TaxTMI Updates e-Newsletter
Mar 05,2022

Provisional attachment of bank accounts - formation of opinion that attachment is necessary to protect the government revenue - tangible material basis for formation of opinion - dual procedural safeguards under Rule 159(5) - de-freezing of attached bank accounts on furnishing of security - continuance of security for the statutory period of attachment

Provisional attachment of bank accounts - formation of opinion that attachment is necessary to protect the government revenue - tangible material basis for formation of opinion - dual procedural safeguards under Rule 159(5) - Validity of the three provisional attachment orders passed under Section 83 of the CGST Act and compliance with statutory conditions for attachment - HELD THAT: - The Court examined the three orders of provisional attachment of the writ-applicant's bank accounts and, applying the principles in the cited Supreme Court summary (including that the power to order provisional attachment is draconian and must be preceded by formation of an opinion based on tangible material that attachment is necessary to protect revenue), observed that the orders do not record any satisfaction that attachment was necessary to protect revenue. The Court noted the statutory requirement of Rule 159(5) providing dual procedural safeguards of entitlement to submit objections and an opportunity of being heard. While the Court recorded prima facie that the attachment orders do not reflect the requisite satisfaction or compliance, it did not set aside the orders on merits; instead it dealt with the interim consequences in the exercise of its powers under Article 226. [Paras 3, 4, 5, 11, 12]

Prima facie the orders do not record the required satisfaction and show non-application of mind; however, the Court did not quash the attachments and proceeded to grant conditional relief by addressing interim operative consequences.

De-freezing of attached bank accounts on furnishing of security - continuance of security for the statutory period of attachment - Whether the Court should direct de-freezing of the attached bank accounts and on what terms - HELD THAT: - Balancing the competing interests of the writ-applicant's ability to continue business and the Department's interest in protecting revenue, the Court accepted the writ-applicant's offer to furnish a bank guarantee and further required individual undertakings by the company's directors to secure any remaining liability. The Court rejected the Department's submission that the proposed bank guarantee would be inadequate without converting that into an immediate order freezing or continuing the attachment; instead the Court directed conditional de-freezing subject to specified security and undertakings. The Court also clarified that if the Department considers continued attachment necessary or passes a fresh order, it may do so and the security shall continue accordingly. The Court emphasised that the Department should not unduly delay issuance of a show-cause notice and should expedite inquiry where there are allegations of fraud or large liability. [Paras 10, 11, 12, 13, 14]

Directed de-freezing of the three bank accounts on the writ-applicant furnishing a bank guarantee of Rs. 1.25 Crore and on individual undertakings by the directors; the bank guarantee shall continue till the statutory period of the attachment orders, and the Department may continue attachment or pass fresh orders if warranted.

Final Conclusion: Writ petition disposed of: the Court ordered conditional de-freezing of the three provisionally attached bank accounts upon the writ-applicant furnishing a bank guarantee of Rs. 1.25 Crore and individual undertakings by the company's directors; the guarantee shall subsist for the statutory period of the attachment orders, and the Department remains free to continue attachment or issue fresh orders while being directed to expedite inquiry and not unduly delay issuance of show-cause notice.

Provisional attachment under Section 83 of the CGST Act - input tax credit - quashing of provisional attachment orders - neutralisation of revenue by payment of tax - show cause notice and adjudication - proceedings against transferees of input tax credit

Provisional attachment under Section 83 of the CGST Act - quashing of provisional attachment orders - The writ applications challenging provisional attachment of bank accounts were allowed and the provisional attachment orders were quashed and set aside. - HELD THAT: - The Court, on the short ground that the aggregate input tax credit availed during July 2017 to May 2019 (as recorded in paragraph 23 of the earlier order) was less than the aggregate tax paid in that period, proceeded to allow the six writ petitions. The coordinate Bench observed that the excess of tax paid over credit availed indicated that the interest of government revenue was not shown to be at risk, and therefore quashed the provisional attachment orders. The Court recorded that, as far as the main controversy in those matters is concerned, the matter has come to an end and nothing further is required in respect of the provisional attachments. [Paras 2, 3, 9]

Writ applications allowed; provisional attachment orders quashed and set aside.

Input tax credit - neutralisation of revenue by payment of tax - show cause notice and adjudication - proceedings against transferees of input tax credit - Payment of tax during the period does not preclude the department from issuing show cause notices, contesting that payment does not absolve liability for wrongful availment of input tax credit, and from proceeding against persons to whom the credits were transferred. - HELD THAT: - While the Court noted the earlier factual finding that aggregate tax paid exceeded aggregate credit availed (paragraphs 23-24), it expressly refrained from treating that observation as finally barring departmental action. The Court permitted the department to issue show cause notices in the form it considers appropriate and to take the stance that payment of tax does not necessarily constitute a case of 'revenue neutral satisfaction' or absolve the opponents of liability for wrongly availed credits. The opponents, if aggrieved by the contents of any show cause notice, may reply and the adjudicating authority will determine final liability according to law. The Court also left open the department's liberty to proceed against persons who received transfers of the input tax credit. [Paras 2, 7, 8]

Revenue may issue show cause notices and proceed against transferees; payment of tax during the period does not by itself preclude departmental adjudication of wrongful availment.

Final Conclusion: The writ petitions attacking provisional attachments were allowed and the attachments quashed; however, the Court left open the department's right to issue show cause notices, contest that payment of tax does not absolve liability for wrongful availment of input tax credit, and to proceed against transferees, with adjudication to follow in accordance with law.

Composite supply - principal supply - taxability of printing contracts - CBIC Circular No. 11/11/2017-GST interpretation - distinction between publishing and non-publishing printing - Section 8(a) of the CGST Act, 2017 - Section 2(90) of the CGST Act, 2017 (definition of principal supply)

Composite supply - principal supply - CBIC Circular No. 11/11/2017-GST interpretation - distinction between publishing and non-publishing printing - Section 8(a) of the CGST Act, 2017 - Section 2(90) of the CGST Act, 2017 (definition of principal supply) - Classification of the appellant's supply of printed leaflets as supply of goods or supply of service - HELD THAT: - The supply by the appellant was held to be a composite supply comprising both goods (paper/ink) and the service of printing the content supplied by the recipient. Applying Section 2(90) and the concept of composite supply, the tribunal examined whether the elements are naturally bundled and supplied in conjunction; the appellant accepted the supply is composite and the elements occur together. The determinative question is which element is the principal supply under Section 8(a). Reliance was placed on CBIC Circular No. 11/11/2017-GST which distinguishes two situations: (i) where only content is supplied by the publisher and physical inputs belong to the printer, printing of the content is the principal supply and constitutes a service (para 4); and (ii) where the goods have independent utility regardless of printed design or logo, the goods are the principal supply (para 5). The tribunal found that in the appellant's transactions the dominant element is the printing of content/instructions provided by pharmaceutical clients - the clients value the printed content, which is mandatory for medicinal packaging and not merely a cosmetic logo or design. The leaflet thus serves as a medium for the recipient's content and would be valueless to the recipient without that content. The circular's illustrative list is non-exhaustive and includes "and the like," so pamphlets/leaflets fall within para 4. Prior pre-GST Central Excise pronouncements and tariff headings recognising leaflets as goods were held inapposite because GST introduces the composite/mixed supply concepts which change the taxability analysis. Practical difficulties advanced by the appellant (EPCG/SEZ/deemed export consequences) were not accepted as a basis to alter legal classification. On the combined reasoning, the printing service (printing of recipient-supplied content) was held to be the predominant element, and therefore the composite supply is to be treated as a supply of service under heading 9989.

The supply of printed leaflets made by the appellant is a composite supply whose principal element is the service of printing recipient-supplied content and therefore constitutes a supply of service falling under SAC 9989.

Final Conclusion: The appeal is dismissed; the Advance Ruling that printing of pamphlets/leaflets falls under the category of supply of service (SAC 9989) is upheld.

Works contract service - Government entity - concessional tax rate under Notification No. 11/2017 (Sr. No. 3(vi)) - civil structure meant predominantly for use other than for commerce, industry or any other business or profession - temporal applicability of concessional rate (up to 31.12.2021 and from 01.01.2022)

Works contract service - Government entity - concessional tax rate under Notification No. 11/2017 (Sr. No. 3(vi)) - civil structure meant predominantly for use other than for commerce, industry or any other business or profession - Whether the works contract executed by the applicant for construction of an administrative building for TSIIC qualifies for the concessional rate under Sr. No. 3(vi) of Notification No. 11/2017 - HELD THAT: - The Authority found that TSIIC qualifies as a Government entity because it is owned by the Government of Telangana with the requisite government participation and its Memorandum of Association shows it carries out functions to further government policies. The work undertaken was the construction of an administrative building, a civil structure meant predominantly for use other than commerce, industry or any other business or profession. The procurement was in relation to work entrusted to TSIIC by the State Government. On these findings the works contract falls within the description in Sr. No. 3(vi) of Notification No. 11/2017 and thus qualified for the concessional rate during the period the provision was applicable to supplies to a Government entity.

Qualified for concessional rate under Sr. No. 3(vi) of Notification No. 11/2017 for the period it remained applicable

Temporal applicability of concessional rate (up to 31.12.2021 and from 01.01.2022) - concessional tax rate under Notification No. 11/2017 (Sr. No. 3(vi)) - The applicable rate of GST for the works contract and its temporal scope - HELD THAT: - The Authority noted that Sr. No. 3(vi) conferred the concessional rate for works contract services supplied to a Government entity until the amendment excluding governmental authority/entity took effect. Accordingly, the concessional tax treatment applied up to 31.12.2021. By notification 15/2021 (effective 01.01.2022) the phrase excluding governmental authority or governmental entity applies and the concessional treatment no longer applies thereafter.

Concessional rate applicable up to 31.12.2021; from 01.01.2022 the concessional treatment is not available and the higher rate applies

Final Conclusion: The works contract for construction of the administrative building for TSIIC qualified for the concessional rate under Sr. No. 3(vi) of Notification No. 11/2017 up to 31.12.2021; with effect from 01.01.2022 the concessional treatment ceases and the higher rate notified thereafter applies.

Classification as medicaments under Serial No. 62 of Schedule II to Notification No. 01/2017 - consisting of two or more constituents mixed for therapeutic or prophylactic uses - not put up in measured doses or in forms or packings for retail sale - meaning of "therapeutic or prophylactic" as applied to medicaments - applicability of GST rate of 12% on medicaments meeting the prescribed conditions

Classification as medicaments under Serial No. 62 of Schedule II to Notification No. 01/2017 - consisting of two or more constituents mixed for therapeutic or prophylactic uses - not put up in measured doses or in forms or packings for retail sale - meaning of "therapeutic or prophylactic" as applied to medicaments - applicability of GST rate of 12% on medicaments meeting the prescribed conditions - Pharmaceutical pellets and granules manufactured by the applicant, except Orlistat, qualify as medicaments under Serial No. 62 of Schedule II to Notification No. 01/2017 and are taxable at 12% GST. - HELD THAT: - The entry at Serial No. 62 applies to medicaments consisting of two or more constituents mixed for therapeutic or prophylactic uses and not put up in measured doses or in forms or packings for retail sale. The applicant's products (other than Orlistat) contain an active ingredient and one or more excipients, are mixed for therapeutic or prophylactic purposes (treatment of specified ailments), and are not put up in measured doses or retail packings. The Authority relied on the Supreme Court's exposition of "therapeutic or prophylactic" to hold that prevention or cure of disease falls within that phrase; because obesity (weight loss) was held not to be a disease, Orlistat (whose stated use is weight loss) does not satisfy the therapeutic/prophylactic condition. On these grounds the Authority held that the applicant's listed products, except Orlistat, meet the conditions of Serial No. 62 and attract the concessional GST rate of 12%. [Paras 7, 8]

Except for Orlistat, the applicant's pharmaceutical pellets and granules are classifiable as medicaments under Serial No. 62 of Schedule II to Notification No. 01/2017 and liable to GST at 12%.

Final Conclusion: The Advance Ruling clarifies that the applicant's pharmaceutical pellets and granules, other than Orlistat, satisfy the conditions of Serial No. 62 of Schedule II to Notification No. 01/2017 and are taxable at 12% GST; Orlistat is excluded as its stated use (weight loss) does not amount to treatment of a disease.

Exclusive jurisdiction of the Settlement Commission/Interim Board in respect of applications under Section 245C made on or after 1st June, 2007 - powers and procedure of the Settlement Commission under Section 245F - jurisdictional bar on Assessing Officer issuing assessment proceedings while matter is pending before the Settlement Commission/Interim Board - quashing of proceedings initiated without jurisdiction

Exclusive jurisdiction of the Settlement Commission/Interim Board in respect of applications under Section 245C made on or after 1st June, 2007 - jurisdictional bar on Assessing Officer issuing assessment proceedings while matter is pending before the Settlement Commission/Interim Board - The validity of the show cause notice dated 15.09.2021 issued under Section 153A/143(3) while the applicant's case was pending before the Settlement Commission/Interim Board. - HELD THAT: - The Court examined Section 245F and the proviso to sub section (2), which confers exclusive jurisdiction on the Settlement Commission from the date of filing where an application under Section 245C was made on or after 1st June, 2007. In that statutory scheme the Settlement Commission (and, from 1.2.2021, the Interim Board) has exclusive jurisdiction to exercise the powers of an income tax authority in relation to matters before it, unless the application is rejected or not allowed to proceed. Consequentially, initiation of assessment proceedings by the Assessing Officer in respect of matters covered by such an admitted settlement application is without jurisdiction. Applying this principle to the facts, the show cause notice dated 15.09.2021 issued for assessing year 2019-20 could not validly be issued while the matter was pending before the Settlement Commission/Interim Board, and therefore stood vitiated. The Court noted that the Assessing Officer had thereafter kept the assessment proceedings in abeyance, and clarified that the Assessing Officer is at liberty to proceed in accordance with law once the proceedings before the Settlement Commission conclude. [Paras 8, 9, 10]

The impugned show cause notice dated 15.09.2021 is quashed as having been issued without jurisdiction; the Assessing Officer may proceed only after the Settlement Commission/Interim Board proceedings are finally disposed of.

