

The Court accepted that the dispute is amenable to writ jurisdiction.

Interim protection - stay on coercive recovery - service of notice by registered post and official email - Interim relief in the form of protection from coercive steps was granted and procedural directions for service and further proceedings were issued. - HELD THAT: - On the material placed before it and the petitioner's request for protection pending adjudication, the Court directed that no further coercive steps be taken against the petitioner in the interim. The Court ordered issuance of notice on respondent No.1 by registered cover with acknowledgment and by speed post, directed that the petitioner effect additional service on respondent No.1 by official email with attachments and file a supplementary affidavit to that effect, and fixed timelines for filing of counter-affidavit and reply. These procedural directions were given to secure the lis and enable adjudication on merits at a future date. [Paras 10, 11, 13]

Interim protection granted: no further coercive steps against the petitioner; notices and service directions issued; matter listed for further hearing.

Final Conclusion: Pending adjudication, the High Court granted interim protection by staying further coercive action against the petitioner, directed service of notices on respondent No.1 by registered post and official email, and listed the matter for further hearing with specified timelines for filing counter-affidavit and reply.

Challenge to seizure or summons by way of writ petition - voluntariness of payment and onus of proof - interim retention of disputed payment pending adjudication - duty to issue show cause notice and afford personal hearing

Challenge to seizure or summons by way of writ petition - Maintainability of a writ petition challenging a seizure order or summons issued by revenue officers. - HELD THAT: - The Court held that a writ petition is not the appropriate forum to question an order of seizure or to challenge a summons issued by the revenue authorities. Such matters raise factual and adjudicatory questions which fall to be examined by the statutory adjudicating authority under the Central Goods & Services Tax Act, 2017 and not in writ proceedings which cannot be used to substitute the statutory adjudication process.

The writ petition cannot be used to challenge the seizure or the summons; those matters are not maintainable in the writ petition.

Voluntariness of payment and onus of proof - Whether the representation dated 30.12.2021 retracting the payment should be directed to be considered by the authority before issuance of show cause notice, and who must decide voluntariness of the payment. - HELD THAT: - The Court observed that the question whether the payment was made voluntarily or under compulsion is a factual matter for the adjudicating authority to determine. As the show cause notice had not yet been issued and statutory timelines for issuing show cause were running, directing immediate consideration of the representation would serve no useful purpose. The onus lies on the appellant to establish that the payment was extracted by undue force or threat; such contentions and the alleged retraction contained in the representation dated 30.12.2021 are to be considered by the adjudicating authority in the course of adjudication of the show cause notice.

The representation need not be separately directed to be considered at this stage; the voluntariness of the payment shall be decided by the adjudicating authority when the show cause notice is issued and adjudicated, and the adjudicating authority may consider the retraction as one of the issues.

Interim retention of disputed payment pending adjudication - duty to issue show cause notice and afford personal hearing - Whether the amount paid by the appellant should be appropriated or retained pending issuance and adjudication of the show cause notice, and the obligation of the revenue to proceed expeditiously. - HELD THAT: - Noting that the payment was made through banking channels in the prescribed statutory form, the Court directed that the sum paid shall be retained to the credit of the appellant until the adjudicating authority issues the show cause notice and completes adjudication; the amount shall not be appropriated against any past dues. In view of the substantial amount and the pending statutory timelines, the Court directed the concerned revenue authority to expeditiously issue the show cause notice, give the appellant reasonable time to reply, afford personal hearing and thereafter adjudicate the matter on merits. The adjudicating authority is also required to consider the appellant's submissions including the asserted retraction dated 30.12.2021 during adjudication.

The payment shall be retained to the appellant's credit and shall not be appropriated; the revenue is directed to issue show cause notice expeditiously, afford reasonable time and personal hearing, and adjudicate the case on merits, considering the retraction as part of the adjudication.

Final Conclusion: Writ challenge to seizure or summons is not maintainable; the factual question of voluntariness of the payment must be decided by the adjudicating authority upon issuance of the show cause notice; meanwhile the disputed payment is to be retained to the credit of the appellant and not appropriated, and the revenue is directed to expeditiously issue show cause notice, afford hearing and adjudicate the matter on merits.

Assessment under section 62 of JGST Act - Notice under section 46 - notice to return defaulters - Deemed withdrawal of assessment on filing return within thirty days (section 62(2)) - Input Tax Credit blocking and unblocking - Principles of natural justice and mandatory procedural requirement

Assessment under section 62 of JGST Act - Notice under section 46 - notice to return defaulters - Principles of natural justice and mandatory procedural requirement - Validity of the assessment order passed under section 62 where no notice under section 46 was served prior thereto - HELD THAT: - The Court examined the statutory scheme whereby a notice under section 46 (in prescribed form GSTR-3A) must be issued to a return defaulter and only after service of such notice the proper officer may proceed to assess under section 62. The purpose of prior notice is to afford the registered person an opportunity to file the return and avoid penal consequences; subsection (2) of section 62 contemplates deemed withdrawal if a valid return is filed within thirty days of service of the assessment order. The record did not disclose service of any notice under section 46 before the assessment dated 02.08.2018, and the respondents failed to show that the assessment order was served on the petitioner prior to issuance of DRC-07. In view of these mandatory procedural defaults and the concomitant breach of principles of natural justice, the assessment could not be sustained. [Paras 10, 11, 12]

Assessment order dated 02.08.2018 passed under section 62 is set aside for failure to comply with the mandatory requirement of notice under section 46.

Assessment under section 62 of JGST Act - Deemed withdrawal of assessment on filing return within thirty days (section 62(2)) - Effect of the petitioner filing returns after receipt of DRC-07 and whether the assessment should be deemed withdrawn - HELD THAT: - The Court noted that upon receipt of the summary DRC-07 on 01.10.2018 the petitioner filed GSTR-01 and GSTR-3B within thirty days and thereby sought to avail the protection under section 62(2). Because the assessment order itself was held to have been issued without the mandatory antecedent notice under section 46 and was not shown to have been served on the petitioner, the petitioner did not have the opportunity to file a return within thirty days of service of the assessment order. Given these procedural infirmities, the consequences envisaged by subsection (2) cannot be allowed to be rendered ineffective by a prior omission to serve the mandatory notice. [Paras 11, 12]

Assessment cannot operate; the conditions for sustaining the assessment (including service of notice and opportunity to file return within thirty days) were not satisfied, supporting withdrawal of the impugned assessment.

Input Tax Credit blocking and unblocking - Assessment under section 62 of JGST Act - Validity of blocking and adjustment of the petitioner's Input Tax Credit arising from the impugned assessment - HELD THAT: - Because the assessment order suffered from the fatal procedural defect of being passed without service of the notice mandated by section 46, the consequential administrative step of blocking and adjusting the petitioner's ITC of Rs. 2.88 crores against the disputed tax liability could not be sustained. The Court observed that the blocking produced penal consequences and therefore must give way to the setting aside of the underlying order which occasioned the blocking. [Paras 11, 12]

ITC amount of Rs. 2.88 crores lying blocked shall be unblocked.

Appellate review of procedural infirmity - Principles of natural justice and mandatory procedural requirement - Sustainability of the appellate order which dismissed the petitioner's appeal on the ground that return was filed beyond thirty days - HELD THAT: - The Appellate Authority affirmed the assessment on the narrow basis that the petitioner filed returns beyond the thirty-day period under section 62(2). The High Court held that the Appellate Authority failed to notice that the assessment itself was vitiated by absence of the mandatory notice under section 46 and by non-compliance with principles of natural justice. Given that the impugned assessment was set aside for these reasons, the appellate order upholding it could not be sustained. [Paras 4, 12]

Appellate order dated 25.01.2020 is set aside.

Administrative acceptance or scrutiny of returns - Obligation of the revenue after setting aside the assessment - whether the return filed by the petitioner must be accepted or can be scrutinized - HELD THAT: - The Court recorded that the petitioner has filed returns for the period in question and left the matter open for the revenue to either accept the returns or undertake proper scrutiny in accordance with law. The direction preserves the Department's statutory power to examine returns subject to compliance with legal procedure. [Paras 12]

Respondent is at liberty to accept the returns filed by the petitioner or to undertake proper scrutiny thereof as per law.

Pre-deposit before Appellate Authority - discretion on refund/release - Whether the pre-deposit made before the Appellate Authority should be released - HELD THAT: - The Court declined to direct release of any pre-deposit but observed that the petitioner may approach the Appellate Authority with an appropriate request for release and that such request shall be considered in accordance with law. This leaves the issue for determination by the Appellate Authority rather than deciding it in the writ petition. [Paras 12]

Petitioner's request for release of pre-deposit is left to the Appellate Authority to consider on proper application; the Court did not direct release.

Final Conclusion: Writ petition allowed: the assessment order dated 02.08.2018 and the Summary DRC-07 dated 01.10.2018 are set aside for failure to issue the mandatory notice under section 46; the appellate order dated 25.01.2020 is also set aside; the petitioner's blocked ITC shall be unblocked; the Department may accept or scrutinize the returns filed in accordance with law; any request for release of pre-deposit is to be pursued before and decided by the Appellate Authority.

Parallel proceedings before central authorities - summons under Section 70 of the Central Goods and Services Tax Act, 2017 - proper officer - transfer of investigation files to a central/zonal unit - quashing of summons addressed to a medical practitioner - maintainability of writ against summons

Quashing of summons addressed to a medical practitioner - summons under Section 70 of the Central Goods and Services Tax Act, 2017 - The summons issued to the doctor who certified the health of respondent no.2 was quashed. - HELD THAT: - The Court found that the medical certificate was produced in discharge of the doctor's professional duties to justify an adjournment and that issuing a summons to the doctor in these circumstances was unjustified and amounted to harassment. The Court observed that the department could have declined the adjournment or granted a short deferment, but issuing a summons to the certifying medical practitioner was in bad taste and not warranted. Consequently, the summons dated 15th February, 2022 issued under Section 70 was quashed. [Paras 12, 13]

Summons to Dr. P. D. Bhutia dated 15th February, 2022 under Section 70 is quashed.

Transfer of investigation files to a central/zonal unit - parallel proceedings before central authorities - All files held by the Siliguri Zonal Unit relating to the respondents are to be transferred to the DGGI (East), Kolkata and assigned to the officer already dealing with the matter. - HELD THAT: - The Court, noting that both the Siliguri Unit and the DGGI (East), Kolkata are Central authorities and that the proceedings arose out of the same search and seizure operations, directed transfer of all files from the Senior Intelligence Officer, Siliguri Zonal Unit to the Director, DGGI (East), Kolkata. The transfer was ordered to ensure a single, centralised investigation to avoid inconsistency and unnecessary hardship to the respondents. Upon transfer, the Director General, DGGI (East), Kolkata was directed to assign the files to the officer already handling the matter so that departmental proceedings may continue. [Paras 10, 15, 16]

Files at Siliguri Zonal Unit shall be transferred forthwith to DGGI (East), Kolkata, which shall assign them to the officer already dealing with the matter.

Maintainability of writ against summons - parallel proceedings before central authorities - The Court recorded that ordinarily a writ challenging a summons is not maintainable, but set aside the interim order of the Single Judge and directed centralisation of proceedings to avoid parallel enquiries. - HELD THAT: - The Court observed the elementary principle that a summons cannot ordinarily be challenged by way of writ and that the Single Judge's prima facie observations did not lay down any binding legal principle. Nevertheless, to prevent parallel proceedings arising from the same search and seizure and to avoid hardship, the Court set aside the interim stay granted by the writ court and issued directions for centralisation of files and orderly continuation of departmental proceedings. The respondents were directed to comply with reasonable summons from the officer in Kolkata and to cooperate with the investigation. [Paras 4, 5, 14, 17]

Interim order of the Single Judge is set aside; respondents shall cooperate with the single investigating unit and may be summoned with reasonable notice by the officer in Kolkata.

Final Conclusion: Writ appeals partly allowed: the interim stay granted by the Single Judge is set aside; all Siliguri Unit files relating to the respondents are directed to be transferred to DGGI (East), Kolkata and assigned to the officer already dealing with the matter; the summons to the medical practitioner is quashed; respondents shall comply with reasonable summons issued by the Kolkata office and cooperate with the centralised investigation.

