TaxTMI Updates e-Newsletter
Mar 22,2022

Default bail under Section 167(2) CrPC - calculation of sixty-day period for default bail (inclusion of day of remand) - forfeiture of accrued right to default bail on presentation of complaint before furnishing surety - conditional release on bail pending authoritative pronouncement

Default bail under Section 167(2) CrPC - calculation of sixty-day period for default bail (inclusion of day of remand) - Grant of default bail to the petitioner despite filing of the complaint on the same day as the application, by treating the petitioner as entitled to conditional release. - HELD THAT: - The petitioner was arrested on 28.09.2021, remanded on 29.09.2021, and applied for default bail under Section 167(2) CrPC on 28.11.2021. The rival contentions turned on whether the first day of remand is to be included in computing the sixty-day period for presenting a complaint. The trial Magistrate allowed default bail on 28.11.2021; the Department filed the complaint the same day before the petitioner could furnish sureties and contended that no indefeasible right had accrued because 28.11.2021 was the sixtieth day if the day of remand is excluded. Noting the conflict in authority on inclusion/exclusion of the day of remand and the reference made by the Supreme Court in Enforcement Directorate v. Kapil Wadhawan to a Larger Bench for an authoritative pronouncement, the High Court leaned in favour of the interpretation beneficial to the accused and directed conditional release. The court therefore set aside the order of the Additional Sessions Judge which had recalled the default bail, while making clear that the Department may seek modification or recall of this order if the Larger Bench rules against inclusion of the remand day.

Order setting aside Magistrate's grant of default bail is set aside; petitioner directed to be conditionally released on bail to the satisfaction of the trial court, subject to modification if the Larger Bench later rules otherwise.

Final Conclusion: The petition is allowed and the petitioner is directed to be conditionally released on bail; the order setting aside the Magistrate's grant of default bail is set aside, with liberty to the respondent to seek modification should the Larger Bench of the Supreme Court determine that the day of remand must be excluded in computing the sixty-day period.

Non-speaking order - cancellation of registration - suspension of registration - show-cause notice - opportunity of hearing - non-application of mind - reasoned and speaking order

Non-speaking order - cancellation of registration - non-application of mind - Impugned order cancelling the petitioners' registration - HELD THAT: - The Court examined the order of cancellation and found that it contains no reasons and is therefore a non-speaking order. The cancellation was recorded as having considered a reply which, on the material, was not furnished, evidencing non-application of mind. For these reasons the impugned cancellation order is unsustainable in law. The Court set aside the order of cancellation and directed that legal consequences follow from that setting aside.

Order of cancellation set aside as non-speaking and based on non-application of mind.

Show-cause notice - suspension of registration - opportunity of hearing - reasoned and speaking order - Impugned show-cause notice insofar as it suspended registration of the petitioners - HELD THAT: - The Court observed that the allegation in the show-cause notice leading to suspension is vague and consists of a one-line allegation without adequate basis. Procedural fairness requires that the basis of allegations be briefly set out so the recipient can meet them. Accordingly, the suspension contained in the show-cause notice is ordered to remain suspended until the petitioners file a reply, are afforded hearing, and the authority disposes of the show-cause notice by passing a reasoned and speaking order in accordance with law.

Order of suspension stayed pending filing of reply, hearing and disposal by a reasoned speaking order.

Final Conclusion: The petition is disposed: the cancellation order is set aside for being non-speaking and reflecting non-application of mind; the suspension effected by the show-cause notice is stayed until the authority affords reply and hearing and passes a reasoned, speaking order.

Summary order. Petition challenging cancellation of GST registration listed for further consideration; respondents granted time to take instructions and matter posted on 3.3.2022.

Correction of typographical errors - rectification of court record - amendment of earlier order

Correction of typographical errors - amendment of earlier order - Corrections to be made in the order dated 18th February, 2022 as specified and the corrected order to be reissued forming part of the original order. - HELD THAT: - The Court permitted specified textual corrections in the earlier order dated 18th February, 2022. The deletions and substitutions directed are limited to typographical corrections in paragraphs 2, 3 and 8 of that order. In paragraph 2 a specified phrase is to be deleted. In paragraph 3 the percentage figure is to be corrected from "100%" to "20%" and the word "admitted" is to be replaced by "balance disputed". In paragraph 8 the word "admitted" is to be replaced by "disputed". The corrections are ministerial and confined to the language of the prior order; the Court directed that a fresh copy incorporating these corrections be issued and that this present order shall form part of the order dated 18th February, 2022.

The specified typographical corrections shall be effected in the order dated 18th February, 2022, a fresh corrected copy shall be issued, and this order shall form part of the earlier order.

Final Conclusion: The Court ordered specified textual corrections to the order dated 18th February, 2022 and directed issuance of a fresh corrected copy which shall be read as part of the original order.

Detention and release of goods under revenue law - interim relief on deposit of admitted tax and a percentage of disputed tax - security for protection of revenue interest - penalty and detention consequences under Section 129 of the CGST Act, 2017 - liability of legal representatives of a deceased registered dealer under Section 93 of the W.B.GST Act, 2017 - non-precedential factual order

Detention and release of goods under revenue law - interim relief on deposit of admitted tax and a percentage of disputed tax - security for protection of revenue interest - Validity of the interim order releasing detained consignments and vehicle on the respondent having paid 100% of the admitted tax and 10% of the disputed tax - HELD THAT: - The Single Judge directed release of the detained consignment and vehicle after noting that the respondent had paid 100% of the admitted tax and a further 10% of the disputed tax and that the consignments had been detained since September 2021. The High Court found that the narrow inquiry on this appeal was whether the interest of the revenue was reasonably safeguarded by those payments. On the facts before the Court the payment of the admitted tax in full and 10% of the disputed tax was held, for the present, to sufficiently protect the revenue's interest and sustain the interim release. The Court expressly refrained from interpreting the provisions of Section 129 and treated its conclusion as fact-specific and limited to the present record.

Interim release upheld on the basis that the respondent's payments reasonably safeguard the revenue's interest; release to be effected in accordance with the Single Judge's order.

Liability of legal representatives of a deceased registered dealer under Section 93 of the W.B.GST Act, 2017 - penalty and detention consequences under Section 129 of the CGST Act, 2017 - Procedural posture regarding technical objections about liability and registration of the respondent as successor to the deceased dealer - HELD THAT: - The High Court observed that the respondent is the wife of the deceased registered dealer and is taking steps to be formally recognized as his successor by substitution in the registration certificate under the prescribed procedure. The Court held that technical objections relating to liability, registration status or recovery mechanisms should be agitated and adjudicated by the learned Single Judge in the writ proceedings, which has granted liberty to file affidavit-in-opposition and replies. Consequently, those questions were not finally adjudicated by this appeal but left for determination by the Single Judge on the existing and any further evidence and submissions.

Technical objections concerning liability/registration are to be raised and decided by the Single Judge in the writ petition; this appeal does not decide those questions on merits.

Final Conclusion: The appeal is dismissed; the interim release order of the Single Judge is to be complied with by the State by the specified date, the decision is limited to the facts and payments made and is not to be treated as a precedent, and all remaining technical and substantive issues are left open for adjudication by the Single Judge in the writ proceedings.

Definition of "Governmental Authority" for concessional treatment - applicability of concessional rate for construction/composite works supplied to governmental authority - reverse charge mechanism for services supplied by local authority to a business entity - value of supply - inclusion of incidental expenses and reimbursement in transaction value - pure agent exclusion from value of supply under Rule 33 of the CGST Rules

Definition of "Governmental Authority" for concessional treatment - Whether M/s Jaipur Smart City Limited (JSCL) is a "Governmental Authority" within the meaning applicable for concessional GST treatment. - HELD THAT: - The Authority examined the shareholding and governance material submitted by the applicant and found that JSCL is a Special Purpose Vehicle with approximately equal shareholding between the State Government nominees and the Municipal Corporation nominees, such that State Government participation is not ninety per cent or more by way of equity or control. The statutory/notification definition relied upon requires ninety per cent or more participation by way of equity or control together with carrying out functions entrusted under Article 243G/243W. On the admitted facts JSCL does not satisfy the equity/control threshold set out in the explanation to the notification and therefore does not qualify as a "Governmental Authority" for the purposes of the concessional entries.

No; M/s Jaipur Smart City Limited is not a "Governmental Authority" within the meaning of the relevant notification/explanation.

Applicability of concessional rate for construction/composite works supplied to governmental authority - Whether the concessional entry for construction/composite works supplied to a governmental authority (item (vi) of serial no. 3 of Notification No. 11/2017 as amended) applies to the contract between the applicant and JSCL. - HELD THAT: - The concessional entry applies only where the recipient qualifies as a governmental authority as defined in the notification/explanation. Having concluded that JSCL does not meet that definition on the facts before it, the Authority held that the concessional item is not attracted to services provided to JSCL. Instead, the services fall within the residual entry for construction services (item (xii) as amended) and the applicable tax rate follows that categorisation.

No; the concessional item (vi) is not applicable to the contract with JSCL.

Applicability of concessional rate for construction/composite works supplied to governmental authority - What is the GST rate applicable to the work undertaken by the applicant for JSCL under the stated bid reference? - HELD THAT: - Because JSCL does not qualify as a governmental authority and the concessional entry is therefore inapplicable, the services provided by the applicant were held to fall under the residual construction services entry (item (xii) as substituted) attracting the standard rate applicable to such construction/composite supplies as per the notification framework.

The services are taxable as construction/composite works under the residual entry and attract GST at the standard rate applicable to that entry (i.e., 18% comprising CGST and SGST).

Reverse charge mechanism for services supplied by local authority to a business entity - Whether the applicant is liable to pay GST under the reverse charge mechanism (RCM) for road cutting/permission fees paid to Jaipur Nagar Nigam (JNN) on behalf of JSCL, and the rate if RCM applies. - HELD THAT: - The Authority analysed the relevant notifications and statutory provisions which make services supplied by a local authority to a business entity liable to tax on a reverse charge basis where specified. The road cutting permission/fees were furnished by JNN (a local authority) to the applicant (a business entity) for consideration exceeding the exemption threshold and the activity was not found to be covered by the exclusion in section 7(2)/notification for functions entrusted under Article 243W. On these facts the transaction is taxable and the liability falls on the recipient under the relevant notification prescribing reverse charge.

Yes; the applicant is liable to pay GST under RCM for the road cutting charges paid to JNN, at the applicable rate for such services (i.e., the standard rate applicable to the supply, held to be 18%).

Pure agent exclusion from value of supply under Rule 33 of the CGST Rules - value of supply - inclusion of incidental expenses and reimbursement in transaction value - Whether recovery of the road cutting charges by the applicant from JSCL is taxable (i.e., included in the value of supply) or excluded as a reimbursement by a pure agent. - HELD THAT: - Rule 33 permits exclusion from the value of supply where the supplier acts as a pure agent and satisfies the specified conditions (contractual authorisation, no title to goods/services, separate indication in invoice, supplies procured as pure agent are in addition to supplier's own supplies, and other explanatory conditions). The demand note from JNN was addressed to the applicant and the record showed the applicant held title to the road cutting approval; the applicant did not satisfy the conditions of acting as a pure agent. Consequently, the amounts recovered constitute incidental expenses includible in the transaction value under section 15(2)(c) and are taxable as part of the supplier's value of supply.

The recovery of road cutting charges by the applicant from JSCL is includible in the value of supply and therefore taxable; the applicant does not qualify as a pure agent and the recovery attracts GST at the standard rate applicable to the supply (held to be 18%).

Final Conclusion: The Authority ruled that JSCL is not a "Governmental Authority" for concessional treatment; the concessional construction entry does not apply and the applicant's contract is taxable under the residual construction entry at the standard rate (18%). The applicant is liable under reverse charge for fees paid to Jaipur Nagar Nigam and, having failed to qualify as a pure agent, recoveries of those fees from JSCL are includible in the value of the applicant's supply and taxable at the standard rate.

Composite supply - mixed supply - principal supply - naturally bundled - declared tariff of a unit of accommodation - exemption under Entry No. 14 of Notification No. 12/2017-C.T.(Rate) - applicability of highest rate in mixed supply

Composite supply - mixed supply - naturally bundled - principal supply - Characterisation of the hostel services (lodging with boarding/food) supplied by MEF to MUST students as composite supply or mixed supply. - HELD THAT: - The Authority examined whether the multi-element service package falls within the definition of composite supply (services naturally bundled with one principal supply) or, alternatively, constitutes a mixed supply (several individual supplies made for a single price but not forming a composite supply). Applying the indicators of "naturally bundled" (including perception of service recipient, prevailing practice among providers, and whether ancillary services are incidental to the principal service) the Authority found that while accommodation could be the principal supply, the ancillary provision of food/boarding does not necessarily arise naturally with accommodation in the ordinary course of business and cannot be treated as bundled with the principal service in the present facts. Consequently, the supply is not a composite supply but a mixed supply comprising accommodation and food services supplied together for a single price.

The supply of hostel accommodation together with boarding/food is a mixed supply and not a composite supply.

Declared tariff of a unit of accommodation - exemption under Entry No. 14 of Notification No. 12/2017-C.T.(Rate) - applicability of highest rate in mixed supply - Whether the hostel facility (lodging with boarding) charged at less than Rs. 1000 per student per day is eligible for exemption under Entry No. 14 of Notification No. 12/2017-C.T.(Rate), 28-06-2017. - HELD THAT: - Entry No. 14 grants nil rate to services by hotels/inns/guest houses/etc. for residential or lodging purposes where the declared tariff of a unit of accommodation is below Rs. 1,000 per day. For mixed supplies, Section 8 prescribes that the entire supply is taxed at the rate applicable to the supply attracting the highest rate. Notification No. 11/2017 (and related entries) classify accommodation and food services under Heading 9963 with differing rates depending on declared tariff and nature of food service. The Authority noted that the applicant had not clarified the declared tariff per unit of accommodation (e.g., number of students occupying a unit) and that food/boarding services form part of the supplies attracting rates under Notification No. 11/2017. Given the characterisation of the transaction as a mixed supply and absence of clear declared tariff per unit, the exemption under Entry No. 14 cannot be held to apply to the entire supply; instead the highest applicable rate among the component supplies governs taxability.

The applicant is not eligible for exemption under Entry No. 14; the hostel-plus-boarding supply is taxable as a mixed supply at the highest rate applicable to its component services.

Final Conclusion: The Authority rules that the hostel services (lodging with boarding) supplied by Mody Education Foundation to Mody University students constitute a mixed supply, not a composite supply, and therefore the exemption under Entry No. 14 of Notification No. 12/2017-C.T.(Rate) does not apply; tax liability is determined by the highest rate applicable to the component services.

Reopening of assessment - escaped assessment - reasons for reopening - objections to reasons and speaking order - procedure under GKN Driveshafts - scope of judicial review under Article 226

Reopening of assessment - reasons for reopening - objections to reasons and speaking order - procedure under GKN Driveshafts - scope of judicial review under Article 226 - Validity of reopening assessments for AY 2013-14 and 2015-16 by issuance of notices under Section 148 read with Section 147 of the Act and the permissibility of interference by the High Court under Article 226 - HELD THAT: - The Court applied the procedure laid down in GKN Driveshafts, holding that on issuance of notices under Section 148 the assessee may file return, seek reasons and, if objections are filed, the Assessing Officer must dispose of them by a speaking order before proceeding. In the present cases the notices were issued, returns filed, reasons furnished on request, objections made by the assessee and those objections were considered and rejected by speaking orders. The Court found no procedural irregularity or breach of the GKN procedure in the material placed before it. The Revenue's prima facie belief of an escaped assessment (alleged undisclosed net freight collected through the assessee) is a matter which can be gone into by the Assessing Authority on receipt of the assessee's defence and evidence; minute factual enquiries and merits cannot be ventilated in writ jurisdiction at the threshold. Only in cases where the procedural requirements laid down by law or by GKN are violated, or where the reopening is founded on no reasonable basis, would interference at the threshold be warranted. No such circumstances were found on the record before this Court. [Paras 11, 16, 17, 18, 19]

Impugned orders rejecting objections and notices reopening the assessments are sustained; writ petitions dismissed while leaving it open for the assessee to place its defence and for the Assessing Authority to consider the same and decide ultimately whether to revise the assessments.

