TaxTMI Updates e-Newsletter
Mar 16,2021

Application for advance ruling - prescribed form FORM GST ARA 01 - fee for advance ruling (CGST and GGST heads) - rejection under Section 98(2) of the CGST/GGST Act

Application for advance ruling - prescribed form FORM GST ARA 01 - fee for advance ruling (CGST and GGST heads) - rejection under Section 98(2) of the CGST/GGST Act - Application for advance ruling held non maintainable and rejected for failure to file in FORM GST ARA 01 and for non payment of the requisite fee. - HELD THAT: - The Authority examined the application and found it was not filed in the prescribed format FORM GST ARA 01 as required by Section 97(1) read with Rule 104. The applicant had deposited only Rs. 5,000. A combined reading of the corresponding provisions under the Central and Gujarat Acts and Rules shows that a fee of Rs. 5,000 is required to be paid under each head (CGST and GGST), resulting in a total fee requirement of Rs. 10,000 for an advance ruling application to this Authority. Non compliance with the statutory mandate as to form and payment renders the application invalid for the purpose of obtaining an advance ruling. Having regard to these mandatory filing and fee requirements, the Authority did not consider the merits of the substantive tax issue and proceeded to reject the application under the provision dealing with rejection of applications for advance ruling. [Paras 5, 6, 7, 8]

Application rejected under Section 98(2) of the CGST/GGST Act for non compliance with filing in FORM GST ARA 01 and non payment of the total fee.

Final Conclusion: The application of M/s. Wiptech Peripheral Pvt. Ltd. is rejected as non maintainable under Section 98(2) of the CGST/GGST Act for failure to submit the application in FORM GST ARA 01 and for not paying the combined fee required under the Central and Gujarat rules.

Application in FORM GST-ARA-01 accompanied by prescribed fee - requirement to deposit separate fees under CGST and GGST Rules - non-maintainability under Section 98(2) of the CGST Act, 2017

Application in FORM GST-ARA-01 accompanied by prescribed fee - requirement to deposit separate fees under CGST and GGST Rules - non-maintainability under Section 98(2) of the CGST Act, 2017 - Whether the Advance Ruling application is maintainable where the applicant paid only one of the two prescribed fees required under the CGST and GGST Rules. - HELD THAT: - The Authority examined the statutory scheme under Section 97 read with Rule 104 of the CGST Rules and the corresponding provisions of the GGST Act and Rules. Rule 104 requires an application in FORM GST-ARA-01 to be accompanied by a fee of five thousand rupees under the CGST Rules; an identical requirement exists under the GGST Rules. A combined reading of the provisions obliges payment of both fees (i.e., five thousand rupees under each statute), resulting in a total fee of ten thousand rupees for filing before the State Advance Ruling Authority. The applicant filed FORM GST-ARA-01 but deposited only five thousand rupees. For non-compliance with the mandatory fee requirement, the application is invalid under the statutory scheme and, consequently, liable to be rejected. Given this defect in maintainability, the Authority declined to consider the merits of the substantive questions raised. [Paras 13, 14, 15, 16, 17]

Application rejected as non-maintainable under Section 98(2) for failure to deposit the total prescribed fee of ten thousand rupees.

Final Conclusion: Advance Ruling application dismissed as non-maintainable for non-payment of the requisite fees (only one of the two statutory fees was paid); substantive questions were not adjudicated.

Advance ruling - supply of goods or services - recipient versus supplier - maintainability of advance ruling application - exemption under Notification No. 12/2017 - pure services in relation to functions entrusted under Article 243W - binding effect of advance ruling

Advance ruling - supply of goods or services - recipient versus supplier - maintainability of advance ruling application - Application for advance ruling filed by the Municipal Corporation as recipient of services was not maintainable because an advance ruling can be sought only in relation to supplies undertaken or proposed to be undertaken by the applicant. - HELD THAT: - The Authority noted that Section 95(a) defines 'advance ruling' as a decision in relation to the supply of goods or services being undertaken or proposed to be undertaken by the applicant. An advance ruling under the CGST/GGST scheme is therefore confined to questions concerning the applicant as supplier. The material on record established that the Municipal Corporation is the recipient of the consultancy/contract services and does not make the supplies in question. Since the application sought a determination as to liability to pay tax on services supplied to the applicant (and not by the applicant), the application did not fall within matters on which an advance ruling may be given. The Authority further observed that advance rulings are binding only as between the applicant and the concerned officer, but that statutory confinement does not permit adjudication where the applicant is solely a recipient. Applying these principles the Authority held the petition non maintainable and rejected it without deciding the substantive exemption question. [Paras 19, 20]

Application rejected as non maintainable and disposed of under Section 98(2) of the CGST/GGST Act, 2017 because the applicant is a recipient of the supplies and not the supplier.

Final Conclusion: The Advance Ruling application by M/s. Surat Municipal Corporation was rejected as non maintainable under Section 98(2) of the CGST/GGST Act, 2017 because the authority can grant advance rulings only in respect of supplies undertaken or proposed to be undertaken by the applicant; the corporation was the recipient of the services.

Advance Ruling - compliance with prescribed fee for advance ruling - form GST ARA-01 requirement - fee payment under corresponding CGST and GGST heads - rejection of application under Section 98(2) for non payment of prescribed fee

Advance Ruling - form GST ARA-01 requirement - fee payment under corresponding CGST and GGST heads - rejection of application under Section 98(2) for non payment of prescribed fee - Maintainability of the application for advance ruling in view of incorrect payment of prescribed fee under the IGST head instead of CGST and GGST heads as required. - HELD THAT: - The Authority examined the statutory scheme for filing an application for advance ruling and the prescribed fee structure. An application under Section 97(1) must be filed in FORM GST ARA 01 and accompanied by the fee specified by Rule 104, which requires payment of five thousand rupees under the CGST Rules and five thousand rupees under the GGST Rules, thereby totaling ten thousand rupees. The applicant paid the amount under the IGST head only and did not discharge the requirement to pay the fee separately under the CGST and GGST heads. Non compliance with this mandatory fee payment requirement vitiates the application. Consequentially, the application is not maintainable and falls to be rejected under Section 98(2) of the CGST Act, 2017 (read with corresponding GGST provisions). The Authority therefore declined to consider the merits of the substantive tax question since the application was invalid on procedural grounds. [Paras 11, 12, 13, 14, 15]

Application rejected as non maintainable and dismissed under Section 98(2) for failure to pay the prescribed fee under the CGST and GGST heads.

Final Conclusion: The application of M/s. Khaitan Chemicals and Fertilizers Ltd. for an advance ruling is rejected as non maintainable under Section 98(2) because the prescribed fee was not paid in the required manner under the CGST and GGST rules.

Application for advance ruling - prescribed form FORM GST ARA-01 - fee for advance ruling - non-maintainability under Section 98(2) of the CGST/GGST Act

Application for advance ruling - prescribed form FORM GST ARA-01 - fee for advance ruling - non-maintainability under Section 98(2) of the CGST/GGST Act - Whether the applicant's advance ruling application is maintainable where it was not filed in FORM GST ARA-01 though the requisite combined fee was paid. - HELD THAT: - The Authority examined the statutory requirement that an application for advance ruling must be submitted in FORM GST ARA-01 and accompanied by the prescribed fee under Rule 104 read with Section 97 of the CGST Act and corresponding provisions of the GGST Act and Rules. While the applicant paid an aggregate fee of Rs. 10,000 (Rs.5,000 under CGST Rules and Rs.5,000 under GGST Rules), the application was not filed in the prescribed FORM GST ARA-01. The Authority found that compliance with both the prescribed form and the fee requirements is mandatory for maintainability. Non-compliance with the requirement to file in FORM GST ARA-01 renders the application defective and liable to rejection under Section 98(2) of the CGST Act (and corresponding GGST provision). Having found the statutory filing requirement unmet, the Authority declined to address the substantive questions raised by the applicant. [Paras 13, 14, 15, 16]

Application rejected as non-maintainable and disposed of under Section 98(2) of the CGST/GGST Act for failure to file in FORM GST ARA-01 despite payment of fee.

Final Conclusion: The Advance Ruling application of M/s. Gujarat State Road Development Corporation Ltd. is rejected as non-maintainable under Section 98(2) of the CGST/GGST Act for failure to file the application in the prescribed FORM GST ARA-01 (notwithstanding payment of the combined fee).

Advance ruling - maintainability of application for advance ruling - prescribed form FORM-GST ARA-01 - fee requirement under Section 97 and Rule 104 - rejection under Section 98(2) for non-payment of mandatory fee - non-compliance with mandatory statutory requirements

Maintainability of application for advance ruling - prescribed form FORM-GST ARA-01 - fee requirement under Section 97 and Rule 104 - rejection under Section 98(2) for non-payment of mandatory fee - Whether the application for advance ruling is maintainable in view of non-payment of the prescribed fees under the CGST and GGST Acts and Rules. - HELD THAT: - The Authority examined the application and filings and found that although the application was in the prescribed FORM-GST ARA-01, the applicant paid only Rs. 5,000. The combined reading of Section 97 and Rule 104 of both the CGST and GGST Acts and Rules requires payment of Rs. 5,000 under each Act, totaling Rs. 10,000, for an application to be validly filed. Non-payment of the total statutory fee meant the application did not comply with the mandatory filing requirements. Since compliance with the prescribed form and payment of the required fee are preconditions to maintainability, the Authority held that the application was invalid and liable to be rejected under the provision for rejection of applications that do not meet statutory requirements. [Paras 6, 7, 8, 9]

Application rejected as non-maintainable under Section 98(2) due to failure to pay the required combined fee of Rs. 10,000.

Final Conclusion: The Advance Ruling application filed by the applicant is rejected as non-maintainable under the CGST/GGST Acts for failure to comply with the mandatory fee requirement; the substantive questions on classification and applicable rate were not adjudicated.