Final Conclusion: Writ allowed on the short ground that the Settlement Commission/Interim Board has exclusive jurisdiction over admitted applications under Section 245C (filed on or after 1.6.2007); the show cause notice dated 15.09.2021 issued during pendency of settlement proceedings is quashed, subject to the Assessing Officer's entitlement to act after those proceedings conclude.

Attachment of bank accounts by tax authorities - release of pension account on application - stay of demand pending appeal - inherent power of an appellate authority to grant interim relief - reopening of assessment and reassessment proceedings

Attachment of bank accounts by tax authorities - release of pension account on application - The Assessing Officer must consider and decide the pending application for release of the pension bank account which had been attached. - HELD THAT: - The writ court noted that three bank accounts, including a pension account, were attached by the Assessing Officer in exercise of statutory powers and that the assessee had filed an application dated 12th April 2021 seeking release of the pension account. The application remained unaddressed. In the exercise of supervisory jurisdiction the court directed the jurisdictional Assessing Officer to take up and decide that application in accordance with law within two weeks from receipt of the writ, thereby requiring an expeditious administrative decision on the claim for release pending adjudication of the assessment and appeal. [Paras 10]

Directed the Assessing Officer to decide the application for release of the pension account within two weeks.

Stay of demand pending appeal - inherent power of an appellate authority to grant interim relief - The assessee is permitted to seek interim relief from the Commissioner of Income Tax (Appeals), and the appellate authority may grant a stay of recovery or other interim orders pending disposal of the appeal. - HELD THAT: - The court observed that an appeal against the assessment order under Section 246A was pending before the CIT(A). It reaffirmed that the CIT(A), as appellate authority, possesses inherent power to pass appropriate interim orders including stay of recovery pending final disposal of the appeal. The court permitted the assessee to file the appropriate application before the CIT(A), directed the CIT(A) to hear such application expeditiously and record that, if the CIT(A) grants relief subject to conditions, the attachment orders would cease to operate accordingly. [Paras 11, 12]

Permitted the assessee to apply to the CIT(A) for interim relief; directed expeditious hearing and recorded that any interim relief granted by the CIT(A) would operate to suspend the attachment orders.

Final Conclusion: Writ petition disposed by directing the Assessing Officer to decide the application for release of the pension account within two weeks and permitting the assessee to seek interim relief from the CIT(A), who shall consider such application expeditiously; if CIT(A) grants relief, the attachment orders will not operate.

Taxability of unexplained cash credits under Section 68 - genuine business transactions and evidentiary corroboration - consistency in departmental acceptance of similar transactions - deemed dividend under Section 2(22)(e) - verification by Assessing Officer and scope of appellate direction

Taxability of unexplained cash credits under Section 68 - genuine business transactions and evidentiary corroboration - consistency in departmental acceptance of similar transactions - Deletion of additions made as unexplained cash credits/gross receipts in respect of turmeric trading and remittances from Shri Bharat Nilakhe in the assessment of the assessees. - HELD THAT: - The Tribunal found that the assessees had disclosed turmeric trading activity and offered net profit for taxation; transactions were supported by purchase and sale bills and were corroborated by the statement of Shri Bharat Nilakhe recorded by the AO. The Revenue itself accepted similar transactions between Shri Bharat Nilakhe and about 100 other traders in Sangli without making additions. The AO rejected the assessee's case without assigning justifiable reasons and treated gross receipts and payments as unexplained cash credits. In view of the consistent departmental treatment of identical transactions with other traders and the documentary and testimonial support for the trading activity and remittances, the Tribunal held there was no basis to sustain the additions and directed their deletion. [Paras 5]

Additions made by the AO treating the turmeric trading receipts/commissions and remittances from Shri Bharat Nilakhe as unexplained cash credits are deleted (applies to both appeals).

Deemed dividend under Section 2(22)(e) - verification by Assessing Officer and scope of appellate direction - Deletion of addition treated as deemed dividend arising from receipt from M/s Apeksha Impex Ltd. in the assessment of the assessee. - HELD THAT: - The assessee contended that the amount treated as deemed dividend had in fact been received and taxed in the preceding year. The appellate authority directed verification by the AO to ascertain the year of receipt. The Tribunal observed that no material was produced by the Revenue contradicting the assessee's claim that the sum related to the earlier year and had already been taxed. Having regard to the lack of contrary material and the appellate direction for verification, the Tribunal ordered deletion of the addition. [Paras 8]

Addition treated as deemed dividend is deleted for lack of contrary material and on account of the transaction having been shown to relate to the earlier year.

Final Conclusion: Both appeals are allowed: additions made as unexplained cash credits in respect of turmeric trading and remittances from Shri Bharat Nilakhe are deleted for both assessees; the addition treated as deemed dividend in the case of the first assessee is also deleted.

Taxation of estimated profit on advances received against construction projects - statement under section 132(4) not binding where actual receipts differ from projected receipts - reopening assessment for earlier years required to tax a changed profit estimation for those years - interest under section 234C limited to returned income and not on assessed income - prematurity of adjudication of penalty under section 271(1)(c)

Taxation of estimated profit on advances received against construction projects - statement under section 132(4) not binding where actual receipts differ from projected receipts - reopening assessment for earlier years required to tax a changed profit estimation for those years - Validity of addition made by applying 30% profit rate (projected in seized advance tax estimate) to opening advances as on 31/03/2012 and bringing differential profit for earlier years to tax in A.Y. 2013-14. - HELD THAT: - The assessee had offered profit at 30% in a seized advance-tax projection based on expected project receipts of Rs.75 Crores, but actual receipts for the year were substantially lower and the assessee offered 30% on the actual receipts. The Assessing Officer applied the 30% rate to opening advances as on 31/03/2012 to tax a 14% differential over the historically offered 16% rate for earlier years. The Tribunal held that where the revenue seeks to tax profits attributable to earlier assessment years on account of a changed estimation, the correct course is to reopen and assess those earlier years in accordance with law; there was no basis to tax the opening balance of advances in the current year by applying the differential profit percentage. The seized projection was a provisional estimate and, given the substantial difference between projected and actual receipts and the fact that the assessee had offered profit on actual receipts (not retracted), the revenue failed to justify the addition in A.Y. 2013-14. [Paras 3]

Addition by applying 30% to opening advances and bringing the differential profit to tax in A.Y. 2013-14 is not justified; ground No.1 allowed.

Interest under section 234C limited to returned income and not on assessed income - Chargeability of interest under sections 234B and 234C consequential to the deletion of the addition. - HELD THAT: - The Tribunal noted the settled legal position that interest under section 234C is to be computed on the returned income and not on the assessed income. Since the primary addition was deleted, the consequential levy of interest under these provisions requires consideration in the light of that settled principle. [Paras 4]

Ground No.2 addressed in favour of the assessee in principle; interest under section 234C is to be on returned income and not on assessed income (consequential nature noted).

Prematurity of adjudication of penalty under section 271(1)(c) - Challenge to initiation of penalty proceedings under section 271(1)(c). - HELD THAT: - The Tribunal considered the challenge to the initiation of penalty proceedings premature for adjudication at the appellate stage. No substantive determination on culpability or levy of penalty was made. [Paras 5]

Ground No.3 dismissed as premature.

Final Conclusion: The appeal is partly allowed: the addition computed by applying a 30% projected profit rate to opening advances and taxing the differential for earlier years in A.Y. 2013-14 is deleted; the settled principle limiting section 234C interest to returned income is noted for consequential application; the challenge to initiation of penalty proceedings is held premature and dismissed.

Jurisdiction of Additional Commissioner to exercise powers of Assessing Officer under section 120(4)(b) - validity of assessment order passed without statutory authorization - admission of additional grounds of appeal raising pure legal question at belated stage - void ab initio for want of jurisdiction - parity and judicial discipline in following co ordinate Bench decisions

Admission of additional grounds of appeal raising pure legal question at belated stage - parity and judicial discipline in following co ordinate Bench decisions - Admission of the assessee's additional grounds challenging jurisdiction of the Additional Commissioner despite belated filing. - HELD THAT: - The Tribunal held that the additional ground challenges a pure legal question going to the root of the validity of the assessment order and therefore is admissible even though raised belatedly. The Revenue's objection that the ground is a mixed question of fact and law and that the plea was raised after a long delay was rejected. The Tribunal relied on earlier coordinate bench decisions in the assessee's own cases and group cases which had admitted identical additional grounds and applied the principle of parity and judicial discipline to admit the grounds in the present appeals. Consequently, the additional grounds were admitted for adjudication on merits. [Paras 8]

Additional grounds admitted for adjudication on merits.

Jurisdiction of Additional Commissioner to exercise powers of Assessing Officer under section 120(4)(b) - validity of assessment order passed without statutory authorization - void ab initio for want of jurisdiction - Whether assessment orders passed by the Additional Commissioner without an authorization under section 120(4)(b) are valid. - HELD THAT: - The Tribunal examined the statutory scheme and earlier coordinate bench decisions and concluded that an Additional Commissioner can exercise the powers and functions of an Assessing Officer only if authorized in accordance with the statute (i.e., by an order under section 120(4)(b) as applicable). The notifications relied upon by the Department were considered and found not to validly confer the required jurisdiction on the Additional Commissioner in the facts of these cases. The Tribunal followed its earlier decision in the assessee's own case for AY 2002 03 and other group decisions which held that, in the absence of proper authorization, the assessment orders are without jurisdiction. As the Department could not produce a valid authorization under section 120(4)(b), the Draft and final assessment orders were held to be void ab initio and were quashed. [Paras 9, 10, 12]

Impugned assessment orders passed by the Additional Commissioner without statutory authorization are void for want of jurisdiction and are quashed.

Parity and judicial discipline in following co ordinate Bench decisions - Application of the lead decision to other assessment years where facts and legal issue are identical. - HELD THAT: - Both parties agreed that the additional grounds and the facts germane to the jurisdictional issue in AYs 2008 09, 2009 10 and 2010 11 are identical to AY 2007 08. Applying the reasoning and conclusions reached in the lead appeal mutatis mutandis, the Tribunal allowed the assessee's appeals for those years and dismissed the corresponding revenue appeals. [Paras 14]

Lead decision applied to AY 2008 09, 2009 10 and 2010 11; assessee appeals allowed and revenue appeals dismissed.

Final Conclusion: The Tribunal admitted the additional grounds as raising a pure legal issue and, following coordinate bench precedents, held that assessment orders passed by the Additional Commissioner without the requisite statutory authorization under section 120(4)(b) are void for want of jurisdiction; the assessee's appeals for AYs 2007 08 to 2010 11 are allowed and the corresponding revenue appeals for 2009 10 and 2010 11 are dismissed.

Revisionary jurisdiction under Section 263 of the Income Tax Act - Erroneous order prejudicial to the interests of revenue - Requirement of adequate show cause notice and stated basis for exercise of revisional power - Exemption under Section 10(23C)(iiiab) as institution wholly or substantially financed by Government - Exemption under Section 11 - permissible accumulation/set apart and application for capital purposes

Revisionary jurisdiction under Section 263 of the Income Tax Act - Requirement of adequate show cause notice and stated basis for exercise of revisional power - Erroneous order prejudicial to the interests of revenue - Validity of the Commissioner's assumption and exercise of jurisdiction under Section 263 in setting aside the assessment order. - HELD THAT: - The Tribunal found that the Commissioner assumed jurisdiction under Section 263 solely by stating that the Assessing Officer had allowed an irregular exemption of 15% on government grants but failed to explain how the law disentitled the assessee to that exemption. The show cause notice and the revisional order contained no legal or factual basis explaining why the assessment was 'erroneous' so as to be 'prejudicial to the interests of the revenue'. The court emphasised that 'consideration' under Section 263 requires a basis for the conclusion that an order is erroneous; initiation of revisionary proceedings without any basis is arbitrary and not in accordance with law. Consequently the assumption of jurisdiction and the order passed in pursuance thereof were held to be without jurisdiction and unsustainable. [Paras 8, 9, 10, 19, 20]

Assumption and exercise of jurisdiction by the Commissioner under Section 263 was invalid for want of any basis; the revisional order is set aside.

Exemption under Section 10(23C)(iiiab) as institution wholly or substantially financed by Government - Exemption under Section 11 - permissible accumulation/set apart and application for capital purposes - Whether the assessee's alternative contentions that it was exempt under Section 10(23C)(iiiab) or, alternatively, entitled to exemption under Section 11 after application to capital purposes, were validly rejected by the Commissioner. - HELD THAT: - The Tribunal recorded that the assessee furnished detailed material showing government grants and endowment receipts constituting the bulk of its receipts (working showing percentages for relevant years) to substantiate that it was 'substantially financed by the Government' under Section 10(23C)(iiiab) and Rule 2BBB. The Commissioner excluded endowment grants when computing percentage of government financing but gave no reasons for excluding them. The Commissioner also rejected the alternative contention based on application to capital assets on the ground that it would amount to revising the return; the Tribunal held that the assessee did not seek to change the quantum of income but only advanced an alternate legal basis for exemption and that such alternate basis could not be summarily rejected without reasons. Because the Commissioner gave no basis for rejecting either contention, the finding that the assessment order was erroneous on these counts was unsustainable. [Paras 12, 14, 15, 16, 18]

The Commissioner erred in rejecting the assessee's contentions under Section 10(23C)(iiiab) and the alternative Section 11 argument without adequate reasons; there was no valid basis to hold the assessment order erroneous on these grounds.

Final Conclusion: The revisional order passed by the Commissioner under Section 263 is set aside for want of jurisdiction and absence of any basis for finding the assessment order erroneous; the appeal is allowed.