Final Conclusion: Writ petitions dismissed; the reopening process under Section 147 has been upheld as complying with procedural requirements and the Assessing Authority is to consider the assessee's defence and decide on the merits, with the assessee having remedy of appeal against any resultant order.

Deemed cooperative society for taxation purposes under section 22 of the Regional Rural Banks Act, 1976 - overriding effect of the Regional Rural Banks Act, 1976 by virtue of section 32 - deduction under section 80P(2)(a)(i) of the Income tax Act, 1961 - non operation of proviso in section 80P(4) as against a statute having overriding effect - penalty under section 271(1)(c) for concealment of income where claim is a bona fide legal claim - strict/literal interpretation of taxing statutes

Deemed cooperative society for taxation purposes under section 22 of the Regional Rural Banks Act, 1976 - overriding effect of the Regional Rural Banks Act, 1976 by virtue of section 32 - deduction under section 80P(2)(a)(i) of the Income tax Act, 1961 - non operation of proviso in section 80P(4) as against a statute having overriding effect - strict/literal interpretation of taxing statutes - Whether the respondent assessee, being a Regional Rural Bank deemed a cooperative society by the RRB Act, 1976, is entitled to deduction under section 80P(2)(a)(i) notwithstanding insertion of sub section (4) to section 80P. - HELD THAT: - The Tribunal found, and this Court concurs, that section 22 of the RRB Act expressly deems a Regional Rural Bank to be a cooperative society for purposes of taxation and that section 32 gives the RRB Act an overriding effect over other laws. Consequently, the bar introduced by sub section (4) of section 80P, enacted later by the Finance Act, 2006, cannot be read down to deny the benefit conferred by the RRB Act in respect of Regional Rural Banks constituted under that statute. The Tribunal's reasoning-tracing the legislative history of section 80P, recognising the wide connotation of 'banking business' under the RRB Act, and applying principles of statutory interpretation (including the rule that taxing statutes are construed strictly in favour of the subject where ambiguity exists)-was perused and found unimpaired. The assessing authority's reliance on administrative circulars and on the withdrawal of an earlier deeming circular did not override the statutory deeming and overriding provisions in the RRB Act. The Tribunal therefore rightly allowed deduction under section 80P(2)(a)(i) and directed recomputation of income accordingly. [Paras 12, 15]

Claim for deduction under section 80P(2)(a)(i) allowed for the respondent assessee (Regional Rural Bank) as the deeming and overriding provisions of the RRB Act operate to preserve its cooperative society status and entitlement to the deduction.

Penalty under section 271(1)(c) for concealment of income where claim is a bona fide legal claim - deduction under section 80P(2)(a)(i) of the Income tax Act, 1961 - Whether penalty under section 271(1)(c) is liable to be imposed on the respondent assessee in respect of claims for deduction under section 80P where the claim was legal in nature and ultimately allowed on merits. - HELD THAT: - The Tribunal recorded factual findings that there was no evidence of concealment of income and held that the assessee had made a legitimate legal claim for exemption under section 80P(2)(a)(i). Because the appeals on the merits allowing the deduction were upheld, the Tribunal concluded that penalty under section 271(1)(c) could not be levied. This Court has perused the Tribunal's order, found no legal infirmity in the conclusion, and accepted the factual finding that the claim was bona fide and legal in nature; accordingly, the penalty findings below were set aside. [Paras 13, 14, 15]

Penalty under section 271(1)(c) not leviable as the claim for deduction was a bona fide legal claim and the Tribunal's factual and legal conclusions finding no concealment are upheld.

Final Conclusion: The High Court upheld the Tribunal's orders allowing the respondent Regional Rural Bank the deduction under section 80P(2)(a)(i) for the specified assessment years by applying the deeming and overriding provisions of the RRB Act, 1976, and set aside the assessments and penalties to the extent contrary; no substantial question of law arises and the appeals are dismissed.

Discretion under Section 220(6) of the Income tax Act - Stay of recovery of demand pending appeal - Assessing Authority's power to impose conditions while granting stay - Remand for fresh consideration by Assessing Authority

Discretion under Section 220(6) of the Income tax Act - Stay of recovery of demand pending appeal - Assessing Authority's power to impose conditions while granting stay - Validity of the Assessing Authority's rejection of the application under Section 220(6) directing the assessee to approach the Appellate Authority instead of exercising its discretionary power to consider stay of demand. - HELD THAT: - The Court found that Section 220(6) confers complete discretion on the Assessing Authority to deal with applications for stay of demand and to decide them on merits, including by imposing conditions depending on the circumstances. Directing the applicant to approach the Appellate Authority, without considering the application on merits or exercising the discretion vested under Section 220(6), did not constitute an adequate reason within the scope of that provision. Given the factual matrix - delayed service of the assessment order and the assessee having filed an appeal shortly after receipt - the Assessing Authority ought to have considered the stay application on its merits and could, if appropriate, impose conditional terms (for example, payment of a percentage of the demand). For these reasons the impugned order rejecting the Section 220(6) application by merely directing the petitioner to approach the appellate forum was set aside and the matter remitted for fresh consideration by the Assessing Authority exercising its statutory discretion. [Paras 10, 11, 12, 13]

Impugned order dated 07.02.2022 set aside; matter remitted to Assessing Authority to consider the Section 220(6) application afresh on merits and to exercise discretion, including power to impose conditions.

Stay of recovery of demand pending appeal - Remand for fresh consideration by Assessing Authority - Whether any interim stay of recovery was granted by the Court and ancillary directions regarding the appeal. - HELD THAT: - The Court did not grant an interim stay of recovery of the demand. Instead, having set aside the Assessing Authority's order, the Court directed that the petitioner may make a fresh application (including any additional inputs) and that the Assessing Authority should decide it at the earliest, exercising its discretion and imposing conditions if necessary. The Court also directed the petitioner to pursue the appeal already filed before the Appellate Authority. [Paras 13]

No interim stay granted; petitioner permitted to seek fresh/renewed consideration before the Assessing Authority and directed to pursue the appeal before the Appellate Authority.

Final Conclusion: The writ petition is allowed in part: the impugned order dated 07.02.2022 is set aside and the matter is remitted to the Assessing Authority to consider the applicant's Section 220(6) application afresh on merits, with liberty to impose appropriate conditions; no interim stay of recovery was granted and the petitioner is directed to pursue the pending appeal before the Appellate Authority.

Opportunity to file a stay petition in appeals under the National Faceless Appeal Scheme - provision of an electronic link to upload stay applications - time bound disposal of stay applications by the appellate authority - abeyance of coercive recovery proceedings pending consideration of stay applications

Opportunity to file a stay petition in appeals under the National Faceless Appeal Scheme - provision of an electronic link to upload stay applications - abeyance of coercive recovery proceedings pending consideration of stay applications - time bound disposal of stay applications by the appellate authority - Whether the petitioner should be granted an opportunity to file a stay application in the pending faceless appeal and whether coercive recovery proceedings should be kept in abeyance pending consideration of such application. - HELD THAT: - The Court noted that the petitioner, previously enjoying exemption under Section 11, was assessed for Assessment Year 2018-2019 and had preferred an appeal before the National Faceless Appeal Centre but had not earlier sought stay as there was then no threat of recovery. In view of the petitioner's apprehension of proposed recovery proceedings during the pendency of the appeal and having regard to earlier similar orders in which assessees were permitted to upload stay petitions, the Court considered it appropriate to afford the petitioner the same procedural opportunity. The Court directed respondents 3 to 5 to provide an electronic link enabling the petitioner to upload an application for stay within four weeks of receipt of the judgment; the petitioner was to upload the stay application within two weeks thereafter. The Competent Appellate Authority was directed to consider and dispose of the stay application as expeditiously as possible and in any event within six weeks from the date of uploading. Pending consideration of the stay application as directed, all coercive proceedings arising from the assessment order (Ext.P1) were to be kept in abeyance. The appellate authority, notwithstanding the stay application, remained at liberty to consider and pass orders on the appeal itself. [Paras 5, 6, 7, 8]

Direction issued to provide an electronic facility to upload a stay application within specified timeframes, with mandated time bound consideration by the appellate authority and suspension of coercive recovery proceedings until the stay application is decided.

Final Conclusion: Writ petition disposed of by directing respondents to permit uploading of a stay application in the pending faceless appeal within prescribed timelines, to decide the stay expeditiously (within six weeks of uploading), and to keep coercive proceedings pursuant to the impugned assessment order in abeyance until such consideration is complete.

Right of access to a court - faceless appeal regime - interim applications in pending appeals - stay of demand - electronic filing link for interim relief

Right of access to a court - faceless appeal regime - interim applications in pending appeals - electronic filing link for interim relief - stay of demand - Absence of a facility to upload interim applications (including stay petitions) in appeals filed under the Faceless Appeal regime violates the litigant's right of access to a court and the Department must provide an electronic link and consider such applications within specified timeframes. - HELD THAT: - The Court observed that the ability to file applications in pending appeals is an aspect of the right of access to a court of law and that the Faceless Appeal regime must not operate so as to deny litigants the opportunity to seek interim relief. The absence of an electronic link to upload stay petitions effectively deprives appellants of access to the appellate authority for redressal of grievances. To redress this deficiency, the Court directed that the Faceless Appeal Centre make provision for an electronic link enabling appellants to upload interim applications, and prescribed a timeline for consideration of any stay application so uploaded. The remedial directions balance the administrative mechanism of faceless appeals with the fundamental right to access judicial fora for interim relief, ensuring that procedural modes do not result in denial of access. [Paras 4, 5]

The 2nd respondent must provide, within four weeks of receipt of the judgment, an electronic link to upload stay petitions; if the petitioner uploads a stay application within two weeks after the link is provided, the application shall be considered and disposed of within two months of uploading; recovery proceedings pursuant to Ext.P1 are to be kept in abeyance until compliance.

Final Conclusion: Writ petition allowed: the Income Tax Department's Faceless Appeal Centre is directed to provide an electronic facility to file interim applications (including stay petitions) within four weeks, and any stay application uploaded in accordance with the order must be decided within the prescribed timeframe while recovery is stayed until such compliance.

Capital gains - cost of acquisition - Inam land - reference to DVO under section 50C - remand for fresh enquiry and decision

Inam land - cost of acquisition - remand for fresh enquiry and decision - Whether the claim that the lands were received as Inam and therefore had nil cost of acquisition should be examined and decided afresh by the Assessing Officer after appropriate enquiries. - HELD THAT: - The assessee raised for the first time before the first appellate authority a claim that the lands were Inam land received by forefathers and hence had no cost of acquisition, which, if accepted, would affect computation of capital gains. The Assessing Officer did not have that contention on record and the documents produced before the CIT(A) were in a torn and illegible condition. The CIT(A) rejected the claim, observing that Nazarana payment would constitute cost of acquisition where applicable. The Tribunal found that the question of Inam status and the attendant claim of nil cost were not properly examined below and that the matter warranted further factual enquiries rather than summary dismissal. The Tribunal therefore set aside the impugned orders and directed the AO to conduct proper enquiries into the assessee's claim of having received the land as Inam, to examine the evidentiary material (including verification with concerned officials), and to determine on merits whether any cost of acquisition (including any payment such as Nazarana, if applicable) arises, while affording the assessee a reasonable opportunity of hearing. The Tribunal did not decide the substantive question on merits but remitted it for fresh consideration. [Paras 4]

Matter remanded to the Assessing Officer for fresh enquiry and decision on the Inam status and the cost of acquisition claim, with opportunity of hearing.

Final Conclusion: The impugned orders are set aside and the appeals are allowed for statistical purposes; the Assessing Officer is directed to examine and decide afresh the assessee's claim that the properties were Inam land and whether there is any cost of acquisition, after conducting appropriate enquiries and granting hearing.

Method of accounting - completed contract method vs percentage of completion method - consistency of accounting method - power of Assessing Officer under section 145 to reject accounts/change method - recognition and applicability of Accounting Standards (AS-7/AS-9) and Guidance Notes - addition on account of unexplained creditors

Method of accounting - completed contract method vs percentage of completion method - consistency of accounting method - power of Assessing Officer under section 145 to reject accounts/change method - recognition and applicability of Accounting Standards (AS-7/AS-9) and Guidance Notes - Deletion of addition made by Assessing Officer by recomputing profit using percentage completion method instead of the assessee's completed contract method. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the assessee consistently followed the project/completed contract method (CCM) recognised in practice for real estate projects and that Accounting Standard AS-7/AS-9 and related guidance notes do not ipso facto empower the Assessing Officer to substitute the assessee's method where books are properly maintained and the method is not defective. Applying settled principles that two recognised methods may be adopted and that change by the revenue is permissible only on material showing inconsistency or that the method distorts profits, the Tribunal found that the AO had not brought material on record to show that the assessee's accounting was inconsistent or defective, that earlier assessments under section 153C were quashed and therefore could not be treated as acceptance of PCM, and that there was no basis to estimate profits at the rate adopted by the AO. Consequently, the addition computed by adopting percentage completion method was deleted. [Paras 5, 6]

Addition on account of recomputation of profit by adopting percentage completion method deleted; Grounds Nos. 2 and 3 dismissed (in favour of the assessee).

Addition on account of unexplained creditors - consistency of supplier transactions - Deletion of addition made by Assessing Officer treating closing balances of two suppliers as unexplained creditors. - HELD THAT: - The Tribunal agreed with the CIT(A) that the Assessing Officer did not question the nature of transactions with the two vendors during the year and had not produced any evidence to show the suppliers were bogus. Ledger copies and continuous running accounts furnished by the assessee were accepted by the appellate authorities, and the AO had not impugned the transactions throughout the year. In these circumstances, making an addition merely on the basis of the year-end closing balances, without adverse material about the genuineness of the suppliers or transactions, was unwarranted. The Tribunal therefore declined to interfere with the deletion of the addition. [Paras 7, 8, 9, 10, 12]

Addition on account of unexplained creditors deleted; Grounds Nos. 4 and 5 dismissed (in favour of the assessee).

Final Conclusion: Revenue's appeal is dismissed; the Tribunal affirms deletion of additions both for recomputation of project profits by PCM and for unexplained creditors for Assessment Year 2011-12.

Penalty under Section 271(1)(c) for furnishing inaccurate particulars - Section 43B - disallowance for non-payment of expenditure - bona fide claim and reasonable explanation as defence to penalty - disallowance of deduction not ipso facto furnishing of inaccurate particulars

Penalty under Section 271(1)(c) for furnishing inaccurate particulars - Section 43B - disallowance for non-payment of expenditure - bona fide claim and reasonable explanation as defence to penalty - Sustainability of penalty under Section 271(1)(c) for the claim of interest debited to OD account but not actually paid during the year - HELD THAT: - The assessee debited interest charged by the bank to its profit and loss account and claimed the same as deduction; the Assessing Officer initially allowed the claim but the Commissioner (Appeals) treated the amount as not actually paid and invoked Section 43B with consequent initiation of penalty proceedings under Section 271(1)(c). The assessee furnished ledger copies and material showing the interest was debited to the OD account, the liability in the balance sheet increased and the OD limit was reduced by the bank to that extent. All material relating to the interest component was placed before the departmental authorities and the deduction was claimed on bona fide grounds. Penalty under Section 271(1)(c) is not automatic; where the assessee offers a reasonable explanation and the claim arises from a bona fide belief, imposition of penalty is not warranted. Applying the principle that mere disallowance of a deduction does not, by itself, establish furnishing of inaccurate particulars (as reiterated in CIT v. Reliance Petro Products), the Tribunal held that the facts disclose a bona fide claim and reasonable explanation and therefore do not support levy of penalty under Section 271(1)(c). [Paras 5]

Penalty imposed under Section 271(1)(c) deleted as the deduction was a bona fide claim and a reasonable explanation was furnished; disallowance alone does not constitute furnishing inaccurate particulars.