Maintainability of advance ruling application for non-payment of prescribed fee - Interpretation of Section 97 and Rule 104 requiring fee under both Central and State GST - Rejection of application under Section 98(2) for non-compliance with fee requirement

Advance Ruling application fee requirement - Combined fee liability under CGST and GGST - Non-maintainability for non-payment of fee - Whether the advance ruling application was maintainable where the applicant paid only one prescribed fee instead of the combined fees under the Central and State Acts. - HELD THAT: - The application was filed in FORM GST ARA-01 but the fee tendered was Rs. 5,000/-. A combined reading of Section 97 and Rule 104 of the CGST Act/Rules and the corresponding provisions of the GGST Act/Rules shows that an applicant must pay the fee prescribed under both the Central and the State provisions, amounting to Rs. 10,000/-. The Authority found that the applicant did not pay the total fee required under both enactments. Consequently, the application did not comply with the statutory filing requirements and was liable to be rejected without examination of the substantive question, since non-payment of the prescribed fee renders the application invalid under the statutory scheme. The Authority therefore declined to examine the merits of the tax characterisation of supplies of E-scrap. [Paras 8, 9, 10, 11]

Application rejected as non-maintainable under Section 98(2) for failure to pay the prescribed combined fee under the CGST and GGST provisions.

Final Conclusion: The Authority rejected the applicant's advance ruling application under Section 98(2) as non-maintainable because the applicant failed to pay the prescribed fees under both the Central and State GST rules, and therefore the substantive question was not adjudicated.

Advance ruling application maintainability - prescribed form requirement under Section 97 and Rule 104 - fee requirement for advance ruling under CGST and GGST - rejection under Section 98(2)

Advance ruling application maintainability - prescribed form requirement under Section 97 and Rule 104 - fee requirement for advance ruling under CGST and GGST - rejection under Section 98(2) - Whether the applicant's advance ruling application is maintainable in view of non-compliance with the prescribed form and fee requirements. - HELD THAT: - The Authority found that the application was not submitted in the prescribed FORM GST ARA-01 and that the applicant had deposited only Rs. 5,000. A combined reading of Section 97 and Rule 104 of the CGST and GGST framework requires filing in FORM GST ARA-01 and payment of fee of Rs. 5,000 under each Act, i.e., a total of Rs. 10,000. Non-compliance with the mandatory form and fee requirements renders the application invalid for adjudication on the merits. Given this statutory non-compliance, the Authority declined to examine the substantive classification question and proceeded to reject the application as non-maintainable under the provision authorising rejection for failure to comply with filing requirements. [Paras 6, 7, 8, 9, 10]

Application rejected as non-maintainable under Section 98(2) for failure to file FORM GST ARA-01 and for non-payment of the required fee of Rs. 10,000 (Rs. 5,000 under each of CGST and GGST).

Final Conclusion: The application of M/s. Mohitkumar Mahendrabhai Patel (C/O Aster Industries) is rejected under Section 98(2) of the CGST/GGST Act, 2017 as non-maintainable for failure to comply with the mandatory form and fee requirements; the substantive classification question was not decided.

Disallowance for failure to deduct/ deposit TDS under section 40(a)(ia) - obligation to deduct tax at source on contract payments under section 194C - liability for interest for failure to deduct or delay in deposit of TDS under section 201(1A) - rejection of books of account and estimation of income under section 145(3) - recognition of revenue by project completion method in real estate - estimation of profit on advances from customers as a reasonable percentage

Disallowance for failure to deduct/ deposit TDS under section 40(a)(ia) - obligation to deduct tax at source on contract payments under section 194C - liability for interest for failure to deduct or delay in deposit of TDS under section 201(1A) - Whether the addition under section 40(a)(ia) for failure to deduct TDS on payments to contractors was justified where TDS and interest were deposited before completion of assessment. - HELD THAT: - The Tribunal found that the assessee had paid the TDS and interest to the Government prior to completion of assessment and produced the challan in support. While section 194C imposes an obligation to deduct TDS on contract payments and section 201(1A) attracts interest for failure or delay, where the tax and interest have been deposited before assessment completion no revenue loss is shown. In those circumstances the disallowance under section 40(a)(ia) was unsustainable and the addition was deleted. [Paras 3, 5]

Addition made under section 40(a)(ia) is deleted as TDS with interest was deposited before completion of assessment.

Rejection of books of account and estimation of income under section 145(3) - recognition of revenue by project completion method in real estate - estimation of profit on advances from customers as a reasonable percentage - Whether the Assessing Officer was justified in estimating income by taxing 15% of the total advances from customers after rejecting the books of account, and if so, whether the entire closing advance (including opening balance brought forward) could be so taxed for AY 2014-15. - HELD THAT: - The Tribunal accepted that the Assessing Officer was entitled to estimate income after rejecting unreliable books under section 145(3). However, the AO erred in applying 15% to the entire closing balance of advances, which included opening balances brought forward from earlier years. Authorities cited establish that advances or booking amounts, and brought-forward credit balances, are not automatically trading receipts of the year and cannot be taxed when title has not passed. The Tribunal therefore directed deletion of the addition attributable to the opening balance and permitted taxation only of the profit element embedded in advances actually received in the relevant financial period 2013-14. Considering the parties' submissions on an appropriate percentage and to reasonably guard against leakage of revenue, the Tribunal found 15% excessive and 5% unduly low and directed the AO to estimate profit at 10% of the advances received during the relevant financial year and recompute the assessment accordingly. [Paras 6, 9, 10, 12]

Addition upheld only to the extent of profit element in advances received in financial period 2013-14; deletion of addition attributable to opening balance; AO directed to recompute income by applying 10% to advances received in 2013-14 for assessment year 2014-15.

Final Conclusion: Appeal partly allowed: disallowance under section 40(a)(ia) deleted as TDS with interest was deposited before completion of assessment; addition on advances partly deleted in respect of opening balances, and AO directed to recompute income by taxing 10% of advances received in financial year 2013-14 relevant to AY 2014-15.

Addition on account of bogus purchases - onus of proof for genuineness of purchases - estimation of embedded profit in accommodation entries - tax effect threshold for filing appeal under CBDT Circular - precedential effect of Tribunal decision in assessee's own case

Tax effect threshold for filing appeal under CBDT Circular - Whether Revenue's appeal is maintainable before the Tribunal having regard to the tax-effect threshold prescribed by CBDT. - HELD THAT: - The Tribunal recorded that the tax effect in the Revenue's appeal was below the limit fixed by the CBDT for filing appeals before the ITAT (CBDT Circular No.17/2019). The Departmental Representative did not dispute that the tax effect was below the prescribed threshold and sought liberty to restore the appeal should the tax effect later exceed the limit. In these circumstances the Tribunal dismissed the Revenue's appeal in limine on account of insufficient tax effect while granting liberty to seek restoration if the tax effect is later found to be above the prescribed limit.

Revenue's appeal dismissed in limine for being below the tax-effect threshold; liberty to restore if tax effect exceeds the CBDT limit.

Addition on account of bogus purchases - onus of proof for genuineness of purchases - estimation of embedded profit in accommodation entries - precedential effect of Tribunal decision in assessee's own case - Whether the addition made by the Assessing Officer on account of alleged bogus purchases should be sustained at 12.5%, reduced, or further limited to 2% of the purchases. - HELD THAT: - The Assessing Officer had estimated and added 12.5% of the alleged bogus purchases, relying on information from investigation and on the assessee's failure to prove genuineness. The CIT(A) reduced the addition to 2% relying on the Tribunal's earlier decision in the assessee's own case. The assessee urged application of a different High Court ratio (Mohommad Haji Adam & Co.) to restrict addition to the difference between gross profits on genuine and bogus purchases, but the Tribunal found that the factual matrix here was distinguishable: the assessee was a manufacturer/exporter, detailed DGIT(Inv.) information indicated large accommodation entries from the Rajendra Jain group, and there were no adequate enquiries into veracity of sales or production records by the AO. Given that the ITAT in the assessee's own case had restricted additions to 2% and no contrary order from the High Court was shown, the Tribunal followed that precedent and upheld the CIT(A)'s restriction of the addition to 2% of the implicated purchases for both years.

Assessee's challenge dismissed; addition sustained at 2% of the implicated purchases for AY 2013-14 and AY 2014-15 (CIT(A)'s orders upheld).

Final Conclusion: Revenue's cross-appeal dismissed in limine for being below the CBDT-prescribed tax-effect threshold with liberty to restore if threshold is later exceeded; assessee's appeals dismissed and CIT(A)'s reduction of the bogus-purchase addition to 2% for AY 2013-14 and 2014-15 upheld.

Time limit under section 92CA(3A) for Transfer Pricing Officer - computation of 60 days prior to expiry of limitation under section 153 - mandatory character of the TPO's time limit despite use of 'may' - consequence of time barred TPO order on transfer pricing adjustments

Time limit under section 92CA(3A) for Transfer Pricing Officer - computation of 60 days prior to expiry of limitation under section 153 - mandatory character of the TPO's time limit despite use of 'may' - Whether the Transfer Pricing Officer's order determining the arm's length price was barred by limitation under section 92CA(3A) read with section 153. - HELD THAT: - The Tribunal examined sub section (3A) of section 92CA as enacted by Finance Act, 2007 and its interplay with section 153. Following the Madras High Court decision in M/s. Pfizer Healthcare India Pvt. Ltd. and the coordinate Bench decision in Honda Trading Corporation, the Tribunal held that the 60 day period to be computed 'prior to the date on which the period of limitation referred to in section 153 expires' requires exclusion of the last date and that the word 'may' in section 92CA(3A) must be read as mandatory in context. Applying this rule to the facts, with the assessment order dated 31.03.2013, the TPO's order had to be passed by 29.01.2013 (excluding 31.03.2013 in computing 60 days). The TPO's order dated 31.01.2013 (recorded as such) was therefore held to be time barred. The Revenue's plea that the operative date was a clerical error (30.01.2013) was rejected because orders of quasi judicial authorities are to be taken at face value and no rectification under section 154 was pursued by the TPO. The Tribunal quashed the TPO's order as barred by limitation. [Paras 21, 23, 24, 25, 26]

TPO's order determining ALP is quashed as barred by limitation.