Service under Section 169: methods of service and sufficiency - Deemed service and electronic portal communication - Interim practice of simultaneous physical service pending technical issues - Quashing and remand for speaking order - Treatment of impugned orders as supplementary Show Cause Notices and right to reply

Service under Section 169: methods of service and sufficiency - Deemed service and electronic portal communication - Interim practice of simultaneous physical service pending technical issues - Whether service by uploading notices on the State web portal alone constitutes sufficient compliance with Section 169 of the GST Acts in the absence of confirmation that portal uploads are auto populated to the GST common portal and accessible to the assessee. - HELD THAT: - The Court observed that Section 169 permits several modes of service, including making communications available on a common portal, but held that mere uploading on the State web portal does not automatically satisfy the statutory requirement unless it is established that such uploads are auto populated and reliably reflected on the GST common portal/dashboard accessible to the assessee. The Court noted recurring technical glitches and intercommunication problems between State and Central GST portals which may prevent actual notice availability to the taxpayer. In view of these practical difficulties, the Court directed that until the technical problems are resolved the authorities should effect service by registered post/speed post/courier with acknowledgment in addition to uploading on the portal, and that once technical issues are fixed physical service may be dispensed with. [Paras 11, 12, 13, 14]

Uploading notices on the State web portal alone is not a sufficient compliance in the absence of confirmed auto population to the common GST portal; authorities must simultaneously serve notices by registered post/speed post/courier with acknowledgment until technical issues are resolved.

Quashing and remand for speaking order - Treatment of impugned orders as supplementary Show Cause Notices and right to reply - Opportunity to reply and timeline for re assessment - Whether the impugned assessment orders should be set aside for violation of principles of natural justice and remitted for fresh consideration after giving the petitioners an opportunity to reply. - HELD THAT: - Finding that the impugned assessment orders were passed without adequate assurance of proper service and thereby in breach of the principles of natural justice, the Court quashed the impugned assessment orders and remitted the matters to the respondents to pass speaking orders on merits and in accordance with law. The Court directed that the impugned orders quashed by this order shall be treated as supplementary Show Cause Notices and that the petitioners file replies to the respective Show Cause Notices. Given the temporal locus of the dispute, the Court mandated that appropriate orders be passed within 45 days from receipt of the order copy. [Paras 15, 16, 17]

Impugned assessment orders quashed and remitted for fresh adjudication after service and opportunity to reply; quashed orders treated as supplementary Show Cause Notices and respondents to pass appropriate orders within 45 days.

Final Conclusion: Writ petitions disposed by setting aside the impugned assessment orders for defective service and remitting the matters for fresh, speaking adjudication after proper service (physical service to continue alongside portal uploads until technical issues are resolved); petitioners permitted to file replies and respondents directed to decide within 45 days.

Suspension and cancellation of GST registration for non-filing of returns - Power of the Commissioner to extend time under Section 80 of the Central Goods and Services Tax Act - Abeyance of administrative proceedings pending disposal of an extension application

Power of the Commissioner to extend time under Section 80 of the Central Goods and Services Tax Act - Abeyance of administrative proceedings pending disposal of an extension application - Direction to the Commissioner to decide the petitioner's pending application for extension of time (Exhibit P1) and interim treatment of related enforcement action. - HELD THAT: - The petitioner had filed Exhibit P1 seeking extension of time for payment and the application was pending. The petitioner contended that, in view of the Commissioner's power under Section 80, the pending application ought to be disposed of before any final adverse action on suspension/cancellation is taken. The Court directed that the Commissioner of State Goods and Services Tax (third respondent) shall finalise Exhibit P1 within three weeks from receipt of the judgment. Pending that decision, the Court ordered interim relief by directing that the proceedings under Exhibit P8 be kept in abeyance to afford the petitioner an opportunity to have its application considered and to place the result before the assessing officer. The direction balances the administrative power of the Commissioner to grant time under the statutory provision with the need to avoid premature finalisation of cancellation proceedings while a remedy under the Act is awaiting adjudication.

Commissioner to finalise Exhibit P1 within three weeks; related enforcement action to be temporarily held in abeyance until that decision.

Suspension and cancellation of GST registration for non-filing of returns - Abeyance of administrative proceedings pending disposal of an extension application - Interim deferral of the show-cause/cancellation proceedings issued by the State Tax Officer (Exhibit P8) and deferment of consideration of the petitioner's replies (Exhibits P9 and P10). - HELD THAT: - The State Tax Officer had issued Exhibit P8 proposing suspension/cancellation of GST registration for continuous non-filing of returns, and the petitioner submitted replies (Exhibits P9 and P10). The Court ordered that final proceedings on Exhibit P8 and the petitioner's replies shall be deferred for six weeks and that the petitioner should appear before the 4th respondent on the scheduled date to apprise the officer of the pendency of Exhibit P1 before the Commissioner. The Court thereby remanded the matter to the administrative authorities for further action guided by the Commissioner's decision on Exhibit P1, leaving substantive questions unresolved for fresh consideration by the authorities.

Final proceedings on Exhibit P8 and consideration of Exhibits P9 and P10 deferred for six weeks; parties to be guided by the Commissioner's decision on Exhibit P1.

Final Conclusion: Writ petition disposed by directing the Commissioner to decide the petitioner's pending extension application within three weeks; show-cause/cancellation proceedings and consideration of the petitioner's replies are deferred for six weeks pending the Commissioner's order; other questions in the petition are left open.

Interpretation of Section 44BB - Definition of "royalty" under Explanation 2 to Section 9(1)(vi) - Connection with prospecting for, extraction or production of mineral oils - Pith and substance test for applicability of special provisions - Withholding obligation under Section 195

Interpretation of Section 44BB - Definition of "royalty" under Explanation 2 to Section 9(1)(vi) - Connection with prospecting for, extraction or production of mineral oils - Pith and substance test for applicability of special provisions - Withholding obligation under Section 195 - Whether the charter hire payments made by the petitioner to non-resident vessel owners are assessable under the special deeming provision of Section 44BB or are taxable as "royalty" under Explanation 2 to Section 9(1)(vi), thereby affecting the withholding obligation under Section 195. - HELD THAT: - Section 44BB applies to a non-resident engaged in providing services or facilities in connection with, or supplying plant and machinery on hire used for, prospecting for, or extraction or production of, mineral oils; the expression "in connection with" expands the scope to services, facilities or plant and machinery having a proximate connection with those activities. Explanation 2 to Section 9(1)(vi) excludes amounts referred to in Section 44BB from the definition of "royalty". The court applied the pith and substance test (as affirmed by the Supreme Court in ONGC v. CIT) to examine the dominant purpose and proximate connection of the contractual work with mineral oil production. On the facts the petitioner had a turnkey contract to design, construct and commission a platform to enhance extraction/production; the tugs and barges were used to tow an integral compressor module from the petitioner's yard to the offshore platform; the record included an Essentiality Certificate for import of the cargo. These findings establish that the hire of the vessels was inextricably connected with exploration/production of mineral oils and not mere commercial transportation. Consequently the payments fall within the special computation regime of Section 44BB and are excluded from "royalty" treatment, affecting the tax deduction obligation under Section 195 accordingly. [Paras 23, 24, 28, 29, 30]

The payments for charter hire are assessable under Section 44BB and not taxable as "royalty" under Explanation 2 to Section 9(1)(vi); the impugned orders under Sections 195 and 264 are quashed.

Final Conclusion: The writ petition is allowed; the orders dated 15th February 2008 and 18th July 2008 are quashed and set aside, the charter hire payments are declared assessable under Section 44BB and the petitioner is entitled to consequential benefits in accordance with law.

Criminal liability for non deposit of TDS under Section 276B - vicarious liability of persons "in charge and responsible" under Section 278B - timeliness of TDS credit vis a vis Rule 30(2)(b) of the Income tax Rules - mandatoriness of postponement of issue of process where accused resides outside territorial jurisdiction under Section 202 Cr.P.C. - de minimis principle under Section 95 IPC (slight harm) - scope of High Court's inherent jurisdiction under Section 482 Cr.P.C. to probe documentary material before trial

Timeliness of TDS credit vis a vis Rule 30(2)(b) of the Income tax Rules - criminal liability for non deposit of TDS under Section 276B - scope of High Court's inherent jurisdiction under Section 482 Cr.P.C. to probe documentary material before trial - Whether the criminal prosecution under Section 276B (and consequential proceedings) could be sustained where bank records show initiation of TDS credit within the time prescribed by Rule 30(2)(b) and interest for the delay had been paid. - HELD THAT: - The Court examined Rule 30(2)(b) which requires deposit on or before seven days from the end of the month in which deduction is made. The taxed amount had been deducted in February 2013 and therefore had to be credited by 07.03.2013. The Bank's letter (Annexure 7) and the enclosed transaction charts, not denied by the Department, show the credit initiation was effected between 10:00 PM and 11:00 PM on 07.03.2013 and the transaction status recorded as 'completed successful'. Given these documentary materials, the Court held that the initiation within time negates the contention that the deductor failed to take steps to credit the amount in time. The Court further held that, having regard to the quality and unrefuted nature of the bank documents, it was permissible under Section 482 Cr.P.C. to consider them at the pre trial stage (relying on the tests in Ravi Thapar), because the material was of sterling quality capable of displacing the accusation without leading evidence. The Court also noted payment of interest for the short delay. Applying these findings, the Court concluded that criminal liability under Section 276B could not be fastened on the petitioners on the ground of the alleged delayed initiative in depositing TDS. [Paras 17, 18, 19, 20]

The prosecution under Section 276B cannot be sustained on the basis of the alleged delay in crediting TDS; the bank documents showing timely initiation and payment of interest justified interference at the Section 482 Cr.P.C. stage.

Vicarious liability of persons "in charge and responsible" under Section 278B - meaning of "in charge and responsible" - requirement of overall control - reliance on precedents concerning scope of vicarious liability - Whether the complaint disclosed facts sufficient to fasten liability on petitioner No.2 under Section 278B by showing he was "in charge of, and responsible to" the company for conduct of its business at the time of the alleged offence. - HELD THAT: - Section 278B creates a deeming liability where a person at the time of the offence was in charge of and responsible to the company for conduct of its business. The Court applied the established test that 'in charge' means overall control of day to day business (as expounded in Girdhari Lal Gupta and approved in subsequent decisions). The complaint and record failed to disclose how petitioner No.2 exercised such overall control; the material did not demonstrate that he was the person in overall charge of the company's day to day business at the relevant time. Consequently, the necessary averments to fasten vicarious liability under Section 278B were absent. [Paras 20, 21]

Liability under Section 278B as against petitioner No.2 was not made out on the face of the complaint and could not be sustained.

Mandatoriness of postponement of issue of process where accused resides outside territorial jurisdiction under Section 202 Cr.P.C. - obligation on magistrate to enquire or direct investigation before issuing process beyond territorial jurisdiction - Whether the learned Magistrate complied with the mandatory requirement of Section 202 Cr.P.C. before issuing process against petitioner No.2 who was residing outside the territorial jurisdiction. - HELD THAT: - The 2005 amendment to Section 202 Cr.P.C. makes it mandatory to postpone issuance of process where the accused resides outside the magistrate's territorial jurisdiction and to either enquire personally or direct an investigation to ascertain sufficiency of grounds before issuing summons. The record shows petitioner No.2 was stationed at Mumbai and the complaint does not disclose compliance with the mandatory provisions of Section 202. The Court observed that the Magistrate ought to have followed the statutory mandate and that failure in this regard weighed against the continuation of the proceedings. [Paras 20]

The mandatory provision of Section 202 Cr.P.C. (postponement and enquiry where accused is outside territorial jurisdiction) was not complied with in respect of petitioner No.2.