Final Conclusion: Appeal allowed; penalty imposed under Section 271(1)(c) for Assessment Year 2015-16 is deleted.

Addition under section 69 - survey under section 133A - estimation of stock - unaccounted/suppressed sales - rejection of books of account - onus on assessing officer to point out specific defects

Addition under section 69 - survey under section 133A - estimation of stock - rejection of books of account - onus on assessing officer to point out specific defects - Deletion of addition made on account of stock discrepancy determined during survey - HELD THAT: - During a survey under section 133A the survey team estimated physical stock at selling price and the assessing officer made an addition under section 69 on the basis of that estimation. The assessee maintained that the stocks were recorded in the books of account produced before the AO and returned income accordingly. The AO did not reject the books of account, nor did he point out any specific defect or deficiency in them; the inventory taken by the survey team was accepted to be an estimation. The Tribunal held that additions based on survey estimates cannot be sustained in the absence of rejection of the books of account or specific material demonstrating defects in those books. The Commissioner (Appeals) affirmed the addition without recording findings to show how the books were incorrect; that affirmation was held to be unsustainable. For these reasons the Tribunal set aside the addition made on account of stock discrepancy. [Paras 5]

Addition on account of stock discrepancy determined during survey deleted and order of CIT(A) set aside.

Unaccounted/suppressed sales - survey under section 133A - rejection of books of account - onus on assessing officer to point out specific defects - Deletion of addition made on account of suppressed/unrecorded sales found during survey - HELD THAT: - The AO added alleged unrecorded sales discovered during the survey, but the assessee produced books of account asserting that such sales were duly recorded and income returned. The AO failed to demonstrate any defect in the books or to reject them; the addition was therefore founded solely on the survey team's estimate. The Tribunal reiterated that additions of this nature cannot be justified without supporting material or rejection of books of account and that the CIT(A) gave no independent finding showing the books to be incorrect. Consequently, the Tribunal directed deletion of the addition made in respect of the suppressed sales. [Paras 5]

Addition on account of suppressed/unrecorded sales deleted and order of CIT(A) set aside.

Final Conclusion: The appeal is allowed: the Tribunal set aside the orders of the lower authorities and directed deletion of the additions made on account of stock discrepancy and suppressed sales found during the survey, on the ground that the AO did not reject the books of account nor point out specific defects to justify estimated additions.

Deductibility of employee's contribution to employee welfare funds - section 36(1)(va) read with section 2(24)(x) - Adjustment under section 143(1) of the Income tax Act - Retrospective operation of statutory explanations - section 43B and the Explanations inserted by Finance Act, 2021 - Requirement of a decision by the jurisdictional High Court before summary reassessment

Deductibility of employee's contribution to employee welfare funds - section 36(1)(va) read with section 2(24)(x) - Adjustment under section 143(1) of the Income tax Act - Requirement of a decision by the jurisdictional High Court before summary reassessment - Addition of employees' contribution to employee welfare funds could not be made in processing under section 143(1) for the assessment years in question in absence of a binding decision of the jurisdictional High Court. - HELD THAT: - The Tribunal examined the claim that employees' contributions, though deposited after the statutory due date for deposit under section 36(1)(va), were deposited before the due date for filing the return under section 139(1). Given the conflict of judicial opinion on whether such contributions fall for treatment under section 36(1)(va) or under section 43B, the scope of summary adjustment under section 143(1) is limited and not available to decide debatable questions on merits. In the absence of any contrary decision by the jurisdictional High Court, the Tribunal held that the Revenue could not effect the addition in processing. The Tribunal therefore directed deletion of the impugned additions for the stated assessment years, while noting that a subsequent decision of the jurisdictional High Court could justify rectification or amendment of the orders after affording the assessee an opportunity of hearing. [Paras 3, 4]

Impugned additions made in processing under section 143(1) are deleted for AY 2018-19 and AY 2019-20 for want of a binding jurisdictional High Court decision and because the matter involved a debatable question not determinable in summary proceedings.

Retrospective operation of statutory explanations - section 43B and the Explanations inserted by Finance Act, 2021 - The Explanations inserted by the Finance Act, 2021 cannot be read as operating retrospectively to govern the assessment years before AY 2021-22. - HELD THAT: - While earlier Tribunal reasoning (cited) treated the Explanations as clarificatory and retrospective, this Bench agreed with the impugned orders that the Explanations were proposed and enacted with prospective effect and that their Notes on Clauses and Memorandum to the Finance Bill, 2021 indicate operation from AY 2021-22. Consequently, the Explanations could not be invoked to sustain additions for the assessment years under appeal. The Court nonetheless observed that if the jurisdictional High Court were subsequently to hold otherwise, the orders might be opened up for amendment or rectification in accordance with settled precedents after giving the assessee a hearing. [Paras 3, 4]

Explanations by Finance Act, 2021 do not apply retrospectively to AY 2018-19 and AY 2019-20 and therefore cannot sustain the impugned additions for those years.

Final Conclusion: The appeals are allowed: the additions of employees' contributions to employee welfare funds made in processing under section 143(1) for AY 2018-19 and AY 2019-20 are deleted; the Finance Act, 2021 Explanations do not operate retrospectively for those years, subject to any subsequent binding decision of the jurisdictional High Court which may warrant amendment after hearing the assessee.

Adjustment under section 143(1)(a)(iv) based on tax audit report - disallowance of car expenses - deductibility of club subscription and club expenses as business expenditure

Adjustment under section 143(1)(a)(iv) based on tax audit report - Validity of Assessing Officer's adjustment under section 143(1)(a)(iv) on the basis of the tax auditor's report in Form No. 3CD. - HELD THAT: - The Tribunal held that Clause (iv) of section 143(1)(a) permits the Assessing Officer to make adjustments for expenditure indicated in the tax audit report but not taken into account in the return. Where the tax auditor has quantified expenditure as personal in the Form No. 3CD report, the AO is entitled to make the corresponding adjustment during processing under section 143(1). The assessee's contention that such disallowance is beyond the scope of section 143(1)(a)(iv) was rejected because the adjustment was made on the basis of the qualified report issued by the tax auditor. [Paras 6]

The Tribunal upheld the legality of the AO's adjustment under section 143(1)(a)(iv) where it was based on the tax auditor's report.

Disallowance of car expenses - Correction of the difference in quantified car expenses between the assessee's claim and the tax auditor's report. - HELD THAT: - The Tribunal noted a factual discrepancy: the assessee claimed a disallowance of 10% of Salem branch car expenses amounting to a certain figure, whereas the tax auditor reported a higher amount, resulting in a difference that the AO added. The Tribunal observed that the factual position requires verification against the statement of total income filed by the assessee and the tax auditor's report, and therefore the matter was not finally adjudicated on merits but remanded to the Assessing Officer for verification. [Paras 6]

Issue remitted to the Assessing Officer for verification and appropriate action.

Deductibility of club subscription and club expenses as business expenditure - Whether subscription fees and club expenses are allowable as business expenditure or are personal in nature. - HELD THAT: - On the material before it, including the break-up of payments, the Tribunal observed that payments to various clubs appeared to be in the nature of personal expenditure of the partners as members of clubs. The Tribunal held that unless the assessee demonstrates that such subscriptions and club expenses were incurred wholly and exclusively for the purpose of business, deduction cannot be allowed. Because the AO had made the adjustment without fully verifying the assessee's claim that the expenses were for business purposes, the Tribunal directed a re-examination of the claim by the AO in light of the assessee's averments. [Paras 7]

Issue set aside and remitted to the Assessing Officer for fresh consideration in light of the assessee's submissions.

Final Conclusion: The Tribunal affirmed the Assessing Officer's power to adjust expenditures indicated in the tax audit report under section 143(1)(a)(iv); remitted the discrepancy in car-expense quantification to the AO for verification; and remitted the question of deductibility of club subscriptions and club expenses to the AO for fresh consideration. The appeal is treated as allowed for statistical purposes.

Unexplained investments under Section 69 - Requirement of actual investment and absence of satisfactory explanation - Accounting/clerical error does not amount to unexplained investment - Re-computation of depreciation for incorrect opening/closing WDV

Unexplained investments under Section 69 - Accounting/clerical error does not amount to unexplained investment - Re-computation of depreciation for incorrect opening/closing WDV - Whether addition of Rs. 86,47,500/- as unexplained investment under Section 69 was sustainable where the difference in WDV arose from a prior-year accounting/clerical error and no evidence of any actual investment was produced. - HELD THAT: - The Tribunal examined Section 69 and noted that two conditions are essential for invoking the provision: (i) there must be some investment in the relevant financial year, and (ii) the assessee must offer no explanation for such investment or the explanation must be unsatisfactory to the assessing officer. The AO's addition rested on a comparison of closing WDV as on 31.03.2008 and opening WDV as on 01.04.2008 and concluded that the assessee had inflated the WDV of machinery and office equipment. However, the material on record showed that the discrepancy arose from a clerical/accounting error in the root year (relating to double deduction of subsidy in the first year) and that the assessee rectified that error in the year under consideration. There was no evidence of any fresh receipt, payment, voucher or other documentary proof of an actual investment made in the relevant year. In those circumstances the Tribunal held that Section 69, which targets unexplained investments, was not attracted. The proper remedial course where WDV figures are incorrect is re-computation of depreciation to reflect correct opening and closing balances rather than treating the discrepancy as unexplained investment and adding it to income under Section 69. Accordingly the Tribunal deleted the addition but directed the AO to recompute depreciation on account of the difference in opening and closing WDV. [Paras 10, 11, 14]

Addition of Rs. 86,47,500/- under Section 69 deleted; AO directed to recompute depreciation for incorrect WDV balances.

Final Conclusion: The Tribunal partly allowed the appeal for Assessment Year 2009-10 by deleting the Section 69 addition of Rs. 86,47,500/- because the discrepancy arose from a prior-year accounting/clerical error with no evidence of actual investment, while directing recomputation of depreciation by the assessing officer.

Deductibility of employees' contribution to Provident Fund and ESI - payment before due date of filing return under section 139(1) - retrospective operation of amendment to section 36(1)(va) and section 43B - effect of Finance Act, 2021 amendment on past assessment years - interpretation of the word "contribution" in clause (b) of section 43B - precedential effect of Essae Teraoka Pvt. Ltd. (jurisdictional High Court)

Deductibility of employees' contribution to Provident Fund and ESI - payment before due date of filing return under section 139(1) - interpretation of the word "contribution" in clause (b) of section 43B - precedential effect of Essae Teraoka Pvt. Ltd. (jurisdictional High Court) - Employees' contribution to PF and ESI paid before the due date of filing the return is allowable as a deduction for the relevant assessment year. - HELD THAT: - Following the binding decision of the jurisdictional High Court in Essae Teraoka Pvt. Ltd., and consistent with the view taken by the Bangalore Bench in M/s. Shakuntala Agarbathi Company, the Tribunal held that the expression "contribution" in clause (b) of section 43B includes both employer and employee contributions. Where the assessee remits the employees' contribution prior to the due date for furnishing the return under section 139(1), that payment qualifies for deduction. The Tribunal applied this precedential interpretation to the facts before it and found that the assessee had made the employees' contribution to PF and ESI before the due date of filing the return; hence the disallowance by the Assessing Officer could not be sustained. [Paras 7]

Disallowance of employees' contribution to PF and ESI is deleted and deduction is to be allowed.

Retrospective operation of amendment to section 36(1)(va) and section 43B - effect of Finance Act, 2021 amendment on past assessment years - Amendments made by the Finance Act, 2021 to section 36(1)(va) and section 43B do not apply retrospectively to A.Y. 2019-2020 and are prospective with effect from 01.04.2021. - HELD THAT: - The Tribunal examined whether the Finance Act, 2021 amendment was clarificatory and retrospective. Relying on the Supreme Court's guidance that a provision stated to be "for removal of doubts" cannot be presumed retrospective if it alters previously settled law, and in view of the jurisdictional High Court's ruling that employees' contributions paid before the return due date were allowable, the Tribunal concluded the 2021 amendment alters the law to the assessee's detriment and therefore cannot be read as retrospective. The amendment is effective from 01.04.2021 and applies from A.Y. 2021-2022 onwards; it does not affect A.Y. 2019-2020. [Paras 7]

Finance Act, 2021 amendment to section 36(1)(va) and section 43B is prospective and not applicable to the relevant assessment year.

Final Conclusion: The Tribunal allowed the appeal, held that employees' contributions to PF and ESI paid before the due date of filing the return are deductible for A.Y. 2019-2020, declared the Finance Act, 2021 amendment inapplicable to that year, and directed the Assessing Officer to grant the deduction and delete the disallowance.

Business Connection - Permanent Establishment - Dependent Agent Permanent Establishment - Arm's length remuneration - Profit attribution to Permanent Establishment - Article 5 and Article 7 of the DTAA - Two taxpayer approach - Single taxpayer (zero sum) approach

Business Connection - Permanent Establishment - Dependent Agent Permanent Establishment - Article 5 and Article 7 of the DTAA - Whether the assessee's Indian associated enterprise constitutes a Business Connection / Permanent Establishment in India and the tax consequences thereof - HELD THAT: - The Tribunal considered whether the Indian A.E. gives rise to a Business Connection or a Permanent Establishment (PE) of the Singapore resident assessee. It noted that the Transfer Pricing Officer accepted that the international transactions between the assessee and its Indian A.E. were at arm's length (order dated 28.01.2021). Relying on coordinate bench decisions in the assessee's own cases and on higher court precedents (including Set Satellite and Morgan Stanley as discussed in the judgment), the Tribunal examined the distinction between a basic (fixed place) PE under Article 5(1)/(2) and a dependent agent PE under Article 5(4). The Tribunal observed that, at best on the facts marshalled by the Assessing Officer, the case amounted to a dependent agent PE (DAPE) rather than a fixed place PE. On the fundamental question of tax consequence, the Tribunal followed the view of the jurisdictional High Court in Set Satellite and the reasoning in Morgan Stanley that where the agent (or associated enterprise constituting the agent) is remunerated at arm's length taking into account the functions, assets and risks, there is no further profit left to be attributed to the PE. The Tribunal reviewed competing academic approaches (the two taxpayer approach versus the single taxpayer/zero sum approach) and acknowledged their divergence but held that binding judicial precedent supports the proposition that an arm's length remuneration paid to the agent renders the DAPE tax neutral. The Assessing Officer had made no specific finding that the agent's remuneration was not arm's length; the Tribunal therefore declined to remit the matter for fresh transfer pricing adjudication. Consequently, even assuming a DAPE, no additional profits were attributable to the assessee in India. [Paras 8, 9]

Held that even if the Indian A.E. constitutes a dependent agent PE, it is tax neutral because the agent has been paid arm's length remuneration; therefore no further profit attribution to the assessee in India.

Final Conclusion: Appeal allowed. The addition made by the Assessing Officer is deleted on the ground that where the Indian associated enterprise has been remunerated at arm's length, any dependent agent permanent establishment is tax neutral and no further profits are attributable to the assessee for AY 2017-18.