Consequence of time barred TPO order on transfer pricing adjustments - quashing of TPO order and deletion of additions - Effect of quashing the time barred TPO order on the transfer pricing additions made in the assessment order. - HELD THAT: - The Tribunal held that where the TPO's order is quashed for being time barred, the transfer pricing determination emanating from that order cannot sustain additions in the final assessment. While the assessment order itself (passed in time) remains valid, additions based solely on the TPO's time barred determination must be deleted. The Tribunal therefore did not decide the merits of the TP adjustments but directed deletion of the additions arising from the impugned TPO order. [Paras 26, 27]

Additions in the assessment order based on the TPO's time barred order are deleted; the assessment stands except for those additions.

Final Conclusion: The TPO's order was quashed as barred by limitation and the transfer pricing additions flowing from that order were deleted; the assessment order otherwise remains in force.

Revision under section 263 - section 40A(3) payments in cash - failure of Assessing Officer to make inquiries - order erroneous and prejudicial to the revenue - fresh assessment after providing opportunity to the assessee

Revision under section 263 - failure of Assessing Officer to make inquiries - order erroneous and prejudicial to the revenue - Validity of the Principal Commissioner of Income-tax's revision under section 263 in setting aside the assessment order passed under section 143(3). - HELD THAT: - The Tribunal examined whether the assessing officer's acceptance of the returned income without making inquiries called for by the circumstances rendered the assessment order erroneous and prejudicial to the interests of the revenue. The assessee contended that payments were genuine and not single-party same-day payments. The assessment order, however, contained no discussion or inquiry on the disputed cash payments and simply accepted the return. Following the principle that a CIT may treat an assessment as erroneous where the AO has issued a stereotyped order accepting the return without making necessary enquiries, the Tribunal held that the AO's failure to investigate the cash-payment issues constituted an error of procedure and substance. Consequently the Principal CIT was justified in setting aside the assessment for fresh consideration. [Paras 4, 5]

Pr. CIT's exercise of revision power under section 263 to set aside the assessment is upheld and the assessee's appeal on this ground is dismissed.

Section 40A(3) payments in cash - fresh assessment after providing opportunity to the assessee - Remand for enquiry into cash payments alleged to violate section 40A(3) in respect of tyre-related payments and vehicle-and-machine insurance. - HELD THAT: - The Principal CIT had called for verification of cash payments aggregating to specified amounts for tyre-related expenses and for vehicle and machine insurance, concluding that these may be in breach of section 40A(3). The Tribunal found that because the AO did not make any enquiry into these payments at the time of assessment, the matter requires fresh investigation. The Tribunal therefore affirms the direction that the assessing officer should conduct appropriate enquiries, examine supporting bills, vouchers and party details, and give the assessee an opportunity of being heard before concluding the assessment on these points. [Paras 2, 5]

Matter remanded to the assessing officer for fresh enquiry and adjudication on the applicability of section 40A(3) to the specified cash payments, after affording the assessee an opportunity.

Final Conclusion: The order of the Principal CIT under section 263 setting aside the assessment is affirmed; the appeal is dismissed and the assessment is remitted to the Assessing Officer for fresh enquiry and decision on the cash-payment issues in accordance with law after giving the assessee opportunity to be heard.

Rectification under section 154 - mistake apparent on the face of the record - taxability by reason of accrual - compulsory acquisition compensation - applicability of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - determination of compensation under the National Highways Act

Rectification under section 154 - mistake apparent on the face of the record - Whether the rectification application before the Assessing Officer could be entertained as a mistake apparent on the face of the record - HELD THAT: - The Tribunal upheld the view of the CIT(A) that the claim made by the assessee in the section 154 application was not a "mistake apparent from the record". The Assessing Officer had passed the assessment on 20.09.2016 and the subsequent reliance on the CBDT Circular and on law made effective later could not be treated as a rectifiable mistake apparent on the face of the record. The CIT(A) correctly adjudicated the claim on merits and concluded that the requirements for exercise of power under section 154 were not satisfied. [Paras 6]

Rectification under section 154 not maintainable as the claim did not disclose a mistake apparent on the face of the record; the CIT(A)'s conclusion is sustained.

Compulsory acquisition compensation - applicability of the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 - determination of compensation under the National Highways Act - taxability by reason of accrual - Whether compensation received on 01.01.2014 was exempt under the RFCTLARR Act or section 10(37), or whether it was taxable by reason of accrual on the earlier award dated 05.02.2013 under the National Highways Act - HELD THAT: - The Tribunal found that the award determining entitlement and amount was passed on 05.02.2013 under Section 3G of the National Highways Act, and the compulsion/accrual event occurred on that date. Though the monetary payment was made on or near 01.01.2014, the RFCTLARR Act could not be applied to vary the tax consequences because the award (and hence the assessee's entitlement) predates the RFCTLARR Act's applicability. Relying on the principle that income is taxable when it accrues or is deemed to accrue, the cutoff for taxability is the date the assessee became entitled to the compensation (the award date), not the date of actual receipt. Consequently, the tribunal declined the contention that the compensation was exempt under the RFCTLARR Act or section 10(37) and held it taxable. [Paras 5, 6]

Compensation held taxable as accruing on the date of the award (05.02.2013); RFCTLARR Act and the claimed exemption do not apply to alter taxability.

Final Conclusion: The appeal is dismissed: the CIT(A)'s refusal to rectify the assessment under section 154 is sustained, and the compensation for compulsory acquisition is held taxable as having accrued on the date of the award under the National Highways Act, with the RFCTLARR Act not altering the taxability in the present case.

Voluntary disclosure - penalty under section 271(1)(c) - survey under section 133A - non specific penalty notice and prejudice - disclosure following detection is not voluntary - requirement to plead and prove prejudice for breach of natural justice

Voluntary disclosure - disclosure following detection is not voluntary - penalty under section 271(1)(c) - survey under section 133A - Whether deletion of penalty by the Commissioner (Appeals) was sustainable where additional income was declared after impounding of documents in a survey and subsequent show cause proceedings. - HELD THAT: - The Tribunal found that documents (loose papers, hard disk and other materials) were recovered and inventorised during a survey on 25.07.2012 and that the assessee thereafter surrendered part of the income but did not disclose the entire amount in the return. The assessee later offered the remaining amount during assessment proceedings, stating the offer was made to avoid litigation and to "buy peace." The Tribunal applied the legal principle that a disclosure made after detection or in response to notices is not voluntary and therefore does not preclude initiation or imposition of penalty. It distinguished the approach taken by the Commissioner (Appeals) and relied on precedents holding that post detection surrender lacks voluntariness and that explanations offered only after departmental action do not necessarily negate liability for penalty. On the facts, the Tribunal concluded the surrender was compelled by the survey and subsequent show cause, lacking voluntariness; accordingly the deletion of penalty by the Commissioner (Appeals) was erroneous. [Paras 20]

Penalty imposed by the Assessing Officer under section 271(1)(c) is confirmed and the deletion by the Commissioner (Appeals) is set aside.

Non specific penalty notice and prejudice - requirement to plead and prove prejudice for breach of natural justice - Whether the assessee's cross objection that the penalty notices were non specific warranted dropping the penalty proceedings. - HELD THAT: - The Tribunal recorded that the assessee had received the penalty notices, responded to them and had not previously raised the plea of non specificity or alleged prejudice before the lower authorities. Citing authority that a plea of violation of natural justice requires demonstration of prejudice, the Tribunal held that mere contention of non specificity, when not pleaded earlier and without any showing of prejudice, cannot succeed. The Tribunal therefore rejected the cross objection on the ground that no prejudice was shown and the assessee was aware of the charge and responded to it. [Paras 15]

Cross objection challenging the notices as non specific is dismissed for want of merit and for failure to prove prejudice.

Final Conclusion: The Revenue's appeal is allowed: the Tribunal confirms the penalty under section 271(1)(c) as the surrender was held to be non voluntary (made after survey and show cause) and the Commissioner (Appeals)'s deletion is annulled. The assessee's cross objection that the penalty notices were non specific is dismissed for lack of pleaded or proved prejudice.

Prior approval of Joint Commissioner under section 153D - Mandatory jurisdictional condition for assessment in search-related cases - Application of mind by approving authority - Technical or perfunctory approval insufficient - Assessment passed without valid approval is void

Prior approval of Joint Commissioner under section 153D - Application of mind by approving authority - Technical or perfunctory approval insufficient - Assessment passed without valid approval is void - Validity of the approval granted by the Joint Commissioner under section 153D and the consequent maintainability of assessments framed by the AO. - HELD THAT: - Section 153D mandates that no order of assessment in search or requisition cases shall be passed by an AO below the rank of Joint Commissioner except with the prior approval of the Joint Commissioner (para 6). The Tribunal examined the correspondence between the AO and the JCIT and the JCIT's approval letter which expressly stated that, due to shortage of time while holding charge of multiple ranges, the draft orders were approved "as per technical requirement" without going "into the deep" (paras 10-11). The Tribunal held that the statutory requirement is not a mere administrative formality but a mandatory, jurisdictional condition: the AO acquires jurisdiction to pass an assessment only after a bona fide approval by the JCIT obtained by application of mind to the draft order and the material on record (para 7). The communications showed that the JCIT had not reached satisfaction or given articulate approval on the merits and instead granted a blanket technical approval prompted by time constraints; such casual or perfunctory approval cannot be treated as the required statutory approval (paras 11-13). Distinguishing authorities relied upon by Revenue, the Tribunal concluded that the present facts demonstrate non-compliance with s.153D which is mandatory; an order passed without valid approval is a nullity and not a mere irregularity (paras 8-9, 13). Consequently the assessments confirmed by the CIT(A) were quashed for want of valid approval under section 153D (para 14). [Paras 10, 11, 12, 13, 14]

The JCIT's technical approval did not satisfy the mandatory requirement of section 153D; assessments passed by the AO without valid prior approval are void and the impugned assessments are quashed.

Final Conclusion: The Tribunal held that the JCIT's stated "technical" approval did not constitute the mandatory prior approval under section 153D because there was no genuine application of mind; accordingly the assessment for Assessment Year 2007-08 (as confirmed by the CIT(A)) was void and was set aside, the revenue appeal dismissed and the assessee's cross-objection allowed.