Deemed sale consideration under section 50C(1) - third proviso to section 50C(1) - acceptance of declared consideration where stamp value does not exceed specified percentage (beneficial and retrospective application) - role of Departmental Valuation Officer under section 50C(3) - retrospective application of beneficial statutory provision

Deemed sale consideration under section 50C(1) - third proviso to section 50C(1) - acceptance of declared consideration where stamp value does not exceed specified percentage (beneficial and retrospective application) - role of Departmental Valuation Officer under section 50C(3) - Whether the addition on account of short term capital gain could be sustained where the Departmental Valuation Officer's valuation, substituted for the Stamp Valuation Authority value, is within 5% of the declared sale consideration and the third proviso to section 50C(1) is beneficial and applicable retrospectively. - HELD THAT: - The Assessing Officer adopted the Stamp Valuation Authority's value as deemed sale consideration under section 50C(1). On appeal the DVO, on direction of the Commissioner (Appeals), determined the market value which narrowed the gap between declared consideration and valuation to an amount within 5%. Valuation inherently involves estimation; the legislature introduced the third proviso to section 50C(1) to relieve hardship where the stamp valuation does not exceed the declared consideration by the specified percentage. The Tribunal noted precedents recognising retrospective application of the beneficial proviso. Because the SVA value was replaced by the DVO's valuation under section 50C(3) and that valuation falls within the percentage threshold contemplated by the third proviso, the proviso applies to the facts, entitling the assessee to have the declared sale consideration accepted and the contested addition deleted. [Paras 4, 6, 7]

The addition of Rs. 2,37,400/- on account of short term capital gain is deleted and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal for AY 2005-06, deleting the addition made under section 50C by applying the third proviso (beneficially and retrospectively) after the DVO's valuation fell within the specified percentage of the declared sale consideration.

Deduction under Section 43B - Revised claim during assessment proceedings - Revised return under Section 139(5) - Power of appellate authority to entertain revised claims subject to factual verification - Remand for factual verification - Failure to consider evidence by Assessing Officer

Deduction under Section 43B - Revised claim during assessment proceedings - Power of appellate authority to entertain revised claims subject to factual verification - Remand for factual verification - Whether the revised claim of deduction under Section 43B filed during assessment proceedings for AY 2014-15 should be adjudicated afresh by the Assessing Officer in view of alleged non-consideration by departmental authorities. - HELD THAT: - The Tribunal recorded that the assessee made a revised claim of deduction under Section 43B during assessment proceedings, which the Assessing Officer ignored and the Commissioner (Appeals) rejected on the ground that supporting evidence was not filed. The Tribunal observed that while a revised claim before the Assessing Officer normally requires a revised return under Section 139(5), there is no corresponding restriction on the appellate authority to entertain a revised claim, subject to factual verification. Given the dispute as to whether supporting evidence was furnished, and in view of the Assessing Officer's failure to consider the revised computation, the Tribunal found it appropriate to restore the matter to the file of the Assessing Officer for examination of the revised Section 43B claim on the basis of evidence on record. The assessee was granted liberty to file additional evidence before the Assessing Officer, and the Assessing Officer was directed to decide the claim strictly in accordance with the evidence. [Paras 7, 8]

Issue restored to the Assessing Officer for fresh examination of the revised claim of deduction under Section 43B, with liberty to the assessee to furnish further evidence; Assessing Officer to decide strictly on the evidence.

Final Conclusion: The Tribunal allowed grounds 1 to 4 for statistical purposes and set aside the departmental disposal in respect of the revised Section 43B claim, restoring the issue to the Assessing Officer for fresh adjudication on the basis of evidence; the appeal is allowed for statistical purposes.

Reopening of assessment under section 147/148 - borrowed satisfaction - application of mind - status of Hindu Undivided Family (HUF) versus individual assessment - partition for tax purposes under Section 171 explanation

Reopening of assessment under section 147/148 - borrowed satisfaction - application of mind - status of Hindu Undivided Family (HUF) versus individual assessment - partition for tax purposes under Section 171 explanation - Validity of the notice issued under section 148 where the reopening and assessment treated the assessee first as HUF and subsequently as an individual, and whether the reopening was based on borrowed satisfaction or lack of application of mind. - HELD THAT: - The Tribunal examined the material and proceedings and found that the land was ancestral and that earlier proceedings had been initiated treating the assessee as HUF with reasons recorded accordingly. The Assessing Officer thereafter completed assessment in the individual status and that assessment was set aside by the CIT(A). The AO again issued notice under section 148 treating the assessee as an individual on the same facts and materially identical reasons, with only the status altered. The Tribunal held that reopening on identical material, resulting in a change of approach from HUF to individual, amounted to change of opinion and demonstrated lack of proper application of mind; the reopening was effectively based on borrowed or mechanical satisfaction. The decision applies the principle that for the purposes of income tax a partition or change of status is recognised only in accordance with the special meaning in the Explanation to Section 171 and requires proof of physical division (as discussed in the judgment relying on ITO v. N.K. Sarada Thampatty and A.P. Oree v. Income tax Officer ). Since the AO accepted that the property was ancestral and the department failed to bring material to show disruption of HUF status in accordance with the statutory test, the reopening and the subsequent assessment in the individual status were held to be illegal and void ab initio. The Tribunal therefore cancelled the reopening/assessment made in the individual status. Other grounds raised by the assessee were not adjudicated as they became academic in view of this conclusion. [Paras 16, 17, 18, 19, 20]

Notice under section 148 and the assessment completed by treating the assessee as an individual (instead of HUF) on identical material and verbatim reasons is illegal, amounts to borrowed satisfaction/change of opinion, and is void ab initio; the reopening/assessment is cancelled.

Final Conclusion: The appeal is allowed on the legal issue: the second reopening and assessment in the individual status on the same material was void for lack of application of mind and borrowed satisfaction; the reopening/assessment is cancelled and other grounds were left undecided as academic.

Deeming fiction under section 50 - computation of capital gains for depreciable assets - classification of capital gains as long-term or short-term - applicability of rate of tax for capital gains - limited scope of statutory legal fictions

Deeming fiction under section 50 - classification of capital gains as long-term or short-term - computation of capital gains for depreciable assets - applicability of rate of tax for capital gains - Whether the deeming fiction in section 50 converts capital gains on transfer of depreciable assets into short-term capital gains for purposes of determining the rate of tax. - HELD THAT: - The Tribunal followed the Coordinate Bench decision in the assessee's own case for A.Y. 2013-14 and the reasoning of higher courts which hold that the deeming fiction in section 50 is a special provision confined to the mode of computation of capital gains and does not alter the character of the asset for all purposes. The Tribunal relied on the ratio that section 50 modifies the operation of sections 48 and 49 for computing gains on depreciable assets but does not obliterate the distinction between long-term and short-term capital gains or extend the fiction to determine applicability of tax rates or other provisions which require a separate classification. The Tribunal noted the Supreme Court and High Court authorities discussed in the Coordinate Bench order, including CIT Vs. V.S. Dempo Company Ltd., Ace Builders (as discussed in the Coordinate Bench), and CIT Vs. M/s. Manali Investment, to the effect that the fiction in section 50 is limited and cannot be extended beyond computation. Applying that principle to the facts, and since the issue, grounds and facts mirrored the earlier adjudication in the assessee's own case, the Tribunal rejected the Revenue's contention that section 50 should be applied to treat the gains as short-term for rate determination and held that the deeming fiction does not affect the tax rate applicability. [Paras 7, 9]

Revenue's contention that gains on sale of flats (depreciable assets) must be taxed as short-term capital gains by operation of section 50 is rejected; the deeming fiction in section 50 is confined to computation and does not determine the rate of tax.

Final Conclusion: Following the Coordinate Bench and higher court precedents, the appeal by the Revenue is dismissed and the order of the Assessing Officer, as set aside by the CIT(A), is not sustained; the deeming fiction in section 50 does not convert the character of the capital gain for rate-determination purposes.

Penalty under section 271(1)(c) - concealment and bonafide claim - assessment proceedings and penalty proceedings are separate - allowability of administrative expenses and depreciation for a company under winding up - disclosed deduction not amounting to furnishing inaccurate particulars

Penalty under section 271(1)(c) - concealment and bonafide claim - assessment proceedings and penalty proceedings are separate - disclosed deduction not amounting to furnishing inaccurate particulars - allowability of administrative expenses and depreciation for a company under winding up - Whether penalty under section 271(1)(c) was correctly levied where the assessee, a government-owned company undergoing winding up and not carrying on business, claimed administrative expenses, interest and depreciation which were disallowed in assessment - HELD THAT: - The Tribunal upheld the view of the CIT(A) that mere disallowance of claims in assessment does not automatically attract penalty under section 271(1)(c) where the assessee had disclosed the facts and legitimately claimed deductions. The assessee was a wholly government-owned company, declared sick under BIFR and subject to winding up, yet required to incur administrative expenses and interest to maintain corporate existence; depreciation and unabsorbed depreciation were legally allowable deductions. The Tribunal observed that assessment and penalty proceedings are distinct and that Explanation 1 to section 271(1)(c) applies only where the assessee fails to offer any explanation, offers a false explanation, or an explanation that cannot be substantiated or shown to be bona fide. Given that the assessee had disclosed relevant facts in audited accounts and return, and the factual matrix was not suppressed, there was no concealment or furnishing of inaccurate particulars. The Tribunal found the facts comparable to CIT v. Reliance Petro Products (as relied upon by the CIT(A)) and distinguished the authority relied on by Revenue, concluding that penalty could not be sustained on the basis of mere disallowance of legitimately claimed deductions. [Paras 8, 9, 11]

Penalty levied under section 271(1)(c) deleted; revenue's appeal dismissed.

Final Conclusion: The Tribunal dismissed the revenue appeal and sustained the deletion of penalty under section 271(1)(c) because the assessee had made bona fide, disclosed claims (administrative expenses, interest and depreciation) while being a government-owned company undergoing winding up, and mere disallowance of those claims in assessment did not constitute concealment or furnishing of inaccurate particulars.

Revisional jurisdiction under section 263 of the Income-tax Act - Verification of source of cash deposits by the Assessing Officer - Acceptance of a possible view by the Assessing Officer - Evidentiary value of a notarized agreement to sell - Requirement of registered instrument for transfer of immovable property

Revisional jurisdiction under section 263 of the Income-tax Act - Acceptance of a possible view by the Assessing Officer - Verification of source of cash deposits by the Assessing Officer - Whether the Pr. CIT was justified in invoking jurisdiction under section 263 and setting aside the assessment framed u/s 143(3) on the ground that the AO had not made adequate enquiries into cash deposits of Rs. 31.50 lakhs. - HELD THAT: - The Tribunal found on the material on record, including the AO's office note and the assessment order, that the AO had specifically called for explanation (Notice u/s 142(1)), obtained and verified the assessee's bank account entries and the agreement to sell and sale deeds, and had directed field action (sharing information with ITO/JcIT, Sub-Registrar and DM) regarding potential understatement of consideration and evasion of stamp duty. The AO after necessary deliberation accepted the assessee's explanation that the cash deposits derived from the sale transaction evidenced by the agreement to sell and related documents. The Tribunal applied the principle that where the AO, after detailed inquiry, takes a possible and plausible view accepting the assessee's explanation, the CIT cannot exercise revisional powers under section 263 merely to direct a fuller inquiry or substitute his own view. Reliance was placed on the principle that two possible views may exist and the AO's adoption of one such view, reached after inquiry, precludes exercise of revisionary jurisdiction. [Paras 5, 7]

The Pr. CIT's exercise of revisionary jurisdiction under section 263 was not justified; the order u/s 263 is set aside and the AO's order u/s 143(3) is restored.

Evidentiary value of a notarized agreement to sell - Requirement of registered instrument for transfer of immovable property - Verification of source of cash deposits by the Assessing Officer - Whether the AO could legitimately rely on the assessee's notarized 'agreement to sell' as evidence of the sale consideration when registered sale deeds recorded a much lower amount. - HELD THAT: - The Tribunal acknowledged the legal position that transfer of immovable property requires a registered instrument for effecting transfer, and that an agreement registered with a Notary Public does not substitute registration with the Sub Registrar. Nonetheless, the Tribunal held that a duly notarized agreement carries evidentiary value as to the fact and quantum of consideration that passed between the parties. The AO's reliance on the agreement to explain the source of cash deposits was therefore permissible, particularly where the AO had corroborated the entries, obtained the bank account, examined related documents and initiated appropriate information sharing with other authorities concerning the discrepancy between agreement and registered deeds. [Paras 6, 7]

The AO was justified in placing evidentiary reliance on the notarized agreement to sell for verifying the source of cash deposits; the mere existence of lower consideration in registered deeds did not, without more, render the AO's acceptance unreasonable.

Final Conclusion: The appeal is allowed: the Tribunal set aside the Pr. CIT's order under section 263 and restored the assessment order u/s 143(3) for Assessment Year 2011-12, holding that the AO had made adequate inquiries, validly relied on the notarized agreement as evidentiary material, and taken a possible view which did not warrant revision by the CIT.

Burden to prove identity, creditworthiness and genuineness of loans under section 68 of the Income-tax Act, 1961 - unexplained credit treated as addition under section 68 - use of bank transactions and confirmations to establish genuineness of loans - disallowance of interest linked to unexplained credit - drawing adverse inference on mere surmise and conjecture

Ad-hoc disallowance - The ground of appeal challenging confirmation of an ad-hoc disallowance was not pressed and thus stands dismissed. - HELD THAT: - The appellant's representative expressly did not press the ground challenging the Ld. CIT(A)'s confirmation of the ad-hoc disallowance. As a result, that ground of appeal was not proceeded with before the Tribunal and the order of the lower authority in respect of that ground is confirmed. [Paras 2]

Ground no. 5, not pressed by the appellant, is dismissed and the lower authorities' order on that ground is confirmed.

Burden to prove identity, creditworthiness and genuineness of loans under section 68 of the Income-tax Act, 1961 - unexplained credit treated as addition under section 68 - use of bank transactions and confirmations to establish genuineness of loans - disallowance of interest linked to unexplained credit - drawing adverse inference on mere surmise and conjecture - Whether the addition of Rs. 12,38,000 as unexplained credit under section 68 and consequential disallowance of interest of Rs. 53,661 were justified. - HELD THAT: - The assessee produced confirmations of account, copies of ITRs for AY 2012-13, balance sheets as on 31.03.2012 and bank statements for each of the seven lenders, showing the transactions through banking channels. The Tribunal found that these documents, taken together, discharged the assessee's burden to establish the identity, creditworthiness and genuineness of the loans as required for AY 2012-13. The Assessing Officer's contrary inference rested on an observation of cash deposits in the lenders' accounts preceding issuance of cheques, but the AO did not make enquiries of the lenders nor point to any infirmity in the documents produced by the assessee. The Tribunal held that adverse inference drawn merely on the basis of suspected cash deposits amounted to surmise and conjecture and was insufficient to sustain an addition under section 68; consequently, the related interest disallowance could not stand. [Paras 6, 7]

Addition of Rs. 12,38,000 as unexplained credit under section 68 and the consequential disallowance of interest of Rs. 53,661 are deleted.