De minimis principle under Section 95 IPC (slight harm) - Whether the omission to credit the TDS within the prescribed time caused only such slight harm as to fall within Section 95 IPC, thereby negating criminality. - HELD THAT: - Section 95 IPC excludes as offence acts causing only slight harm which no person of ordinary sense and temper would complain of. The Court noted the shortness of the delay (effectively one day in credit though the bank initiation was within time) and that interest for the delay had been paid. On these facts the Court considered that the harm occasioned was slight and, applying Section 95, concluded that criminal prosecution on this basis was not warranted. [Paras 22]

The delay amounted to slight harm; Section 95 IPC applies and supports quashing of the prosecution.

Final Conclusion: The High Court quashed the entire criminal proceedings and the order of cognizance dated 08.12.2017 in C.O. Case No.13 of 2017 relating to alleged offences under Sections 276B and 278B for F.Y.-2012-2013, holding that bank records showed timely initiation of credit, vicarious liability of petitioner No.2 was not established on the record, mandatory requirements of Section 202 Cr.P.C. were not followed as to petitioner No.2, and the short delay constituted slight harm; the petition is allowed and the proceedings are quashed.

Addition under Section 68-genuineness of share capital and creditworthiness of shareholders - disallowance under Section 14A and Rule 8D-use of borrowed funds versus own funds for investments yielding exempt income - allocation of interest under Section 36(1)(iii)-treatment of interest on borrowed capital for capital work in progress - appellate interference on findings of fact

Addition under Section 68-genuineness of share capital and creditworthiness of shareholders - appellate interference on findings of fact - Whether the Tribunal and CIT(A) were justified in deleting the addition made under Section 68 in respect of share application money. - HELD THAT: - The High Court examined the CIT(A)'s findings (including paragraph 3.3 of the CIT(A) order) that the share application monies were received by account payee cheques through banking channels, that the share applicants were regular income tax assessees, and that the assessee furnished documentary support for the source of funds which the Assessing Officer had discredited. The CIT(A) also found that common business address of companies alone did not render them sham entities and that a time gap between receipt and encashment of cheques did not convert the transaction into a paper transaction. The Tribunal, after considering comparable material, affirmed the factual conclusions. As these conclusions were factual determinations supported by record evidence, the High Court held there was no substantial question of law warranting interference.

Deletion of the addition under Section 68 upheld; no substantial question of law arises.

Disallowance under Section 14A and Rule 8D-use of borrowed funds versus own funds for investments yielding exempt income - appellate interference on findings of fact - Whether the disallowance under Section 14A read with Rule 8D was rightly deleted by the CIT(A) and confirmed by the Tribunal. - HELD THAT: - The CIT(A) noted (paras 4.3-4.4 of its order) that for earlier years the department had accepted the assessee's explanation that the investments were made from own funds, and the Tribunal verified and affirmed that factual position for the year under consideration. Given that the finding rested on evaluation of evidence as to source of funds and prior departmental acceptance, the High Court found no substantial question of law to be decided.

Deletion of disallowance under Section 14A/Rule 8D upheld; no substantial question of law arises.

Allocation of interest under Section 36(1)(iii)-treatment of interest on borrowed capital for capital work in progress - appellate interference on findings of fact - Whether the addition under Section 36(1)(iii) by allocating interest to capital work in progress was correctly deleted by the CIT(A) and Tribunal. - HELD THAT: - The CIT(A) (paras 5.4-5.5 of its order) concluded that the Assessing Officer had not shown any inaccuracy in the unit wise accounts or in the assessee's allocation of interest among units, and that the assessee had identified specific sources of funds used for capital work in progress; absent material to show borrowed funds were deployed for capital, allocation of interest was unjustified. The Tribunal agreed with these factual findings. The High Court held these were factual determinations and that no substantial question of law arose for consideration.

Deletion of the interest allocation under Section 36(1)(iii) upheld; no substantial question of law arises.

Final Conclusion: The appeal is dismissed for lack of any substantial question of law arising from the factual findings upheld by the CIT(A) and Tribunal; the stay application is closed.

Reason to believe - reopening of assessment - assumption of jurisdiction under Section 147/148 - information from Investigation Wing - borrowed satisfaction - independent application of mind

Reason to believe - information from Investigation Wing - borrowed satisfaction - independent application of mind - reopening of assessment - assumption of jurisdiction under Section 147/148 - Validity of reopening the assessments for A.Y. 2014-15 and A.Y. 2015-16 under Section 147/148 of the Income Tax Act where the Assessing Officer relied on information from the Investigation Wing - HELD THAT: - The Court examined the reasons recorded by the Assessing Officer and the order rejecting objections to the reopening. It reiterated that reopening under Section 147 requires the Assessing Officer's own reason to believe that income has escaped assessment, founded on application of his independent mind and not merely on third party information. While information from the Investigation Wing may constitute material, the Assessing Officer must demonstrate a tangible link between that material and the formation of his belief; mere reproduction of the investigation report or reliance on information without stating particulars (such as nature of transaction or identity of parties) amounts to a borrowed satisfaction. The impugned reasons in the present case referred repeatedly to a high value transaction and accommodation entries as per the Investigation Wing but failed to disclose specific particulars or show independent appreciation sufficient to constitute the Assessing Officer's own reasoned satisfaction. For notices issued beyond four years where scrutiny under Section 143(3) had already been completed, the statutory conditions for reopening demand a clear demonstrable nexus and independent reasons, which were absent here. Consequently the condition precedent for validly assuming jurisdiction under Sections 147/148 was not satisfied. [Paras 8, 9, 10, 11, 12]

Reopening was invalid as the Assessing Officer had not recorded an independent reason to believe and had acted on a borrowed satisfaction based on information from the Investigation Wing.

Final Conclusion: Writ petitions allowed; impugned notices dated 31.03.2021 and 30.03.2021 reopening assessments for A.Y. 2014-15 and A.Y. 2015-16 are quashed and set aside.

Allowability of exemption under section 11(1)(a) - carry forward of deficit of a charitable trust and set off against subsequent years - extension of limitation by the Hon'ble Supreme Court suo motu order

Allowability of exemption under section 11(1)(a) - carry forward of deficit of a charitable trust and set off against subsequent years - Carry forward of deficit, being excess of expenditure over receipts, and the allowability of exemption under section 11(1)(a) for the assessment year 2015-16. - HELD THAT: - The Assessing Officer denied exemption under section 11(1)(a) on the ground that expenditure for objects of the trust exceeded gross receipts and therefore no surplus remained for accumulation or carry forward. The CIT(A) allowed the claim, observing that section 11(1)(a) does not condition the exemption on expenditure being less than gross receipts. The Tribunal has applied the decision of the Hon'ble Supreme Court in CIT v. Subros Educational Society holding that excess expenditure incurred by a trust in an earlier year may be set off against income of subsequent years by invoking section 11. The Tribunal further noted that the Revenue's review petition against Subros was dismissed by the Supreme Court on 11th January 2022 and, respectfully following that precedent, found no reason to interfere with the CIT(A)'s allowance of the carry forward of the deficit. [Paras 13, 14]

The carry forward of the deficit and the allowance of exemption under section 11(1)(a) are upheld; the Revenue's ground is dismissed and the appeal is dismissed on this issue.

Extension of limitation by the Hon'ble Supreme Court suo motu order - time bar and condonation of delay - Whether the appeal filed before the Tribunal was time barred. - HELD THAT: - The Registry noted a defect that the appeal appeared to be filed 30 days late. The Departmental Representative explained that while the CIT(A)'s order was received on 5th May 2021 and the appeal was filed on 3rd August 2021, the last date for filing was extended in view of the Supreme Court's suo motu order dated 27th April 2021 in Suo Motu Writ (Civil) No.3/2020. Applying that extension of limitation, the Tribunal held there was no delay in filing the appeal and proceeded to decide the matter on merits. [Paras 4, 5]

The appeal is not time barred in view of the Supreme Court's extension of limitation and is heard on merits.

Final Conclusion: The Tribunal, following the Supreme Court's decision in Subros Educational Society and having found no delay in filing the appeal due to the Supreme Court's extension of limitation, dismissed the Revenue's appeal and upheld the CIT(A)'s allowance of carry forward of the deficit under section 11(1)(a) for AY 2015-16.

Notice under section 153C - Incriminating material - Requirement of satisfaction for issuance of notice under section 153C - Validity of assessment framed under section 153C - Application of Sinhgad Technical Education Society

Notice under section 153C - Incriminating material - Requirement of satisfaction for issuance of notice under section 153C - Validity of assessment framed under section 153C - Application of Sinhgad Technical Education Society - Whether the notice issued under section 153C and the consequential assessment framed thereunder are valid in the absence of incriminating material found during the search - HELD THAT: - The CIT(A) examined the satisfaction note forming the basis for issuance of notice under section 153C and found that it rested on the assessee's alleged investments in M/s Golf Link Hospitality Pvt. Ltd. but the factual matrix showed the investment recorded only for A.Y. 2011-12 and not for other years mentioned in the satisfaction. The CIT(A) further observed that the additions made by the AO were drawn from items already appearing in the assessee's balance sheet and profit and loss account and were not founded on any incriminating material seized during the search. Relying on the Apex Court decision in Sinhgad Technical Education Society, the CIT(A) held that where the satisfaction for issuance of a section 153C notice is not supported by incriminating material found on search, the notice is void ab initio and the assessment under section 153C is not sustainable. The Revenue did not point to any contrary binding decision or identify a fallacy in the CIT(A)'s findings. On this basis the Tribunal found no reason to interfere with the CIT(A)'s conclusion and dismissed the Revenue's appeals for both relevant years.

The notices issued under section 153C and the assessments framed thereunder were held invalid for lack of incriminating material; Revenue's appeals dismissed.

Final Conclusion: Appeals of the Revenue dismissed for A.Y. 2011-12 and A.Y. 2014-15 on the ground that the satisfaction for issuing notices under section 153C was not supported by incriminating material; cross-objections not pressed and dismissed.

Penalty under Section 271(1)(c) for concealment of particulars of income or for furnishing inaccurate particulars of income - requirement to record satisfaction before imposing penalty - notice under section 274 r.w.s. 271(1)(c) must specify which limb is invoked - non-application of mind vitiates penalty proceedings - reliance on judicial precedent on notice and specification of limb

Penalty under Section 271(1)(c) for concealment of particulars of income or for furnishing inaccurate particulars of income - requirement to record satisfaction before imposing penalty - notice under section 274 r.w.s. 271(1)(c) must specify which limb is invoked - non-application of mind vitiates penalty proceedings - Validity of levy of penalty under Section 271(1)(c) where AO did not record whether concealment or furnishing of inaccurate particulars was the basis and the notice did not specify the limb - HELD THAT: - The Tribunal held that imposition of penalty under Section 271(1)(c) requires, as a precondition, that the Assessing Officer record satisfaction and specifically determine which of the two limbs-concealment of particulars of income or furnishing inaccurate particulars of income-applies. The notice issued under section 274 read with section 271 must indicate which limb is being invoked; in a printed/formatted notice the inapplicable portion must be struck off to show application of mind. In the present case the assessment order did not record any specific finding as to which limb applied and the notice left the inapplicable portion unstruck, giving rise to an inference of non-application of mind. Reliance was placed on the decision of the Delhi High Court in PCIT v. Sahara India Life Insurance Co. Ltd., which followed earlier High Court rulings that a failure to specify the limb in the notice renders penalty proceedings bad in law. Revenue did not place material to show that that authority has been stayed or overruled. For these reasons the Tribunal concluded that the AO was not justified in levying penalty under Section 271(1)(c) and set aside the penalty. [Paras 9, 11]

Levy of penalty under Section 271(1)(c) quashed for failure to record satisfaction and for issuance of a notice that did not specify which limb of the provision was invoked.

Final Conclusion: The assessee's appeal is allowed and the penalty imposed under Section 271(1)(c) is set aside.