Reopening of assessment under section 147 - taxation of interest on fixed deposits as business income versus income from other sources - nexus between fixed deposits/bank guarantees and the business of the assessee - remand for fresh adjudication and opportunity of hearing

Taxation of interest on fixed deposits as business income versus income from other sources - nexus between fixed deposits/bank guarantees and the business of the assessee - Whether interest earned on fixed deposits deposited as bank security for performance of contracts is to be treated as business income or as income from other sources. - HELD THAT: - The assessee, a contractor, had deposited FDRs as cash margin/security to obtain bank guarantees required by contract terms; the FDRs and interest thereon were intrinsically connected to securing and performing the contracts. The Tribunal accepted the assessee's factual position that the FDRs were not investments but security deposits made pursuant to contract and bank norms, and held there is a direct nexus between the deposits/interest and the business of contracting. Relying on established authorities addressing the determinative test of 'immediate nexus' between FDR interest and the business, the Tribunal concluded that where such nexus exists the interest must be treated as business income. Applying that test to the facts on record, the Tribunal held the interest is business income and allowed the ground relating to the chargeability of the interest income. [Paras 7, 8, 9]

The addition of interest on FDRs is treated as business income and the ground is allowed.

Remand for fresh adjudication and opportunity of hearing - Disposition of the claim relating to receipt from an insurance claim which the assessee contends was already included in the profit and loss account and assessed under section 143(3). - HELD THAT: - The Tribunal recorded that there was no argument before the CIT(A) on this issue and that no representative appeared before the Tribunal as the authorised representative had expired. Given the absence of opportunity for the Commissioner (Appeals) to examine the assessee's submission on the insurance receipt and in the interest of fair adjudication, the Tribunal directed that the matter be remanded to the Commissioner (Appeals) for fresh consideration after issuing notice and granting the assessee an opportunity of hearing. [Paras 10]

The issue relating to the insurance claim is remanded to the Commissioner (Appeals) for fresh adjudication after notice and hearing.

Final Conclusion: The appeal is partly allowed: the addition of interest on FDRs is held to be business income in the assessee's favour, while the issue concerning the insurance claim is remanded to the Commissioner (Appeals) for fresh adjudication with notice and opportunity of hearing.

Condonation of delay - substantial justice over technical dismissal - allowability of interest under Section 36(1)(iii) of the Income Tax Act - interest on borrowed capital treated as revenue expenditure after the asset is put to use - onus on the assessee to establish utilisation of loan funds

Condonation of delay - substantial justice over technical dismissal - Whether the delay of 73 days in filing the appeal before the Tribunal should be condoned. - HELD THAT: - The Tribunal, applying a liberal test, found that the assessee's short delay was caused by an inadvertent lapse and was not shown to be mala fide. The delay was not of such degree as to bar the appeal when weighed together with the prima facie strength of the assessee's case and absence of any serious prejudice to Revenue. The Court relied on the principle that substantial justice should be preferred over technical infirmities and, accordingly, condoned the delay to enable disposal on merits. [Paras 6]

Delay of 73 days in preferring the appeal is condoned and the appeal is admitted for hearing on merits.

Allowability of interest under Section 36(1)(iii) of the Income Tax Act - interest on borrowed capital treated as revenue expenditure after the asset is put to use - onus on the assessee to establish utilisation of loan funds - Whether the interest expense on the term loan availed from a non-banking finance company is allowable under Section 36(1)(iii) for AY 2014-15. - HELD THAT: - On the merits the Tribunal observed that the loan was secured against a capital asset belonging to the holding company and that no diversion of loan funds for non-business purposes was alleged by Revenue. The Tribunal held that under Section 36(1)(iii) there is no distinction between capital borrowed for revenue purpose and capital borrowed for capital purpose and that interest on borrowed capital is allowable as revenue expenditure once the asset is put to use for business. The CIT(A)'s brief and cryptic dismissal, which required the assessee to prove utilisation of interest for the loan's purpose, was found to be wrongly applied. In view of the audited financial statements and the recorded facts indicating security of the loan against the asset and absence of any allegation of diversion, the assessee's claim for interest was held to be maintainable. [Paras 7]

Disallowance of interest is set aside; interest expense is allowable under Section 36(1)(iii) and the appeal is allowed on merits.

Final Conclusion: The Tribunal condoned the short delay in filing the appeal and on merits allowed the assessee's claim for interest under Section 36(1)(iii) for AY 2014-15, finding that interest on borrowed capital is allowable once the asset is put to use and that the CIT(A)'s contrary conclusion was unsustainable.

Allowability of business expenditure under section 37 - disallowance based on discrepancy between annual report and assessment records - valuation and reconciliation of raw material consumption based on surveys under section 131 - suppression of sales and addition of unaccounted receipts - addition limited to gross profit on undisclosed sales - admission of additional evidence before appellate authority and compliance with rule 46A

Allowability of business expenditure under section 37 - disallowance based on discrepancy between annual report and assessment records - Deletion of disallowance of power and fuel expenses claimed by the assessee - HELD THAT: - The AO disallowed a portion of 'power & fuel' expenses after comparing figures in the annual report with a chart prepared from process plant consumption, treating differences as inflated expenditure. The Tribunal held that the AO did not contend that the expenses were bogus or not incurred for business, and that mere variation from the preceding year or between annual report figures and process plant details is not a ground for disallowance absent material showing the expenditure was not incurred in the course of business. The Tribunal accepted that the assessee had submitted specific, audited books based explanations (including consumption in utilities, R&D, staff colonies, ETP etc.) which the AO failed to rebut or verify; consequently the AO's mechanical computation based on his chart was unsustainable. Applying the test of allowability under section 37 (expense not capital/personal and incurred in business), the Tribunal found no infirmity in CIT(A)'s deletion of the addition. [Paras 10]

Addition of Rs. 4,71,53,581/- on account of power & fuel disallowed by AO is deleted; revenue ground dismissed.

Valuation and reconciliation of raw material consumption based on surveys under section 131 - disallowance based on discrepancy between annual report and assessment records - Deletion of addition on account of alleged excess raw material consumption at Nandesari plant - HELD THAT: - The AO compared data gathered during a survey under section 131 (which recorded only major items collected at the time) with the annual report and treated the difference as excess/raw material manipulation, making an addition. The Tribunal agreed with CIT(A) that the information collected by inspectors was incomplete (11 items vs. 68 items actually consumed) and the AO failed to verify or point to defects in the assessee's audited books, bills or vouchers. Mere disparity between spot verification figures and audited financial statements, without evidence that purchases or consumption were bogus, does not justify disallowance. The AO himself computed a smaller discrepancy yet made a larger addition without supporting material; consequently CIT(A)'s deletion was upheld. [Paras 18]

Addition of Rs. 2,28,41,828/- on account of excess consumption of raw material deleted; revenue ground dismissed.

Suppression of sales and addition of unaccounted receipts - requirement of reconciliation and evidentiary onus on assessee - addition limited to gross profit on undisclosed sales - Deletion of addition for alleged suppression of sales at Bareilly unit and partial confirmation (gross profit only) for Nandesari unit - HELD THAT: - Bareilly: The AO treated transfers from the Bareilly plant to a Bhiwandi godown as sales and made an addition. The assessee furnished annexure explaining the stock transfer accounting (transfer at cost, subsequent sales from godown and closing stock). The AO did not verify books or indicate defects in vouchers; CIT(A) accepted the explanation and deleted the addition. The Tribunal concurred, observing the AO mischaracterised stock transfer as sale and failed to disprove the assessee's account. Nandesari: The AO relied on data collected under section 131 to find differences in quantities and values of sales and added the full value as suppressed sales. The Tribunal found that the assessee failed to discharge the primary onus to reconcile differences before the AO; however, noting absence of any material showing investment/cost in respect of the allegedly unaccounted sales, the Tribunal held that entire undisclosed sale proceeds could not be treated as income. Applying the principle (as expounded by the Gujarat High Court) that addition should be limited to the profit element, the Tribunal directed the AO to compute and add only the gross profit embedded in such suppressed sales. [Paras 22, 27, 32]

Addition for Bareilly of Rs. 36,77,078/- deleted. Addition for Nandesari of Rs. 92,66,496/- not sustained in full; Tribunal directs AO to add only the gross profit embedded in the unaccounted sales (appeal partly allowed).

Admission of additional evidence before appellate authority and compliance with rule 46A - Allegation that CIT(A) admitted additional evidence in violation of rule 46A - HELD THAT: - Revenue alleged that CIT(A) admitted additional evidence behind the back of the AO in violation of rule 46A. The Tribunal observed that no material was placed on record to show that additional evidence was admitted without affording the AO an opportunity; the learned DR did not substantiate the allegation. On the evidence before it, the Tribunal found no breach of rule 46A. [Paras 34]

Ground alleging violation of rule 46A dismissed.

Final Conclusion: The Tribunal dismisses Revenue's challenges to (a) disallowance of power & fuel expenses and (b) disallowance for excess raw material consumption, upholding CIT(A)'s deletions; it upholds deletion of the Bareilly sales addition but directs the AO to restrict any addition for Nandesari suppressed sales to the gross profit element only; allegation of improper admission of additional evidence under rule 46A is rejected. Overall, Revenue's appeal is partly allowed.

Penalty under Section 112(a) of the Customs Act, 1962 - penalty under Section 114AA of the Customs Act, 1962 - prior knowledge / abetment requirement for imposing penalty on a Customs House Agent - liability of CHA where no proceedings under the Customs Broker Licensing Regulations, 2013 are initiated - effect of non-suppression by importer on CHA liability - prohibition on issuance of a fresh show-cause notice in de novo remand proceedings

Penalty under Section 112(a) of the Customs Act, 1962 - prior knowledge / abetment requirement for imposing penalty on a Customs House Agent - effect of non-suppression by importer on CHA liability - Imposability of penalty under Section 112(a) on the appellant (customs broker/CHA). - HELD THAT: - The Tribunal found that Revenue failed to produce any evidence showing that the appellant had prior knowledge of or abetted the alleged violation of the Customs Act. The Tribunal placed weight on its earlier Final Order in favour of the passenger, which held there was no suppression of facts by the importer; in those circumstances the CHA could not be held to have abetted the importer. Reliance was also placed on precedent that penalty under Section 112(a) is not imposable on a CHA in the absence of proceedings or material establishing culpability. Applying these principles to the facts, the Tribunal concluded that the statutory requirement of prior knowledge/abetment necessary to sustain a penalty under Section 112(a) was not satisfied.