Final Conclusion: The appeal is partly allowed: the ad-hoc disallowance ground not pressed is dismissed and confirmed; the addition under section 68 of Rs. 12,38,000 and the related disallowance of interest of Rs. 53,661 are deleted.

Reopening of assessment under section 147 r.w.s. 148 - reason to believe - tangible material to form belief - no reopening on mere suspicion - rational nexus between material and belief - validity of approval under section 151(2) - mechanical approval

Reopening of assessment under section 147 r.w.s. 148 - reason to believe - tangible material to form belief - no reopening on mere suspicion - Reopening of assessment for A.Y 2009-10 under section 147 r.w.s. 148 was invalid. - HELD THAT: - The Tribunal held that the Assessing Officer did not possess any reliable information or tangible material to form a reason to believe that income chargeable to tax had escaped assessment for A.Y. 2009-10. The reasons recorded merely recited that a share premium figure appeared in earlier accounts and that enquiries made in assessment for A.Y. 2012-13 had not been answered; this, on the facts, amounted to suspicion and lacked the requisite rational nexus between material and the belief of escapement. Reliance was placed on settled principles that the AO must act on tangible material and not on mere suspicion or conjecture, and that the reasons must demonstrate a live link between material coming to notice and the formation of belief. Applying these principles to the reproduced reasons, the Tribunal found no valid basis to reopen the assessment and quashed the reassessment proceedings. [Paras 8, 9, 10, 11, 12]

Reopening on the recorded reasons was bad in law and the assessment framed under section 147 is quashed.

Validity of approval under section 151(2) - mechanical approval - requirement of application of mind - The approval by the Addl. CIT under section 151(2) was invalid as it was given mechanically and under a wrong section reference. - HELD THAT: - The Tribunal examined the approval proforma and noted that the Addl. CIT recorded approval by simply marking 'Yes' and that the proposal itself cited applicability of '147(b)', a provision omitted from the statute w.e.f. 01.04.1989. The approval therefore manifested lack of application of mind and was rendered mechanical. Following precedent that mere affirmative ticks without evidencing consideration do not constitute valid satisfaction under section 151, the Tribunal held that the purported approval did not confer jurisdiction on the AO to reopen the assessment and thereby vitiated the reassessment. [Paras 13, 14, 15]

Approval under section 151(2) was invalid; reopening based on such approval was without jurisdiction and is set aside.

Final Conclusion: The appeal is allowed: the reassessment for A.Y. 2009-10 framed under section 147 r.w.s. 148 is quashed because (i) the Assessing Officer lacked tangible material to form a reason to believe escapement of income and (ii) the approval under section 151(2) was mechanical and invalid.

Valuation of unquoted equity shares - Discounted Cash Flow (DCF) method - Rule 11UA(2) of I.T. Rules - Section 56(2)(viib) of the Income-tax Act - binding effect of the prescribed valuation method - Assessing Officer's power to substitute valuation

Rule 11UA(2) of I.T. Rules - Discounted Cash Flow (DCF) method - Assessing Officer's power to substitute valuation - Section 56(2)(viib) of the Income-tax Act - Validity of AO/CIT(A) substituting NAV method in place of DCF valuation chosen and furnished by the assessee under Rule 11UA(2) for determining fair market value of unquoted equity shares. - HELD THAT: - The Tribunal held that the assessee had validly opted for valuation under clause (b) of Rule 11UA(2) by applying the DCF method and furnishing a valuation report by a Chartered Accountant. Where a statutory method is prescribed and the assessee follows the specified procedure, the AO/CIT(A) cannot arbitrarily change the methodology and adopt an alternative method (NAV) in substitution. The Tribunal relied on the principle that when a statute requires a thing to be done in a certain manner it must be done in that manner, and observed that Explanation (a)(i) to section 56(2)(viib) does not make the valuation subject to the AO's satisfaction in the manner of Explanation (a)(ii). In the absence of specific defects pointed out in the DCF report which would justify rejection, the authorities below exceeded their power by substituting their own valuation. [Paras 12, 13]

Assessee's DCF valuation under Rule 11UA(2) could not be disregarded and substituted by NAV; addition under section 56(2)(viib) deleted.

Valuation of unquoted equity shares - Discounted Cash Flow (DCF) method - assumption versus actuals in projections - Whether the DCF valuation report submitted by the assessee was vitiated by timing of valuation, projection variances and methodological shortcomings so as to justify the addition. - HELD THAT: - The Tribunal examined the material and noted that the AO/CIT(A) did not point to specific inaccuracies in the DCF report beyond variation between projected and actual results. The assessee had explained reasons for variations, and the coordinate-bench analysis of the valuation certificate (including reliance on management projections, CAPM inputs, terminal growth assumptions and limitations disclosed by the valuer) supported the report's acceptability. Given that valuation necessarily reflects future aspects at the valuation date and may diverge from later actuals, and absent concrete defects in the valuation exercise, the rejection was unjustified. Consequently, the addition based on purported excess share premium was not sustainable. [Paras 12, 13]

Assessee's DCF valuation not vitiated by the noted variations; the addition on account of alleged excess premium is unsustainable and is deleted.

Final Conclusion: Appeal allowed; impugned addition under section 56(2)(viib) deleted as the DCF valuation furnished under Rule 11UA(2) cannot be disregarded or substituted by the AO/CIT(A) in the absence of specific defects.

Principle of natural justice - right to disclosure of documents relied upon - right to cross-examination - non-speaking order - remand for fresh consideration on limited issues

Principle of natural justice - right to disclosure of documents relied upon - right to cross-examination - Whether there was violation of the principle of natural justice by not providing the petitioner the documents relied upon by the adjudicating authority and by denying opportunity to cross-examine witnesses whose statements were relied upon. - HELD THAT: - The Court found on the material before it and the specific grounds taken in the memorandum of appeal that the petitioner alleged non-provision of documents and denial of opportunity to cross-examine witnesses whose statements were relied upon. The respondents did not produce any record to contradict these allegations. In view of the admitted position appearing from the record and the absence of any satisfactory explanation or rebuttal from the respondents, the Court concluded that there was a breach of the principle of natural justice in respect of these two matters. The Court did not decide the merits of the underlying adjudication but held that the procedural infirmities corrupted the adjudicatory process to the extent that the appellate order could not be sustained on these points and required fresh consideration.

The adjudication was remitted to the Appellate Authority for fresh consideration limited to the two procedural issues of providing the documents relied upon and affording the petitioner opportunity to cross-examine the witnesses; the substantive adjudication otherwise was not interfered with at this stage.

Non-speaking order - remand for fresh consideration on limited issues - Whether the Appellate Authority's order was a non-speaking order for failing to deal with the specific grounds taken by the petitioner regarding non-provision of documents and denial of cross-examination. - HELD THAT: - On perusal of the impugned appellate order, the Court observed that the Appellate Authority did not specifically consider or deal with the two identified grounds (non-provision of documents and denial of cross-examination) despite those grounds being expressly pleaded in the memorandum of appeal. The omission rendered the appellate order non-speaking insofar as those grounds were concerned. Consequently, the Court set aside the appellate order only on these limited aspects and directed the Appellate Authority to decide them afresh, leaving the remainder of the appellate decision undisturbed subject to the outcome of the fresh consideration.

Impugned appellate order set aside and remanded to the Appellate Authority to deal specifically and finally with the pleaded grounds of non-provision of documents and denial of opportunity to cross-examine; the rest of the order is not interfered with.

Final Conclusion: The writ petition is allowed to the limited extent that the Appellate Authority's order dated 28.02.2017 is set aside and remitted for fresh consideration on the two procedural issues of disclosure of documents relied upon by the adjudicating authority and opportunity to cross-examine witnesses; the Appellate Authority has six months from communication of this order to conclude and pass a final order. No costs.

Maintainability of application under Section 127B(1) of the Customs Act - mandatory jurisdictional requirement of issuance of a show cause notice - definition of "case" under Section 127A(b) - deemed written show cause notice - return of defective or premature application - procedure under Section 127C and powers under Section 127F of the Customs Act - settlement Commission's exclusive jurisdiction upon admission of application

Maintainability of application under Section 127B(1) of the Customs Act - definition of "case" under Section 127A(b) - mandatory jurisdictional requirement of issuance of a show cause notice - Application for settlement under Section 127B(1) filed before issuance of any show cause notice was not maintainable and was premature. - HELD THAT: - The Court held that Section 127B(1) read with its proviso and Rule 3 requires that an application for settlement can be made only in respect of a "case" as defined in Section 127A(b), i.e., proceedings pending before an adjudicating authority. Proviso (a) to Section 127B(1) makes issuance of a show cause notice by the proper officer a mandatory jurisdictional pre-condition to filing such an application. Form SC(C)-1 expressly requires particulars of the show cause notice and the duty demanded. Where no show cause notice had been issued and no adjudication was pending, there was no "case" within the statutory definition and the settlement application filed by the petitioners based on self-assessed duty was defective and premature. The Court rejected the contention that voluntary self-assessment or other provisions (such as Section 17) could substitute for the statutory requirement of a show cause notice and observed that Chapter XIVA is an exception in a fiscal statute to be strictly construed. The Court therefore concluded that the Settlement Commission could not assume jurisdiction in the absence of the mandatory show cause notice requirement and that returning the application was justified. [Paras 44, 47, 48, 53, 68]

Application under Section 127B(1) filed prior to issuance of a show cause notice was not maintainable and was properly returned as premature.

Deemed written show cause notice - proviso (a) to Section 127B(1) - Affidavit-in-reply filed by the Commissioner in separate writ proceedings does not constitute a "deemed written show cause notice" for purposes of Section 127B(1). - HELD THAT: - The Court rejected the petitioners' submission that the respondents' affidavit filed in earlier writ proceedings could be treated as a show cause notice contemplated by proviso (a) to Section 127B(1). There is no provision in the Customs Act for a "deemed written show cause notice," and the averments in the affidavit did not quantify any duty, interest or demand as would be required for a statutory show cause notice. Consequently, the affidavit could not cure the statutory pre-condition for maintainability of a settlement application. The Court agreed with prior High Court authorities that the statutory ingredients must be strictly satisfied and that an applicant cannot, by unilateral acts or reliance on correspondence, confer jurisdiction on the Settlement Commission in the absence of a proper show cause notice. [Paras 44, 45, 50, 51, 56]

The affidavit-in-reply is not a show cause notice and cannot substitute the mandatory issuance of a statutory show cause notice for filing a Section 127B application.

Return of defective or premature application - procedure under Section 127C and powers under Section 127F of the Customs Act - settlement Commission's exclusive jurisdiction upon admission of application - The communications dated 2nd and 10th February 2022 and the order dated 16th February 2022 returning the application were validly made by the Settlement Commission (through its office) on grounds of defect/prematurity; the application was returned in original and not rejected on merit. - HELD THAT: - On the material placed before it, the Court found that the Registry/Chairman had placed the application on file, directed that defects be communicated to the applicant, reviewed petitioners' replies and ultimately ordered the application returned. The correspondence and file-notes showed the Chairman's orders and approvals; therefore the communications could not be treated as merely administrative acts of the Superintendent divorced from the Commission. Given the application did not meet the statutory prerequisites, returning it was a permissible procedural step. The Court noted that return of a defective or premature application does not foreclose the petitioners from filing a proper application after compliance with mandatory requirements and that protections and exclusive jurisdiction envisaged under Sections 127C and 127F would apply only once an application is admitted in accordance with law. [Paras 55, 56, 57, 61, 68]

The Settlement Commission was justified in returning the defective/premature application; those communications and the return order do not amount to unlawful closure of settlement remedy and do not preclude a future valid application.

Final Conclusion: Writ petition dismissed. The impugned communications and the return of the settlement application were upheld as proper because the statutory pre-condition of issuance of a show cause notice and existence of a "case" was not satisfied; petitioners remain free to file a fresh application for settlement in respect of the specified Bills of Entry after complying with the mandatory requirements under Section 127B(1) and the Rules.

Provisional anti-dumping duty - final anti-dumping duty - levy under Rule 13 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty) Rules, 1995 - finalization of assessment of Bills of Entry - consideration of representations - right to be heard

Finalization of assessment of Bills of Entry - consideration of representations - provisional anti-dumping duty - final anti-dumping duty - levy under Rule 13 of the Customs Tariff (Identification, Assessment and Collection of Anti-Dumping Duty) Rules, 1995 - right to be heard - Respondent directed to consider the petitioner's representations and finalize assessment of the subject Bills of Entry after applying the law as expounded by the Hon'ble Supreme Court in G.M.Exports. - HELD THAT: - The writ petition sought relief in respect of assessments provisionally made under Notification No.79/2010-Customs and the subsequent levy under Notification No.82/2011-Customs. The High Court observed that the Supreme Court's decision in Commissioner of Customs, Bangalore v. G.M.Exports interprets the meaning of "levied" for the purpose of anti-dumping duties (in the context of Rule 13) and is directly relevant to the petitioner's case. Without expressing any opinion on the merits, the Court disposed the petition by directing the respondent to consider and decide the outstanding representations, to finalize the assessment of the mentioned Bills of Entry, and to take into account the said Supreme Court decision. The petitioner must be heard before any orders are passed, subject to protocols for Covid-19. [Paras 5, 6, 7, 8]

Writ disposed by directing the respondent to decide the petitioner's representations and finalize the assessments within three months, after considering the Supreme Court decision and after hearing the petitioner.

Final Conclusion: The High Court disposed of the writ petition by directing the respondent to consider and decide the petitioner's representations, finalize assessment of the subject Bills of Entry in light of the Supreme Court's decision in G.M.Exports, and to hear the petitioner before passing orders; the exercise to be completed within three months.