Penalty under section 271C - tax deduction at source - year-end provisions - reasonable cause under section 273B - accrual versus receipt of invoice for TDS liability - no loss of revenue/tax evasion as defence to penalty

Penalty under section 271C - tax deduction at source - year-end provisions - accrual versus receipt of invoice for TDS liability - reasonable cause under section 273B - no loss of revenue/tax evasion as defence to penalty - Penalty under section 271C for non-deduction of TDS on year end provisions deleted and such deletion upheld on appeal. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the impugned amounts were year end provisions created on an estimated basis in conformity with Accounting Standard 29 and were not backed by invoices or crystallized liabilities as on the respective balance sheet dates. In the absence of invoices and an ascertainable liability, the payer could not practically deduct TDS on the provisions; taxes were, however, duly deducted and deposited when the liabilities crystallized in the subsequent year. The Tribunal accepted that there was no tax evasion or loss of revenue, and that the peculiar facts (indeterminate payees/amounts and provision entries) constituted a reasonable cause preventing deduction under section 273B, making levy of penalty under section 271C unsustainable. The Tribunal also relied on coordinate decisions under identical circumstances which reached the same conclusion, and found no distinguishable feature warranting interference with the CIT(A)'s order.

Order of the CIT(A) deleting the penalty under section 271C is upheld and the Revenue's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s deletion of the penalty under section 271C, holding that non deduction of TDS on year end provisions (created on estimate without invoices) was justified on the facts, taxes were subsequently deducted on crystallization of liability, and there was no loss of revenue.

Capital gains on transfer of property - Diverted sale consideration / overriding title - Deduction for bad debts - Reopening of assessment under section 147 - Summons under section 131

Admission of additional grounds - Additional grounds filed by the assessee were admitted by the Tribunal. - HELD THAT: - The Tribunal examined the petition seeking admission of additional grounds which challenged the CIT(A)'s findings. Although not purely legal, the Tribunal found that the facts relevant to the additional grounds were already on record before the AO and that no new evidence would be required. In view of this, the Tribunal admitted the additional grounds for adjudication. [Paras 2]

Additional grounds are admitted.

Capital gains on transfer of property - Diverted sale consideration / overriding title - Whether capital gains arise in the assessee's hands on the sale of mortgaged properties or whether sale consideration was diverted to the bank (so no capital gains arises) - remanded to the AO for factual verification. - HELD THAT: - The Tribunal noted conflicting factual positions: the assessee's case that the bank sold the mortgaged properties (including under SARFAESI) and the purchaser paid the bank directly, thereby diverting the sale consideration by overriding title (which, if proved, would attract the principle in CIT v. Smt. Thressiamma Abraham and negate liability for capital gains); and the AO's finding that the assessee himself sold the properties, received consideration, discharged the companies' liabilities and executed sale deeds. Given these contradictory findings, the Tribunal held that the factual matrix requires fresh verification by the AO to determine whether sale consideration was diverted to the lender or was received by the assessee, and directed the AO to re-examine the issue in light of the Kerala High Court decision relied upon by the assessee. [Paras 11]

Issue is set aside and remanded to the AO for verification of facts and reconsideration of capital gains in light of the competing factual claims and relevant precedent.

Deduction for bad debts - Reopening of assessment under section 147 - Whether amounts paid by the assessee (in discharge of companies' liabilities) became loans/advances to the companies and whether write off of such loans in the assessee's books qualifies as deduction for irrecoverable bad debts - remanded to the AO for verification. - HELD THAT: - The Tribunal observed that the CIT(A) recorded that the assessee became a creditor of the companies after settling the banks and had written off loans and advances as irrecoverable. The Tribunal held that if such payments constitute loans or advances in the assessee's books and the conditions of the relevant provisions for deduction of bad debts are satisfied, the assessee may be entitled to deduction under the statutory provisions. Because this contention was raised for the first time before the Tribunal and factual verification is necessary, the Tribunal directed the AO to examine the claim afresh and verify compliance with the statutory conditions. [Paras 12]

Issue is set aside and remanded to the AO for factual verification and consideration of deduction for bad debts under the applicable provisions.

Final disposal and direction to AO - Outcome of appeals and procedural direction. - HELD THAT: - Having admitted the additional grounds and identified the need for factual verification on both the capital gains and bad debts contentions, the Tribunal set aside the orders of the CIT(A) and restored the matter to the file of the AO for fresh examination as directed. The Tribunal applied the same reasoning to the identical appeal for the subsequent assessment year. [Paras 13, 14, 15, 16]

Appeals are set aside and remanded to the AO for reconsideration; treated as allowed for statistical purposes.

Final Conclusion: The Tribunal admitted the assessee's additional grounds, found contradictions in the factual record concerning who received the sale consideration, and directed the Assessing Officer to re-examine (a) whether the sale consideration was diverted to the bank such that no capital gains arise in the assessee's hands and (b) whether amounts paid by the assessee constituted loans/advances which, being written off, qualify as deduction for irrecoverable bad debts; the orders below were set aside and the matters remitted to the AO for fresh verification for assessment years 2013-14 and 2014-15.

Deduction under section 80P(2)(a)(i) for income from banking or providing credit facilities - deduction under section 80P(2)(a)(iii) for profit from marketing agricultural produce of members - deduction under section 80P(2)(c)(i) for profit of consumer co-operative society from PDS after attributing expenses - deduction under section 80P(2)(d) for interest/dividend derived from investments with another co-operative society - meaning of the expression "attributable to" in the context of section 80P

Deduction under section 80P(2)(a)(i) for income from banking or providing credit facilities - meaning of the expression "attributable to" in the context of section 80P - Interest income on short term deposits of surplus funds with a co operative bank is eligible for deduction under section 80P(2)(a)(i) where such deposits are surplus funds attributable to the business of providing credit facilities to members. - HELD THAT: - The Tribunal examined whether interest earned by the assessee on surplus funds deposited with Jila Sahakari Kendriya Bank could be treated as "income from carrying on the business of banking or providing credit facilities to its members" and thus deductible under section 80P(2)(a)(i). Distinguishing the Totgars precedent on its facts (where retained sale proceeds payable to members were invested and held as liabilities), the Tribunal relied on the wider import of the word "attributable" and on the High Court decision in Tumkur Merchants, observing that where amounts represent simpliciter surplus/idle funds (not liabilities payable to members) deposited because there were no takers, the interest earned is attributable to the business of providing credit and is deductible. Applying that reasoning to the facts before it, the Tribunal directed the Assessing Officer to allow the claimed deduction of Rs. 7,98,705 under section 80P(2)(a)(i). [Paras 13]

Deduction of Rs. 7,98,705 under section 80P(2)(a)(i) allowed; interest on surplus deposits with the co operative bank is attributable to the business of providing credit to members.

Deduction under section 80P(2)(a)(iii) for profit from marketing agricultural produce of members - Claim for deduction under section 80P(2)(a)(iii) in respect of profit from paddy procurement was not finally adjudicated on merits and is remanded to the Assessing Officer for fresh determination in light of additional documentary evidence regarding procurement from members and non members. - HELD THAT: - The Assessing Officer had limited the deduction on an ad hoc 35% basis because the purchase register produced earlier did not identify members and non members. The assessee filed a compilation of paddy purchases as additional documentary evidence before the Tribunal, which was admitted. The Tribunal found that the new evidence could materially affect the extent to which profits are attributable to marketing of members' produce and therefore set aside the matter for the AO to re adjudicate. The AO is directed to determine the extent of procurement from non members and restrict the deduction under section 80P(2)(a)(iii) only to the profit relatable to marketing of members' produce, allowing the assessee to furnish requisite documents during the remand proceedings. [Paras 15, 16, 17]

Matter remanded to the Assessing Officer to determine, on the admitted additional evidence, the proportion of paddy procurement attributable to members and to compute deduction under section 80P(2)(a)(iii) accordingly.

Deduction under section 80P(2)(c)(i) for profit of consumer co-operative society from PDS after attributing expenses - Claim for deduction under section 80P(2)(c)(i) in respect of profit from PDS activities is remanded to the Assessing Officer to allow deduction only to the extent of net profit after attributing proportionate expenses, subject to factual verification. - HELD THAT: - The Assessing Officer disallowed the assessee's claim on the ground that the provision applies to consumer co operative societies. The assessee contended that after attributing proportionate expenses the net profit from PDS is lower. The Tribunal agreed in principle that deduction, if available, should be restricted to net profit (after proportionate expenses) but held that factual verification is required. Accordingly, the Tribunal restored the issue to the AO for determination of net profit from PDS and for adjudication of the claim under section 80P(2)(c)(i) after the assessee furnishes required documents. [Paras 18, 19]

Issue remitted to the Assessing Officer to verify facts and restrict any deduction under section 80P(2)(c)(i) to the net profit from PDS after attributing proportionate expenses.

Deduction under section 80P(2)(d) for interest/dividend derived from investments with another co-operative society - Dividend income received from Jila Sahakari Kendriya Bank, a co operative bank, is deductible under section 80P(2)(d), and the disallowance by the lower authorities is vacated. - HELD THAT: - The Assessing Officer disallowed the claim on the view that subsection (4) of section 80P (effective from AY 2007 08) excludes co operative banks from claiming section 80P; he therefore concluded the bank was not a "co operative society" for the purposes of section 80P(2)(d). The Tribunal held that a co operative bank remains a "co operative society" within the definition in section 2(19), and that section 80P(2)(d) permits deduction for income (interest/dividend) derived from investments with any other co operative society. The Tribunal followed decisions favouring the assessee on this point and set aside the disallowance, directing allowance of the claimed deduction of Rs. 1,16,224. [Paras 21, 22]

Deduction of dividend income of Rs. 1,16,224 under section 80P(2)(d) allowed; the view of the lower authorities is vacated.

Final Conclusion: The Tribunal allowed the assessee's appeals in part: it allowed deduction of interest on surplus deposits under section 80P(2)(a)(i) and deduction of dividend from the co operative bank under section 80P(2)(d); it remanded the claims relating to deduction under section 80P(2)(a)(iii) (paddy procurement) and section 80P(2)(c)(i) (PDS profit) to the Assessing Officer for fresh adjudication in light of admitted additional evidence and factual verification, respectively; appeals allowed/allowed for statistical purposes for A.Y.2011-12.

Deductibility of rent paid by a tenant - meaning of 'transfer' for transfer of property under Section 2(47) - ownership for tax purposes determined by actual payment of consideration - effect of non-encashment of earnest money cheques on transfer

Deductibility of rent paid by a tenant - meaning of 'transfer' for transfer of property under Section 2(47) - ownership for tax purposes determined by actual payment of consideration - effect of non-encashment of earnest money cheques on transfer - Whether rent paid by the assessee for the period prior to actual payment of sale consideration is deductible where an agreement to sell exists but the earnest money cheques were not encashed and the consideration was paid later by RTGS. - HELD THAT: - The Tribunal found on the facts that although an agreement to sell was executed, the cheques drawn as earnest money were not encashed within their validity and the substantial part of the sale consideration (90%) was actually paid only on 13.09.2013 by RTGS. The CIT(A)'s conclusion that the assessee had become owner upon execution of the agreement/MOU (recorded as 13.05.2013 or 25.03.2013) was therefore factually incorrect. Applying the principle that transfer of ownership for the relevant tax consequence depends on the occurrence of the transfer event (here, effective payment of consideration), the Tribunal held that the assessee continued as tenant until actual payment and accordingly the rent paid prior to the date of actual part-payment is allowable. For these reasons the disallowance made by the Assessing Officer and sustained by the CIT(A) for the period before the RTGS payment was set aside. [Paras 6, 7]

Assessee's appeal allowed; rent disallowance set aside as sale/ownership occurred only on actual payment of consideration on 13.09.2013.

Final Conclusion: The Tribunal allowed the appeal for Assessment Year 2014-15, holding that the assessee remained tenant until actual payment of the sale consideration on 13.09.2013 and that the rent paid prior to that date is allowable; the disallowance by the AO and its partial sustainment by the CIT(A) were set aside.

Unexplained cash deposits under section 68 - treatment of inheritance/jewellery received from deceased brother - reliance on cash book and bank statements as proof of source - surmise and conjecture insufficient to discard books of account - remand to assessing officer and consequence of failure to file remand report

Unexplained cash deposits under section 68 - reliance on cash book and bank statements as proof of source - surmise and conjecture insufficient to discard books of account - Addition treating frequent cash deposits in assessee's bank account as unexplained and assessable under section 68 was not sustainable. - HELD THAT: - The assessee produced bank statements, a cash balance summary, cash book extracts and evidence of average cash balance demonstrating that the cash deposits were supported by books of account. The assessing officer did not point to any deficiency in the cash book and rejected the books merely on surmise and conjecture. The Tribunal held that such conjectural approach was impermissible and, in the absence of any positive finding of defect in the records, the addition could not be sustained. [Paras 6]

Addition on account of unexplained cash deposits deleted.