Reopening of assessment - change of opinion - section 147 - 'reason to believe' and requirement of tangible material - allowability of corporate social responsibility expenditure under section 37(1) - commercial expediency - Explanation 2 to section 37(1) - exclusion of CSR expenditure (prospective effect from 1.4.2015) - compensatory payment/penalty for illegal mining - revenue expenditure v. penal character

Reopening of assessment - change of opinion - section 147 - 'reason to believe' and requirement of tangible material - Validity of reassessment under section 147 for Assessment Year 2013-14 (whether reassessment was a permissible exercise of jurisdiction or amounted to impermissible change of opinion). - HELD THAT: - The Tribunal examined the record of the original scrutiny assessment and the subsequent reasons recorded for issuing notice under section 148. It found that the alleged Corporate Social Responsibility (CSR) expenditure had been specifically raised and documented during the original assessment proceedings and that no new material or fresh information had emerged after the conclusion of the original assessment. Applying the principle that post 1989 reopening must be founded on a 'reason to believe' supported by tangible material and that mere change of opinion on the same material cannot justify reassessment, the Tribunal concluded that the Assessing Officer was effectively seeking to review his earlier conclusion. The reassessment was therefore held to be vitiated by change of opinion and not sustainable as a valid exercise under section 147. [Paras 6, 7, 8, 9, 10]

Reassessment for AY 2013-14 quashed; reopening held invalid as amounting to change of opinion.

Compensatory payment/penalty for illegal mining - revenue expenditure v. penal character - allowability of CSR expenditure under section 37(1) - commercial expediency - Allowability of payments characterised as penalty/compensation (relating to illegal mining) for Assessment Year 2014-15. - HELD THAT: - The Tribunal considered the nature of the payments levied in consequence of the Supreme Court and CEC directions and the contemporaneous treatment and purpose of such payments. Noting precedents of coordinate benches and the Karnataka High Court, the Tribunal observed that the payments were directed to be used for reclamation, rehabilitation and other public/environmental measures through an SPV and that they were a prerequisite for resumption of operations. Considering the statutory and factual matrix, including the Supreme Court's characterization and the use of funds for public/environmental purposes, the Tribunal held that these payments were compensatory and commercial in nature rather than punitive, and accordingly were revenue expenditures allowable under section 37(1). [Paras 11, 14, 15]

Disallowance of the compensatory/penalty payments for AY 2014-15 set aside; payments held allowable as revenue expenditure.

Allowability of CSR expenditure under section 37(1) - commercial expediency - Explanation 2 to section 37(1) - exclusion of CSR expenditure (prospective effect from 1.4.2015) - Allowability of CSR expenditure for Assessment Years 2013-14 and 2014-15 (whether such expenditures are deductible under section 37(1) prior to Explanation 2's prospective effect). - HELD THAT: - The Tribunal reviewed the legislative amendment (Explanation 2 to section 37(1)) and its retrospective/non retrospective effect, the scope of section 135 of the Companies Act, 2013 and relevant judicial decisions. It observed that Explanation 2 took effect from 1.4.2015 (applicable to AY 2015-16 onwards) and that the restriction in Explanation 2 applies to CSR obligations under section 135 of the Companies Act. For the years in issue (prior to the amendment's operative date) and on the facts before it, the Tribunal accepted that the CSR expenditures were incurred in the commercial context (for goodwill, to enable operations, or as exigent commercial expediency) and followed precedents holding such payments allowable as revenue expenditure. The Tribunal therefore concluded that the CSR amounts were deductible under section 37(1) for the assessment years under appeal. [Paras 16, 17, 18, 20, 24]

Disallowances of CSR expenditure for AYs 2013-14 and 2014-15 set aside; CSR expenses held allowable as business expenditure for those years.

Final Conclusion: Both appeals allowed: reassessment for AY 2013-14 quashed as impermissible change of opinion; for AY 2014-15 compensatory payments related to illegal mining held to be revenue/compensatory and allowable; CSR expenditures for AYs 2013-14 and 2014-15 held deductible under section 37(1) (Explanation 2 to section 37(1) operates prospectively from 1.4.2015 and did not apply to the years under appeal).

Merchandise Exports from India (MEIS) incentive as substantive benefit - procedural lapse in electronic shipping bill option - rules and procedures are handmaids of justice - judicial direction to grant relief/ministerial re-consideration

Merchandise Exports from India (MEIS) incentive as substantive benefit - procedural lapse in electronic shipping bill option - judicial direction to grant relief/ministerial re-consideration - Whether the petitioner, despite having inadvertently not opted for MEIS in the electronic shipping bills, is entitled to the benefit and relief from the respondents - HELD THAT: - The Court found on the material before it, including the No Objection Certificate dated 07.06.2021 from the Assistant Commissioner of Customs confirming a mistake in filing the shipping bills and recommending favourable consideration, that the petitioner had otherwise satisfied the substantive requirements of the MEIS scheme. Reliance was placed on earlier decisions of this Court holding that the MEIS is an export incentive whose substantive benefit cannot be denied for a hyper-technical or inadvertent procedural lapse in clicking the correct option in the electronic system, and that procedural rules cannot be applied to defeat an entitlement. The committee's conclusion that shipping bills where 'No' was ticked do not get electronically transmitted was rejected as a basis to deny the substantive incentive where eligibility is otherwise established. Applying the principle that rules are handmaids of justice, the Court held that the respondents must grant relief if the petitioner indeed exported goods and was otherwise entitled under the Foreign Trade Policy 2015-2020. [Paras 5, 8]

Writ petition allowed; respondents directed to grant MEIS relief to the petitioner within thirty days from receipt of the order and to give consequential benefits; no costs.

Final Conclusion: The High Court allowed the writ petition, holding that an exporter who has satisfied the substantive eligibility for MEIS cannot be denied the incentive for an inadvertent procedural error in the electronic shipping bill; the respondents are directed to grant the relief within thirty days.

Redemption fine on re-exported goods - penalty under Customs Act, 1962 for undeclared goods despite absence of mens rea - liability of importer for wrong supply by foreign supplier - appellate modification of confiscation-related sanctions

Redemption fine on re-exported goods - liability of importer for wrong supply by foreign supplier - Whether the redemption fine imposed on the importer is sustainable where the undeclared goods have been re-exported and the importer asserts wrong supply by the foreign supplier. - HELD THAT: - The Tribunal noted the adjudicating authority's finding that the importer had no knowledge of the presence of undeclared items. Applying the legal position affirmed by the Hon'ble Supreme Court in Siemens India Ltd. and the jurisdictional High Court in Sankar Pandi, the Tribunal held that a redemption fine cannot be sustained where the goods have been exported. The appellant had not challenged confiscation or re-export orders and had produced supplier communications admitting wrongful shipment. In these circumstances, the redemption fine was found unwarranted and was set aside. [Paras 9]

Redemption fine set aside.

Penalty under Customs Act, 1962 for undeclared goods despite absence of mens rea - appellate modification of confiscation-related sanctions - Whether the penalty imposed for importation of undeclared/infringing goods should be sustained or moderated where the goods were screened and undeclared items were recovered and the importer claims lack of mens rea. - HELD THAT: - The Tribunal observed that undeclared goods were discovered during departmental screening and that the adjudicating authority had imposed penalty under the penal provisions even while recording absence of mens rea. Having regard to the facts, the findings of the authorities below and the mitigating circumstance that the goods were exported and supplier accepted error, the Tribunal exercised its appellate power to reduce the penalty. The original penalty was accordingly moderated to a lesser sum as a proportionate response to the contravention. [Paras 10]

Penalty reduced to Rs. 50,000.

Final Conclusion: Appeal partly allowed: redemption fine set aside and penalty reduced to Rs. 50,000; impugned order modified accordingly with consequential reliefs, if any.

Termination of concession agreement for concessionaire default - interim relief against dispossession - continuing effect of prior interim orders - contractual dispute resolution through arbitration - standing of financial creditors to challenge termination - deferred implementation of termination

Continuing effect of prior interim orders - interim relief against dispossession - Whether the order dated 8th April, 2019 (and subsequent order of 23rd October, 2019) continued to restrain NHAI from issuing the Termination Notice dated 21st December, 2021 or from taking steps to cancel the Concession Agreement - HELD THAT: - The Tribunal examined the scope and terms of the order dated 8th April, 2019 and the subsequent order dated 23rd October, 2019. Paragraph 10 of the 8th April order recorded a limited, time bound direction for filing affidavits and an interim restraint that was not in terms to operate in perpetuity. The 23rd October, 2019 order in IA No.3320 of 2019 similarly did not record a continuing prohibition on NHAI terminating concession agreements; it merely granted liberty to place facts before IL&FS board and referred to the earlier directions about categorisation of entities. The Tribunal therefore held that no continuing restraint survived to prevent NHAI from issuing the Termination Notice dated 21st December, 2021. [Paras 9, 10, 11, 12]

The earlier interim directions did not continue to restrain NHAI from terminating the Concession Agreement; the Termination Notice was not barred by the orders of 8th April, 2019 or 23rd October, 2019.

Termination of concession agreement for concessionaire default - contractual dispute resolution through arbitration - Whether this Tribunal should adjudicate the merits of the Termination Notice dated 21st December, 2021 in the present proceedings - HELD THAT: - The Tribunal declined to adjudicate disputed factual questions about whether NHAI validly invoked termination for concessionaire default. It observed that the Concession Agreement itself prescribes the remedy and dispute resolution mechanism (including arbitration under Clause 39) and that the applicant's remedy lies under the contractual process. The Tribunal therefore refused to entertain the challenge on merits in these proceedings and did not determine whether the facts justified termination. [Paras 13]

The Tribunal will not decide the merits of the termination in these proceedings; the applicant must seek remedy under the Concession Agreement (including arbitration).

Standing of financial creditors to challenge termination - deferred implementation of termination - Relief to be granted pending completion of the IL&FS resolution process and disposition of the application - HELD THAT: - While declining to entertain the application on merits and noting lenders' concerns about recovery, the Tribunal held that the lenders' submissions did not justify entertaining the applicant's claim where the applicant itself was the direct aggrieved party. In view of the critical stage of the IL&FS Group resolution process, the Tribunal directed a limited, time bound accommodation: the Termination Notice of 21st December, 2021 was to be implemented only with effect from 1st April, 2021. The interim protection previously granted (restraining dispossession) was discharged. [Paras 13, 14]

I.A. No.2908 of 2021 is dismissed; the interim order restraining dispossession is discharged; implementation of the Termination Notice is deferred to take effect from 1st April, 2021.

Final Conclusion: The application challenging NHAI's Termination Notice dated 21st December, 2021 is dismissed. The Tribunal declined to adjudicate the merits of termination in these proceedings, held that earlier interim orders did not prevent NHAI from issuing the notice, discharged the interim protection against dispossession, but directed that the Termination Notice shall take effect from 1st April, 2021 to accommodate the ongoing IL&FS resolution process.

Rectification of mistake apparent on the record - correction of clerical or arithmetical error - limitation of power to amend versus power to review - finality of adjudicatory orders in absence of statutory review or recall

Rectification of mistake apparent on the record - correction of clerical or arithmetical error - Whether the Tribunal has jurisdiction under Section 420(2) of the Companies Act, 2013 read with Rule 154 of the NCLT Rules, 2016 to review or modify a final order or is limited to rectifying clerical/arithmetic mistakes or mistakes apparent on the face of the record. - HELD THAT: - The Tribunal examined the text of Rule 154 and Section 420(2) and authoritative decisions which construe the power under those provisions. Rule 154 permits correction of clerical or arithmetical mistakes or errors arising from accidental slip or omission. Section 420(2) permits amendment to rectify a mistake apparent from the record within two years, but does not confer a general power to modify or rehear the merits of a judgment. The Tribunal relied on precedent holding that an error apparent on the face of the record must be patent and self-evident and not require re-appraisal of evidence or detailed argument; review, rehearing or substitution of an earlier view on merits is beyond the scope of these provisions. Accordingly, the power available is confined to correction of manifest mistakes and not to re-opening or altering substantive adjudications. [Paras 7, 8, 9, 10, 11]

The Tribunal's power under Rule 154 and Section 420(2) is limited to correction of clerical/arithmetic errors or patent mistakes apparent on the record and does not extend to modifying an order on merits.

Finality of adjudicatory orders in absence of statutory review or recall - limitation of power to amend versus power to review - Whether the present Review Application disclosed any mistake apparent on the record warranting rectification or amendment of the Tribunal's earlier order dated 21.12.2021. - HELD THAT: - The applicant sought review of the Tribunal's earlier dismissal, arguing factual misstatements and omissions. The Tribunal considered the submissions and the record and found no patent, manifest or self-evident error on the face of the record that would qualify for correction under the cited provisions. Reliance was placed on authorities which clarify that review cannot be used to re-appraise evidence or correct an erroneous view on merits and that, absent power of review or recall, a concluded adjudicatory order remains final and binding. As there was no error of the nature contemplated by Section 420(2) or Rule 154, the application did not meet the statutory threshold for rectification. [Paras 9, 12, 13]

No mistake apparent on the record was found; the Review Application was not maintainable and is dismissed.

Final Conclusion: The Tribunal held that its remedial power under Rule 154 and Section 420(2) is confined to correcting clerical/arithmetic errors or patent mistakes apparent on the record and does not permit revisiting or altering a decision on merits; finding no such mistake in the earlier order dated 21.12.2021, the Review Application is dismissed.

Scheme of Amalgamation sanction - Binding effect on shareholders and creditors - Transfer of assets, liabilities and proceedings - Transfer of statutory benefits, incentives and concessions - Continuity and transfer of employees - Dissolution of transferor without winding up - Preservation of powers of revenue authorities and statutory compliance - Filing of certified copy with Registrar of Companies - Service of notice to statutory authorities and Official Liquidator's report

Scheme of Amalgamation sanction - Binding effect on shareholders and creditors - Sanction of the Scheme of Amalgamation under Sections 230 to 232 of the Companies Act, 2013 and its binding effect on the parties. - HELD THAT: - Having considered the Scheme placed on record, the reports filed by the Official Liquidator and the Regional Director, service and publication of notices to statutory authorities, and the absence of any sustainable objection, the Tribunal granted sanction to the proposed Scheme. The Tribunal recorded that the Members and Creditors had approved the Scheme and that no impediment existed to sanctioning it. The Order expressly provides that the sanctioned Scheme shall be binding on the Transferor and Transferee companies and their shareholders and creditors, subject to statutory requirements and compliance with law. [Paras 12, 13, 14]

The Scheme is sanctioned and is binding on the Petitioner Companies and their shareholders and creditors.

Transfer of assets, liabilities and proceedings - Dissolution of transferor without winding up - Effect of sanction on transfer of assets, liabilities and pending proceedings, and dissolution of the Transferor Company. - HELD THAT: - The Tribunal directed that upon the sanction becoming effective from the Appointed Date, the Transferor Company shall stand dissolved without undergoing winding up. All assets, liabilities, contingent liabilities, duties and obligations of the Transferor Company outstanding as on the Effective Date shall, by operation of law and pursuant to the Scheme and relevant provisions, stand transferred to and be deemed to be those of the Transferee Company. Further, all proceedings pending by or against the Transferor shall continue by or against the Transferee Company. [Paras 5, 13, 17]

On the Effective Date the Transferor is dissolved and its assets, liabilities and pending proceedings stand transferred to the Transferee Company.

Transfer of statutory benefits, incentives and concessions - Preservation of powers of revenue authorities and statutory compliance - Whether statutory benefits, incentives and concessions of the Transferor vest in the Transferee and whether sanction affects tax recovery or statutory liabilities. - HELD THAT: - The Tribunal held that benefits, entitlements, incentives and concessions available to the Transferor under various statutory incentive schemes and tax statutes shall, to the extent statutorily available and subject to associated obligations, stand transferred to the Transferee as if the Transferee were originally entitled thereto. However, the Tribunal expressly clarified that the sanction does not grant exemption from payment of stamp duty, taxes or other statutory dues and shall not affect the tax treatment of the transactions under the Income Tax Act, 1961. The Income Tax Department's power to recover pending dues, penalties or to exercise jurisdiction remains unimpaired. [Paras 11, 16, 17]

Statutory benefits transfer to the Transferee to the extent available, while tax recovery powers and statutory compliance obligations remain unaffected.