Review period under section 129D(3) - Computation of limitation from date of receipt of order by the reviewing authority - Limitation and time-bar of departmental appeals - No provision to permit resubmission to cure limitation

Review period under section 129D(3) - Computation of limitation from date of receipt of order by the reviewing authority - Limitation and time-bar of departmental appeals - Whether the appeals filed by the department before the Commissioner (Appeals) were time-barred because the review orders were passed beyond the three month period prescribed under subsection (3) of section 129D of the Customs Act, 1962. - HELD THAT: - The Tribunal examined the table of orders and the record and applied subsection (3) of section 129D which requires the reviewing authority to pass the review order within three months from the date of communication or receipt of the adjudicating authority's order. The Commissioner (Appeals) had repeatedly asked the department to furnish documentary proof of the date on which the reviewing authority received the original orders; the department failed to produce such proof despite multiple chances and adjournments. The Commissioner (Appeals) scrutinised the available dates (date of passing, dispatch, job/OIO generation) and found substantial unexplained gaps and inconsistencies; he treated the latest reliable date among these as the relevant date for computing limitation and did not allow minor transit delays to excuse the excess. The Tribunal found no basis to disturb that approach and concluded on the record that the review orders were passed beyond the three month period, rendering the departmental appeals time barred. [Paras 5, 6, 7]

The appeals filed by the Revenue are time barred and are dismissed.

No provision to permit resubmission to cure limitation - Limitation and time-bar of departmental appeals - Whether the Commissioner (Appeals) could permit the department to resubmit appeals after providing documentary evidence to cure the limitation defect. - HELD THAT: - The record shows that instead of outright dismissing as time barred, the Commissioner (Appeals) gave the department an option to furnish documentary evidence and resubmit the appeals to overcome the limitation objection. The Tribunal observed that there is no provision under the Customs Act, 1962 authorising the Commissioner (Appeals) to allow resubmission for the purpose of curing a limitation defect where the review order itself is beyond the statutory three month period. Given the absence of the requisite documentary dates and the department's failure to produce them, the Tribunal concluded that permitting resubmission could not cure the statutory time bar and therefore such a direction could not alter the result on limitation. [Paras 2, 6, 7]

The Commissioner (Appeals)'s de facto option to resubmit to cure limitation cannot validate appeals that are time barred; the appeals therefore stand dismissed.

Final Conclusion: On the record before it, and in view of the department's failure to produce documentary proof of the date of receipt of original orders by the reviewing authority, the Tribunal held that the review orders were passed beyond the three month period under subsection (3) of section 129D and accordingly dismissed the departmental appeals as time barred; the cross objection was also disposed of.

Likelihood of continuation or recurrence of dumping and injury in a sunset review - Duty continuation under Article 11.3 of the Anti Dumping Agreement and Section 9A(5) of the Tariff Act - Requirement of positive, independent and corroborative evidence in a sunset review; burden of proof on the domestic industry - Validity of unauthenticated market research reports and duty to disclose sources/non confidential summaries - Relevance of import volume and price effects (volume effect and price undercutting) in determining threat of injury - Exclusion of grounds not raised in the memorandum of appeal without leave - Obligation to file exporter questionnaires only when applicable and non applicability of Part II where Part I is not required

Likelihood of continuation or recurrence of dumping and injury in a sunset review - Requirement of positive, independent and corroborative evidence in a sunset review; burden of proof on the domestic industry - Duty continuation under Article 11.3 of the Anti Dumping Agreement and Section 9A(5) of the Tariff Act - Final findings discontinuing anti dumping duty were lawful as the designated authority found insufficient factual basis to conclude likelihood of continuation or recurrence of dumping and injury. - HELD THAT: - The Tribunal held that a sunset review is prospective and requires a rigorous, fact based determination whether expiry of duty would likely lead to recurrence or continuation of dumping and injury. The statutory and international framework (Section 9A(5), Rule 23 and Annexure II; Article 11.3 of the Anti Dumping Agreement) mandates positive evidence and a determination based on facts, not conjecture. Applying these principles to the record for the injury investigation periods, the designated authority found (inter alia) dramatically reduced import volumes from the subject country, negligible market share of such imports, negative price undercutting and absence of sufficient independent corroborative evidence to establish likelihood of injury on revocation. Those findings provided a sufficient factual basis for recommending withdrawal of duty, and the Tribunal declined to interfere. [Paras 59, 60, 94, 104, 105]

Appeal dismissed as against the designated authority's conclusion that continuation of anti dumping duty was not justified for lack of sufficient evidence of likely recurrence or continuation of dumping and injury.

Validity of unauthenticated market research reports and duty to disclose sources/non confidential summaries - Requirement of positive, independent and corroborative evidence in a sunset review; burden of proof on the domestic industry - Designated authority rightly declined to rely upon the market research report which did not disclose author/agency or original data sources and for which no non confidential summary was provided. - HELD THAT: - The Tribunal upheld the designated authority's approach that the report's reliability and authenticity were suspect because it omitted the name of the author/agency and source data. Rule 8 requires the authority to satisfy itself as to the accuracy of information, and rule 7 obliges interested parties to provide non confidential summaries or reasons for non disclosure. The burden to provide cogent, corroborative evidence in a sunset review rests with the domestic industry; an unauthenticated report lacking identifiable source or data cannot form the basis for an affirmative likelihood determination. The Tribunal also rejected the appellant's attempt to rely before the Tribunal on a new ground (Data Secrecy Law) not pleaded in the appeal memorandum. [Paras 41, 43, 50, 51, 52]

No illegality in refusing to place reliance on the unauthenticated report; appellant failed to discharge the burden of proof.

Relevance of import volume and price effects (volume effect and price undercutting) in determining threat of injury - Principles for determination of injury under Annexure II and Rule 11 - The designated authority properly considered import volumes and price effects as relevant factors in the sunset review and reasonably concluded that negligible import volumes and negative price undercutting did not indicate likelihood of injury on revocation. - HELD THAT: - Annexure II and Rule 11 require the authority to consider whether there has been a significant increase in dumped imports and whether dumped imports have depressed or suppressed prices. The Tribunal accepted the authority's factual findings-substantial decline in subject imports from the subject country, imports constituting less than 1% of demand/production, and absence of price undercutting-which supported the conclusion that subject imports were unlikely to cause injury if duties ceased. The Tribunal noted that likelihood must be 'likely' not merely 'possible' and must be established by reasoned factual analysis. [Paras 56, 57, 60, 77, 94]

Consideration of import volume and price effects was lawful and supports discontinuation of duty.

Exclusion of grounds not raised in the memorandum of appeal without leave - Appellant could not be permitted to advance before the Tribunal a new ground (Data Secrecy Law preventing disclosure of the report's author) that was not pleaded in the memorandum of appeal and for which leave to raise was not sought. - HELD THAT: - The Tribunal observed that the contention about the Data Secrecy Law was not included in the appeal memorandum and the appellant did not seek leave to introduce that ground at the hearing. Procedural rules preclude urging new grounds on appeal without permission; moreover, the Data Secrecy Law post dated the report and was not shown to have retrospective effect. Accordingly the Tribunal declined to permit reliance on that unpleaded ground. [Paras 40, 41]

New ground not entertained; appellant barred from raising Data Secrecy Law argument not pleaded in the memorandum of appeal.

Obligation to file exporter questionnaires only when applicable and non applicability of Part II where Part I is not required - Respondent no. 8 was not required to file the Exporter Questionnaire Part II where the Main Questionnaire Part I was not applicable because it had not exported the subject goods during the period of investigation. - HELD THAT: - The Tribunal accepted respondent no. 8's explanation that it had not exported the subject goods during the POI or injury period and therefore Part I was not applicable; no objection was recorded in the final findings to its non filing of Part II. The Tribunal held that absent any record showing the authority required Part II despite Part I being inapplicable, the appellant could not fault the respondent for non filing. [Paras 53, 54, 55]

No requirement to file Exporter Questionnaire Part II in the circumstances; non filing does not vitiate the final findings.

Final Conclusion: The Tribunal dismissed the appeal and upheld the designated authority's final findings and recommendation to withdraw the anti dumping duty, concluding that the designated authority lawfully exercised its fact based discretion in finding absence of sufficient evidence to establish a likelihood of continuation or recurrence of dumping and injury on revocation of the duty.

Validation of disposition after commencement of winding up - requirement of court leave for enforcement of security after commencement of winding up - power of the court to validate dispositions under Sections 536 and 537 of the Companies Act - Official Liquidator's custody of assets and role upon appointment as provisional liquidator - pari passu charge in favour of workmen and representation by the Official Liquidator - criteria for validation: bona fide transaction, appropriate valuation and ordinary course of business

Requirement of court leave for enforcement of security after commencement of winding up - Official Liquidator's custody of assets and role upon appointment as provisional liquidator - pari passu charge in favour of workmen and representation by the Official Liquidator - Leave of the court was required before enforcing the pledge and completing the private sale after the commencement of winding up (appointment of the Official Liquidator as provisional liquidator). - HELD THAT: - Section 537, read in context with the post-1985 amendments to the Companies Act, shows that enforcement steps affecting the estate, properties or effects of a company after commencement of winding up require leave of the court. The 1985 amendments introduced a pari passu charge for workmen and conferred roles on the Official Liquidator to represent those interests; consequently a secured creditor can no longer unilaterally enforce and sell secured assets after commencement of winding up without involving the Official Liquidator. The appointment of the Official Liquidator as provisional liquidator triggers the legal fiction of commencement of winding up and places assets and money transactions within the custody of the Official Liquidator; therefore enforcement completed after that appointment required court leave. The Court rejected the contention that leave is unnecessary merely because the company may not have workmen, noting that the Official Liquidator represents wider stakeholder interests and must be involved in enforcement and valuation processes. On the facts the Security Trustee and the purchaser proceeded after notice of the provisional liquidator's appointment and therefore should have sought leave prior to enforcement. [Paras 18, 19, 20, 21, 27]

ICICI Bank India, the Security Trustee and the Purchaser were required to obtain leave of this Court before enforcing the pledge and completing the sale which took place after the appointment of the Official Liquidator as provisional liquidator.

Power of the court to validate dispositions under Sections 536 and 537 of the Companies Act - validation of disposition after commencement of winding up - criteria for validation: bona fide transaction, appropriate valuation and ordinary course of business - A disposition completed after commencement of winding up may be validated, but a higher threshold applies where enforcement occurred after the Official Liquidator's appointment; on the facts the transaction warranted contingent validation subject to stringent conditions including fresh valuation and payment of any differential to the company in liquidation. - HELD THAT: - Although Section 537 renders sales after commencement of winding up void without leave, the statute also confers on the court the power to validate dispositions under Section 536(2) and to grant leave; this recognises that bona fide transactions or enforcement of legitimate pre-existing rights may need to be preserved. The Court identified the principal criteria for validation: bona fides, whether the transaction was in the ordinary course of business, the appropriateness of valuation, whether legitimate prior rights of a secured creditor were exercised, and whether the transaction was in the interest of the company in liquidation. Applying these tests, the creation of the pledge and the call on it were bona fide and pre-dated the winding up petition, but enforcement and sale were completed after appointment of the provisional liquidator and without court leave. Given deficiencies in involvement of the Official Liquidator/Administrator in valuation and the low sale price relative to the valuation band, the Court exercised its validating power conditionally. Validation was granted subject to revaluation as of the acquisition date by two valuers (with concurrence of the Administrator and Official Liquidator), the Purchaser bearing valuation costs, the higher of the two valuations to govern, and the Purchaser remitting the entire differential (if any) to the company in liquidation within 60 days; failure to comply renders the disposition ipso facto void and permits consequential applications. [Paras 23, 24, 28, 30, 31]

The sale is validated on contingent terms: fresh valuation as on the date of acquisition, appointment of two valuers with concurrence of the Administrator and Official Liquidator, Purchaser to bear costs and pay any differential (entirely for the benefit of Zylog) within 60 days; non-compliance will render the disposition void.

Final Conclusion: Both petitions were disposed of: the Court held that leave was required for enforcement and sale after commencement of winding up but exercised its power to validate the completed sale conditionally; validation is contingent on strict revaluation and payment terms, failure of which will render the disposition void and permit consequential applications.

Priority of secured creditor's charge - Payment by Official Liquidator in compliance with court directions - Adjudication and settlement of claims in liquidation - Re-adjudication of workmen's claims

Payment by Official Liquidator in compliance with court directions - Adjudication and settlement of claims in liquidation - Whether the Official Liquidator had paid the amounts due to the appellant bank in accordance with earlier orders of this Court. - HELD THAT: - The Court examined the report and records of the Official Liquidator which set out payments made pursuant to this Court's earlier orders. The report and accompanying breakdown show that the Official Liquidator paid the secured and ordinary claims and interest components pursuant to the orders dated 20.12.2012, 27.03.2013 and 28.03.2018. The Court accepted the Official Liquidator's report that a total sum of Rs. 27,08,97,080.44 had been paid to the appellant bank in fulfilment of the directions contained in those orders. Having accepted the report and the documentary breakdown of payments, the Court found that the relief now sought by the appellant was exhausted by the payments already made. [Paras 8, 13, 14]

The Court accepted the Official Liquidator's report that the directed payments were made and held that nothing survives for consideration on this point.

Priority of secured creditor's charge - Re-adjudication of workmen's claims - Whether any further direction should be given to the Official Liquidator to pay amounts then standing in the liquidation account to the appellant bank after accounting for re-adjudication of workmen's claims and contributories' claims. - HELD THAT: - The Court noted that the Official Liquidator was engaged in re-adjudication of workmen's claims for the period up to the date of winding up and had published notices to contributories; one contributory's claim remained pending. The Court observed the Official Liquidator's continued processes and the financial position of the liquidation account. In view of the fact that the Official Liquidator had made the payments directed by earlier orders and that re-adjudication and notice to contributories were in progress, the Court found no basis to direct further payment from the liquidation account to the appellant. The learned Single Judge's direction that the appellant should approach the Official Liquidator for any residual matters was sustained to the extent appropriate. [Paras 11, 12, 13]

No further direction to pay from the liquidation account was warranted; matters relating to re-adjudication and contributories remain with the Official Liquidator.

Final Conclusion: The Court accepted the Official Liquidator's report that payments ordered by earlier directions were made to the appellant bank (totaling as reported), held that nothing further survives for adjudication in this appeal, and dismissed the appeal. No costs; connected miscellaneous petition closed.