Treatment of inheritance/jewellery received from deceased brother - remand to assessing officer and consequence of failure to file remand report - Addition made in respect of claimed receipt of jewellery and other assets from the estate of the deceased brother was not justified and was deleted. - HELD THAT: - The assessee produced supporting material including bank records showing substantial redemptions by the deceased brother, an invoice for purchase/sale of gold in the brother's name and other documentary evidence indicating the brother's means to have owned the jewellery. The CIT(A) had called for a remand report from the assessing officer which was not filed; the Tribunal observed that it was not fair to decide against the assessee when the Assessing Officer had an opportunity to submit the remand report and had not done so. On these facts and the documentary evidence on record, the Tribunal reversed the findings of the authorities below and deleted the addition. [Paras 2, 7]

Addition in respect of inheritance/jewellery from deceased brother deleted.

Final Conclusion: Both grounds of appeal allowed; the Tribunal deleted the additions made by the assessing officer and confirmed in appeal, and the appeal is allowed.

Disallowance under section 40(a)(ia) of the Income-tax Act, 1961 - tax deduction at source liability - treatment of freight shown separately as part of purchase cost - supplier-paid freight versus payment on behalf of the purchaser

Disallowance under section 40(a)(ia) of the Income-tax Act, 1961 - tax deduction at source liability - treatment of freight shown separately as part of purchase cost - Whether disallowance under section 40(a)(ia) for freight charges debited as carriage outward is sustainable where the supplier has charged prices inclusive of freight and actually engages and pays the transporter. - HELD THAT: - The Tribunal accepted the assessee's case that the supplier's selling price to the assessee was inclusive of cost, freight, taxes and duties and that the supplier (M/s. Rukmini Rama Steel Rollings Pvt. Ltd.) engages the lorry and forwards goods directly to the assessee's customers. The assessee furnished a letter from the supplier confirming that the price charged was inclusive of freight and that the supplier bears the freight on its own account. On these facts the Tribunal held that the freight shown separately in the assessee's books did not establish that the supplier paid freight on behalf of the assessee such as to attract the assessee's obligation to deduct tax at source. The Tribunal therefore disagreed with the Assessing Officer and the Commissioner (Appeals) who treated the payments as made on behalf of the assessee and made the disallowance under section 40(a)(ia). Applying these findings, the Tribunal set aside the appellate order and directed deletion of the disallowance. [Paras 5, 6]

The disallowance made under section 40(a)(ia) in respect of the freight charges is deleted and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal for Assessment Year 2007-08, holding that freight charges shown separately were part of the supplier's inclusive price and not payments on behalf of the assessee attracting TDS liability; the disallowance under section 40(a)(ia) was deleted.

Exercise of revisionary powers under Section 263 - Scope of reassessment where issue was considered during Section 143(3) proceedings - Claim of deduction under Section 80P for interest from co-operative banks - Prohibition on invoking Section 263 after satisfaction of the Assessing Officer

Exercise of revisionary powers under Section 263 - Scope of reassessment where issue was considered during Section 143(3) proceedings - Claim of deduction under Section 80P for interest from co-operative banks - Validity of the Commissioner's exercise of powers under Section 263 to set aside the assessment order and direct de novo assessment on account of allowance of Section 80P claim for interest from a co operative bank. - HELD THAT: - The Tribunal found that the Assessing Officer had before him the details of the Section 80P claim and had examined the interest income from Mehsana Urban Co operative Bank during the assessment under Section 143(3); the assessee had furnished the relevant details including a letter dated 22.05.2017. The PCIT issued a show cause on the same issue on 14.02.2020 and set aside the assessment under Section 263. Where the matter has been verified and considered by the AO in the assessment proceedings, the revisional power under Section 263 cannot be invoked merely because the Commissioner, on a later view, considers the allowance to be incorrect. The assessee's reliance on authoritative decisions was noted by the Tribunal as supporting the proposition that once the AO has examined and formed a view after verification, the Commissioner should not exercise Section 263 to re open that concluded exercise. Applying this principle to the facts, the Tribunal held that the exercise of power under Section 263 in the present case was not sustainable.

Order under Section 263 setting aside the assessment is invalid and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the PCIT erred in invoking Section 263 after the Assessing Officer had considered and verified the Section 80P claim for interest from a co operative bank during assessment under Section 143(3); the revisional order was set aside.

Condonation of delay - limitation / time-barred appeals - sufficient cause / reasonable cause for delay - due diligence expected of a corporate assessee - dismissal of appeal in limine

Condonation of delay - sufficient cause / reasonable cause for delay - due diligence expected of a corporate assessee - limitation / time-barred appeals - dismissal of appeal in limine - Whether the delay of 712 days in filing the appeal before the Tribunal should be condoned and the appeal admitted despite the delay - HELD THAT: - The Tribunal examined the affidavit filed by the assessee-company's director and found the stated reasons not satisfactory. The impugned order was received by the then Accounts Manager, who allegedly left the company and country about 25 months after the order; no convincing explanation was given for why the company remained unaware of the disposal until recovery proceedings were initiated. As a private limited company with an accounts manager and retained professional representation before the CIT(A), the assessee was held to an expectation of reasonable diligence in taxation matters. The Tribunal also noted that the assessee had been granted multiple opportunities during assessment and appellate proceedings and had not produced any new material before the Tribunal to justify delay. In view of the absence of a sufficient cause to explain a substantial delay of 712 days, the Tribunal declined to exercise its discretion to condone the delay. [Paras 3, 4, 8, 9]

Delay of 712 days not condoned; appeal dismissed as time-barred and not admitted.

Final Conclusion: The application for condonation of delay is refused; the appeal is dismissed in limine as time-barred for Assessment Year 2009-10.

Claims frozen on approval of resolution plan - extinguishment of claims not part of resolution plan - binding nature of an approved resolution plan on the corporate debtor and its creditors including the Central Government, State Government or local authority - interpretation of Section 31 of the IBC

Claims frozen on approval of resolution plan - extinguishment of claims not part of resolution plan - binding nature of an approved resolution plan on the corporate debtor and its creditors including the Central Government, State Government or local authority - Whether a revenue claim not lodged with the Resolution Professional after public notices under the IBC survives after approval of the resolution plan. - HELD THAT: - The Court applied the law laid down in Ghanashyam Mishra & Sons Pvt. Ltd. (paragraph 102) and held that once a resolution plan is duly approved by the adjudicating authority under sub section (1) of Section 31, the claims provided in the resolution plan stand frozen and bind the corporate debtor and its creditors, including governmental and local authorities. On the date of approval, all claims not part of the resolution plan stand extinguished and no person may initiate or continue proceedings in respect of such claims. In the present case the revenue demand underlying these proceedings was not lodged with the Resolution Professional after the public announcements under Sections 13 and 15 of the IBC; consequently that claim did not survive the approval of the resolution plan and could not be entertained thereafter.

The claim of the revenue authority, not being part of the approved resolution plan and not lodged with the Resolution Professional after public notice, stands extinguished and cannot be proceeded with.

Refund of amounts deposited pending appeal - effect of approval of resolution plan on interim deposits - Whether the amount deposited by the appellant at the time of admission of the appeals should be refunded. - HELD THAT: - Having held that the revenue claim does not survive the approval of the resolution plan, the Court directed that the amount deposited by the appellant at the time of admission of the appeals, together with the interest accrued thereon, be refunded to the appellant. This remedy follows from the extinguishment of the underlying claim which negates the basis for retaining the deposit.

Deposit made by the appellant at admission of the appeals, with interest accrued, to be refunded to the appellant.

Final Conclusion: Appeals allowed on the ground that the revenue claim, not lodged with the Resolution Professional and not part of the approved resolution plan, stood extinguished on approval of the plan; the deposit made by the appellant with interest is to be refunded and pending applications stand disposed of.

Renewal of customs broker license - discretion in renewal based on performance and absence of complaints of misconduct - isolated instance of misconduct not ground for refusal of renewal - penalty and suspension not automatically bar renewal - double jeopardy

Renewal of customs broker license - discretion in renewal based on performance and absence of complaints of misconduct - isolated instance of misconduct not ground for refusal of renewal - penalty and suspension not automatically bar renewal - Whether the Commissioner and CESTAT were justified in refusing renewal of the appellant's CHA licence solely on the basis of a single past irregularity for which a penalty and a temporary suspension had already been imposed. - HELD THAT: - Regulation 9(2) of the Customs Brokers Licensing Regulations requires the Commissioner to renew a licence if the licensee's performance is found satisfactory, inter alia having regard to the absence of instances of complaints of misconduct. That discretionary power must be exercised in light of the nature and frequency of misconduct. Where there is only a single, isolated instance of irregularity which was adjudicated by imposing a monetary penalty and which did not warrant revocation of the licence and where the licence-holder thereafter resumed duties and worked without further complaint for several years, refusal to renew solely on that past incident is unjustified. A prior penalty and a period of suspension do not ipso facto preclude renewal; multiple or recurrent instances of misconduct could legitimately justify refusal, but a lone incident already penalised cannot be used to inflict de facto perpetual exclusion from the profession. Applying these principles to the facts, the Commissioner's order and the Tribunal's confirmation thereof failed to appreciate that the adjudicated penalty and suspension had already addressed the misconduct and that the solitary past instance, in the absence of further complaints, did not justify denial of renewal.

The refusal to renew the CHA licence on the sole basis of the isolated and already penalised irregularity was held unjustified; the orders refusing renewal are set aside.

Final Conclusion: The question of law is answered in favour of the appellant; the Commissioner's order refusing renewal and the Tribunal's confirmation are quashed and the appeal is allowed.

Refund of countervailing duty and special additional duty paid post-GST due to regularisation of advance licence - entitlement to refund where cenvat credit is no longer available under the GST regime - refund under Section 142(3) and (6) of the CGST Act - interest on refund under Section 11BB of the Central Excise Act

Refund of countervailing duty and special additional duty paid post-GST due to regularisation of advance licence - regularisation of advance licence - unavailability of cenvat credit under GST - refund under Section 142(3) and (6) of the CGST Act - interest on refund under Section 11BB of the Central Excise Act - Refund of CVD and SAD paid in the GST regime for imports made under advance licence prior to 30.06.2017 and regularised subsequently is allowable where cenvat credit is no longer available. - HELD THAT: - The Tribunal found that the appellant had imported inputs under advance licences prior to 30.06.2017 and regularised those licences by depositing BCD, CVD and SAD during the GST regime. The claim for refund was rejected below on the ground that the appellant had not produced duty-paid invoices and records to demonstrate utilisation in manufacture of dutiable outputs. The Tribunal held that those findings were erroneous: the imports and their entry in statutory registers (RG-23A Part I and RG 1) and subsequent utilisation in manufacture, with clearance on payment of duty, were not disputed. As cenvat credit under the erstwhile regime was not available after implementation of GST, the amount of CVD and SAD paid on regularisation is refundable. The Tribunal applied the statutory scheme embodied in Section 142(3) and (6) of the CGST Act to allow refund and directed grant of refund with interest under Section 11BB of the Central Excise Act, observing that the lower authorities had incorrectly imposed an evidentiary bar not supported by the materials. [Paras 7, 8]

The refund of CVD and SAD as reflected in the show cause notices and orders in appeal is allowed; the impugned orders are set aside and the jurisdictional Assistant Commissioner is directed to grant refund with interest within 45 days.

Final Conclusion: All three appeals are allowed; the orders rejecting the refund claims are set aside and the respondent is directed to grant the refunds of CVD and SAD with interest within 45 days from receipt of this order.