The penalty imposed under Section 112(a) was set aside and the appellant's appeal allowed.

Penalty under Section 114AA of the Customs Act, 1962 - liability of CHA where no proceedings under the Customs Broker Licensing Regulations, 2013 are initiated - Sustainability of penalty under Section 114AA on the appellant in absence of proceedings under the Customs Broker Licensing Regulations, 2013. - HELD THAT: - The Tribunal noted that no proceedings under the Customs Broker Licensing Regulations, 2013 had been initiated against the appellant at the time of the original order and relied on the principle that penalties under provisions addressing broker misconduct are not imposable without appropriate regulatory proceedings or material establishing breach. In the absence of such proceedings or evidence, the Tribunal found the imposition of penalty under Section 114AA unsustainable.

The penalty under Section 114AA was not sustained.

Prohibition on issuance of a fresh show-cause notice in de novo remand proceedings - Permissibility of issuing a fresh show-cause notice raising new allegations in remand (de novo) proceedings directed by the Commissioner (Appeals). - HELD THAT: - The Tribunal held that issuance of a show-cause notice in de novo remand proceedings, which introduces fresh allegations or regulatory violations not previously raised, is not permitted. The remand by the Commissioner (Appeals) had directed the original authority to provide a reasonable and effective opportunity of hearing and to finalize the issue; issuing a new show-cause alleging different violations in the course of remand was contrary to that mandate and impermissible.

Issuance of a fresh show-cause notice in the remand proceedings was held to be not permissible.

Final Conclusion: The appeal is allowed: the Tribunal set aside the penalty imposed on the appellant under Section 112(a) of the Customs Act, 1962 and held that the penalty under Section 114AA was not sustainable; the Tribunal also held that issuing a new show-cause notice in the de novo remand proceedings was impermissible.

Binding effect of an approved resolution plan under Section 31 - Jurisdiction of NCLT under Section 60(5)(c) to decide claims and questions arising out of CIRP - Belated claims and requirement to submit claims during CIRP - Classification of expenses as insolvency resolution process costs - Change in shareholding does not constitute transfer of leasehold rights - Statutory lessor cannot fasten post-approval demands on Successful Resolution Applicant which were not claimed in CIRP - No discretionary power to compel statutory owner to grant NOC for encumbrance

Jurisdiction of NCLT under Section 60(5)(c) to decide claims and questions arising out of CIRP - This Tribunal has jurisdiction under Section 60(5)(c) to entertain and decide questions of law or fact arising out of or in relation to the insolvency resolution proceedings, including belated claims and related disputes. - HELD THAT: - The Tribunal reproduced Section 60(5) and held that questions of priorities or any question of law or fact arising from the insolvency resolution or liquidation proceedings fall within its jurisdiction. R3's contention that post-approval disputes about dues and levies fall outside NCLT's jurisdiction was rejected. The Tribunal relied on the statutory breadth of Section 60(5)(c) to entertain the present challenge to R3's post-approval demands and to adjudicate whether such demands could be fastened on the Successful Resolution Applicant. [Paras 15, 19, 31]

Tribunal has jurisdiction under Section 60(5)(c) to decide the issues raised in the application.

Belated claims and requirement to submit claims during CIRP - Statutory lessor cannot fasten post-approval demands on Successful Resolution Applicant which were not claimed in CIRP - Claims raised by the lessor (R3) after approval of the resolution plan which were not submitted during the CIRP cannot be fastened upon the Successful Resolution Applicant. - HELD THAT: - R3 had filed a claim of Rs. 2.92 Crores in the CIRP which was dealt with in the approved plan. Subsequently, after approval, R3 made additional demands and raised fresh claims without having presented those claims to the resolution professional during CIRP. The Tribunal held that amounts not claimed at the appropriate stage cannot be sprung on the Successful Resolution Applicant post-approval; such belated claims are not sustainable. Reliance on procedural or other statutory provisions to justify post-approval demands was held to be inadequate in light of the binding nature of the approved plan and the requirement that all claims be submitted during the CIRP. [Paras 16, 17, 18, 19, 31]

R3 cannot fasten its belated post-approval claims on the Applicant; such claims are not sustainable.

Classification of expenses as insolvency resolution process costs - The amounts demanded by R3 in its letter of 02/11/2020 do not constitute insolvency resolution process costs under Section 5(13) read with Regulation 31 of the CIRP Regulations. - HELD THAT: - The Tribunal examined the statutory definition of insolvency resolution process costs and Regulation 31, and concluded that the demands made by R3 in response to the Applicant's request for 'no dues' and 'no objection' certificates cannot be classified as CIRP costs. The demanded items (renewal fees, transfer fees, water/service tax and related levies asserted after plan approval) do not fall within the categories enumerated under Section 5(13) or Regulation 31 and therefore cannot be treated as costs of the CIRP that would survive or be payable outside the approved resolution plan framework. [Paras 22, 23, 24, 31]

The claimed amounts do not qualify as insolvency resolution process costs and cannot be treated as such.

Change in shareholding does not constitute transfer of leasehold rights - A change in the shareholding of the corporate debtor effected by the operation of the approved resolution plan does not amount to a transfer of the leasehold rights in the corporate debtor; therefore transfer and renewal fees claimed on that basis are not leviable. - HELD THAT: - R3 contended that change in management/shareholding on implementation of the resolution plan attracts transfer/renewal fees under the MID Act and its circulars. The Tribunal emphasised the separate legal personality of the company and held that the lessee before and after the CIRP remains the same corporate debtor; only its shareholders have changed. Since there was no transfer of leasehold rights to a third party, the levy of transfer and renewal fees by R3 on the ground of change in shareholding was held untenable. Consequently, judgments relied upon by R3 were found inapplicable to the factual position where the corporate entity continued as lessee. [Paras 20, 25, 26, 27, 31]

Change in shareholding pursuant to the resolution plan does not constitute transfer of leasehold rights; transfer/renewal fees claimed on that basis are untenable.

No discretionary power to compel statutory owner to grant NOC for encumbrance - The Tribunal will not direct the statutory lessor (R3), as owner of the property, to issue 'no objection certificate' or 'no dues certificate' for creation of mortgage; the issuance of such certificates lies within R3's prerogative. - HELD THAT: - While the Tribunal found that R3 could not fasten belated claims on the Applicant, it recognised that issuance of NOCs and no-dues certificates is within the statutory owner's discretion. The Tribunal noted its earlier order at the time of plan approval which stated that the Resolution Applicant must approach relevant regulatory authorities for reliefs and concessions. Given the limits of jurisdiction under Section 60(5) and the proprietary rights of R3 as owner, the prayer seeking a direction to issue NOC/no-dues certificate was refused. [Paras 32, 33]

Prayer for direction to R3 to issue NOC/no-dues certificate is refused; issuance is within R3's prerogative.

Final Conclusion: Application allowed in part. Declarations that no amount is due over and above the sum provided in the approved resolution plan, and that the demand in R3's letter dated 02/11/2020 and the asserted charges for building completion are unlawful and contrary to the Code, are granted. The prayer directing R3 to issue 'no objection' and 'no dues' certificates is refused; no interim extension order was made.

Sale of corporate debtor as a going concern - transfer of assets free of encumbrances and extinction of pre acquisition liabilities - distribution of sale proceeds in accordance with Section 53 of the Code - liquidator's powers and duties under the Liquidation Process Regulations (Regulation 32) - continuation/transfer of licences, contracts and employee relations on going concern sale - reconstitution of board and restoration of corporate status with Registrar of Companies - permissibility of consideration structure comprising share capital and unsecured debt

Permissibility of consideration structure comprising share capital and unsecured debt - Applicant permitted to discharge part of the sale consideration by way of equity infusion and balance as unsecured debt. - HELD THAT: - The Tribunal, after noting the terms of the E auction Memorandum and the Liquidator's lack of objection, allowed the Applicant to pay the sale consideration by bringing in a specified amount as share capital and the balance as unsecured debt. The order recognises the commercial arrangement between the parties and permits the proposed structuring of the consideration to give effect to the sale to the successful bidder. [Paras 34]

Prayer (a) allowed; Applicant permitted to bring specified amounts as share capital and unsecured debt towards payment of sale consideration.

Transfer of assets free of encumbrances and extinction of pre acquisition liabilities - distribution of sale proceeds in accordance with Section 53 of the Code - On payment of the sale consideration, Applicant acquires all rights, title and interest in the corporate debtor and shall not be liable for pre acquisition claims; sale proceeds to be distributed by the Liquidator under Section 53. - HELD THAT: - The Tribunal explained the nature of a going concern sale under the Code and Liquidation Process Regulations and held that once the sale consideration is received and distributed under Section 53, the purchaser takes the corporate debtor/assets free from encumbrances and past liabilities. The order records that the purchaser will not be responsible for creditors' claims or government dues arising prior to the date of acquisition and that the Liquidator shall distribute proceeds in accordance with Section 53. [Paras 27, 28, 34]

Prayers (b) and (c) allowed; Applicant to get rights, title and interest free of security/encumbrance and free from pre acquisition liabilities; sale proceeds to be distributed under Section 53.

Continuation/transfer of licences, contracts and employee relations on going concern sale - Successful bidder entitled to transfer/apply for transfer of licences and approvals; existing employees may continue; right to review or terminate pre acquisition contracts; licences to continue subject to payment of renewal fees where applicable. - HELD THAT: - Relying on the concept of going concern as understood in the Liquidation Process Regulations and policy materials, the Tribunal held that the sale contemplates transfer or entitlement to transfer licences, approvals and related benefits to the successful bidder and continuity of employees engaged in running the unit. The Tribunal permitted the bidder to review and terminate contracts entered prior to the order and allowed continuation of subsisting consents and licences subject to payment of renewal fees where applicable. [Paras 6, 21, 25, 34]

Prayers (j), (k) and (g) (as applicable) allowed; successful bidder entitled to transfer/apply for transfer of licences, may review/terminate prior contracts, and licences continue subject to renewal fees.