Scheme of Amalgamation - Convening and dispensation of meetings under Sections 230-232 of the Companies Act, 2013 - Electronic meeting (e meeting) and quorum as per Section 230(6) - Appointment of Chairperson and Scrutinizer for creditors' meetings - Notice, publication and service requirements for meetings under Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Furnishing of compliance affidavit prior to meetings

Scheme of Amalgamation - Convening and dispensation of meetings under Sections 230-232 of the Companies Act, 2013 - Dispensation of convening/holding of meeting of equity shareholders of the Transferor Company - HELD THAT: - The Transferor Company produced consent affidavits of all its equity shareholders representing 100% value (Annexure C-9). On that basis, the Tribunal dispensed with convening/holding the meeting of equity shareholders of the Transferor Company and directed only the meeting of its unsecured creditors to be convened. The direction is recorded in the Tribunal's directions dealing with the Transferor Company. [Paras 10, 13]

Requirement to convene meeting of equity shareholders of the Transferor Company is dispensed with.

Scheme of Amalgamation - Convening and dispensation of meetings under Sections 230-232 of the Companies Act, 2013 - Dispensation of convening/holding of meeting of equity shareholders of the Transferee Company - HELD THAT: - The Transferee Company produced consent affidavits of all its equity shareholders representing 100% value (Annexure D-9). Consequently, the Tribunal dispensed with convening/holding the meeting of equity shareholders of the Transferee Company and directed only the meeting of its unsecured creditors to be convened. This finding follows the materials placed on record and the applicants' prayer. [Paras 11, 13]

Requirement to convene meeting of equity shareholders of the Transferee Company is dispensed with.

Nil secured creditors - Convening and dispensation of meetings under Sections 230-232 of the Companies Act, 2013 - Non-requirement to convene meetings of secured creditors of both Applicant Companies - HELD THAT: - Both Applicant Companies filed certificates from chartered accountants certifying that there are no secured creditors (Annexure C-10 and D-10). The Tribunal recorded that the issue of convening or dispensing with meetings of secured creditors does not arise for either company. [Paras 10, 11, 13]

No meetings of secured creditors are required for either Applicant Company.

Electronic meeting (e meeting) and quorum as per Section 230(6) - Convening of unsecured creditors' meetings - Direction to convene meetings of unsecured creditors of both Applicant Companies by electronic mode on specified date and times - HELD THAT: - Having allowed dispensation of equity meetings and recorded the presence of numerous unsecured creditors (Annexure C-11 and D-11), the Tribunal directed that meetings of unsecured creditors of both the Transferor and Transferee Companies shall be held on 07.04.2022 via electronic meeting mode through the 'InstaMeet Platform' at specified timings. The e-notice is to be issued by email, and the quorum for such electronic meetings shall be as provided in Section 230(6) of the Companies Act, 2013. Adjournment and deemed quorum rules for non-satisfaction of quorum were also prescribed. [Paras 10, 11, 12, 13, 15]

Meetings of unsecured creditors of both Applicant Companies to be convened electronically on 07.04.2022 with quorum and adjournment rules as directed.

Appointment of Chairperson and Scrutinizer for creditors' meetings - Remuneration of Chairperson, Alternate Chairperson and Scrutinizer - Appointment of Chairperson, Alternate Chairperson and Scrutinizer for the unsecured creditors' meetings and fixation of their remuneration - HELD THAT: - The Tribunal appointed Ms. Natasha Thakur as Chairperson, Mr. Gurmehar S. Sistani as Alternate Chairperson and Ms. Rakhi Chanana as Scrutinizer for the unsecured creditors' meetings, and fixed their remunerations and incidental expenses (as recorded). The Chairperson was directed to file the reports within one week of holding the meetings. [Paras 14, 16]

Chairperson, Alternate Chairperson and Scrutinizer appointed and remunerations fixed; Chairperson to file meeting report within one week.

Notice, publication and service requirements for meetings under Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Furnishing of Scheme free of charge on requisition - Service of petition on regulatory authorities and Official Liquidator - Directions on dispatch of notices, publication in newspapers, supply of scheme to creditors, and service of petition on statutory authorities - HELD THAT: - The Tribunal directed the Applicant Companies to send individual notices by e-mail and speed post 30 days before the meetings with copies of the Scheme and explanatory statement, publish advertisements in specified newspapers at least 30 days prior, provide copies of the Scheme free of charge on requisition, and serve the petition and documents on the Regional Director, Registrar of Companies, Income Tax Department and Official Liquidator as applicable, in accordance with the Act and Rules. [Paras 17, 18, 19, 20]

Applicants to comply with prescribed notice, publication, supply and service requirements prior to the meetings.

Furnishing of compliance affidavit prior to meetings - Compliance with Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Filing of affidavit of compliance before the Tribunal and overall compliance with statutory forms and rules - HELD THAT: - The authorized representative of the Applicant Companies was directed to file an affidavit confirming compliance with all directions regarding service of notices, publication and other directions at least one week before the meetings. All directions were ordered to be complied with strictly in accordance with the Companies Act, 2013 and the Rules, including prescribed forms and formats. [Paras 21, 22]

Applicants to file affidavit of compliance one week before meetings and to strictly comply with statutory provisions and rules.

Final Conclusion: The joint application under Sections 230-232 read with the Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 is allowed subject to the directions set out above; meetings and procedural steps are to be conducted and complied with in accordance with the Tribunal's directions and applicable law.

Operational debt - requirement of documentary evidence to prove operational debt - acknowledgement of debt - dishonour of cheque under the Negotiable Instruments Act not equating to operational debt - inadmissibility of unilateral journal entries to establish operational debt - forensic report filed without permission of adjudicating authority

Operational debt - requirement of documentary evidence to prove operational debt - inadmissibility of unilateral journal entries to establish operational debt - Whether the amounts claimed in Part IV of Form 5 were established as 'operational debt' due and payable by adducing sufficient documentary evidence - HELD THAT: - The Tribunal examined the ledger entries, the 37 invoices produced and the Statement of Account and found that the ledger reflected a running account which showed that up to 23/01/2018 dues had been fully paid and that the opening balance from 01/04/2018 lacked invoices or supporting documents to substantiate the asserted operational debt. The delayed payment charges and penalty interest claimed were not mentioned in the invoices, and journal entries unsupported by additional corroborative evidence could not alone be relied upon to bring the claimed amounts within the definition of 'operational debt' under Section 5(21) of the Code. Having regard to the material on record, the Tribunal concluded there was no sufficient evidence that any outstanding operational debt remained due and payable. [Paras 6, 7]

The claimants failed to establish that the amounts in Part IV of Form 5 constituted an operational debt due and payable; the adjudicating authority's finding to that effect is upheld.

Acknowledgement of debt - dishonour of cheque under the Negotiable Instruments Act not equating to operational debt - forensic report filed without permission of adjudicating authority - Whether the letters and dishonoured cheques, and the Appellant's forensic reports, sufficed to establish an operational debt despite the Respondent's denial and allegations of forgery - HELD THAT: - The Tribunal noted that the Respondent had expressly denied the authenticity of the letters and filed affidavits asserting forgery. The Appellant's forensic reports were obtained and filed without permission of the Adjudicating Authority, diminishing their evidentiary force. Further, the dishonour of cheques and the pendency of proceedings under the Negotiable Instruments Act established an issue under the NI Act but did not, in the absence of underlying invoices or an agreement, demonstrate that the amounts were payable as operational debt arising from supply of goods or services. The Tribunal therefore held that mere admission or issuance of cheques, even if amounting to an acknowledgment in another forum, did not convert the disputed amounts into operational debt under the Code. [Paras 4, 7, 8]

The letters and dishonoured cheques, in the face of the Respondent's denial and lack of supporting documentary proof, did not establish an operational debt; the adjudicating authority's rejection of the Section 9 application on this basis is sustained.

Final Conclusion: The appeal is dismissed. The Tribunal upholds the Adjudicating Authority's conclusion that the Appellant did not prove any outstanding operational debt due and payable, and there are no substantial grounds to interfere with the impugned order.

Operational debt - default - running account and limitation - authority to receive payment / payment authority letters - pre-existence of dispute - initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 - appointment of Interim Resolution Professional and moratorium

Running account and limitation - operational debt - Whether the Section 9 application is barred by limitation - HELD THAT: - The Tribunal found that the parties maintained a continuous running account, supported by the ledger from 01.04.2013 to 30.11.2017, the last sale invoice dated 15.09.2017 and last payment on 23.01.2018. On that basis the petition filed on 07.11.2019 was held to be within limitation and not time-barred; the running account and subsequent transactions brought the claim within the limitation period. [Paras 4]

Application is not barred by limitation and is within time.

Authority to receive payment / payment authority letters - operational debt - Whether the Operational Creditor had a right to payment for goods supplied through third party manufacturers - HELD THAT: - The Corporate Debtor contended that goods were supplied by third party manufacturers and the Operational Creditor had no right to claim payment. The Tribunal observed that the Operational Creditor had annexed 'Payment Authority Letters' authorising it to receive payments on behalf of the manufacturers. On that footing the Operational Creditor was held to have the right to claim payment for the invoices relied upon. [Paras 5]

Operational Creditor had authority to claim payment and the invoices could be considered in computing the debt.

Pre-existence of dispute - section 138 proceedings - Whether a pre existing dispute barred admission of the Section 9 petition - HELD THAT: - The Corporate Debtor relied on alleged reconciliation and pending proceedings under Section 138 of the N.I. Act. The Tribunal noted absence of documentary proof of account reconciliation or of a substantive pre existing dispute in the reply to the demand notice. The Tribunal further treated the corporate debtor's offer of settlement during Section 138 proceedings as not amounting to an existing dispute which would defeat the petition. Consequently, no pre existing dispute was found to preclude admission. [Paras 6, 7, 8]

No pre existing dispute established; Section 9 petition may be admitted.

Initiation of Corporate Insolvency Resolution Process (CIRP) under Section 9 - appointment of Interim Resolution Professional and moratorium - Admission of the Section 9 application, appointment of Interim Resolution Professional and imposition of moratorium - HELD THAT: - Upon appreciation of the documents and hearing parties, the Tribunal concluded there was an operational debt and default by the Corporate Debtor. The application under Section 9 was admitted, Mr. Aishwarya Mohan Gahrana was appointed as Interim Resolution Professional to act in terms of the Code, the applicant was directed to deposit funds for immediate expenses, public announcement was ordered and moratorium in terms of Section 14 was declared with the statutory prohibitions and clarifications as recorded. [Paras 8, 9, 10, 11, 12]

Section 9 application admitted; CIRP initiated, IRP appointed and moratorium imposed.

Final Conclusion: The Tribunal admitted the Section 9 petition finding an operational debt and default, rejected the plea of limitation and pre existing dispute, held that the Operational Creditor had authority to claim payments for supplies through manufacturers, appointed an Interim Resolution Professional, ordered deposit for immediate expenses, directed public announcement and declared the moratorium, thereby initiating CIRP against the Corporate Debtor.

Offence of money laundering - Projection of proceeds of crime as untainted property - Knowledge and involvement in activities connected with proceeds of crime - Scheduled offence / predicate offence

Offence of money laundering - Projection of proceeds of crime as untainted property - Knowledge and involvement in activities connected with proceeds of crime - Complaint does not disclose commission of an offence under Section 3 read with Section 4 of the PML Act against the petitioner, and the proceedings insofar as they relate to him are quashed. - HELD THAT: - The court examined the statutory ingredients of the offence under Section 3 read with Section 4 of the PML Act, namely that (i) a scheduled offence must have been committed, (ii) proceeds of crime must have been generated by that offence, and (iii) such proceeds must have been projected as untainted property. Applying the principle in Nikesh Tarachand Shah, liability under Section 3 requires that the person be knowingly or actually involved in a process or activity connected with the proceeds of crime and must also project or claim the property as untainted. The complaint against the petitioner contains allegations that, as Branch Manager, he sanctioned large loans in violation of banking norms and is separately prosecuted before the CBI for offences under the IPC and the PC Act. However, the complaint does not contain any material showing that the petitioner directly or indirectly assisted in projecting the proceeds of the alleged scheduled offence as untainted property or otherwise participated in activities by which the proceeds were so projected. The case against other accused disclosed overt acts of assistance in projecting proceeds as untainted property, but the petitioner's conduct is confined to the alleged abuse of office in sanctioning loans; nothing in the complaint satisfies the additional statutory requirement of projecting proceeds as untainted property essential for prosecution under the PML Act. For these reasons the complaint, insofar as it concerns the petitioner, fails to disclose the offence under Section 3 read with Section 4 of the PML Act. [Paras 7, 9, 10]

Proceedings in C.C.No.31 of 2015 insofar as they relate to the petitioner are quashed.

Final Conclusion: The criminal original petition is allowed; the complaint and proceedings in C.C.No.31 of 2015 against the petitioner are quashed for failure to disclose the offence under Section 3 read with Section 4 of the PML Act.

Refund of accumulated CENVAT Credit under Rule 5 - Recovery of wrongly taken CENVAT credit under Rule 14 - Requirement to follow statutory procedure prescribed by the rules (doctrine of exclusive procedure) - Denial of refund on merits of eligibility (nexus of input services / Rule 4(7) payment delay)

Refund of accumulated CENVAT Credit under Rule 5 - Recovery of wrongly taken CENVAT credit under Rule 14 - Requirement to follow statutory procedure prescribed by the rules (doctrine of exclusive procedure) - Whether refund claims filed under Rule 5 can be denied or reduced without initiating recovery proceedings under Rule 14 where the department alleges irregular/incorrect availment of CENVAT credit. - HELD THAT: - The Tribunal held that Rule 5 provides for refund of accumulated CENVAT credit of exporters and does not itself contain any provision to determine correctness of the initial availment of credit. Rule 14 is the specific statutory mechanism for recovery of wrongly taken or erroneously refunded credit and prescribes the procedure to be followed. Absent initiation of proceedings under Rule 14 (and the consequential applicability of the recovery provisions), the revenue could not alter the quantum of Net CENVAT credit for the quarter or deny encashment in refund proceedings. The court applied the settled principle that where a statute prescribes a particular mode of action, that mode alone must be followed. Consequently, denial of refund on the ground that certain credits were irregularly availed, without following Rule 14, was held to be impermissible. [Paras 4]

Denial or reduction of refund under Rule 5 on the ground of alleged irregular availment of CENVAT credit is not permissible unless recovery proceedings are first initiated under Rule 14; impugned disallowance on that basis set aside.