Continuity and transfer of employees - Whether employees of the Transferor shall stand transferred to the Transferee and on what terms. - HELD THAT: - The Tribunal directed that all employees of the Transferor shall be deemed to have become employees of the Transferee with effect from the Appointed Date, transferred without interruption of service and on terms no less favourable than those on which they were engaged by the Transferor as on the Effective Date, including remuneration and contractual and statutory benefits. [Paras 17]

Employees of the Transferor are to be transferred to the Transferee with continuity of service and no less favourable terms.

Filing of certified copy with Registrar of Companies - Service of notice to statutory authorities and Official Liquidator's report - Administrative steps to give effect to the sanction and recordal with the Registrar of Companies. - HELD THAT: - The Tribunal directed the Petitioner Companies to deliver a certified copy of the Order to the Registrar of Companies within thirty days. Upon such delivery and registration, the Transferor Company shall be dissolved and the Registrar shall consolidate files of the Petitioner Companies accordingly. The Tribunal recorded compliance steps taken by the Petitioners, including publication and service of notices, and noted the Official Liquidator's report indicating no complaints and no prejudicial conduct of the Transferor's affairs. [Paras 8, 9, 10, 18]

Petitioners must file the certified copy with the ROC; on registration the Transferor will be dissolved and records consolidated.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation between the Petitioner Companies with effect from the Appointed Date, making the Scheme binding on the parties; the Transferor's assets, liabilities, employees and statutory benefits stand transferred to the Transferee as directed, subject to statutory compliances, tax recovery rights and other legal obligations, and the Transferor shall be dissolved upon filing the certified copy of this Order with the Registrar of Companies.

Payment of debts of operational creditors under a resolution plan - commercial wisdom of the Committee of Creditors - fair and equitable treatment of creditors - extinguishment of pre CIRP dues by an approved resolution plan - priority of operational creditors under the distribution matrix of a resolution plan - jurisdictional limits of the Adjudicating Authority under the IBC - application of WBERC Regulations for fresh power connection and tariff

Payment of debts of operational creditors under a resolution plan - fair and equitable treatment of creditors - commercial wisdom of the Committee of Creditors - Allocation towards settlement of the Appellant's claim as an operational creditor in the approved resolution plan complies with the requirements of the IBC and the plan is viable and feasible. - HELD THAT: - The Tribunal examined Section 30(2)(b) read with Section 53 and the distribution matrix in the approved resolution plan which provides Rs. 0.14 crore for operational creditors, of which DVC's admitted claim receives Rs. 0.03 crore. The plan satisfies the statutory requirement that operational creditors receive not less than the higher of the liquidation based amount or the distribution under the priority in section 53; in the instant case liquidation would yield nil for operational creditors, and the plan offers the payable settlement which the Resolution Applicant and CoC adopted. The CoC's commercial wisdom in approving the plan is accorded primacy and is not amenable to judicial interference except for legal infirmity or denial of fair and equitable treatment to similarly situated creditors. The Tribunal found no such infirmity: the distribution is in accordance with section 30(2)(b), thereby meeting the statutory test of being fair and equitable and reflecting the commercial decision of the CoC. Consequently, the treatment of the Appellant's claim under the plan is upheld. [Paras 20, 30, 31, 32]

The allocation for settlement of the Appellant's operational claim in the approved resolution plan complies with the IBC; the plan is viable and feasible and will not be disturbed.

Extinguishment of pre CIRP dues by an approved resolution plan - jurisdictional limits of the Adjudicating Authority under the IBC - application of WBERC Regulations for fresh power connection and tariff - Whether the Appellant's rights under the Electricity Act and WBERC Regulations have been infringed by approval of the resolution plan and the extent to which pre CIRP dues and reconnection obligations are affected. - HELD THAT: - The Tribunal held that the approved resolution plan expressly treats DVC's pre Effective Date liabilities as extinguished to the extent set out in the plan, with corresponding clauses directing settlement, withdrawal of legal cases, and restoration of supply post Effective Date. Such extinguishment of pre CIRP dues follows from the operation of the approved plan under the IBC. However, the Tribunal recognised that supply and tariff for a fresh connection post CIRP must conform to WBERC Regulations; accordingly, the obligation to supply and the rate clause in the plan require modification so that any new connection and tariff are governed by the applicable regulatory framework and the Successful Resolution Applicant must comply with requirements such as security deposit and other charges as per WBERC. The Tribunal therefore sustained the extinguishment effected by the plan while stipulating that post CIRP reconnection and tariff conditions be governed by WBERC Regulations. [Paras 24, 28, 29, 32]

The approved resolution plan lawfully extinguishes pre CIRP dues as provided therein; obligations concerning reconnection and tariff for a fresh connection shall be governed by WBERC Regulations and the plan is to be modified accordingly on that aspect.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's approval of the resolution plan is upheld subject to modification that post CIRP reconnection and tariff conditions be governed by WBERC Regulations and that the Successful Resolution Applicant comply with regulatory requirements for a fresh connection.

Corporate Insolvency Resolution Process - date of default under Section 7(5) of the Insolvency and Bankruptcy Code, 2016 - limitation under the Limitation Act - applicability of Section 18 and Section 22 - effect of an Arbitral Award on limitation for initiation of insolvency proceedings - record of default filed with an Information Utility (NeSL) - appointment of Interim Resolution Professional - compliance with Section 7(3)(b)

Appointment of Interim Resolution Professional - compliance with Section 7(3)(b) - Whether the applicant complied with the requirement to propose an Interim Resolution Professional under Section 7(3)(b) of the Code. - HELD THAT: - The applicant proposed Mr. Sanjay Chopra as Interim Resolution Professional, produced his Form 2 communication in terms of Rule 9(1) and the requisite declarations including that no disciplinary proceedings are pending and other disclosures as required under IBBI Regulations. The Tribunal examined these records and found that the statutory requirement of Section 7(3)(b) was satisfied. [Paras 6]

Requirement of Section 7(3)(b) fulfilled and the proposed Interim Resolution Professional had agreed and made necessary disclosures.

Date of default under Section 7(5) of the Insolvency and Bankruptcy Code, 2016 - limitation under the Limitation Act - applicability of Section 18 and Section 22 - effect of an Arbitral Award on limitation for initiation of insolvency proceedings - record of default filed with an Information Utility (NeSL) - Whether the Section 7 application was barred by limitation and, if so, from which date the period of limitation is to be reckoned. - HELD THAT: - The Tribunal held that the date of default for the purpose of Section 7 is the date when the applicant recalled the entire loan, namely 06.05.2015, and noted that arbitration proceedings culminating in an Arbitral Award were subsequent to that recall. The applicant's contention that limitation should begin from the date of dishonour of a post dated cheque (17.01.2018) or that there was a written acknowledgement under Section 18 of the Limitation Act was rejected: there is no written acknowledgement on record amounting to an admission or promise to pay, and post dated cheque dishonour could not be treated as extending or restarting the limitation where the loan had already been recalled. The Tribunal also relied on the Record of Default filed with the Information Utility which itself states an earlier date of default (30.09.2015), reinforcing that the application was filed well beyond the three year period. Even if limitation were to be counted from the date of the Arbitral Award (26.02.2016), the application filed in 2021 remained time barred. On these bases the Tribunal concluded the application was hopelessly barred by limitation. [Paras 10, 11, 12, 13]

Section 7 application is barred by limitation; limitation runs from 06.05.2015 (date of loan recall) and the petition filed in 2021 is time barred.

Final Conclusion: The Tribunal found that the applicant complied with the appointment and disclosure requirements for the Interim Resolution Professional, but rejected the Section 7 petition as barred by limitation - the date of default was held to be the loan recall on 06.05.2015 (and alternatively the Arbitral Award of 26.02.2016), rendering the 2021 application time barred; the application is dismissed with no order as to costs.

Appointment of resolution professional under Section 97 of the IBC - duty of resolution professional to examine application and submit report under Section 99 of the IBC - admission or rejection of an application only after report under Section 99 and order under Section 100 - interim moratorium on debts of personal guarantor under Section 96(1) of the IBC - maintainability of insolvency application against personal guarantor where resolution rights of guarantor are claimed

Appointment of resolution professional under Section 97 of the IBC - duty of resolution professional to examine application and submit report under Section 99 of the IBC - Appointment of a resolution professional is the first stage after filing an application under Section 95 and the Resolution Professional must be appointed to examine the application and submit a report under Section 99 before the Adjudicating Authority considers admission or rejection under Section 100. - HELD THAT: - A conjoint reading of Sections 97, 99 and 100 shows that when an application under Section 94 or 95 is filed the Adjudicating Authority must first direct the Board to confirm or nominate a resolution professional and then appoint the resolution professional. The resolution professional is required to examine the application within the stipulated period and submit a reasoned report recommending acceptance or rejection under Section 99. Only after submission of that report can the Adjudicating Authority decide admission or rejection under Section 100. Where the matter is pending for appointment of the resolution professional, the question of admission or rejection under Section 100 does not arise. [Paras 6, 7, 8]

Proceed to appoint a resolution professional and require him to examine the application and submit a report under Section 99 before any adjudication under Section 100.

Maintainability of insolvency application against personal guarantor where resolution rights of guarantor are claimed - Objection based on Section 240A and related provisions that personal guarantor (as an MSME) has a right to be a resolution applicant does not preclude the appointment of a resolution professional and is premature at the stage of appointment. - HELD THAT: - The respondent's contention that, by virtue of Section 240A read with Section 29A(h), personal guarantors of an MSME corporate debtor have a right to file resolution plans and therefore the Section 95 application is not maintainable was considered. The Tribunal observed that such contentions relate to the merits and to matters to be considered after the resolution professional examines the application and reports under Section 99. Since the present proceedings were at the stage of appointment of the resolution professional, the objection was not a bar to proceeding in accordance with Sections 97-99. [Paras 4, 8]

The maintainability objection based on claimed rights of the personal guarantor is premature and does not prevent appointment of the resolution professional.

Interim moratorium on debts of personal guarantor under Section 96(1) of the IBC - Interim moratorium under Section 96(1) commences on the date of the application in relation to all debts of the personal guarantor and continues until the application is admitted. - HELD THAT: - In terms of Section 96(1), once an application under the Code in relation to a personal guarantor is filed, an interim moratorium in respect of all debts of the personal guarantor commences from the date of the application and shall cease to have effect on the date of admission of such application. The Tribunal recorded this statutory effect in the order. [Paras 10]

Interim moratorium in favour of the personal guarantor commences with the filing of the application and remains until admission.

Appointment of resolution professional under Section 97 of the IBC - The specific nominee for resolution professional proposed by the applicant is appointed by the Adjudicating Authority. - HELD THAT: - The applicant had proposed a name for the resolution professional within its application and the Tribunal found that the requirements of Section 95(4) were satisfied, including that CIRP against the principal borrower had been initiated and demand notice had been sent. Accordingly, the Tribunal exercised its power under Section 97 to appoint the proposed resolution professional and directed him to perform the duties under Section 99 within the statutory timeframe. [Paras 8, 9]

Mr. Gautam Mittal is appointed as Resolution Professional and directed to examine the application and submit the report under Section 99 within the stipulated period.

Final Conclusion: The Tribunal appointed the nominated resolution professional to examine the Section 95 application and submit a reasoned report under Section 99; held that admission or rejection under Section 100 can only follow that report; treated maintainability objections based on resolution rights claimed by the guarantor as premature at this stage; recorded that interim moratorium under Section 96(1) is operative from the date of the application; and directed service of the order and listing for further consideration after the report.

Voluntary liquidation - declaration of solvency - compliance with IBBI (Voluntary Liquidation Process) Regulations, 2017 - public announcement and stakeholder claims - liquidator's final report - dissolution under Section 59(8) of the Insolvency and Bankruptcy Code, 2016 - communication to Registrar of Companies and IBBI

Voluntary liquidation - declaration of solvency - public announcement and stakeholder claims - liquidator's final report - dissolution under Section 59(8) of the Insolvency and Bankruptcy Code, 2016 - communication to Registrar of Companies and IBBI - Whether the company satisfied the statutory requirements for voluntary liquidation and is liable to be dissolved under Section 59(8) of the Insolvency & Bankruptcy Code, 2016, and consequential directions to the liquidator for statutory communications. - HELD THAT: - The Tribunal found that the company and its liquidator complied with the statutory framework for voluntary liquidation. The Board of Directors passed a resolution for voluntary liquidation and appointed a liquidator, and the requisite Declaration of Solvency was filed. Members constituting 100% approved the voluntary liquidation in an Extra Ordinary General Meeting and the liquidation commencement date was recorded. The liquidator made the required public announcements, fixed the claims submission date, verified and prepared the list of stakeholders, and submitted the preliminary and final reports to the Registrar of Companies and the Insolvency and Bankruptcy Board of India. The liquidator completed the final distribution of assets, closed the liquidation bank account, and settled or adjudicated the received claims; the Income Tax Department raised no objection to the liquidation. On these facts and documents, the Tribunal held that the statutory prerequisites under the Code and the IBBI Regulations were met and that dissolution should be effected under Section 59(8). The Tribunal also directed the liquidator to communicate the order to the Registrar of Companies and to forward copies to the IBBI and other statutory authorities within the stipulated period. [Paras 21, 22, 23]

The company is dissolved with effect from the date of the order under Section 59(8) of the Insolvency & Bankruptcy Code, 2016; the liquidator is directed to communicate the order to the Registrar of Companies (Jammu & Kashmir), the IBBI and other statutory authorities within the specified period.

Final Conclusion: The petition for voluntary liquidation is allowed; the company is dissolved under Section 59(8) of the Insolvency & Bankruptcy Code, 2016, and the liquidator is required to notify the Registrar of Companies, the IBBI and other statutory authorities as directed.

Admission under section 7(5) of IBC, 2016 - Financial debt and default - Limitation and subsisting default - Jurisdiction based on registered office - Appointment of Interim Resolution Professional with statutory disclosures - Deposit for IRP expenses and adjustment by Committee of Creditors - Moratorium under section 14(1) of IBC, 2016

Financial debt and default - Existence of financial debt and continuing default by the corporate debtor - HELD THAT: - The Tribunal found that the Debenture Subscription Agreement and related instruments established the financial indebtedness of the corporate debtor to the financial creditor and that the corporate debtor had defaulted in payment of interest for specified quarters and failed to redeem outstanding debentures. The defaults continued and remained uncontroverted by the corporate debtor, thereby constituting a subsisting and continuing default entitling the financial creditor to proceed under the Code. [Paras 4, 5, 9, 11, 14]

The Tribunal accepted that a financial debt exists and that default is subsisting and continuing.

Limitation and subsisting default - Maintainability of the section 7 application with regard to limitation - HELD THAT: - The Tribunal recorded that the default is subsisting and continuing and explicitly held that the application was filed within the period and is not barred by limitation. This conclusion supported admission of the section 7 application on the merits of default and timeliness. [Paras 13, 14]

The application under section 7 was held to be within limitation and maintainable.

Jurisdiction based on registered office - Jurisdiction of the Tribunal to entertain the application - HELD THAT: - The Tribunal noted that the registered office of the corporate debtor is situated in Delhi and, on that basis, concluded that the National Company Law Tribunal, New Delhi Bench, has jurisdiction to entertain and try the section 7 application. [Paras 12]

The Tribunal has jurisdiction to adjudicate the petition.