Reconstitution of board and restoration of corporate status with Registrar of Companies - Existing shares to be extinguished and new shares issued to the successful bidder; Registrar of Companies to reflect status as 'active' and permit reconstitution of board as directed. - HELD THAT: - The Tribunal explained that a going concern sale entails extinguishment of existing equity and issuance of fresh equity to the acquirer, resulting in transfer of ownership. It directed the Liquidator, in consultation with the Registrar of Companies, to take necessary steps to cancel existing share capital, effect issuance of fresh shares to the successful bidder and change the company's status from 'liquidation' to 'active', and allowed reconstitution of the board with persons proposed by the Applicant. [Paras 25, 31, 34]

Prayers (g), (h) and (i) allowed; existing shares cancelled, RoC to reflect active status, and board may be reconstituted as indicated.

Liquidator's powers and duties under the Liquidation Process Regulations (Regulation 32) - Liquidator directed to assist the successful bidder in completing ancillary processes and filings, and to make accounting entries for transmission and clearing of the balance sheet. - HELD THAT: - The Tribunal observed the Liquidator's role under Regulation 32 and related provisions, and directed the Liquidator to provide all necessary support and assistance to perfect/amend land records, execute novation/ancillary documents, complete pending statutory filings, and cooperate in accounting and distribution processes so as to effectuate the going concern transfer and enable business continuity. [Paras 20, 32, 34]

Prayers (m), (n), (o) allowed; Liquidator directed to assist in perfection of records, accounting entries and completion of pending statutory filings.

Brought forward tax losses subject to appropriate authority - Corporate debtor may be entitled to carry forward and set off brought forward tax losses subject to permission of the appropriate tax authority under the Income Tax Act. - HELD THAT: - The Tribunal granted that the corporate debtor could seek to avail brought forward tax losses, but clarified that such entitlement is subject to the relevant provisions and permission of the competent authority under the Income Tax Act. The Tribunal did not itself adjudicate the tax entitlement, leaving statutory authority to determine eligibility. [Paras 16, 34]

Prayer (p) allowed in principle subject to permission of the appropriate income tax authority.

Availability of government incentives subject to scheme eligibility - Applicant/Corporate Debtor may apply for incentives under the Package Incentive Scheme subject to eligibility and scheme norms. - HELD THAT: - The Tribunal allowed the corporate debtor to apply for incentives under the state scheme but limited the grant of such benefit to the fulfilment of eligibility criteria and other conditions prescribed by the scheme; it did not order automatic grant of incentives. [Paras 16, 34]

Prayer (q) allowed subject to eligibility and norms of the Package Incentive Scheme.

Requests under other statutes to be pursued before appropriate authorities - Prayer seeking treatment of the bid as a resolution plan under the Income Tax Act was not adjudicated; Applicant to approach the competent authority under the Income Tax Act. - HELD THAT: - The Tribunal declined to treat the bid as a resolution plan under the Income Tax Act and directed the Applicant to approach the relevant income tax authority for consideration of such request under the tax statute, thereby leaving the statutory interpretation and regulatory relief under the Income Tax Act to that authority. [Paras 34]

Prayer (r) not granted by the Tribunal; Applicant may approach the authority concerned under the Income Tax Act.

Final Conclusion: The Tribunal approved the sale of the corporate debtor as a going concern to the Applicant on the terms agreed, permitted the proposed consideration structure, directed issuance of shares to the successful bidder and extinguishment of prior equity, confirmed that the purchaser takes the corporate debtor/assets free of pre acquisition liabilities with sale proceeds to be distributed under Section 53, allowed continuation/transfer of licences and contracts subject to conditions, directed the Liquidator to provide necessary assistance and complete statutory filings, and left tax statutory claims (including brought forward losses and any treatment under the Income Tax Act) to be determined by the appropriate tax authorities as noted.

Wrongful trading - fraudulent trading - mens rea - duty to hand over assets on commencement of CIRP - specific pleading of material facts for section 66 - inspection and inquiry under sections 206 and 207 of the Companies Act, 2013 - role of Forensic Audit as basis for inquiry

Wrongful trading - duty to hand over assets on commencement of CIRP - Respondents' liability to contribute the cash balance of Rs. 12.31 lakhs to the assets of the corporate debtor under section 66 of the IBC, 2016. - HELD THAT: - The Tribunal examined the allegation that when CIRP commenced on April 15, 2019 the corporate debtor had a cash balance of Rs. 12.31 lakhs as reflected in the audited balance-sheet and notes for year ended March 31, 2019 and that the amount was not handed over to the IRP/RP. The Tribunal noted the duty of the corporate debtor and its officers to enable the IRP/RP to take possession of assets on the insolvency commencement date and that failure to account for or secret the cash, without satisfactory explanation or vouchers, supports a finding of dishonest removal of assets during CIRP. Applying the scope of section 66 (distinguishing fraudulent trading under sub section (1) and wrongful trading under sub section (2)), the Tribunal concluded that the respondents removed the cash balances with dishonest intention to defraud creditors and directed contribution to the corporate debtor's assets under section 66. The finding rests on the absence of explanation/accounting for the cash and the statutory duty to hand over assets on commencement of CIRP. [Paras 10, 48, 49, 53]

Respondents directed to contribute the sum of Rs. 12.31 lakhs to the assets of the corporate debtor within four weeks.

Wrongful trading - specific pleading of material facts for section 66 - role of Forensic Audit as basis for inquiry - inspection and inquiry under sections 206 and 207 of the Companies Act, 2013 - Allegation of diversion of stocks to the extent of Rs. 2,70,46,147 not finally adjudicated and entrusted to statutory inspection and inquiry for further verification. - HELD THAT: - The Tribunal found that while the applicant demonstrated inconsistencies in stock figures across various statements and relied upon a forensic audit and valuers' report, the application failed to demonstrate how the specific figure of Rs. 2,70,46,147 was computed. The forensic audit and annexed documents did not sufficiently quantify or explain the variance so as to permit final adjudication under section 66. Given these deficiencies and the seriousness of the allegation, the Tribunal directed the Registrar of Companies, Coimbatore to exercise powers under sections 206 and 207 of the Companies Act, 2013 to inspect and inquire and to furnish a report under section 208 if required, thereby remanding the factual verification to the statutory authority rather than deciding the claim on merits in the present proceedings. [Paras 20, 26, 50, 51, 52]

Allegation of stock diversion not finally decided; Registrar of Companies directed to conduct inspection and inquiry and report for further action.

Wrongful trading - fraudulent trading - specific pleading of material facts for section 66 - inspection and inquiry under sections 206 and 207 of the Companies Act, 2013 - Claims regarding diversion of funds to related parties, receivables written off, payments written off to customers and loans given and written off require third party impleadment or statutory inquiry and were not finally adjudicated by the Tribunal. - HELD THAT: - The Tribunal observed that several of the primary reliefs (diversion of funds to related parties, receivables/write offs and loans written off) involve third parties without whom the transactions cannot be fully examined; the application did not implead those parties or sufficiently plead material particulars to sustain a section 66 remedy. In light of the forensic audit findings and the CoC having commissioned that audit, the Tribunal held the matters serious but procedurally and factually inadequate for final determination. Consequently, the Tribunal directed the Investigative Wing of the Registrar of Companies, Coimbatore to conduct inspection and inquiry under sections 206 and 207 of the Companies Act, 2013 and to proceed as per the report under section 208; it also directed the RP to furnish the forensic audit report to the Registrar of Companies for reference. These directions effectively remand the substantive factual investigation to the statutory authority rather than disposing the substantive s.66 claims on merits in the present application. [Paras 31, 39, 40, 52, 53]

Claims under clauses (a), (d), (e) and (f) are not finally decided; Registrar of Companies to inspect and inquire and the RP to supply the Forensic Audit Report for that purpose.

Final Conclusion: The application under section 66 of the IBC, 2016 is partly allowed: respondents are directed to contribute the cash sum of Rs. 12.31 lakhs to the corporate debtor's assets. Other serious allegations (stock diversion and multiple fund/write off transactions involving third parties) were not finally adjudicated due to deficiencies in quantification and impleadment; those matters are remitted to the Registrar of Companies, Coimbatore for inspection/inquiry under the Companies Act, 2013 and related action, and the RP is directed to furnish the Forensic Audit Report for that purpose.

Financial debt - consideration for time value of money - default - evidence/documentary proof - financial creditor - information utility record

Financial debt - consideration for time value of money - evidence/documentary proof - financial creditor - Whether the amounts advanced by the applicant qualify as a 'financial debt' and whether the applicant is a 'financial creditor' entitled to invoke section 7 of the Code. - HELD THAT: - The Adjudicating Authority examined whether the applicant established that the sums paid constituted a debt disbursed against consideration for the time value of money within the meaning of section 5(8). The petitioner failed to produce any agreement or documentary evidence specifying the loan terms or agreed interest, and the payments were made into personal accounts of intermediaries and directors rather than directly to the corporate debtor. The communications (WhatsApp messages) produced were held insufficient to establish a legally enforceable debt falling under sub-clauses (a) to (i) of section 5(8). On these facts the Authority concluded that the applicant did not demonstrate that the transfers had the commercial effect of a borrowing or that he was a financial creditor as defined in section 5(7). [Paras 10, 11, 12, 13, 14]

The payments do not qualify as 'financial debt' and the applicant is not a 'financial creditor' for the purposes of section 7.

Default - information utility record - evidence/documentary proof - Whether default by the corporate debtor was established and whether necessary records (including information utility records) were placed on record enabling admission under section 7. - HELD THAT: - The Authority noted that admission under section 7 requires proof of default and supporting records. The applicant did not produce documents showing default by the corporate debtor; consequently there was no established record of default with an information utility or equivalent evidence as required to proceed. In the absence of such proof the petition could not be admitted. [Paras 9, 16, 17]

Default was not proved and requisite records were not placed on record; the petition could not be admitted under section 7.

Final Conclusion: For want of documentary evidence to establish that the transfers constituted a financial debt, and for failure to prove default or place requisite records on record (including information utility records), the application under section 7 was dismissed and proceedings for initiation of corporate insolvency resolution process were refused.