Sale of corporate debtor as a going concern - applicability and interpretation of Regulation 32A of IBBI (Liquidation Process) Regulations - directory versus mandatory character of statutory timelines - estoppel by conduct of stakeholder committee - powers of liquidator to fix and reduce reserve price under Liquidation Regulations - validity and legal effect of IBBI circular issued under Section 196

Applicability and interpretation of Regulation 32A of IBBI (Liquidation Process) Regulations - directory versus mandatory character of statutory timelines - Whether the sale of the Corporate Debtor as a going concern held on 11.02.2021 was contrary to Regulation 32A and liable to be set aside - HELD THAT: - The Tribunal found that Regulation 32A (inserted w.e.f. 27.07.2019) post-dates the liquidation commencement (04.02.2019) and that the provision does not operate to automatically invalidate sales in processes commenced earlier. The Bench held that sub regulation (4) of Regulation 32A-requiring that if the corporate debtor cannot be sold as a going concern within ninety days the liquidator shall proceed to sell assets individually-is to be treated as directory rather than mandatory in the facts of this case. The court relied on the legislative purpose of the Code (revival and maximisation of value), principles of statutory construction distinguishing mandatory and directory provisions, and prior authorities emphasising encouragement of going concern sales. The Tribunal also observed that the Stakeholders Consultation Committee (which included the applicant) had been informed of the 90 day timeline and had unanimously agreed to pursue a going concern sale; accordingly the applicant is estopped from now challenging the sale on the ground of lapse of time. Having regard to these conclusions, and the fact that the sale ultimately fructified with payment and issuance of a sale certificate, the Tribunal found no legal ground to set aside the going concern sale. [Paras 9, 10, 11, 12, 17]

The sale as a going concern is not contrary to Regulation 32A in the circumstances of this case and is not liable to be set aside.

Estoppel by conduct of stakeholder committee - Whether the applicant could challenge the going concern sale despite having participated in and consented to the Stakeholders Consultation Committee decisions - HELD THAT: - The record establishes that at the first Stakeholders Consultation Committee meeting (10.10.2019), the liquidator explained the 90 day timeline and the committee-including the applicant-unanimously agreed to pursue sale of the corporate debtor as a going concern and to the modalities for reserve price and EMD. The Tribunal held that the applicant's prior conscious assent and participation in fixation and publication of sale notices estops him from assailing the post fruition sale on grounds of non compliance with Regulation 32A's timeline. [Paras 10, 12]

The applicant is estopped from challenging the going concern sale having participated in and consented to the Stakeholders Consultation Committee decisions.

Powers of liquidator to fix and reduce reserve price under Liquidation Regulations - Whether the reductions in reserve price and the final reserve price fixed by the liquidator were impermissible or warranted setting aside of the sale - HELD THAT: - Under Clause 4 of Schedule I of the Liquidation Process Regulations the liquidator may reduce the reserve price up to 25% on failed auctions. The minutes show the liquidator repeatedly informed and obtained the committee's concurrence for reserve price reductions; the average reduction was about 8%, well within the regulatory limit. The Tribunal noted it is natural to reduce reserve price after repeated failed auctions to attract bidders and avoid further value deterioration. The applicant, being a committee member, had the opportunity to place material contrary to the reserve price fixed but did not do so. The court found no substance in the contention that the reserve price was improperly low. [Paras 13, 14, 15]

The reductions in reserve price were within the liquidator's regulatory powers and, given committee concurrence and the circumstances of repeated failed auctions, do not warrant setting aside the sale.

Validity and legal effect of IBBI circular issued under Section 196 - Whether the IBBI circular dated 26.08.2019 deprived the liquidator of discretion or otherwise rendered the going concern sale unlawful - HELD THAT: - The Tribunal noted the IBBI circular stated the amendment was not applicable to liquidation processes commenced before 25.07.2019. While acknowledging arguments on the limited legal force of circulars, the Bench proceeded on the factual matrix-including the committee's informed consent and the timing of events-and held that the liquidator had discretion in applying amended regulations to pending processes when issuing auction notices. The court emphasised that absent a demonstrated illegality affecting the objectives of the Code, the circular and its legal character did not render the sale unlawful in this case. [Paras 8, 9, 12]

The IBBI circular did not invalidate the sale; the liquidator's actions in the circumstances were not found unlawful.

Final Conclusion: The application challenging the going concern sale and related actions of the liquidator is dismissed: the Tribunal found Regulation 32A to be directory in the circumstances, the applicant was estopped by his conduct as a Stakeholders Consultation Committee member, the reserve price reductions were within the liquidator's powers with committee concurrence, and there was no legal basis shown to set aside the sale; no costs are ordered.

Maintainability of writ petition in presence of efficacious alternate remedy - constitutionality of Sections 95, 97, 99 and 100 of the Insolvency and Bankruptcy Code - role and powers of the Resolution Professional vis-a -vis the Adjudicating Authority in the Insolvency Resolution Process - allegation of non-application of mind and limitation in proceedings before the NCLT

Maintainability of writ petition in presence of efficacious alternate remedy - Writ petition under Article 226 challenging NCLT order is not maintainable where the Code provides an appellate remedy. - HELD THAT: - The Court held that Section 61 of the IBC affords an appeal to the NCLAT against orders of the Adjudicating Authority and therefore provides an efficacious alternate remedy. In view of the statutory appellate mechanism for orders passed under the Code, the High Court declined to adjudicate the sustainability of the NCLT order in writ proceedings and observed that when the Code itself prescribes an appeal, resort to Article 226 is not justified to re-open the merits of the impugned order. [Paras 10]

The writ petition is not maintainable in view of the alternate remedy under the IBC; petitioners directed to approach the NCLAT.

Constitutionality of Sections 95, 97, 99 and 100 of the Insolvency and Bankruptcy Code - role and powers of the Resolution Professional vis-a -vis the Adjudicating Authority in the Insolvency Resolution Process - Sections 95, 97, 99 and 100 of the IBC are not unconstitutional and do not reduce the Adjudicating Authority to a mere rubber stamp. - HELD THAT: - The Court analysed Chapter III, Part III of the IBC and concluded that the Resolution Professional's functions in initiating an IRP are confined to making recommendations with reasons; the Adjudicating Authority remains the decision-making body and is not bound by those recommendations. The Court relied on the principle that imposition of duties on the Resolution Professional does not circumscribe the jurisdiction of the NCLT, observing that other provisions of the Code similarly vest final decision-making power in the Adjudicating Authority. The petitioners' contention that the statutory scheme confers judicial powers on the Resolution Professional and renders the Tribunal a rubber stamp was rejected as factually incorrect. [Paras 11, 12, 13, 14, 15]

Sections 95, 97, 99 and 100 of the IBC are not arbitrary or unconstitutional; no relief on that ground.

Allegation of non-application of mind and limitation in proceedings before the NCLT - Allegations that the NCLT erred by proceeding against a deceased person and that claims were barred by limitation were not adjudicated in the writ since an alternate appellate remedy exists. - HELD THAT: - The petitioners alleged non-application of mind by the NCLT, proceedings against a deceased person, and that the claims were barred by limitation. The High Court did not decide these factual and legal contentions on merits, observing that the appropriate forum for challenging such aspects of the impugned order is the appellate remedy under the Code. Consequently, the High Court declined to re-adjudicate those contentions in writ jurisdiction and directed that the petitioners may approach the NCLAT for redressal. [Paras 3, 5, 6, 10]

These contentions were not decided on merits by the High Court; petitioners given time to pursue statutory appeal to the NCLAT.

Interim deferral of implementation of NCLT order - Implementation of the impugned NCLT order is deferred for a limited period to enable petitioners to approach the appellate forum. - HELD THAT: - Although the writ petition was dismissed for lack of maintainability, the Court granted a limited interim accommodation: petitioners were afforded one month to move the NCLAT and the operation of the NCLT order (Ext.P11) was stayed for that period so that they may seek appellate relief. This limited deferment is interlocutory and directed solely to permit access to the statutory appellate remedy. [Paras 15]

Implementation of Ext.P11 deferred for one month; petitioners granted one month to approach the NCLAT.

Final Conclusion: Writ petition dismissed as not maintainable in view of the alternate remedy under the IBC; constitutional challenge to Sections 95, 97, 99 and 100 rejected; factual/contentionsof non-application of mind and limitation left to be agitated before the NCLAT; operation of the impugned NCLT order deferred for one month to enable filing of the statutory appeal.

Fraud on court - recall of judgment obtained by fraud - acknowledgement of debt and extension of limitation - doctrine of merger - inherent jurisdiction to set aside judgments obtained by fraud - contempt proceedings and impleadment of advocates

Fraud on court - recall of judgment obtained by fraud - acknowledgement of debt and extension of limitation - Whether the Appellate Tribunal's judgment dated 07.01.2022 was obtained by fraud such as to warrant recall or to declare the judgment a nullity - HELD THAT: - The Applicant alleged that Respondent No.1 obtained the admission order and the appellate dismissal by misrepresenting that documents evidencing acknowledgements and extensions were filed with the Section 7 petition. The Tribunal examined the Section 7 pleadings, the annexures to the petition and the Reply filed in the appeal (which contained correspondence referred to as Annexures R-3 to R-10). The Tribunal held that the Section 7 application itself contained pleadings in Part V about the DRT decree, the OTS and that extensions were granted, and that the correspondence relied upon was brought on record by the Financial Creditor in its Reply in the appeal. The Tribunal found no representation by Respondent No.1 that those correspondence documents had been filed with the Adjudicating Authority, and that the appellate observations (including para 24 of the judgment) recording dates and documents did not amount to a finding that Respondent No.1 falsely asserted those documents were part of the Section 7 record. Applying established principles that a judgment obtained by fraud is a nullity, the Tribunal nevertheless concluded that the Applicant had not proved any deliberate deception with intent to secure undue advantage and therefore there was no fraud on this Tribunal or misrepresentation justifying recall of the judgment dated 07.01.2022. [Paras 15, 16, 26, 31, 41]

Allegation of fraud rejected; the judgment dated 07.01.2022 was not obtained by fraud and will not be recalled.

Correction of record - mistake apparent on face of record - Application for expunging certain events from the order dated 07.01.2022 (I.A. No. 190 of 2022) - HELD THAT: - The Applicant sought correction of 'mistakes apparent' in the appellate judgment. The Tribunal examined the challenged factual statements and the record and found no error in the judgment's factual recitals or events as recorded. [Paras 46]

I.A. No. 190 of 2022 dismissed; no expunction ordered.

Status quo applications - Applications for interim status quo pending adjudication of I.A.s (I.A. Nos. 191 and 337 of 2022) - HELD THAT: - The Applicant sought temporary injunctions/status quo orders. The Tribunal considered the requests in light of the substantive challenges and found no merit in maintaining status quo pending adjudication. [Paras 47]

I.A. Nos. 191 and 337 of 2022 dismissed; no status quo ordered.

Contempt proceedings - impleadment of advocates - Contempt Application (AT) No. 06 of 2022 seeking proceedings for alleged fraud and criminal prosecution, including impleadment of advocates who appeared in the appeal - HELD THAT: - The Tribunal observed that the contempt petition largely repeated allegations already rejected in the fraud application and found no grounds to initiate contempt or criminal proceedings. Further, the Tribunal noted that the Applicant had recklessly sought to implead counsel who had assisted Respondent No.1 before the Tribunal as possible accused; such impleadment was inappropriate. In consequence, the Tribunal ordered deletion of the names of the advocates (Respondent Nos. 16-21) from the array of parties and dismissed the contempt application. [Paras 48, 49, 50]

Contempt Application (AT) No. 06 of 2022 dismissed; names of Respondent Nos. 16-21 (advocates) deleted from the array of parties.

Final Conclusion: The applications I.A. Nos. 190, 191, 192 and 337 of 2022 and Contempt Application (AT) No. 06 of 2022 are dismissed. The Tribunal finds no fraud or misrepresentation by Respondent No.1 warranting recall of its judgment dated 07.01.2022; the names of the advocates (Respondent Nos. 16-21) are deleted from the contempt proceedings.