Denial of refund on merits of eligibility (nexus of input services / Rule 4(7) payment delay) - Refund of accumulated CENVAT Credit under Rule 5 - Whether the refund claim could be rejected in the refund proceedings on grounds asserted in the adjudicating order - specifically lack of nexus of certain input services to exported output services and delay in payment to service providers under Rule 4(7). - HELD THAT: - The Tribunal examined the departmental grounds which included (a) absence of nexus between certain input services and exported output services, and (b) non-payment to service providers within the period specified in Rule 4(7). It concluded that such contentions, which challenge the correctness of availment of CENVAT credit or the eligibility of particular input services, are matters for determination under the recovery/adjudication procedure (see Rule 14) and not for denial in a Rule 5 refund adjudication. The Tribunal relied on precedent and the statutory scheme distinguishing availment/utilisation (and recovery) from refund under Rule 5, and held that rejection of refund on these substantive eligibility grounds without following the procedure prescribed for recovery was unsustainable. Accordingly the impugned findings rejecting parts of the refund on these grounds were set aside. [Paras 4]

Rejection of refund on the basis of alleged lack of nexus or Rule 4(7) payment delay, without invoking the recovery procedure under Rule 14, was not sustainable; impugned rejections set aside.

Final Conclusion: The impugned order is set aside and the appeal is allowed: refund proceedings under Rule 5 cannot be used to deny or reduce the refund on grounds of alleged irregular availment or ineligibility of credit unless the department first initiates and follows the recovery/adjudication procedure under Rule 14; the refund claim for the period Oct 2016 to Dec 2016 is accordingly allowed as per the Tribunal's order.

Relevant date - limitation for refund under Section 11B - date of adjustment - refund of service tax on returned consideration - time-bar

Relevant date - date of adjustment - limitation for refund under Section 11B - refund of service tax on returned consideration - time-bar - Refund claim for service tax paid on sale consideration returned to customers is not barred by limitation where the refund was claimed within one year from the date of adjustment/refund to customers. - HELD THAT: - The Tribunal held that where service tax was paid but subsequently the sale was cancelled and the amounts (including service tax) were returned to customers, the date when the refund/adjustment occurred is the "relevant date" for computing limitation under clause (eb) of Section 11B. The court reasoned that clause (eb) applies where duty (service tax) is adjusted at a later stage and, accordingly, the one year period for filing a refund claim must be reckoned from the date of such adjustment/refund to the customer rather than the original date of deposit. The Tribunal relied on its earlier decision in M/s Ramesh Kumar Agarwal and other precedents recognizing the date of reversal/refund as the relevant date for claiming refund, and found that the Commissioner (Appeals) erred in treating the claim as time-barred when the refund claim was filed within one year of the date on which the consideration (and service tax) was returned to customers. Applying that principle to the facts, the Tribunal concluded entitlement to refund and set aside the impugned appellate order while upholding the original order granting refund. [Paras 4, 5]

The refund claim is not time-barred; the date of refund/adjustment to customers is the relevant date under Section 11B and the appellant is entitled to refund; the impugned appellate order is set aside and the original order granting refund is upheld.

Final Conclusion: The appeal is allowed: the Tribunal held that the one-year limitation for refund under Section 11B runs from the date of adjustment/refund to the customers upon cancellation of sale, and on that basis the appellant's refund claim is within time and is granted; the appellate order rejecting the refund on limitation is set aside.

Classification of services as Consulting Engineering Services versus Information Technology Software Services (ITSS) - entitlement to refund of CENVAT credit under the CENVAT Credit Rules and refund procedure - nexus between input services and output service for availment of CENVAT credit - effect of retrospective amendment substituting 'used in' with 'used for' in the context of input/service utilisation - scope of departmental re-examination of admissibility of CENVAT credit at the refund stage

Classification of services as Consulting Engineering Services versus Information Technology Software Services (ITSS) - primary activity test for classification - Activity of development of software/computerised engineering drawings for the appellant was not to be treated as non-taxable ITSS where the primary activity is that of consulting engineering services. - HELD THAT: - The Tribunal found that services rendered by the appellant constituted consulting engineering services as reflected in the documents and correspondence, and that mere use of CAD/CAM software or computers does not convert the primary activity into ITSS. The Tribunal relied on prior decisions and subsequent departmental treatment in the appellant's own case for later periods to conclude that the activity is appropriately characterised as consulting engineering services and not as ITSS for the relevant periods.

Classification of the appellant's exported activity as consulting engineering services is accepted and the finding of ITSS in the impugned orders is set aside.

Entitlement to refund of CENVAT credit under the CENVAT Credit Rules and refund procedure - nexus between input services and output service for availment of CENVAT credit - effect of retrospective amendment substituting 'used in' with 'used for' - scope of departmental re-examination of admissibility of CENVAT credit at the refund stage - Refund claims in respect of input/input services credited were allowable for the relevant periods where the output service was held to be taxable consulting engineering service and the claim of inadmissibility based on alleged lack of nexus or procedural defects was unsustainable. - HELD THAT: - The Tribunal observed that the issue of admissibility of the claimed credit and entitlement to refund has repeatedly been decided in favour of the appellant in earlier Tribunal orders and was accepted by the Department for a later period in the appellant's own case. The Tribunal noted the relevance of the retrospective amendment replacing 'used in' with 'used for' (and the administrative clarification explaining it) in assessing the link between inputs and output services. Having regard to the settled judicial and departmental treatment and the principle that the Department may not re-examine admissibility of CENVAT at the refund stage in the face of such precedents, the Tribunal allowed the refund claims with consequential relief as per law.

Refund of the claimed CENVAT credit for the stated periods is allowed; the impugned orders rejecting the refund are set aside and consequential relief granted.

Final Conclusion: The appeal is allowed. The Tribunal, following earlier decisions and subsequent departmental acceptance in the appellant's own case, held that the services in question were consulting engineering services (not ITSS) and that the refund claims for the periods April 2006 to March 2007 and April 2007 to June 2007 are admissible; the impugned orders are set aside and consequential relief granted as per law.

Refund of Cenvat Credit under Rule 5 of the Cenvat Credit Rules, 2004 - Self-contained nature of Rule 5 - Nexus requirement under Rule 3 read with Rule 14 - Requirement of issuance of show cause notice under Rule 14 before denial of Cenvat Credit - Admissibility of Cenvat credit and refund in respect of exported services

Refund of Cenvat Credit under Rule 5 of the Cenvat Credit Rules, 2004 - Self-contained nature of Rule 5 - Requirement of issuance of show cause notice under Rule 14 before denial of Cenvat Credit - Whether the refund claim filed under Rule 5 could be denied on the ground of non-establishment of nexus between input services and exported output services without initiating proceedings under Rule 14 and related provisions for recovery of irregular credit - HELD THAT: - The Tribunal held that Rule 5 is a self-contained provision for granting refund of Cenvat credit in case of export of services and confines the departmental scrutiny to compliance with the formula and conditions prescribed under that rule. The adjudicating authorities cannot, while deciding a refund application under Rule 5, substitute the procedure prescribed under Rule 14 (which mandates show cause proceedings and recovery where credit is irregularly availed or utilised) unless the ingredients of Rule 5 itself are shown to be non-complied with. Where the department has not pointed to any deficiency in compliance with Rule 5 and has not proceeded under Rule 14 to disallow the credit, denial of refund solely on the ground of alleged lack of nexus is impermissible. The Tribunal relied on its earlier decision in Warburg Pincus India Pvt. Ltd. and distinguished the decisions cited by Revenue as dealing with primary eligibility of Cenvat credit rather than refund claims in the export context. Applying these principles to the facts, since no deficiency under Rule 5 was alleged and no Rule 14 show cause proceedings had concluded to disallow the credit, the refund could not be rejected on nexus grounds in the refund adjudication. [Paras 5, 6, 7, 8]

Impugned order denying refund on nexus grounds set aside; refund claim under Rule 5 to be allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the Commissioner (Appeals) order, and held that refund under Rule 5 cannot be denied on nexus grounds without Rule 14 proceedings or demonstration of non-compliance with Rule 5; accordingly the appellant's refund claim is to be granted.

Extinguishment of claims by approved resolution plan - retrospective effect of the 2019 amendment to Section 31 of the Insolvency and Bankruptcy Code - binding effect of an approved resolution plan on statutory authorities and creditors - liberty to challenge approval of resolution plan under Section 61 of the Insolvency and Bankruptcy Code

Extinguishment of claims by approved resolution plan - retrospective effect of the 2019 amendment to Section 31 of the Insolvency and Bankruptcy Code - binding effect of an approved resolution plan on statutory authorities and creditors - Whether the writ petition challenging departmental demands is rendered infructuous and the revenue's pending claims stand extinguished on approval of the resolution plan by the NCLT. - HELD THAT: - The Court held that following approval of the resolution plan by the National Company Law Tribunal the petition stands rendered infructuous and is to be disposed of as abated. The Court applied the principle in Ghanshyam Mishra & Sons Pvt. Ltd. v. Edelweiss Asset Reconstruction Co. Ltd., wherein the Supreme Court treated the 2019 amendment to Section 31 as clarificatory and declaratory with retrospective operation, and held that claims not part of an approved resolution plan stand extinguished and related proceedings terminate. Consequently, having examined the NCLT approval order and the effect of the 2019 amendment, the Court concluded that the pending writ which sought to challenge demands that are subject to the insolvency resolution process cannot be maintained and is rendered nonest and infructuous. The Court expressly refrained from expressing any opinion on the merits of the underlying excise demand. [Paras 8, 9, 11]

Writ petition disposed of as abated and rendered infructuous; claims which are not part of the approved resolution plan stand extinguished; no opinion expressed on merits.

Liberty to challenge approval of resolution plan under Section 61 of the Insolvency and Bankruptcy Code - Whether the revenue retains any procedural remedy following approval of the resolution plan. - HELD THAT: - The Court noted that Section 61 of the Code provides a specific appellate remedy against an order approving a resolution plan and identified the limited grounds on which such an appeal may be filed (including contravention of law, material irregularity, and non-provision for operational creditors as specified). The Court therefore reserved liberty in favour of the revenue to prefer an appeal under Section 61 before the National Company Law Appellate Tribunal if it is dissatisfied with the approval of the resolution plan. [Paras 10]

Liberty reserved to the revenue to file proceedings or an appeal under Section 61 of the Insolvency and Bankruptcy Code; notice discharged.

Final Conclusion: The writ petition challenging the revenue demand is disposed of as abated and rendered infructuous consequent to the NCLT's approval of the resolution plan; claims not included in the approved plan stand extinguished, while liberty is reserved to the revenue to challenge the approval under Section 61 of the Insolvency and Bankruptcy Code; the Court has not expressed any view on the merits of the excise demand.

Cenvat credit entitlement - restriction on Cenvat credit under Rule 3(1)(i) and proviso - exemption under Customs Notification No. 12/2012-Cus - exemption under Central Excise Notification No. 12/2012-CE - distinction between customs exemption and excise exemption for imported goods - applicability of excise-only exemption to indigenous goods

Cenvat credit entitlement - restriction on Cenvat credit under Rule 3(1)(i) and proviso - exemption under Customs Notification No. 12/2012-Cus - exemption under Central Excise Notification No. 12/2012-CE - distinction between customs exemption and excise exemption for imported goods - Appellant entitled to Cenvat credit of the Countervailing Duty (CVD) paid on imported coal by availing Customs Notification No. 12/2012-Cus notwithstanding the restriction in Rule 3(1)(i) of the Cenvat Credit Rules. - HELD THAT: - The restriction in Rule 3(1)(i) and its proviso applies to duties of excise paid where benefit of specified Central Excise exemption notifications (Notification No. 01/2011-CE or Notification No. 12/2012-CE dated 17.03.2012) is availed. In the present case the CVD on imported coal was paid by availing Customs Notification No. 12/2012-Cus and not by availing any Central Excise exemption notification. Consequently the express restriction in Rule 3(1)(i) is inapplicable. The Tribunal's earlier final order in the appellant's own case reached the same conclusion on identical facts, holding that Rule 3 restricts credit only where excise exemption notifications are availed and that Notification No. 12/2012-CE pertains to indigenously manufactured coal and does not operate in respect of imports (consistent with the principle in SRF Limited). The decision in Lonsenkiri Chemicals Industries was distinguished on facts because there the credit concerned CVD where Central Excise exemption notification had been availed. For these reasons the impugned denial of credit could not stand and the appeal was allowed with consequential relief. [Paras 5, 6, 7]

Impugned order set aside; appellant entitled to Cenvat credit of CVD paid under Customs Notification No. 12/2012-Cus and appeal allowed.

Final Conclusion: The Tribunal held that Rule 3(1)(i) bars Cenvat credit only where Central Excise exemption notifications are availed; since the appellant paid CVD by availing Customs Notification No. 12/2012-Cus (and not an excise exemption), the restriction does not apply, the denial of credit was set aside and the appeal allowed with consequential relief.

Non speaking order - duty to record reasons and consider replies - nexus between use of input service and manufacture and clearance of final products for CENVAT credit - remand for fresh reasoned adjudication - extended period of limitation (cryptic treatment) - notice to recipient of services distributed by an Input Service Distributor

Non speaking order - duty to record reasons and consider replies - nexus between use of input service and manufacture and clearance of final products for CENVAT credit - Whether the adjudication orders denying CENVAT credit were sustainable where the orders do not deal with the appellant's replies and merely state lack of nexus between the services and manufacture/clearance. - HELD THAT: - The Tribunal found that the Commissioner's orders simply state that the appellant failed to demonstrate a nexus between the use of the services and manufacture and clearance of final products, without engaging with or answering the detailed replies filed by the appellant on each service. Such cursory findings render the orders non speaking. The adjudicating authority was required to examine the appellant's submissions and quantify the denial with reasons; failure to do so vitiates the orders. Consequently the orders denying CENVAT credit are set aside and the matters remitted for fresh reasoned adjudication.

Impugned orders set aside on the ground that they are non speaking and fail to consider the appellant's replies; matter remitted for fresh reasoned adjudication on entitlement to CENVAT credit.

Remand for fresh reasoned adjudication - quantification of demand - Whether the quantification of the demand was addressed in the adjudication and whether the quantification requires reconsideration. - HELD THAT: - The Tribunal observed that the appellant's specific contentions on quantification were not considered and no findings recorded by the Commissioner. Quantification being integral to the demand, the matter must be re examined by the adjudicating authority. The appellant is permitted to file fresh submissions and the Commissioner shall decide the quantification with reasons.