Implementation of approved scheme - liquidator's duty to hand over management upon scheme approval - payment of liquidation costs and liquidator's fees contingent on receipts and disbursal events - liquidator as an independent observer of the implementing agency's board - statutory auditor to quantify disputed liquidation costs and afford opportunity to object - consequences for wrongful withholding of possession by liquidator - non-applicability of section 29A of the Insolvency and Bankruptcy Code, 2016 upon compliance by affidavit

Liquidator's duty to hand over management upon scheme approval - implementation of approved scheme - consequences for wrongful withholding of possession by liquidator - Whether the liquidator could withhold handing over management and possession of the corporate debtor after Tribunal approval of the scheme. - HELD THAT: - The Tribunal found that once the scheme proponents and the liquidator complied with the requirement that they were not hit by section 29A (by affidavit) and after the scheme was sanctioned on January 10, 2020, there was no impediment to give effect to the scheme and the liquidator was bound to effect the handover. The liquidator's stated ground of non-payment of CIRP and liquidation costs did not justify continued withholding where the Tribunal had provided a mechanism (including quantification and verification) to resolve disputes over costs and fees. The order accordingly records that the liquidator should not have withheld handing over the reins and that wrongful failure to hand over will attract personal responsibility and costs to the liquidator. [Paras 2, 6, 7, 8, 26]

Directed the liquidator to hand over management and possession of the corporate debtor to the implementing agency within 10 days; no fees to be charged for the handover and liability for delay to rest personally on the liquidator.

Payment of liquidation costs and liquidator's fees contingent on receipts and disbursal events - implementation of approved scheme - Whether the liquidator's claimed fees and liquidation costs were immediately payable or payable only upon occurrence of specified events under the scheme. - HELD THAT: - The Tribunal reiterated its prior directions that liquidator's fees are to be paid on a percentage basis only upon the occurrence of the specified receipts/disbursal events as set out in the May 5, 2020 order. The liquidator's demand for immediate payment of fees was held to be incorrect. The Tribunal excluded liquidator's fees from amounts to be immediately remitted and directed exclusion of fees from the statement of immediately payable sums. [Paras 5, 19, 24]

Liquidator's fees are not immediately payable and shall become payable only upon the occurrence of the specified receipts/disbursal events at the prescribed percentages.

Statutory auditor to quantify disputed liquidation costs and afford opportunity to object - payment of liquidation costs - How disputes over quantified liquidation costs (notably amounts claimed to KMEWPL and claim-verification costs) are to be resolved before remittance. - HELD THAT: - The Tribunal noted that the statutory auditor had been directed to quantify liquidation costs but, having produced a table that also quantified liquidator's fees, failed in fairness to afford the scheme proponents an opportunity to object to the quantification relating to KMEWPL and the claim-verification cost. The Tribunal therefore directed the statutory auditor to afford the scheme proponents an opportunity to put forth objections and to submit a reconciled report limited to the disputed amounts, with supporting documents made available for scrutiny. [Paras 18, 22, 23]

Directed the statutory auditor to afford the scheme proponents an opportunity to file objections and to submit a reconciled report confined to the disputed amounts; undisputed amounts (and admitted parts of KMEWPL claim) to be remitted within seven days.

Statutory auditor to quantify disputed liquidation costs and afford opportunity to object - remand for fresh consideration - Whether the disputed amounts should be finally adjudicated by the Tribunal immediately or remitted for further quantification and report. - HELD THAT: - The Tribunal did not finally adjudicate the disputed amounts on merits but remitted the matter to the statutory auditor for quantification after affording opportunities to the scheme proponents to file objections and for reconciliation of records. The Tribunal directed that upon receipt of that report within three weeks, the registry will list a separate SR. No. for further proceedings to crystallize the issues and avoid multiplicity of applications. [Paras 23, 28]

Remitted the dispute to the statutory auditor for a limited report (with opportunity to scheme proponents) and reserved further adjudication pending that report; directed report to be filed within three weeks.

Liquidator as an independent observer of the implementing agency's board - implementation of approved scheme - Who should decide on extension or re-engagement of the agreement with KMEWPL for maintenance of dredging equipment and what role the liquidator plays. - HELD THAT: - The Tribunal recorded that protection of the dredging equipment is material to preservation of corporate assets and that an agreement with KMEWPL had been entered into with prior approval. However, decision-making on whether to extend that agreement or engage alternative parties rests with the board of the corporate debtor constituted as part of the implementing agency. The liquidator's role is limited to that of an 'independent observer' without voting rights. [Paras 21, 25]

Directed the board (with liquidator as independent observer) to decide within the implementing agency whether to extend the KMEWPL agreement or engage others; liquidator to have no vote.

Implementation of approved scheme - remedy under Companies Act, 2013 for delay in filing - Relief for condonation of delay in filing statutory form sought by the liquidator. - HELD THAT: - Instead of granting condonation in these proceedings, the Tribunal directed the liquidator to pursue the statutory remedy available under section 460 of the Companies Act, 2013 by following the proper procedure. [Paras 27]

Directed the liquidator to seek condonation (if required) under section 460 of the Companies Act, 2013 through the appropriate procedure.

Final Conclusion: The Tribunal ordered immediate implementation of the sanctioned scheme by directing the liquidator to hand over management and assets within ten days, required remittance of undisputed and admitted amounts within seven days, held liquidator's fees payable only upon specified receipts/disbursal events, remitted disputed cost items to the statutory auditor for reconciliation and a report within three weeks (followed by separate proceedings), limited the liquidator to the role of independent observer in the implementing agency's board, and directed the liquidator to seek any statutory condonation under the Companies Act, 2013.

Input service - Eligibility for refund of CENVAT credit - nexus/use test for input services - exclusion clause of the definition of input service - Rule 5 of CENVAT Credit Rules, 2004 - prohibition on questioning eligibility of CENVAT credit at refund stage

Input service - Eligibility for refund of CENVAT credit - nexus/use test for input services - Rule 5 of CENVAT Credit Rules, 2004 - Refund claim rejection in respect of Architect, Club & Association, Event Management, General Insurance and other taxable services - HELD THAT: - The Tribunal held that the proper legal test for entitlement to refund under Rule 5 is whether the input service was used by the provider of the taxable output service for providing the exported output service and that the input service is not excluded by the exclusion clause of the definition. The Tribunal found that the appellant had furnished detailed justification showing use and nexus of the impugned services with the exported output services. The reasoning of the Commissioner (Appeals) applying a test of whether absence of such services would adversely affect performance of output services (recorded in para 9.4 of the impugned order) was held to be incorrect in law. The Tribunal also noted that the Department had not challenged the eligibility of these input services at the time CENVAT credit was taken and relied on earlier precedents and CBEC clarification that Rule 5 does not require direct co-relation between each input service and the exported output service. Applying these principles and the authorities cited by the appellant, the Tribunal concluded that the five services were eligible input services and the refund could not be rejected.

Refund rejection in respect of Architect, Club & Association, Event Management, General Insurance and other taxable services set aside; appellant entitled to refund of CENVAT credit on these services.

Prohibition on questioning eligibility of CENVAT credit at refund stage - Whether eligibility of previously availed CENVAT credit can be re-opened at refund stage - HELD THAT: - The Tribunal accepted the appellant's submission and prior authority that the Department cannot question the eligibility of CENVAT credit when refund is claimed if the credit had been availed earlier without objection. The Tribunal relied on the decision in K Line Ship Management India Pvt. Ltd. and on CBEC Tax Research Unit clarification to hold that eligibility once not contested at the credit stage cannot be re-evaluated to deny refund under Rule 5.

Eligibility of CENVAT credit already availed and not questioned cannot be reopened to deny refund; refund claim must be allowed where other legal requirements are met.

Final Conclusion: The appeal is allowed in part: the Tribunal set aside the Commissioner (Appeals) rejection and directed grant of refund of CENVAT credit in respect of Architect, Club & Association, Event Management, General Insurance and other taxable services used for providing the exported output services, following the correct legal test under Rule 5 and the principle that eligibility of credit not contested earlier cannot be re-opened at refund stage.

Natural justice - right to be heard before adverse ex parte decision - power to set aside ex parte order / restoration of appeal - sufficient cause for non-appearance - effect of undecided adjournment application on maintainability of ex parte hearing - principle of unjust enrichment / deposit under protest

Natural justice - right to be heard before adverse ex parte decision - effect of undecided adjournment application on maintainability of ex parte hearing - The learned Tribunal's decision to proceed and decide the appeal on merits ex parte without deciding the petitioner's earlier application for adjournment was in violation of principles of natural justice and was legally impermissible. - HELD THAT: - The Court found as a matter of fact that an application for adjournment dated 09.10.2017, seeking time to place documents on record, was filed before the Tribunal and remained undecided when the appeal was taken up and decided ex parte on 13.10.2017. Relying on the principle that an appellate forum should not decide an appeal on merits in the absence of a party who has shown sufficient cause for non-appearance, the Court observed that the undecided adjournment application deprived the petitioner of the opportunity to be heard. The Court noted the Code of Civil Procedure authorities and the settled view that deciding appeals on merits in the absence of an appellant who has shown sufficient cause would frustrate the appellant's right to be heard and is contrary to established precedent. In these circumstances the ex parte decision could not be sustained. [Paras 11, 12, 14, 17]

The Tribunal's ex parte adjudication in absence of a decision on the adjournment request was contrary to law and therefore liable to be set aside.

Power to set aside ex parte order / restoration of appeal - sufficient cause for non-appearance - The Tribunal erred in rejecting the petitioner's restoration application on the ground that recalling its earlier order would amount to review and that the Tribunal lacked power to set aside an ex parte order. - HELD THAT: - The Court applied the principle laid down by the Apex Court in J.K. Synthetics and followed in Shivam Casting, holding that when an ex parte order is passed and the absent party establishes sufficient cause for non-appearance, the Tribunal has the power and duty to set aside the ex parte order, restore the appeal and hear it on merits. The Tribunal's reasoning that recall would amount to review and therefore was impermissible was held to be erroneous. Given that the petitioner had filed the adjournment application before the hearing date and relied upon sufficient cause, the Tribunal should have considered the restoration application on its merits instead of refusing it for lack of power. [Paras 15, 16, 18]

The Tribunal's refusal to entertain recall/restoration on the stated ground was legally incorrect; the restoration application ought to have been considered and, if sufficient cause was established, the ex parte order set aside.