Verification of claims by liquidator - powers and duties of liquidator under Section 35 and Section 39 of the IBC - substantiation of claims under Regulation 23 of the IBBI (Liquidation Process) Regulations, 2016 - proof of debt requirement under Regulation 18(2)(b)(i) of the IBBI (Liquidation Process) Regulations, 2016 - rate of interest applicable to Letter of Credit vis-a -vis Cash Credit facilities - reliance on bank circulars and sanction letters to establish accrual of interest

Rate of interest applicable to Letter of Credit vis-a -vis Cash Credit facilities - reliance on bank circulars and sanction letters to establish accrual of interest - proof of debt requirement under Regulation 18(2)(b)(i) of the IBBI (Liquidation Process) Regulations, 2016 - verification of claims by liquidator - Whether the liquidator was justified in admitting the appellant's claim only in part by reducing interest claimed on Letter of Credit exposures and treating overdue LC amounts on the basis of cash credit rate. - HELD THAT: - The Tribunal accepted the liquidator's legal and practical approach that an LC is a non fund based facility and does not, by itself, carry a contractual rate of interest; where a bank makes a forced debit to a cash credit/overdraft account on account of LC utilisation, interest on the resultant overdue amounts is governed by the rate applicable to the cash credit facility. The appellant relied on sanction letters and selected bank circulars to claim a higher rate, but failed to place on record a financial contract or corroborative financial statements or any acknowledgement by the corporate debtor evidencing agreement to the asserted rate. Regulation 18(2)(b)(i) requires a financial contract supported by financial statements to establish debt and accrued interest; Regulation 23 permits the liquidator to call for further substantiation. Sections 35 and 39 of the Code vest the liquidator with the duty and power to verify claims and to require production of documents, and to admit or reduce claims after verification. Reliance on a single circular without demonstrating that the corporate debtor had accepted or been bound by it, and absence of requisite documentary evidence, was insufficient to displace the liquidator's verification and partial admission of the claim. The Adjudicating Authority's conclusion that the appellant failed to prove entitlement to the higher interest rate was therefore sustainable. [Paras 4, 5, 6]

The adjudicating authority's order upholding the liquidator's partial admission of the claim (reducing the interest portion) is affirmed and the appeal is dismissed.

Final Conclusion: Appeal dismissed. The Tribunal upholds the liquidator's exercise of verification and partial admission of the financial creditor's claim for lack of adequate documentary substantiation of the higher interest claimed; no order as to costs.

Power of liquidator to issue Letter of Intent for part extent - validity of issuing LOI excluding disputed portion - compliance with EOI process memorandum and auction terms - interpretation of the Insolvency and Bankruptcy Code and regulations in relation to sale of corporate debtor's assets

Power of liquidator to issue Letter of Intent for part extent - validity of issuing LOI excluding disputed portion - compliance with EOI process memorandum and auction terms - Whether the Liquidator was entitled to issue a Letter of Intent for 45.21 Acres excluding the disputed 2.78 Acres out of the 47.99 Acres described in the EOI and related auction documents. - HELD THAT: - The Tribunal examined the EOI process memorandum, the e-auction terms and conditions and the applicable provisions of the Code and regulations thereunder. The Court confined the controversy to the permissibility of issuing a LOI for a part extent and did not decide proprietory rights in the disputed 2.78 Acres. On review of the documents and governing law, the Applicant failed to identify any clause in the EOI process memorandum, auction terms or provisions of the Code or its regulations which prohibited the Liquidator from issuing a LOI for a lesser extent than that described in the EOI. In light of the absence of any contractual or regulatory bar and having regard to the pending litigation concerning the disputed extent, the Tribunal held that the Liquidator was within his powers to exclude the disputed portion and issue the LOI for the remaining extent. [Paras 9, 10, 11]

The Liquidator was entitled to issue the LOI for 45.21 Acres excluding the disputed 2.78 Acres; the challenge to such action is without merit.

Final Conclusion: Both interlocutory applications filed by the successful bidder seeking extension, waiver of interest and directions to treat the auction as relating to the entire 47.99 Acres were dismissed; the Liquidator was held entitled to issue the LOI for the part extent after excluding the disputed portion.

Alternate remedy by way of appeal - pre-deposit under Section 35F of the Central Excise Tax, 1944 as made applicable to appeals/stay petitions under the Finance Act, 1994 - consideration of binding precedent and question of distinguishability - time bound adjudication by the Appellate Commissioner

Alternate remedy by way of appeal - pre-deposit under Section 35F of the Central Excise Tax, 1944 as made applicable to appeals/stay petitions under the Finance Act, 1994 - consideration of binding precedent and question of distinguishability - time bound adjudication by the Appellate Commissioner - Writ petition disposed of in view of the availability of an alternate statutory remedy; petitioner permitted to prefer an appeal to the Appellate Commissioner subject to the mandatory pre deposit and the Appellate Commissioner directed to decide the appeal on merits within a specified time, duly considering the cited Division Bench decision. - HELD THAT: - The Court recorded that the petitioner has an alternate remedy against the impugned Order in Original and that the petitioner relies on a Division Bench decision of this Court. The respondent had considered the contention and distinguished the cited precedent on facts. Because entitlement to the benefit of that decision requires detailed factual consideration, the Court declined to adjudicate the matter in writ jurisdiction and instead disposed the petition by granting liberty to the petitioner to file the statutory appeal. The statutory pre deposit obligation under Section 35F of the Central Excise Tax, 1944 (as made applicable to appeals/stay petitions under the Finance Act, 1994) was held to be applicable; on satisfaction of that requirement the Appellate Commissioner was directed to consider and dispose of the appeal on merits and in accordance with law within four weeks, expressly taking into account the petitioner's submission that the matter is covered by the Division Bench decision and the respondent's distinction of that decision. [Paras 2, 6, 7, 8, 9]

Writ petition disposed; petitioner granted liberty to file appeal within fifteen days with mandatory pre deposit and Appellate Commissioner directed to decide the appeal on merits within four weeks considering the cited Division Bench decision.

Final Conclusion: The writ petition is disposed of on the ground of an available alternate remedy: the petitioner may file the statutory appeal within fifteen days on making the mandated pre deposit and the Appellate Commissioner shall consider and dispose of the appeal on merits within four weeks, giving due consideration to the cited Division Bench decision.

No notice where service tax voluntarily paid under Section 73(3) of the Finance Act, 1994 (voluntary payment provision) - Exception to Section 73(3) where fraud, collusion, wilful mis-statement, suppression of facts or intent to evade exists under Section 73(4) - Penalty under Section 78 not leviable where payment and interest fall within Section 73(3) protection - Business support services - whether cinema-owner's share of net box-office collections is exigible to service tax - Unincorporated joint venture - cumulative tests for emergence and absence of joint venture

No notice where service tax voluntarily paid under Section 73(3) of the Finance Act, 1994 (voluntary payment provision) - Exception to Section 73(3) where fraud, collusion, wilful mis-statement, suppression of facts or intent to evade exists under Section 73(4) - Penalty under Section 78 not leviable where payment and interest fall within Section 73(3) protection - Validity of show cause notice and imposition of penalty in respect of service tax on renting of immovable property where tax was paid during audit and interest paid thereafter - HELD THAT: - The Tribunal found it undisputed that the appellant paid the service tax on rental receipts during the audit and paid interest after issuance of the show cause notice. Applying the statutory scheme, the Tribunal held that the voluntary payment provision in Section 73(3) applies and, in the absence of any material establishing elements enumerated in Section 73(4) (fraud, collusion, wilful mis-statement, suppression of facts or intent to evade), the exception in Section 73(4) is inapplicable. The impugned order did not contain findings or evidence establishing any of those disqualifying elements; rather it showed the appellant paid the tax when pointed out by audit. Consequentially, issuing the show cause notice in respect of the amount covered by the voluntary payment protection was improper and imposition of penalty under Section 78 in respect of that part of the demand was not justified. [Paras 7]

SCN in respect of the renting-of-immovable-property demand (paid during audit) should not have been issued; Section 73(3) protection applies and penalties under Section 78 insofar as this demand are set aside.

Business support services - whether cinema-owner's share of net box-office collections is exigible to service tax - Unincorporated joint venture - cumulative tests for emergence and absence of joint venture - Whether the appellant's share of net box-office collections is taxable as consideration for business support services by virtue of an alleged unincorporated joint venture with film distributors - HELD THAT: - The Tribunal examined the contractual and factual matrix, applying established tests for the existence of an unincorporated joint venture (express or implied agreement, pooling of assets/management, sharing of profits and losses, mutual control, intention to form a joint enterprise, and accountability to each other). The agreements were for temporary transfer/licence of copyright to exhibit films; the appellant owned and operated the theatres under its licence, recognized gross ticket receipts as its revenue and booked amounts paid to distributors as direct film-hire expense. Distributors did not control exhibition, did not share losses or business risk, and there was no joint ownership, mutual control, or intention to create a new business entity. The Tribunal also noted binding and consistent precedents of this Tribunal and other decisions holding that the cinema-owner's share of box-office collections is not exigible to service tax. On these findings, there was no unincorporated joint venture and no service liable as business support services. [Paras 13, 14]

Demand of service tax (and interest) on the appellant's share of net box-office collections under the category of business support services is set aside; no joint venture found and such receipts are not exigible to service tax.

Final Conclusion: The appeal is allowed in part: the demand and interest alleged under the head of business support services are quashed; the renting-of-immovable-property tax demand was already paid and, being covered by Section 73(3), the related show cause notice and penalties are set aside; all penalties imposed upon the appellant are consequently vacated.

Condonation of delay - statutory limitation for filing appeals - strict construction of proviso permitting only further thirty days - exclusion of Section 5 of the Limitation Act - maintainability of appeal filed beyond prescribed period

Condonation of delay - statutory limitation for filing appeals - strict construction of proviso permitting only further thirty days - exclusion of Section 5 of the Limitation Act - Whether the appeal before the Commissioner (Appeals) could be entertained despite a delay of 1,325 days by condoning the delay. - HELD THAT: - The Tribunal examined the explanation for the delay-periods of incarceration, personal/familial fears and the COVID-19 pandemic-and rejected them as insufficient to excuse non compliance with the statutory timeline. The Bench held that incarceration does not per se bar access to judicial remedies and that the appellant had opportunities to seek legal assistance, including obtaining bail. Reliance was placed on the Supreme Court decision in Singh Enterprises which interprets the proviso to the statute as permitting condonation only for the specified further period of thirty days and excluding the operation of Section 5 of the Limitation Act; therefore the appellate authority has no power to condone delay beyond that period. Applying that ratio, the Tribunal found no infirmity in the Commissioner (Appeals) dismissing the appeal as time barred and declined to enter into the merits. [Paras 2, 3, 4, 5]

The appeal was correctly dismissed as barred by limitation; condonation beyond the statutory further period of thirty days is not permissible and the Commissioner (Appeals)' order is upheld.

Final Conclusion: The appeal is dismissed; the order of the Commissioner (Appeals) dismissing the appeal as time barred is affirmed.

Use of Form 26AS and reconciliations for establishing service tax liability - reverse charge versus forward charge in respect of renting of immovable property - proviso to Section 73(1) relating to extended period of limitation - revenue-neutrality and invocability of extended period for reverse charge demands - duty of departmental detailed manual scrutiny (including examination of Form 26AS) - requirement of positive evidence of suppression or fraud to invoke extended period - CA certified reconciliation as evidentiary material

Use of Form 26AS and reconciliations for establishing service tax liability - CA certified reconciliation as evidentiary material - Whether figures in Form 26AS can be used to determine Service Tax liability in the absence of independent evidence of taxable service and notwithstanding a CA certified reconciliation - HELD THAT: - The Tribunal accepted the appellant's CA certified reconciliation of ST 3 returns with Form 26AS and the confirmations from service recipients that TDS was deducted also on the service tax component, holding that inflated figures in Form 26AS alone are not a basis to fasten Service Tax liability. The Tribunal relied on the principle that figures submitted to income tax authorities cannot be used to determine service tax unless evidence establishes that the amounts relate to taxable services, and found that the reconciliation and invoices showed tax was collected/treated, so demand based solely on Form 26AS mismatch could not be sustained. [Paras 10, 11]

Demand founded on mismatch in Form 26AS is unsustainable; the CA certified reconciliation and recipient confirmations rebut the Department's claim.