Admission under section 7(5) of IBC, 2016 - Admission of the section 7 petition and initiation of CIRP - HELD THAT: - Applying the statutory scheme and on the material placed before it, including uncontroverted default and service on the corporate debtor, the Tribunal held that the present application was complete and the applicant was entitled to claim its dues. Consequently, the application was admitted under section 7(5) of the Insolvency and Bankruptcy Code, 2016, thereby initiating the corporate insolvency resolution process in respect of the corporate debtor. [Paras 10, 11, 14]

The section 7 application was admitted and CIRP initiated.

Appointment of Interim Resolution Professional with statutory disclosures - Appointment of the proposed Interim Resolution Professional subject to compliance requirements - HELD THAT: - The Tribunal appointed the proposed individual as Interim Resolution Professional on condition that he has no pending disciplinary proceedings, files specific consent in the prescribed Form 2, and makes the disclosures required under the Insolvency Regulations within one week from the date of the order. The appointment was therefore conditional upon fulfillment of the statutory and regulatory requirements. [Paras 15]

The proposed IRP was appointed subject to the stated conditions and statutory disclosures.

Deposit for IRP expenses and adjustment by Committee of Creditors - Direction to the financial creditor to deposit funds for IRP's expenses and future adjustment - HELD THAT: - The Tribunal directed the financial creditor to deposit a specified sum with the Interim Resolution Professional to meet expenses for performing his functions in accordance with the Insolvency Regulations, to be done within three days. The amount ordered to be deposited was to be subject to adjustment by the Committee of Creditors as accounted for by the IRP and repayable to the financial creditor accordingly. [Paras 16]

The financial creditor was directed to deposit funds for IRP expenses, subject to later adjustment by the Committee of Creditors.

Moratorium under section 14(1) of IBC, 2016 - Operation of moratorium consequent to admission - HELD THAT: - The Tribunal held that on admission of the section 7 application, the moratorium envisaged under section 14(1) of the Code shall follow in relation to the corporate debtor, prohibiting the specified actions under provisos (a) to (d), and that the provisos and other provisions of sections 14(2) to 14(4) would operate during the moratorium period. [Paras 17]

The statutory moratorium under section 14(1) was declared to be in effect upon admission.

Final Conclusion: The Tribunal admitted the section 7 petition against Ansal Urban Condominium Private Limited, having found a subsisting financial default and proper jurisdiction, initiated the corporate insolvency resolution process, appointed an Interim Resolution Professional subject to statutory compliance, directed a deposit to meet IRP expenses (adjustable by the Committee of Creditors), and declared the operation of the moratorium under the Code.

Operational Creditor - Corporate Insolvency Resolution Process - existence of default - presumption of service of demand notice returned as "SHIFTED" - moratorium under Section 14 - appointment of Interim Resolution Professional - deposit for IRP expenses - public announcement of admission

Operational Creditor - existence of default - Corporate Insolvency Resolution Process - The applicant is an Operational Creditor and the petition under Section 9 is maintainable as there is a debt and default. - HELD THAT: - The Tribunal found on the material on record that the corporate debtor received goods from the applicant and has admitted liability of Rs. 3,10,789/-. The Form-5 filed under Section 9 read with the Rules was complete and no infirmity was found. The Tribunal applied the Code's threshold that for applications filed before 24.03.2020 a default of at least Rs. 1 lakh is material and held that a default of more than Rs. 1 lakh exists. The corporate debtor failed to demonstrate absence of debt or default. Consequently the petition to initiate the Corporate Insolvency Resolution Process was held to be maintainable and deserving of admission. [Paras 8, 9, 10, 11]

Admission of the Section 9 petition and initiation of the Corporate Insolvency Resolution Process.

Presumption of service of demand notice returned as "SHIFTED" - Service of the Section 8 demand notice is presumed despite its return marked 'SHIFTED'. - HELD THAT: - The Tribunal accepted the applicant's contention and relied on the legal proposition that delivery of a demand notice may be presumed where a notice sent to the registered office is returned with a remark such as 'SHIFTED'. On the facts the demand notice sent on 28.12.2017 was returned with the remark 'SHIFTED' and the Tribunal held that due service can be legally presumed, negating the corporate debtor's denial of receipt. [Paras 5, 8]

Demand notice is deemed to have been served; the objection to non-receipt is rejected.

Appointment of Interim Resolution Professional - deposit for IRP expenses - public announcement of admission - moratorium under Section 14 - Appointment of an Interim Resolution Professional, directions for deposit to meet IRP expenses, requirement for public announcement, and imposition of moratorium. - HELD THAT: - The Tribunal appointed Mr. Anshuj Dhingra as Interim Resolution Professional subject to usual conditions and directed the applicant to deposit a specified sum with the IRP to meet costs in terms of the relevant Regulations. The IRP was directed to make the public announcement within the prescribed time. The Tribunal declared the moratorium in terms of Section 14 and specified the prohibitions flowing therefrom, while noting exceptions provided by law and subsequent amendments. Further directions were given regarding the IRP's duties and cooperation expected from the corporate debtor's management. [Paras 12, 13, 14, 15, 17]

IRP appointed; applicant directed to deposit funds for IRP expenses; public announcement to be made; moratorium imposed with directions to the IRP and parties.

Final Conclusion: The application under Section 9 is admitted: the Tribunal held that an operational debt and default exist, presumed service of the demand notice returned as 'SHIFTED', appointed an Interim Resolution Professional with directions for deposit and public announcement, and declared the moratorium under the Code.

Distribution of unsold assets under regulation 38(1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - Consent-based distribution among stakeholders in proportion to their claims - Disposition of peculiar/illiquid financial assets during liquidation - Liquidator's discharge subject to procedural compliance - Deposit of future realizations into the Corporate Liquidation Account maintained by the Insolvency and Bankruptcy Board of India

Distribution of unsold assets under regulation 38(1) of the Insolvency and Bankruptcy Board of India (Liquidation Process) Regulations, 2016 - Consent-based distribution among stakeholders in proportion to their claims - Disposition of peculiar/illiquid financial assets during liquidation - Approval of the Liquidator's proposal to distribute the Corporate Debtor's unsold/illiquid financial assets among stakeholders in proportion to their admitted claims - HELD THAT: - The Liquidator applied under regulation 38(1) seeking permission to distribute assets that are peculiar and not readily realizable, citing frozen trading of quoted shares, liquidation status of a company holding unquoted shares, non-responsive counterparties, minimal prospects of recovery of advances, and funds lying in multiple bank accounts not yet transferred. The stakeholders (including unsecured financial creditors) confirmed consent to the proposed proportional distribution and agreed to effect transfers at their cost after issuance of asset distribution certificates/offline delivery instruction slips by the Liquidator. Having considered the nature of the assets, the practical difficulties and remote prospects of recovery which would prolong liquidation and increase costs, and the stakeholders' informed consent, the Tribunal found no impediment to the proposed scheme and approved distribution of the unsold/illiquid financial assets among stakeholders in proportion to their claims. [Paras 6, 7, 9, 10]

Application under regulation 38(1) granted; proposed distribution of unsold assets among stakeholders in proportion to their claims approved.

Liquidator's discharge subject to procedural compliance - Deposit of future realizations into the Corporate Liquidation Account maintained by the Insolvency and Bankruptcy Board of India - Release of the Liquidator from responsibilities and treatment of any future realizations - HELD THAT: - The Tribunal directed that upon compliance with required procedural formalities the Liquidator shall be discharged from his responsibilities. It also provided that any future realization of assets shall be deposited into the Corporate Liquidation Account maintained by the Insolvency and Bankruptcy Board of India, and any stakeholder entitled to amounts so deposited may apply to the Board for withdrawal. These directions secure follow-up mechanism for subsequent realizations while finalizing closure steps for the liquidation. [Paras 12, 13]

Liquidator discharged subject to procedural compliance; future realizations to be deposited in the IBBI Corporate Liquidation Account with entitlement governed by applications to the Board.

Final Conclusion: The Tribunal allowed the Liquidator's application under regulation 38(1) to distribute the Corporate Debtor's unsold/illiquid financial assets among stakeholders pro rata to admitted claims, discharged the Liquidator subject to procedural compliance, and directed that any future realizations be deposited in the IBBI Corporate Liquidation Account for withdrawal by entitled stakeholders.

Termination of corporate insolvency resolution process - non-cooperation of the sole member of the Committee of Creditors as ground for termination - relief of the interim resolution professional - liability of the applicant for insolvency resolution process costs - exercise of jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - inherent power under Rule 11 of the NCLT Rules, 2016

Termination of corporate insolvency resolution process - non-cooperation of the sole member of the Committee of Creditors as ground for termination - exercise of jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 - inherent power under Rule 11 of the NCLT Rules, 2016 - Closure of the corporate insolvency resolution process (CIRP) of New Town Grand Realtors LLP and related consequences including dismissal of connected applications. - HELD THAT: - The Tribunal found that the CIRP had made no progress: the Corporate Debtor was declared ex parte, the IRP could not obtain cooperation or records from the Corporate Debtor or its directors, no claims were submitted following the public announcement, and no Committee of Creditors was constituted. In these circumstances and having considered precedent and submissions, the Tribunal exercised its jurisdiction under Section 60(5) of the Insolvency and Bankruptcy Code, 2016 along with its inherent power under Rule 11 of the NCLT Rules, 2016 to terminate the CIRP. The order closes the CIRP with immediate effect, releases the Corporate Debtor from the moratorium and directs that the connected interim applications be dismissed along with the main petition. [Paras 11, 12, 14]

CIRP in respect of New Town Grand Realtors LLP is terminated with immediate effect; the Corporate Debtor is released from the rigours of CIRP and moratorium; IA(IB)/484/KB/2021, IA(IB)/1078/KB/2020 and IA(IB)/827/KB/2021 are dismissed along with C.P.(IB) No. 466/KB/2019.

Relief of the interim resolution professional - liability of the applicant for insolvency resolution process costs - Relief of the Interim Resolution Professional (IRP) and allocation of CIRP costs and IRP fees to the Operational Creditor who initiated the process. - HELD THAT: - The Tribunal accepted the IRP's submission that no claims were received and that the CIRP could not be carried forward due to lack of cooperation and participation. Applying the principle that where no Committee of Creditors is constituted expenses fixed by the Adjudicating Authority are to be borne by the applicant who moved the application, the Tribunal directed closure of the CIRP and relieved the IRP of his assignment. The Operational Creditor at whose instance the CIRP was initiated was ordered to pay the CIRP costs and the IRP's fees as fixed by the Tribunal. [Paras 12, 13]

The IRP stands relieved; the Operational Creditor shall pay the CIRP costs and the IRP's fees as directed by the Tribunal.

Final Conclusion: The Tribunal closed the CIRP of New Town Grand Realtors LLP, dismissed the pending interim applications along with the main petition, relieved the IRP, and directed that the Operational Creditor who initiated the CIRP bear the CIRP costs and the IRP's fees.

Financial debt arising from amounts raised from real estate allottees - maintainability of Section 7 application under the Insolvency and Bankruptcy Code - requirement of representation by 100 or 10% of creditors in the same class for joint applications - obligation to file additional affidavit on maintainability as directed by the Apex Court - inadmissibility of using the insolvency forum as a recovery forum

Financial debt arising from amounts raised from real estate allottees - Whether the amounts paid by the applicants to the corporate debtor fall within the definition of 'financial debt' under the Code. - HELD THAT: - The Tribunal recorded that para 16 of the MoU dated 17.04.2015 and para 10 of the MoU dated 17.03.2016 describe the applicant as a home buyer and noted the statutory position that amounts raised from real estate allottees are included within the definition of 'financial debt'. While this legal characterization was acknowledged, the Tribunal did not rest the maintainability of the petition solely on that basis and proceeded to consider other mandatory prerequisites for admission of a Section 7 application. [Paras 4]

The payment by the applicants is recognised as capable of being classified as financial debt, but this conclusion did not suffice to render the Section 7 application maintainable in the absence of other requirements being satisfied.

Requirement of representation by 100 or 10% of creditors in the same class for joint applications - Whether the Section 7 application was maintainable in the absence of evidence that the applicants represented the requisite threshold of creditors in the same class. - HELD THAT: - The Tribunal applied the proviso to Section 7(1) which permits a joint application by not less than 100 or not less than 10% of the total number of creditors in the same class, whichever is less. The record did not show that the applicants represented 10% (or the numerically required threshold) of the allottees in the housing project; there was no evidence on record as to the total number of allottees in 'Morpheus Greens'. In view of this lacuna the Tribunal found the statutory threshold for a joint application to be unestablished. [Paras 4]

The petition was not maintainable because the applicants failed to demonstrate that they met the statutory representation threshold for a joint Section 7 application.

Obligation to file additional affidavit on maintainability as directed by the Apex Court - Whether the applicants' failure to file an additional affidavit regarding maintainability, as mandated by the Apex Court, affected admissibility of the application. - HELD THAT: - The Tribunal noted the binding mandate from the Apex Court requiring a financial creditor to file an additional affidavit addressing maintainability. The applicants did not file such an affidavit. The Tribunal treated this omission as a material procedural deficiency relevant to the maintainability of the Section 7 petition and relied upon it in declining to admit the application. [Paras 4]

The application was rendered not maintainable in light of the applicants' failure to file the required additional affidavit on maintainability.

Inadmissibility of using the insolvency forum as a recovery forum - Whether the present dispute ought to be pursued as a recovery action rather than by initiating CIRP under the Code. - HELD THAT: - The Tribunal observed that criminal proceedings under Section 138 of the Negotiable Instruments Act had been instituted and that the metropolitan magistrate had declared the corporate debtor absconder. The Bench reiterated the settled principle that the insolvency forum is not a substitute for a civil recovery forum and that matters primarily seeking recovery where delinquency of payment is the core grievance may be more appropriately pursued in civil proceedings. This consideration, together with the other procedural deficiencies, informed the decision on maintainability. [Paras 4]

The petition was inappropriate for treatment under the insolvency process insofar as it amounted to a recovery claim; the Tribunal concluded the matter was fit for recovery proceedings in a civil court.

Final Conclusion: For the reasons recorded - absence of proof that the applicants met the statutory threshold for a joint Section 7 filing, failure to file the additional affidavit on maintainability as required by the Apex Court, and the character of the dispute as essentially a recovery claim - the application under Section 7 was held not maintainable and was dismissed.

Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - existence of debt and default - pre-existing dispute (reliance and proof) - moratorium under Section 14(1) of the IBC - continuation of corporate insolvency resolution process until completion - appointment of Interim Resolution Professional - duties and public announcement by Interim Resolution Professional under Section 15 and Regulations - powers and supersession of board of directors under Sections 17 and 18 of the IBC - claim submission under Regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016

Existence of debt and default - pre-existing dispute (reliance and proof) - Operational Creditor proved existence of debt and default and the alleged pre-existing dispute was not established by the Corporate Debtor. - HELD THAT: - The Tribunal examined the invoices, delivery challans and the Section 8 notice filed by the Operational Creditor and noted that the invoices in question relate to 2018 supplies. The Corporate Debtor relied on an alleged longstanding dispute concerning defects, but did not produce contemporaneous documents or communications to substantiate a pre-existing dispute in relation to the invoices before the Tribunal. In the absence of documentary proof of a pre-existing dispute, the Tribunal accepted that there was debt and default on the part of the Corporate Debtor and proceeded to admit the Section 9 application. [Paras 2, 3, 4]

Section 9 application admitted on the ground that debt and default were proved and the asserted pre-existing dispute was not established.

Moratorium under Section 14(1) of the IBC - continuation of corporate insolvency resolution process until completion - Moratorium under Section 14 was imposed upon admission of the Section 9 application and shall continue until completion of the CIRP or earlier cessation as provided in the Code. - HELD THAT: - Upon admission under Section 9(5), the statutory moratorium provisions were held to follow, restraining institution or continuation of suits or proceedings, disposal or alienation of assets, enforcement of security interests and recovery of property occupied by the Corporate Debtor, subject to the statutory explanations and exceptions. The Tribunal reproduced the statutory scope and duration and directed that the moratorium shall be effective from the date of the order until completion of the Corporate Insolvency Resolution Process, with the proviso for cessation upon approval of a resolution plan or liquidation order as provided in the Code. [Paras 5, 6, 7]

Moratorium declared with effect from the date of the order until completion of the CIRP (subject to statutory provisos).