Quantification not considered in the impugned orders; remitted to the adjudicating authority for fresh determination after taking appellant's submissions into account.

Notice to recipient of services distributed by an Input Service Distributor - Whether issuance of the show cause notice to the recipient of services distributed by an ISD was considered and decided by the adjudicating authority. - HELD THAT: - The Tribunal noted that the appellant raised the objection that the show cause notice could not have been served on the recipient of services distributed by an ISD, but the Commissioner did not record any finding on this contention. Because no determination was made, the point remains undecided by the adjudicator and requires consideration on remand.

Issue not decided below; remitted to the adjudicating authority to consider and decide with reasons.

Extended period of limitation (cryptic treatment) - Whether the adjudicating authority properly dealt with the contention against invocation of the extended period of limitation. - HELD THAT: - The Tribunal found the adjudicator's treatment of limitation to be cryptic-a short reference to settled position and earlier rulings without engaging with the appellant's detailed reply. Such summary rejection does not suffice. The Tribunal directed that the adjudicating authority must consider the appellant's submissions on limitation afresh and give a reasoned decision.

Cryptic treatment of extended limitation disapproved; matter remitted for reasoned consideration of the appellant's submissions on limitation.

Remand for fresh reasoned adjudication - Treatment of services of rent a cab and outdoor catering where the appellant limits its challenge to quantification only. - HELD THAT: - The appellant conceded that it was not challenging on merits the denial of credit for rent a cab and outdoor catering but contested the quantification. The Tribunal directed that the adjudicating authority need not re open the merits for these two services but must re examine and decide the quantification aspect in a reasoned order.

For rent a cab and outdoor catering, adjudicator to examine only quantification on remand; merits need not be re adjudicated.

Final Conclusion: Impugned orders dated 27.04.2018, 01.05.2019 and 11.12.2019 are set aside and all thirty two appeals are allowed to the extent of remitting the matters to the adjudicating authority for fresh, reasoned decisions after considering the appellant's submissions; the appellant may file fresh submissions within six weeks.

Cenvat credit on outward transportation (GTA) - Entitlement to credit where sale is on FOR basis and freight is included in assessable value - Refund of reversed Cenvat credit - Obligation to decide refund claim on merits despite voluntary reversal - Distinction of Supreme Court precedent by reference to Board Circular No. 1065/4/2018-CX dated 08.06.2018

Cenvat credit on outward transportation (GTA) - Entitlement to credit where sale is on FOR basis and freight is included in assessable value - Appellant's entitlement to Cenvat credit in respect of outward transportation (GTA) relating to sales made on FOR basis where freight is included in the price of the goods. - HELD THAT: - The Tribunal found that the freight expenditure for outward transportation related to sales made on FOR basis and that the freight amount was included in the price of the goods on which excise duty had been paid. On these facts the Tribunal followed its prior decisions in Ultratech Cement Ltd and Sanghi Industries, which were affirmed by the Jurisdictional High Court of Gujarat, and held that the appellant was entitled to Cenvat credit of the outward transportation charges. The Tribunal also noted that its decisions in Sanghi Industries and Ultratech Cement Ltd had considered and, in the light of Board Circular No. 1065/4/2018-CX dated 08.06.2018, respectfully distinguished the Supreme Court authority relied upon by the Commissioner (Appeals). Applying that reasoning to the material facts, the Tribunal concluded that the credit was properly claimable.

Entitlement to Cenvat credit for outward transportation was accepted and the earlier denial on merits set aside.

Refund of reversed Cenvat credit - Obligation to decide refund claim on merits despite voluntary reversal - Whether the refund claim filed after voluntary reversal of Cenvat credit could be rejected solely on the ground of voluntary reversal. - HELD THAT: - The Tribunal held that the fact that the appellant had reversed the Cenvat credit pursuant to an audit observation did not preclude their statutory right to claim benefits to which they were entitled. The refund claim filed after realization that the credit was properly allowable ought to have been adjudicated on its merits by the adjudicating authority. Consequently, the mere voluntariness of the earlier reversal could not be a ground for summary rejection of the refund claim where the underlying entitlement to credit was established.

Refund claim could not be rejected merely because the credit had earlier been voluntarily reversed; claim must be decided on merits and is allowable in the circumstances.

Final Conclusion: The impugned order is set aside; the appellant is held entitled to Cenvat credit on outward transportation for FOR sales where freight was included in the price and accordingly entitled to refund of the amount earlier reversed; appeal allowed with consequential relief.

Cenvat credit on outward transportation (GTA) - Admissibility of Cenvat credit where sales are on FOR basis - Binding effect of a High Court decision within its territorial jurisdiction - Remand for fresh adjudication after verification of documents

Cenvat credit on outward transportation (GTA) - Admissibility of Cenvat credit where sales are on FOR basis - Entitlement of the appellant to Cenvat credit on outward GTA linked to the nature of sale (FOR or otherwise) was not finally adjudicated and is remanded for fresh consideration. - HELD THAT: - The Tribunal observed that the controversy concerns Cenvat credit claimed on outward transportation charges (GTA). The Tribunal noted that, prima facie, if the sales are on FOR basis the appellant would be entitled to Cenvat credit in view of this Tribunal's earlier decisions in Ultratech Cement Ltd and Sanghi Industries which were upheld by the Hon'ble High Court of Gujarat. However, the appellant failed to file replies or documentary evidence before the Original Authority to establish the nature of sale; consequently the Original Authority did not verify the documents. Given the absence of such material before the adjudicating authority, the Tribunal found it necessary to remit the matter for de novo adjudication so that the nature of the sale can be verified, documents examined and the claim decided on merits after affording the appellant opportunity of personal hearing and to file written submissions and documents. [Paras 2, 4, 5]

Impugned order set aside and appeal allowed by remanding the matter to the Adjudicating Authority for fresh adjudication after verification of documents and giving the appellant opportunity to be heard.

Binding effect of a High Court decision within its territorial jurisdiction - Distinguishing contrary decisions - The Tribunal treated its earlier decisions in Ultratech Cement Ltd and Sanghi Industries, upheld by the Hon'ble High Court of Gujarat, as binding within that jurisdiction and distinguished later contrary decisions relied upon by the revenue. - HELD THAT: - The Tribunal considered the authority relied upon by the revenue, including the Supreme Court decision in Ultratech Cement Ltd and subsequent tribunal and High Court decisions. It observed that the Tribunal's decision in Ultratech Cement Ltd and Sanghi Industries had been upheld by the Hon'ble High Court of Gujarat and therefore, within the territorial jurisdiction of that High Court, those decisions are binding. Consequently, the Tribunal distinguished the revenue's reliance on the Apex Court decision as having been considered in the Tribunal's earlier view, and also distinguished the Andhra Cement Ltd decision on the basis that it did not take into account the Tribunal's decision which was upheld by the Hon'ble High Court of Gujarat. The Tribunal therefore applied the binding effect of the Gujarat High Court's ruling while remanding the factual determination. [Paras 4]

The Tribunal held the High Court of Gujarat's upholding of the Tribunal's decisions to be binding within its jurisdiction and distinguished contrary decisions relied upon by the revenue.

Final Conclusion: The impugned order is set aside; appeal is allowed limited to remand for de novo adjudication by the Adjudicating Authority to verify documents and determine, after giving the appellant opportunity of hearing, whether sales were on FOR basis and whether Cenvat credit on outward GTA is admissible, with the Tribunal's earlier decisions upheld by the High Court of Gujarat treated as binding within that jurisdiction.

Monetisation of unutilised CENVAT credit - Refund of accumulated CENVAT credit under section 11B - Nature and scope of CENVAT Credit Rules as not constituting an exemption/refund scheme - Conversion of tax credit into cash as equivalent to refund of tax collected without authority - Precedential effect of Slovak India decision and Article 141

Monetisation of unutilised CENVAT credit - Refund of accumulated CENVAT credit under section 11B - Nature and scope of CENVAT Credit Rules as not constituting an exemption/refund scheme - Claim for refund of accumulated CENVAT credit on cessation/transfer of manufacturing activities is not permissible and was rightly rejected. - HELD THAT: - The Tribunal applied the settled legal understanding that CENVAT credit is an in chain mechanism to avoid cascading of tax and is intended for discharge of duty liability on outputs, not as an entitlement to convert unused credit into cash. The CENVAT Credit Rules, 2004 were issued to operationalise levy provisions and are not an exemption or refund code (they were issued under the rule making power and not under provisions which authorise refund as such). Allowing cash refund of accumulated credit would amount to treating tax collected at an earlier stage as having been collected without authority, which is contrary to statutory scheme. The Tribunal relied on earlier decisions (including Voltas Ltd) and on the Larger Bench conclusion in Gauri Plasticulture that answers the reference questions against the assessee, holding that cash refund is not permissible where inputs credit cannot be utilised; the Supreme Court order in Slovak India cannot be read as declaring the contrary as binding law for refund. In consequence, rejection of the refund claim was affirmed.

Appeal dismissed; rejection of the claim for refund of accumulated CENVAT credit upheld.

Final Conclusion: The Tribunal dismissed the appeal and upheld the denial of refund of the accumulated CENVAT credit, holding that the CENVAT Credit Rules do not permit monetisation of unused credit and that cash refund under section 11B in such circumstances is not allowable.

Condonation of delay in filing appeal - limitation - service of adjudicatory order - bona fide ignorance of order due to third-party possession - requirement of pre-deposit for admission of appeal - right to be heard on merits

Condonation of delay in filing appeal - limitation - service of adjudicatory order - bona fide ignorance of order due to third-party possession - requirement of pre-deposit for admission of appeal - Delay of approximately 3 years and 7 months in filing the Second Appeals before the Tribunal is to be condoned. - HELD THAT: - The Court found that the assessment orders (for A.Y. 2010-11 to 2013-14) and the First Appellate Authority's order dated 12.10.2015 were served at premises which, from 24.02.2015, were in the physical possession of the lending bank under SARFAESI proceedings. The assessee's registered address is at Mumbai and the assessee produced a demand notice dated 05.09.2018 and a letter of the bank dated 05.12.2018 showing return of possession after 30.11.2018. On these facts the Court accepted that the assessee was not aware of the First Appellate Authority's order earlier, acted promptly upon becoming aware, applied for a duplicate certified copy on 25.07.2019, filed the Second Appeal soon thereafter and made the required pre-deposit. The Court found no basis to infer mala fide or deliberate inaction on the part of the assessee and that the Tribunal erred in construing the assessee's request for a duplicate copy as an admission of prior service. Having regard to the bona fides, prompt steps taken once aware, and compliance with the pre-deposit requirement, the Court held there existed sufficient cause to condone the delay and that a liberal approach ought to have been adopted by the Tribunal.

Delay of approximately 3 years and 7 months is condoned and the Tribunal's order dismissing the appeals as barred by limitation is quashed and set aside.

Right to be heard on merits - Second Appeals are to be registered and decided on merits by the Tribunal after fresh hearing. - HELD THAT: - The Court directed that the Tribunal shall register the Second Appeals and hear and decide them on merits afresh after hearing the parties and considering the materials on record. The Court expressly kept all contentions of the parties open and did not decide the merits of the underlying assessment or the First Appellate Authority's order; those matters are remitted to the Tribunal for adjudication in accordance with law without influence from this Court's observations.

Second Appeals remanded to the Tribunal for fresh adjudication on merits after registration and hearing.

Final Conclusion: The Tribunal's common order dated 06.07.2021 dismissing the Second Appeals as barred by limitation is quashed and set aside; the delay is condoned and the Second Appeals (relating to A.Y. 2010-11 to 2013-14) are directed to be registered and decided on merits afresh by the Tribunal, all contentions being kept open.

Mens rea not essential for civil penalties - strict liability for breach of statutory civil obligations - power to recover damages under Section 14B of the Employees Provident Fund & Miscellaneous Provisions Act, 1952 - default/delay in payment as sine qua non for levy of damages - parity between Section 14B (EPF Act) and Section 85B (ESI Act)

Mens rea not essential for civil penalties - strict liability for breach of statutory civil obligations - Mens rea or actus reus is not an essential element for imposing damages under Section 14B of the Act 1952. - HELD THAT: - The Court applied settled precedents holding that penalties or damages imposed for breach of statutory civil obligations are attracted by proof of contravention and do not require proof of guilty intention. Authorities considering analogous regimes (including SEBI and Income-tax contexts) were relied upon to conclude that civil liability for recovery of damages operates on a strict-liability/ remedial footing rather than a criminal mens rea standard. The Court rejected reliance on contrary Division Bench reasoning which rested on a now-overruled two-Judge decision, and held that Section 14B does not require the authority to establish mens rea before levying damages; the authority need only follow the statutory procedure, including affording a reasonable opportunity of hearing, before recovery is ordered. [Paras 11, 12, 13, 17]

Mens rea or actus reus is not required to be proved for imposition of damages under Section 14B; proof of default/contravention suffices for civil liability.

Power to recover damages under Section 14B of the Employees Provident Fund & Miscellaneous Provisions Act, 1952 - default/delay in payment as sine qua non for levy of damages - parity between Section 14B (EPF Act) and Section 85B (ESI Act) - Default or delay in payment of EPF contribution is a sine qua non for imposition of damages under Section 14B, and once default is established after due procedure damages may be levied. - HELD THAT: - The Court noted that the appellant's establishment was covered by the Act and had failed to make payments; adjudication under Section 7A established arrears which were paid, and thereafter the assessing authority, after affording opportunity of hearing as prescribed, proceeded under Section 14B to levy damages for the period of delay. Having regard to the statutory scheme and precedents upholding the remedial nature of such recovery provisions (and the parity with Section 85B of the ESI Act), the Court held that default/delay in payment is the determinative trigger for levy of damages under Section 14B and that damages are consequential once such default is established and the statutory procedure complied with. [Paras 2, 3, 10, 17]

Where default/delay in EPF contributions is established and the prescribed procedure is followed, damages under Section 14B may be levied as a consequential civil liability.

Final Conclusion: Appeals dismissed; insofar as Section 14B is concerned, default/delay in payment is the requisite basis for levy of damages and mens rea is not an essential ingredient for imposing such civil liability.