Reverse charge versus forward charge in respect of renting of immovable property - use of Form 26AS and reconciliations for establishing service tax liability - Whether the portion of demand raised on reverse charge basis is sustainable where invoices and reconciliations show service tax was collected by service providers, and whether certain service providers fall outside reverse charge notification - HELD THAT: - The Tribunal found that where invoices and the reconciliation certificate demonstrate that service tax was collected by the service providers, the department cannot demand the same amount again on reverse charge. Further, the Tribunal noted that several service providers (e.g., corporate entities) invoked by the Department are companies and thus not subject to reverse charge under the relevant notification's carve out; accordingly, the demand on RCM basis could not be sustained. [Paras 10]

Portions of the demand framed on reverse charge basis fail: tax shown as collected by service providers cannot be re demanded, and certain providers are not covered by the reverse charge notification.

Proviso to Section 73(1) relating to extended period of limitation - duty of departmental detailed manual scrutiny (including examination of Form 26AS) - requirement of positive evidence of suppression or fraud to invoke extended period - revenue-neutrality and invocability of extended period for reverse charge demands - Whether the department could invoke the extended period of limitation for the demand (in whole or in part) - HELD THAT: - The Tribunal held that the show cause notice did not invoke the proviso to Section 73(1) and therefore could not sustain demands for the extended period. It further found that the Department had conducted detailed manual scrutiny (which includes checking Form 26AS) and that the appellant had been filing returns regularly, so extended limitation could not be invoked on the basis of Form 26AS figures. The Tribunal also held that for the portion of demand raised on reverse charge the situation is revenue neutral (the appellant would have been eligible for credit) and extended period cannot be invoked for such revenue neutral demands. Finally, absence of any positive evidence of suppression or intent to evade (and the appellant being a private limited company whose accounts are public) precluded invocation of extended limitation. [Paras 12, 13, 14]

Extended period is not invocable for the demands in question; the demands are time barred and cannot be sustained on the grounds advanced by the Department.

Final Conclusion: The Tribunal allowed the appeal, set aside the impugned order and held that the Service Tax demand (including interest and penalty) for the periods in dispute cannot be sustained - demands based on Form 26AS mismatch, on reverse charge where tax was collected by providers, and demands sought to be made for the extended period were rejected.

Assessment includes self-assessment - refund of Cenvat credit arising as on the appointed day - overriding effect of the CGST Act on limitation under Section 11B of the Central Excise Act - entitlement to refund under Section 142(3) read with Section 142(8)(b) of the CGST Act - disbursement of refund with interest under Section 11BB of the Central Excise Act

Assessment includes self-assessment - Whether a refund claim rejected on the ground that it 'arises by way of self-assessment' is not entertainable under Section 142(8)(b). - HELD THAT: - The Tribunal examined Rule 2(b) of the Central Excise Rules, 2002 which expressly provides that assessment includes self-assessment and provisional assessment. On that basis the contention that refunds arising from self-assessment are excluded from the scope of refund under Section 142(8)(b) was rejected. The Court held that the first objection to the refund - that it arose from self-assessment and therefore was not entertainable - is contrary to the statutory definition and is unsustainable.

The objection that the refund arises from self-assessment and is not entertainable under Section 142(8)(b) is rejected; assessment includes self-assessment.

Entitlement to refund under Section 142(3) read with Section 142(8)(b) of the CGST Act - overriding effect of the CGST Act on limitation under Section 11B of the Central Excise Act - Whether the refund claim filed on 07th March 2019 for Cenvat credit as on 30th June 2017 was rightly rejected on the ground of limitation and whether the CGST Act permits disbursement notwithstanding the limitation under Section 11B. - HELD THAT: - A plain reading of Section 142(3) shows that claims for refund of any amount of Cenvat credit after the appointed day are to be disposed of in accordance with the provisions of the existing law and amounts eventually accruing shall be paid in cash, subject only to the proviso regarding sub-section (2) of Section 11B (unjust enrichment) of the Central Excise Act. Section 142(8)(b) similarly provides for refund where it becomes refundable pursuance to assessment or adjudication proceedings. The Tribunal held that the CGST Act has an overriding effect on the limitation period under Section 11B and, on the facts of the case, no limitation bar as per Section 11B applied to defeat the claim. Consequently the appellant was held entitled to refund under Section 142(3) read with Section 142(8)(b) and the corresponding erstwhile Central Excise provisions and Cenvat Credit Rules.

The refund claim is not barred by limitation under Section 11B in view of the overriding provisions of the CGST Act; the appellant is entitled to the refund under Section 142(3) r/w 142(8)(b).

Final Conclusion: Appeal allowed. The impugned order rejecting the refund is set aside; the adjudicating authority is directed to disburse the refund of Cenvat credit as on 30th June 2017 with interest under Section 11BB of the Central Excise Act within 45 days of service of this order.

Suppression of fact - penalty under Rule 15(4) of Cenvat Credit Rules, 2004 - incorrect invocation of penal provision does not absolve liability - remand to Adjudicating Authority for fresh decision

Suppression of fact - penalty under Rule 15(4) of Cenvat Credit Rules, 2004 - incorrect invocation of penal provision does not absolve liability - Whether penalty under Rule 15(4) should have been imposed where the Adjudicating Authority found suppression of fact but invoked Rule 15(2). - HELD THAT: - The Adjudicating Authority has expressly recorded a finding of suppression of fact on the part of the assessee. In such circumstances the correct penal provision to be invoked is Rule 15(4) of the Cenvat Credit Rules, 2004 which contemplates imposition of penalty equal to the service tax; a mere clerical or incorrect reference to Rule 15(2) cannot operate to absolve the assessee of a penalty otherwise legally exigible. However, the Tribunal noted that an allied appeal (ST/307/2010) arising from the same impugned order has been remanded to the Adjudicating Authority for determination of suppression of fact; in the interest of consistent adjudication the present matter requires remand as well so that the question of suppression and the consequent penalty under the correct rule are decided together. [Paras 4]

Matter remanded to the Adjudicating Authority to decide the question of suppression and to impose penalty under Rule 15(4) as appropriate, along with the earlier remand in appeal No ST/307/2010.

Final Conclusion: Revenue's appeal is disposed of by remanding the matter to the Adjudicating Authority for fresh consideration of suppression of fact and, if established, imposition of penalty under Rule 15(4) of the Cenvat Credit Rules, 2004, to be decided along with the earlier remand in appeal No ST/307/2010.

CENVAT credit admissibility for input services - input service used "in or in relation to" manufacture of final products - credit for services in respect of assets located outside factory premises - interpretation of Rule 2(1) (input service) and Rules 3 & 4 of CENVAT Credit Rules, 2004

CENVAT credit admissibility for input services - input service used "in or in relation to" manufacture of final products - credit for services in respect of assets located outside factory premises - interpretation of Rule 2(1) (input service) and Rules 3 & 4 of CENVAT Credit Rules, 2004 - Entitlement to Cenvat credit for repair and maintenance services of a windmill situated outside the factory premises. - HELD THAT: - The Tribunal examined whether repair and maintenance of a windmill located outside the factory premises qualifies as an "input service" eligible for Cenvat credit. Applying the definitions and conditions in Rule 2(1) (input service) and Rules 3 and 4 of the CENVAT Credit Rules, 2004, the Tribunal held that the expression "input service" is broad and covers services used by the manufacturer "whether directly or indirectly, in or in relation to the manufacture of final products." Rules 3 and 4 require that input services be received by the manufacturer but do not confine receipt to within the factory premises. The Tribunal relied on earlier High Court decisions interpreting Rule 2(1) expansively and accepted the ratio in Commissioner of Central Excise & Customs, Aurangabad v. Endurance Technology (and the authorities therein) to conclude that management, maintenance and repair services relating to windmills, even if the windmills are located outside the factory, are input services eligible for Cenvat credit. On that basis the impugned orders denying credit solely because the windmill is outside the factory were set aside and the appeals allowed. [Paras 4, 5, 6]

Cenvat credit allowed for repair and maintenance services of the windmill located outside factory premises; impugned orders set aside and appeals allowed.

Final Conclusion: The Tribunal allowed the appeals and held that repair and maintenance services of windmills situated outside the factory premises qualify as "input services" under the CENVAT Credit Rules, 2004 and are admissible for Cenvat credit; the orders denying credit on the sole ground that the windmill was outside the factory are set aside.

Input tax credit - requirement of VAT invoice for claiming input tax credit - obligation to issue VAT invoice - disallowance of input tax credit for non-compliance with Rule 38 - reading of statutory provisions conjointly

Input tax credit - requirement of VAT invoice for claiming input tax credit - disallowance of input tax credit for non-compliance with Rule 38 - Claim of input tax credit may be disallowed where the dealer has not complied with the invoicing requirements of Rule 38 despite the entitlement under Section 18. - HELD THAT: - The Court held that entitlement to input tax credit under Section 18 of the Rajasthan Value Added Tax Act, 2003 must be examined together with the other provisions of the Act and the Rules. Section 72 and Rule 38 lay down the obligation of the selling dealer to issue a VAT invoice and Rule 38(3) expressly provides that no input tax credit shall be allowed unless there is full compliance with Rule 38(1) and (2). Rule 18 permits credit on the basis of an original VAT invoice or a duplicate issued under Rule 38(4), but does not override the mandatory invoice issuance and particulars prescribed by Rule 38. Accordingly, the Board was justified in disallowing the claim where it was found, and admitted by the petitioner, that various cash transactions had occurred and invoices in respect of those transactions were not issued. The statutory provisions therefore must be read conjointly and non-compliance with Rule 38(1) and (2) disentitles the purchaser to input tax credit under the scheme of the Act and Rules.

The Board's disallowance of the petitioner's input tax credit claim for non-compliance with Rule 38 was upheld.

Final Conclusion: Revision petition dismissed; the order of the Rajasthan Tax Board denying the input tax credit for failure to comply with the VAT invoicing requirements under Rule 38 is upheld.

Abuse of the process of court - continuation of proceedings under Section 174-A of the Indian Penal Code as an abuse where main NI Act complaint is withdrawn - effect of withdrawal/compromise in proceedings under Section 138 of the Negotiable Instruments Act on ancillary criminal proceedings - setting aside declaration of proclaimed person for non-service where main complaint is subsequently withdrawn

Continuation of proceedings under Section 174-A of the Indian Penal Code as an abuse where main NI Act complaint is withdrawn - abuse of the process of court - effect of withdrawal/compromise in proceedings under Section 138 of the Negotiable Instruments Act on ancillary criminal proceedings - Whether FIR No.390 dated 09.06.2020 registered under Section 174-A IPC and consequent proceedings should be quashed where the complaint under Section 138 NI Act has been withdrawn on compromise. - HELD THAT: - The Court found that the FIR under Section 174-A IPC was registered pursuant to an order made when the petitioner was declared a proclaimed person in the Section 138 NI Act proceedings, and that the prosecution before the Magistrate arose solely from the petitioner's non-appearance in those NI Act proceedings. The complaint under Section 138 was subsequently withdrawn on 16.04.2021 following compromise between the parties. Relying on consistent coordinate-Bench precedents, the Court applied the principle that continuation of independent criminal proceedings instituted only because of absence in the main NI Act proceedings, when the main complaint has been withdrawn by compromise, would constitute an abuse of the process of court. In the circumstances of this case, where the petitioner was not duly served in the NI Act proceedings, was declared a proclaimed person, and the main complaint has been withdrawn, the determinative legal conclusion was that the auxiliary FIR and related proceedings cannot be permitted to continue and the order declaring the petitioner a proclaimed person must be set aside.

FIR No.390 dated 09.06.2020 registered under Section 174-A IPC and all consequent proceedings are quashed and the order dated 04.07.2019 declaring the petitioner a proclaimed person is set aside.

Final Conclusion: Petition allowed: in view of the compromise and withdrawal of the Section 138 NI Act complaint and the attendant principles against abuse of process, the FIR under Section 174-A IPC and the proclamation order are quashed and set aside.