Principle of unjust enrichment / deposit under protest - The petitioner's contention that pre-deposit made during proceedings is a deposit under protest and not acceptance of duty (relevant to limitation and refund claim) was noted but the Court's primary relief was procedural - restoration for fresh adjudication rather than substantive adjudication on the refund/limitation point. - HELD THAT: - Although the petitioner argued that the amount was a pre-deposit and therefore not liable to limitation under Section 11B, the High Court emphasised that the Tribunal must first hear the appeal afresh in accordance with law and principles of natural justice. The Court did not decide the substantive controversy on limitation or refund merits; instead it directed restoration to enable the Tribunal to consider all contentions, including those relating to deposit under protest and unjust enrichment, on merits. [Paras 9, 19]

Substantive issues concerning characterization of the deposit and limitation were left open for the Tribunal to decide when the restored appeal is heard afresh.

Final Conclusion: The petition is allowed: the Tribunal's judgment and order dated 13.10.2017 and its order dated 04.05.2018 rejecting restoration are quashed and set aside; Central Excise Appeal No.11173 of 2014 is restored to the Tribunal for fresh hearing in accordance with law (to be listed for further hearing as directed).

Continuance as Member (Judicial) of the Income Tax Appellate Tribunal - effect of delay in appointment not attributable to the candidate - continuance pending re-appointment under Section 184 of the Finance Act, 2017 - parity with earlier selectees

Continuance as Member (Judicial) of the Income Tax Appellate Tribunal - effect of delay in appointment not attributable to the candidate - parity with earlier selectees - continuance pending re-appointment under Section 184 of the Finance Act, 2017 - Direction to permit the applicant to continue in office as Member (Judicial), ITAT for a specified extended period - HELD THAT: - The applicant, whose selection arose from a 2013 notification but whose appointment was delayed and effected on 19.03.2018, sought continuation on terms comparable to other selectees who were appointed earlier. The Court noted the delay in appointment was not attributable to the applicant. The Attorney General accepted that the applicant would be entitled to continuation for a five-year period with re-appointment thereafter in accordance with Section 184 of the Finance Act, 2017. Without adjudicating all contentions in the pending miscellaneous application, the Court granted interim relief by directing that the applicant be permitted to continue as Member (Judicial), ITAT until 18.03.2023. The order is expressly without prejudice to the contentions in MA No.111/2021 and related matters, which have been listed for further hearing.

Applicant directed to continue as Member (Judicial), ITAT till 18.03.2023; further contentions reserved and related applications listed for hearing.

Final Conclusion: Interim direction permitting the applicant to continue as Member (Judicial) of the ITAT until 18.03.2023; claims on long-term tenure and re-appointment under the statutory scheme left open for adjudication in the listed miscellaneous matters.

Suspension of sentence under Section 389(1) of the CrPC - stringent bail provisions under Section 37 of the NDPS Act - post-conviction bail - presumption of innocence - prima facie merits of the appeal - strong compelling reasons - public policy underlying Section 37 of the NDPS Act

Suspension of sentence under Section 389(1) of the CrPC - stringent bail provisions under Section 37 of the NDPS Act - post-conviction bail - prima facie merits of the appeal - strong compelling reasons - Validity of the High Court's order suspending the respondent's sentence under Section 389(1) CrPC in light of the NDPS Act's requirements. - HELD THAT: - The Court held that when a conviction has been recorded after trial, the High Court exercising power under Section 389(1) CrPC to suspend sentence must be conscious of the NDPS Act's stringent regime encapsulated in Section 37. Post-conviction suspension of sentence is distinguishable from pre-trial bail because the presumption of innocence no longer applies; the High Court must consider the prima facie merits of the appeal and record strong and compelling reasons for suspension. The learned Single Judge's order did not demonstrate application of mind to the statutory criteria under Section 37 and rested only on general references to "facts and circumstances", the period already undergone and pandemic-related delay. On the material that formed the basis of the conviction, no sufficient reasons were shown to justify departing from the public policy underlying Section 37. Consequently, the suspension order was unsustainable and liable to be set aside. The Court clarified that these observations relate only to the grant of suspension and do not affect adjudication of the appeal on merits. [Paras 9, 10, 11, 12]

The High Court's order suspending the sentence is set aside; the respondent shall surrender forthwith to serve the sentence, and the High Court is requested to take up and dispose of the appeal upon surrender by end of 2021.

Final Conclusion: The appeal is allowed: the High Court's order dated 28 July 2020 suspending the respondent's sentence is set aside; the respondent is directed to surrender forthwith and the High Court is requested to hear and decide the appeal after surrender by the end of 2021.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttable presumption and burden of proof - signed blank cheque and filling up by payee - proof of financial capacity of the complainant to lend - no adverse inference from non-response to lawyer's notice where defence raises probable case - acquittal under Section 255(1) Cr.P.C.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttable presumption and burden of proof - signed blank cheque and filling up by payee - proof of financial capacity of the complainant to lend - no adverse inference from non-response to lawyer's notice where defence raises probable case - acquittal under Section 255(1) Cr.P.C. - Whether the trial court was right in acquitting the accused by accepting his defence that the cheque was not issued for the claimed debt and that the complainant failed to prove his capacity to lend the alleged amount. - HELD THAT: - The court applied the statutory presumption under Section 139 that a cheque admitted to be executed is presumed to have been issued for discharge of a legally enforceable liability, but reiterated that this presumption is rebuttable on the basis of preponderance of probabilities. The accused need not necessarily depose, but must raise a probable defence by adducing material or making dents in the complainant's case. The defence here was that the cheque was a signed blank cheque issued for a smaller loan and that the complainant lacked capacity to provide the larger loan. The complainant relied on oral testimony and documents but did not produce satisfactory evidence of bank loan or gold-pledge to substantiate his capacity, and expressly declined a remand to adduce further proof. In these circumstances the trial court legitimately accepted that the accused had discharged the initial onus of creating doubt about existence of the claimed indebtedness, thereby shifting the burden back to the complainant who failed to prove the alleged liability. The Court therefore found no ground to fault the trial court's conclusion of acquittal under Section 255(1) Cr.P.C. [Paras 9, 10, 11, 12, 13]

The trial court's finding of not guilty is upheld and the acquittal confirmed.

Final Conclusion: The appeal is dismissed; the acquittal of the 1st respondent in the complaint under Section 138 of the Negotiable Instruments Act is confirmed.

Requirement of details of the amount payable and the secured assets in a notice under sub section (3) of section 13 of the SARFAESI Act - validity of notice under sub section (2) of section 13 of the SARFAESI Act - power of the Debts Recovery Tribunal under section 17 of the SARFAESI Act to examine legality and validity of measures taken under section 13(4) - consequential invalidity of measures under section 13(4) where pre requisites under sections 13(2), 13(3) and 13(3A) are not complied with - imposition of costs for frivolous and vexatious litigation by public authorities

Requirement of details of the amount payable and the secured assets in a notice under sub section (3) of section 13 of the SARFAESI Act - A notice under section 13(2) must comply with section 13(3) by giving details of the amount payable and details of the secured assets; an aggregate single figure without break up does not satisfy the statutory mandate. - HELD THAT: - The court held that the plain language and scheme of section 13 require that the notice under sub section (2) must give the "details of the amount payable" and the "secured assets intended to be enforced". If Parliament had intended only an aggregate figure, sub section (3) would have been unnecessary. The purpose of sub section (3) is to enable the borrower meaningfully to avail the representation remedy under section 13(3A); without particulars (principal, interest for different periods, penal interest, costs, etc.) the borrower cannot challenge specific heads. In the present case the demand notice gave only an aggregate sum and did not provide the requisite particulars, and the secured assets description was not correct as per the mortgage deed; accordingly the notice was held to be non compliant and bad in law. The court rejected the bank's contention that only a single figure was required and concluded the secured creditor was obliged to furnish the detailed break up and correct asset particulars when demanded by the borrower. [Paras 30, 31, 43, 44, 45]

The notice dated December 29, 2014 was deficient for not providing the details mandated by section 13(3) and therefore invalid.

Power of the Debts Recovery Tribunal under section 17 of the SARFAESI Act to examine legality and validity of measures taken under section 13(4) - consequential invalidity of measures under section 13(4) where pre requisites under sections 13(2), 13(3) and 13(3A) are not complied with - The Debts Recovery Tribunal in proceedings under section 17 can examine the validity of the notice under section 13(2) and compliance with sub sections (3) and (3A); if those pre requisites are not satisfied the measures taken under section 13(4) can be declared invalid. - HELD THAT: - On construing section 17 read with section 13, the court observed that section 17 empowers the Tribunal to consider whether measures taken under section 13(4) are in accordance with the Act and the rules. Because recourse under section 13(4) is consequential upon a valid notice and the borrower's failure to discharge liability within the period specified, the Tribunal must examine whether the foundational steps (sections 13(2), 13(3) and 13(3A)) were complied with. The proviso to section 13(3A) only bars challenge at the communication stage but does not preclude subsequent challenge once measures under section 13(4) are invoked. Authorities and prior decisions were examined and the court concluded that the Tribunal has wide powers to declare actions under section 13(4) invalid if the statutory requirements in the preceding sub sections are not met. Applying that principle, the Tribunal and the Appellate Tribunal correctly set aside the demand notice and consequential action; the High Court rightly dismissed the bank's challenges. [Paras 39, 40, 41, 42, 43]

Proceedings under section 17 properly permit the Tribunal to test the validity of the earlier notice and related compliance; the Tribunal was entitled to quash the measures taken under section 13(4) on finding non compliance with sections 13(2)/13(3)/13(3A).

Final Conclusion: Both Letters Patent Appeals are dismissed; the concurrent findings of the Debts Recovery Tribunal, the Debts Recovery Appellate Tribunal and the High Court that the demand notice was non compliant with section 13(3) and that the Tribunal could quash consequential action under section 13(4) are upheld. Exemplary costs of Rs. 5,00,000 per appeal are imposed on the appellant bank to be deposited as directed.