Appointment of Interim Resolution Professional - duties and public announcement by Interim Resolution Professional under Section 15 and Regulations - powers and supersession of board of directors under Sections 17 and 18 of the IBC - An Interim Resolution Professional was appointed and directed to take charge, make the public announcement, call for claims, and perform statutory functions; the board of directors' powers stand superseded. - HELD THAT: - As the Operational Creditor had not proposed an IRP, the Tribunal appointed a named IRP from the IBBI list subject to compliance with disclosures and absence of disciplinary proceedings. The IRP was directed to take immediate charge of management, cause the public announcement under Section 15, invite claims under Regulation 6, perform obligations under Sections 15, 17 and 18 and file a report within 30 days. The Tribunal also directed cooperation by the directors and persons associated with management and clarified that the board's powers are superseded consequent to CIRP initiation. [Paras 8, 9, 10, 11, 12]

IRP appointed and directed to take charge, make statutory announcements, call for claims and perform the functions of the office, with the board's powers superseded.

Administration of IRP expenses and Regulation 6 of the IBBI Regulations - Operational Creditor directed to deposit an initial amount to meet IRP expenses as required under the Regulations. - HELD THAT: - To enable the IRP to discharge functions and meet initial expenses, the Tribunal directed the Operational Creditor to pay a specified sum to the IRP upon the IRP filing the required declaration, in accordance with Regulation 6 of the IBBI (Insolvency Resolution Process for Corporate Persons) Regulations, 2016. [Paras 13]

Operational Creditor directed to pay the initial expense deposit to the IRP as ordered.

Final Conclusion: The Section 9 application filed by the Operational Creditor was admitted; the Tribunal found debt and default proved and no established pre-existing dispute, declared the moratorium under Section 14 with its statutory scope and duration, appointed an Interim Resolution Professional with directions to take charge, make statutory announcements and invite claims, and directed the Operational Creditor to deposit initial expenses for the IRP.

Limitation under Article 137 of the Limitation Act, 1963 - requirement of timely demand notice for initiation of corporate insolvency resolution process - minimum threshold of default under MCA Notification No. 1205(E) dated 24.03.2020

Limitation under Article 137 of the Limitation Act, 1963 - Application under Section 9 IBC was time-barred as the defaults occurred in 2017 and the application was filed in 2021 beyond three years - HELD THAT: - The Tribunal found that the amounts in default arose on 14.07.2017 and 31.08.2017; therefore the right to apply accrued on those dates. Article 137 of the Limitation Act, 1963, being the residuary provision prescribing a three-year period, governs the limitation for such applications. Since the Section 9 application was filed on 28.06.2021, the Tribunal held it to be barred by limitation and not maintainable on that ground. [Paras 5, 6]

Application held time barred and not maintainable on limitation grounds.

Minimum threshold of default under MCA Notification No. 1205(E) dated 24.03.2020 - Application was not maintainable because the claimed default was below the minimum amount fixed by the Ministry of Corporate Affairs notification dated 24.03.2020 - HELD THAT: - The Tribunal noted Notification No. 1205(E) dated 24.03.2020 which prescribes Rupees One Crore as the minimum amount of default for admission of applications under the Code. The present petition claimed an amount below that threshold. Consequently, the Tribunal found the petition not maintainable on account of failing to meet the statutory monetary threshold established by the notification. [Paras 7]

Application held not maintainable for being below the prescribed minimum default threshold.

Requirement of timely demand notice for initiation of corporate insolvency resolution process - Delay in issuing the demand notice and absence of any valid explanation disentitled the Operational Creditor from relief - HELD THAT: - The Tribunal observed a substantial delay between the dates of default (July and August 2017) and the service of the demand notice on 06.12.2019. The Operational Creditor failed to offer any satisfactory justification for this delay. The Tribunal treated the delayed issuance of the demand notice, without adequate explanation, as a factor militating against entertaining the Section 9 application and contributing to its dismissal. [Paras 8]

Delay in service of the demand notice, unexplained, led to refusal to entertain the application.

Final Conclusion: The Section 9 application was dismissed: it was time barred under Article 137, the claimed default fell below the minimum amount fixed by Notification No. 1205(E) dated 24.03.2020, and the demand notice was belatedly issued without a valid explanation.

Contempt of Court - Willful disobedience of court orders - Status quo - Maintenance of status quo in relation to property/shareholding - Ingredients of contempt - Courts must confine contempt inquiry to the four corners of the order - Carrying out construction through a development agency does not amount to contempt if legal ownership remains unchanged

Maintenance of status quo in relation to property/shareholding - Willful disobedience of court orders - Whether there was contempt by altering shareholding in breach of the Tribunal's order dated 15.09.2017 - HELD THAT: - The Tribunal noted the order of 15.09.2017 directed maintenance of status quo in relation to shareholding. The petition did not allege or establish that any change in the shareholding of the respondent company had in fact been effected. On the material before it the Tribunal found no case of disobedience with respect to that part of the order and therefore no contempt on this ground. [Paras 7, 8, 10]

No contempt established insofar as the order dated 15.09.2017 relating to maintenance of status quo in shareholding is concerned; allegation dismissed.

Status quo - Carrying out construction through a development agency does not amount to contempt if legal ownership remains unchanged - Ingredients of contempt - Courts must confine contempt inquiry to the four corners of the order - Whether carrying out construction activity and alleged creation of third party rights on the project land violated the Tribunal's order dated 15.01.2019 and amounted to contempt - HELD THAT: - Applying the settled principle that contempt proceedings must be confined to explicit directions within the order, the Tribunal identified the ingredients required to establish contempt and examined whether respondents knowingly and willfully disobeyed a restraining direction. The respondents admitted ongoing construction activity but maintained that no transfer of legal ownership or creation of third party ownership rights had occurred and that a development agency had been engaged to continue the project. The applicant failed to adduce cogent evidence showing transfer of ownership or creation of third party rights in the subject property. Thus, continuing construction through a development agency, without alienation of legal title, did not constitute breach of the status quo direction in the order and did not satisfy the ingredients of contempt. [Paras 5, 6, 9, 10]

No contempt established in respect of alleged construction activity or creation of third party rights; contempt petition dismissed on this ground.

Final Conclusion: The contempt petition alleging breach of the Tribunal's orders dated 15.09.2017 and 15.01.2019 is dismissed for want of merit: no change in shareholding was shown and no cogent evidence established transfer of ownership or creation of third party rights on the subject property, accordingly no willful disobedience of the orders was found.

Service of Form B demand notice under Personal Guarantor Rules - Statutory mode of service versus personal service - Service by registered post/speed post/courier or affixing at residence - Prerequisite of valid service for maintainability of application under Section 95 - Interim moratorium on debts upon filing under Section 95 - Appointment and duties of Resolution Professional under the Code

Service of Form B demand notice under Personal Guarantor Rules - Statutory mode of service versus personal service - Service by registered post/speed post/courier or affixing at residence - Prerequisite of valid service for maintainability of application under Section 95 - Form B demand notice was validly served on the personal guarantor and the application under Section 95 is maintainable. - HELD THAT: - The Bench examined Rule 7 read with Rule 3(h) of the Personal Guarantor Rules and Rule 38 of the NCLT Rules and concluded that service contemplated by the statute includes sending communication by registered post/speed post/courier or electronic means and, where service cannot be effected by those modes, affixing at a conspicuous part of the residence. The Petitioner filed an affidavit of service showing delivery at the guarantor's residential address and receipt by his son. The Bench distinguished the procedure for service of summons on an incarcerated defendant under Order 5 Rule 24 CPC and held that the Code prescribes statutory modes of service for Form B and does not mandate personal service. Reliance was placed on precedents interpreting the need to follow the specific statutory mode of service and on authority holding that the copy of the application and demand notice must be served in the prescribed manner before filing; on the facts the Form B notice was validly served and the objection on service was rejected. [Paras 19, 21, 25]

Service of the Form B demand notice was held valid; the petition under Section 95 is maintainable.

Interim moratorium on debts upon filing under Section 95 - Interim moratorium under Section 96(1) commences from the date of filing of the application. - HELD THAT: - The Bench applied the Code to hold that, upon admission of the application filed under Section 95, interim moratorium as provided by Section 96(1) attaches to all debts of the personal guarantor, staying pending legal actions and restraining creditors from initiating proceedings, subject to exceptions notified by the Central Government in consultation with regulators. [Paras 27]

Interim moratorium commences from the date of filing the application.

Appointment and duties of Resolution Professional under the Code - The Resolution Professional appointed by the Applicant is confirmed and directed to perform duties under the Code, including filing recommendations under Section 99. - HELD THAT: - The Bench noted the criticality of appointing a Resolution Professional to safeguard the guarantor's assets and confirmed the appointment of the Resolution Professional named in the petition. The Resolution Professional is directed to exercise the powers under Section 99 and the rules thereunder and to submit written recommendations, with reasons, accepting or rejecting the application within the statutory time; a copy of the report is to be provided to the creditor when filed before the Authority. [Paras 28, 29]

Appointment of the named Resolution Professional confirmed; he shall exercise powers under the Code and submit the report as directed.

Final Conclusion: The Tribunal allowed the Section 95 application: the Form B demand notice was held validly served and the petition is maintainable; interim moratorium under Section 96(1) operates from filing; the named Resolution Professional is confirmed and directed to act and file recommendations; matter listed for further hearing.

Show cause notice under Rule 4(1) of the Foreign Exchange Management (Adjudication Proceedings And Appeal) Rules, 2000 - formation of opinion under Rule 4(3) of the Foreign Exchange Management (Adjudication Proceedings And Appeal) Rules, 2000 - adjudication for imposition of penalty under Section 13 of the Foreign Exchange Management Act, 1999 - inspection of documents relied upon in the complaint - principles of natural justice and duty of adequate disclosure - time bound disposal obligation under Section 16(6) of the Foreign Exchange Management Act, 1999

Show cause notice under Rule 4(1) of the Foreign Exchange Management (Adjudication Proceedings And Appeal) Rules, 2000 - formation of opinion under Rule 4(3) of the Foreign Exchange Management (Adjudication Proceedings And Appeal) Rules, 2000 - principles of natural justice and duty of adequate disclosure - inspection of documents relied upon in the complaint - Validity of the show cause notice dated 08.04.2021 and the subsequent notice for personal hearing dated 28.06.2021 under Rule 4 of the 2000 Rules and compliance with principles of natural justice. - HELD THAT: - The Court held that the Adjudicating Authority, on perusal of a detailed complaint under Section 16(3) of FEMA with annexed documents, was entitled to issue a show cause notice under sub rule (1) and to form a prima facie opinion under sub rule (3) to proceed with enquiry. The rules do not require supply of all documents not relied upon; supply or inspection of documents upon which the Authority has set the process in motion satisfies the duty of adequate disclosure. The record shows that the notice expressly afforded an opportunity to inspect documents at the Authority's office (para 4 of the notice), which the petitioners did not avail themselves of and instead filed a delayed reply. Given that sub rules (4) and (5) provide for a fuller hearing on the date fixed (including explanation of alleged contraventions and further inspection/production of documents), the preliminary opinion formed by the Authority and issuance of the personal hearing notice cannot be faulted as violative of natural justice. Reliance on the principles in Natwar Singh (paras 32-34) supports that the minimum requirements at the preliminary stage are met by a show cause notice and opportunity to be heard, with detailed rights at the enquiry stage. [Paras 9, 10, 11]

The impugned show cause notice and the personal hearing notice were validly issued and not vitiated for want of compliance with Rule 4 or principles of natural justice.

Inspection of documents relied upon in the complaint - adjudication for imposition of penalty under Section 13 of the Foreign Exchange Management Act, 1999 - time bound disposal obligation under Section 16(6) of the Foreign Exchange Management Act, 1999 - Directions to the Adjudicating Authority for further proceedings and time bound completion of the enquiry. - HELD THAT: - Although the preliminary notices were upheld, the Court granted the petitioners four weeks to inspect the relied documents and file a comprehensive reply and directed the Adjudicating Authority to consider the reply and complete the adjudication within eight weeks thereafter, mindful of the one year disposal objective under Section 16(6). The Court observed that on completion of the enquiry the statutory appellate remedies under Sections 17, 19 and 35 are available to the petitioners and that the Authority should properly consider the reply during proceedings. This constitutes remand for fresh consideration of evidence and replies, with express timelines imposed. [Paras 11, 12]

Petitioners given four weeks to inspect documents and file reply; Adjudicating Authority directed to conclude proceedings within eight weeks thereafter.

Final Conclusion: Writ petition dismissed insofar as it sought quashment of the show cause and personal hearing notices; the notices are held valid. Petitioners granted four weeks to inspect relied documents and file reply, and the Adjudicating Authority directed to complete the adjudication within eight weeks thereafter, with statutory appellate remedies preserved.

Anticipatory bail - Section 45(1) of the Prevention of Money Laundering Act - twin conditions for bail - money laundering - proceeds of crime - presumption of innocence and Article 21

Anticipatory bail - Section 45(1) of the Prevention of Money Laundering Act - twin conditions for bail - money laundering - proceeds of crime - Whether the petitioner is entitled to anticipatory bail in proceedings under the PMLA in view of the amendment to Section 45(1) and the facts of the case. - HELD THAT: - The Court examined the effect of the 2018 amendment to Section 45(1) of the PMLA and the Supreme Court's observations in Nikesh Tarachand Shah, concluding that the amendment adding the words "under this Act" does not nullify the earlier judicial finding that the twin conditions are constitutionally infirm in their application. The Court noted that the twin conditions remain on the statute book but that the Supreme Court directed courts to decide bail applications on merits without applying those twin conditions. Applying the statutory and precedential framework to the material on record, the Court found that investigation established that proceeds of crime amounting to Rs. 20 lakhs originating from bank accounts in Gaya were routed through several firms and merged into the petitioner's company account after layering through entities found to be fake or non-existent. The Court observed that the petitioner's firm failed to produce credible, verifiable documentation (purchase orders, reliable contact details, delivery acknowledgements) to discharge the statutory burden under the PMLA and that the transactions fell within the statutory concept of money laundering. The Court further considered the public interest dimension of economic offences and the gravity of calculated economic crime vis-a -vis the community interest. Although acknowledging that the twin-test has been judicially criticised, the Court proceeded to assess whether, on merits, there were reasonable grounds to believe the petitioner was not guilty or that he would not commit an offence if enlarged on bail. On the material produced and the investigation findings, the Court concluded there were reasonable grounds to believe in the petitioner's complicity and that anticipatory bail was not justified. [Paras 40, 41, 43, 45, 46]

Anticipatory bail is refused and the petitioner is not enlarged on anticipatory bail.

Final Conclusion: The petition for anticipatory bail is rejected on merits: the court found that proceeds of crime were merged into the petitioner's company account through layering via fictitious firms and that the petitioner failed to produce credible evidence to dispel the suspicion of money laundering; consequently anticipatory bail was refused.

Applicability of Section 160 CrPC to investigations under the PMLA - Power to summon and enforce attendance under Section 50 of the PMLA - Territorial limitation on police jurisdiction under Chapter XII CrPC - Proviso to Section 160 CrPC providing special protection to women - Section 65 PMLA - application of CrPC insofar as not inconsistent - Section 71 PMLA - non-obstante / overriding effect of the PMLA - Doctrine that a special statute prevails over the general law

Applicability of Section 160 CrPC to investigations under the PMLA - Power to summon and enforce attendance under Section 50 of the PMLA - Territorial limitation on police jurisdiction under Chapter XII CrPC - Proviso to Section 160 CrPC providing special protection to women - Section 65 PMLA - application of CrPC insofar as not inconsistent - Section 71 PMLA - non-obstante / overriding effect of the PMLA - Section 160 of the CrPC does not apply to summonses issued under Section 50 of the PMLA; the PMLA occupies the field and its provisions (including the absence of territorial or gender-based exceptions in Section 50) prevail. - HELD THAT: - The Court examined the scheme of Chapter XII of the CrPC (which imposes territorial limits on police officers and contains a proviso protecting women under Section 160) and the scheme of the PMLA (which grants national investigative powers, authorises compelling attendance of "any person" under Section 50 and contains Sections 65 and 71). Section 50 of the PMLA empowers authorised officers to summon and enforce attendance of any person without the territorial limitation and without the proviso protecting women which features in Section 160 CrPC. Section 65 makes CrPC applicable only insofar as not inconsistent with the PMLA, and Section 71 gives the PMLA an overriding effect in case of inconsistency. Given these provisions and the legislative design of the PMLA to address offences with cross border and national dimensions, there is a clear inconsistency between Section 160 CrPC and Section 50 PMLA. The Court held that where both provisions operate in the same field but are inconsistent, the special statute (PMLA) must prevail; accordingly the proviso to Section 160 (and the territorial restrictions of Chapter XII of the CrPC) cannot be read into Section 50. Administrative arrangements such as zonal office charts do not create statutory territorial limits. The Court also observed that allegations of mala fides were not established by cogent material and that investigation strategy and mode are primarily for the investigating agency, subject to legal limits. [Paras 23, 31, 32, 41, 42]

The summonses issued under Section 50 of the PMLA did not fall within the protective/territorial ambit of Section 160 CrPC; Section 50 governs and the petitioners' challenge therefore fails.

Final Conclusion: Writ petition dismissed: Section 160 CrPC is not applicable to summonses issued under Section 50 of the PMLA; the PMLA's provisions occupy the field and prevail, and no mala fide has been made out. All pending applications are disposed of.

Refund of pre-deposit - predeposit calculated on restricted demand - finality of appellate order restricting demand - collection without authority of law - time-barred refund claim

Refund of pre-deposit - predeposit calculated on restricted demand - finality of appellate order restricting demand - collection without authority of law - time-barred refund claim - Whether the appellant was entitled to refund of the excess amount paid as pre-deposit when the demand was finally restricted to 2008-09, despite the Revenue's reliance on limitation and procedural defects in the refund application. - HELD THAT: - The appellate order dated 27/02/2017 restricting the demand to 2008-09 has attained finality and is binding on both parties; therefore the quantum of pre-deposit must be computed with reference to the restricted demand alone. The payment made under the earlier adjudication was not voluntary, having been made prior to filing the first appeal, and thereby fulfils the purpose of pre-deposit. Once the liability was confined to 2008-09 (demand recalculated at Rs. 4,06,391/- in the record), the 7.5% pre-deposit must be worked out on that demand; the Department cannot retain any excess amount collected without lawful authority. Reliance on decisions of the jurisdictional High Court holding that amounts collected without authority cannot be retained supports that the Revenue's alternate reasoning (limitation under Section 11B and defect in format) could not justify retention of the balance when part refund was already allowed. The Tribunal therefore found the rejection and retention to be without authority of law. [Paras 3, 6]

Impugned order rejecting refund and retaining the balance is set aside; appeal allowed and appellant entitled to consequential relief.

Final Conclusion: The Tribunal set aside the Revenue's order and allowed the appeal, holding that the pre-deposit must be computed with reference to the demand finally restricted to 2008-09 and that the Department could not lawfully retain the excess payment; consequential relief to follow as per law.

Eligibility for refund of unutilized cenvat credit where input services were availed prior to service tax registration - validity of rejecting refund on account of invoice/FIRC address differing from premises where services were availed - interpretation of Cenvat Credit Rules, 2004 insofar as registration pre-condition for credit

Eligibility for refund of unutilized cenvat credit where input services were availed prior to service tax registration - interpretation of Cenvat Credit Rules, 2004 insofar as registration pre-condition for credit - Refund claims rejected on the ground that input services were received before obtaining service tax registration were not sustainable. - HELD THAT: - The Tribunal accepted the appellant's contention and followed the decision of the Hon'ble jurisdictional High Court in Scionspire Consulting Services (India) Pvt. Ltd. and earlier Tribunal decisions (Vamshadhara Paper Mills Ltd. and Rajendra Kumar & Associates) holding that denial of credit merely because services were availed at an unregistered premises or prior to registration is not justified. The Tribunal noted that CCR 2004 does not prescribe that credit can be availed only after obtaining registration and therefore the rejection on this ground was set aside. [Paras 7]

Rejection of refund claims on ground that input services were availed prior to registration set aside; refunds allowed on this ground.

Validity of rejecting refund on account of invoice/FIRC address differing from premises where services were availed - Refund claims rejected because invoices and FIRC bore the head office address (Bangalore) instead of the Chennai premises where services were availed were not sustainable. - HELD THAT: - The Tribunal noted that some vendor invoices and the FIRC reflected the appellant's Bangalore head office address while the services were availed at Chennai. The Tribunal relied on its own earlier final order in the appellant's favour for a different period and concluded that the address discrepancy did not justify denial of the refund. The appellate findings rejecting the claims on this basis were therefore set aside. [Paras 8]

Rejection of refund claims on account of invoice/FIRC address mismatch set aside; refunds allowed on this ground.

Final Conclusion: The impugned order rejecting the refund claims is set aside; the appeals are allowed and refunds shall be granted with consequential relief, if any.

Port Service - authorization by port for port services - transport of coastal goods and goods through inland/national waterways - prospective operation of taxing entry - extended period of limitation and suppression

Port Service - authorization by port for port services - Whether barging/lighterage services and charges collected by the appellant during November 2006 to May 2009 are taxable as 'Port Service'. - HELD THAT: - The Tribunal examined the pre amendment definition of 'Port Service' which taxed services rendered by a port or a person authorized by such port. The Court applied binding precedents (Velji P. & Sons and Homa Engineering Works) and held that mere licences or permissions to enter port area, and a lease for use of port land for stacking cargo, do not amount to authorization under the Major Port Trusts Act to render services on behalf of the port. The facts showed no evidence of authorization by the port to the appellant to render barging services on behalf of the port; the appellant provided barging on behalf of importers/exporters on a reimbursable basis. The Tribunal further noted that the expanded definition of 'Port Service' (rendered within a port) became effective only after the Finance Act, 2010 amendment, and thus could not apply retrospectively to the period in question. [Paras 11, 12, 13, 16, 17]

Barging/lighterage services and the charges collected by the appellant for the period November 2006 to May 2009 do not fall within 'Port Service' and are not taxable as such.

Transport of coastal goods and goods through inland/national waterways - prospective operation of taxing entry - Whether transportation of goods by barges (lighterage) was taxable under the entry for transport of coastal goods/through waterways prior to 01.09.2009. - HELD THAT: - The Tribunal considered the Finance Act, 2009 entry defining taxable service as transport of coastal goods, national waterway goods or inland water goods and its explanation. The Court held that lighterage/barging services in respect of coastal or inland water transport were brought into the tax net w.e.f. 01.09.2009. Relying on authority that a subsequently introduced entry cannot be read back into and displace an earlier entry unless clearly carved out, the Tribunal held that prior to 01.09.2009 transport by waterways was not taxable and could not be taxed as 'Port Service'. It noted that the appellant began paying service tax under the waterways entry from the operative date. [Paras 18]

Transportation of goods by barges became chargeable under the waterways transport entry only from 01.09.2009; the disputed activity was not taxable under that entry during November 2006 to May 2009.

Extended period of limitation and suppression - Whether extended period of limitation and penalties can be invoked against the appellant for the disputed period. - HELD THAT: - The Tribunal found the dispute to be one of legal interpretation and noted that the appellant had contemporaneously disclosed and discussed the matter with the audit team and department, furnishing documents and explanations. There was no evidence of suppression or mala fide intent to evade tax. In these circumstances, the Tribunal held that invoking the extended period of limitation and imposition of penalty was not justified. [Paras 19]

Extended period of limitation is not invokable and no penalty is payable in respect of the disputed lighterage charges for the period November 2006 to May 2009.

Port Service - authorization by port for port services - Whether, having set aside the demand on merits, interest and penalty could be sustained. - HELD THAT: - Since the Tribunal set aside the demand on merits by holding that the services did not fall within 'Port Service' for the relevant period and that the appellant had no suppression or mala fide conduct, the consequences of demand (including penalty and extended interest) could not stand. The Court applied the established principle that where the substantive demand fails on merits and there is bona fide interpretation, penal consequences are inappropriate. [Paras 18, 19]

There can be no penalty or extended interest in respect of the set aside demand.

Final Conclusion: The appeal is allowed: the demand of service tax on barging/lighterage charges for November 2006 to May 2009 as 'Port Service' is set aside; the waterways transport entry was effective only from 01.09.2009; extended limitation and penalty are not sustainable; consequential reliefs to follow in accordance with law.

Supply of Tangible Goods for Use - Goods Transport Agency service - reverse charge mechanism - exemption notification - negative list - extended period of limitation

Supply of Tangible Goods for Use - extended period of limitation - Sustainability of the demand founded on the agreement with M/s JMC Projects (I) Ltd. and the SCN issued invoking extended limitation - HELD THAT: - The adjudicating authority examined the contract with M/s JMC and, having accepted the appellant's defence in respect of that contract, dropped the demand arising from it. The Department did not challenge that finding and no other contract formed the basis of the show cause notice. Because the SCN and extended period invocation relied on the JMC contract as the foundational basis for the broader demand, once the JMC-based demand was dropped the remaining demand could not be sustained. The Tribunal accordingly held that the demand premised on the JMC agreement was the foundation of the SCN and, in absence of any other sustaining contract relied upon by the Department, the demand was unsustainable. [Paras 12]

Demand founded on the JMC contract (and the SCN based thereon) is not sustainable and must be set aside.

Goods Transport Agency service - reverse charge mechanism - exemption notification - negative list - Supply of Tangible Goods for Use - Correctness of the impugned demand on merits in respect of the three categories of activities carried out by the appellant - HELD THAT: - The Tribunal considered the three categories of activity alleged: (a) transportation of goods with or without consignment notes; (b) hiring of vehicles to other GTA providers; and (c) transfer of right to use vehicles. It recorded that where transportation was accompanied by issuance of consignment notes the liability to pay service tax lay on the service recipient under the reverse charge mechanism and the recipients had discharged that liability, so no demand could be sustained against the appellant. Transport without consignment notes prior to June 2012 was not classifiable as GTA service and therefore not taxable in that period. Hiring out vehicles to other GTA service providers was covered by the exemption notifications relied upon (notification no. 1/2009 ST up to 30.6.2012 and notification no. 25/2012 ST/21/2012 ST thereafter) and was not taxable. Transfer of right to use vehicles did not fall within Supply of Tangible Goods for Use prior to June 2012 since possession and control were transferred to the user; from July 2012 such transactions fall within the negative list and the appellant in any event discharged service tax for the period 2015 16. On these merits the Tribunal found no basis to sustain the confirmed demand or penalties. [Paras 13, 14, 15]

On the merits the impugned demand and penalties are unsustainable: consignments with consignment notes attract reverse charge (paid by recipients); transport without consignment notes pre June 2012 not taxable as GTA; hiring to GTA providers covered by exemption; transfer of right to use not taxable as Supply of Tangible Goods for Use prior to June 2012 (and treated under negative list thereafter).

Final Conclusion: The impugned order confirming service tax demand and imposing penalties is set aside. Appeals allowed with consequential relief, if any.

Scope of Show Cause Notice - Adjudicatory authorities bound by the four corners of the SCN - Cenvat Credit reversal and consequential non-liability - Applicability of Rule 6(3) of the Cenvat Credit Rules, 2004 - Penalty under Section 78 read with Rule 15(2) of the Cenvat Credit Rules, 2004

Scope of Show Cause Notice - Cenvat Credit reversal and consequential non-liability - Adjudicatory authorities bound by the four corners of the SCN - Penalty under Section 78 read with Rule 15(2) of the Cenvat Credit Rules, 2004 - Whether confirmation of demand of Cenvat credit (with interest and penalty) is sustainable where the SCN did not propose such demand and the appellant had reversed and deposited the Cenvat credit and interest. - HELD THAT: - The Tribunal examined the show cause notice and the impugned order. The SCN, as framed, proposed recovery of service tax (and related interest/appropriation) and did not propose a demand for the Cenvat credit that was later confirmed. The adjudicating authority and Commissioner (Appeals) records acknowledge that the appellant had reversed the entire Cenvat credit availed for the periods in question and deposited the same along with interest; the appellate order nevertheless confirmed a demand for that Cenvat credit and imposed penalty. The Court applied the settled principle that adjudication must remain within the four corners of the SCN; confirmation of a demand not proposed in the SCN is beyond the scope of adjudication. Further, the confirmed demand was contrary to the adjudicating authorities' own findings that the credit had been reversed and deposited. On these grounds the confirmation of the Cenvat-credit demand (and attendant interest/penalty founded upon that demand) was held to be unreasonable and unsustainable. [Paras 6, 7, 9, 10, 11]

Confirmation of the demand of Cenvat credit (with interest and penalty) is set aside as it was beyond the scope of the SCN and contrary to the authorities' own findings; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the confirmation of the Cenvat-credit demand (including interest and penalty) as being beyond the scope of the show cause notice and contrary to the finding that the appellant had reversed and deposited the credit; consequential relief granted.

Interest on delayed refund under statutory scheme - entitlement to interest on revenue deposit made during investigation till realization - application of statutory interest rate under Section 11BB - comparative reliance on interest rates in notifications under sections 11AA, 11BB, 11DD and 11AB - precedential effect of Tribunal's earlier decision

Entitlement to interest on revenue deposit made during investigation till realization - interest on delayed refund under statutory scheme - comparative reliance on interest rates in notifications under sections 11AA, 11BB, 11DD and 11AB - precedential effect of Tribunal's earlier decision - Appellants entitled to claim interest at 12% per annum on amounts deposited during investigation from the date of deposit till realization - HELD THAT: - The Tribunal noted that in the earlier round it had allowed the appellants' entitlement to interest from the date of deposit till realization but had inadvertently not specified the rate; having considered the matter and the Tribunal's subsequent decision in M/s. Parle Agro Pvt. Ltd., the Tribunal examined the range of statutory notifications fixing varying interest rates under related provisions (including the notifications under sections 11AA, 11BB, 11DD and 11AB) and relevant judicial decisions which, taken together, supported adoption of a 12% rate for refunds of revenue deposits made during investigation. The Tribunal further observed that the deposits in the present case were made under protest, distinguishing it from cases relied on by the revenue; accordingly the rate of 12% was held to be appropriate and applicable from the date of deposit till realization. The Tribunal therefore allowed the appellants' claim for differential interest, applying its earlier determination and the reasoning in Parle Agro to fill the omission regarding the rate. [Paras 6, 7, 8]

Allowed: appellants entitled to differential interest at 12% per annum on deposits made during investigation from date of deposit till realization; appeals allowed.

Final Conclusion: Appeals allowed; appellants granted differential interest at 12% per annum on amounts deposited during investigation from the date of deposit till their realization.

Eligibility to avail cenvat credit on excisable goods removed under exemption to a Mega Power Project - application of Rule 6(6)(vii) of the Cenvat Credit Rules and exclusion of sub rules (1) to (4) - entitlement to refund of un utilised cenvat credit under the transitional provisions of the CGST Act (transfer of un utilised credit on transition) - effect of non filing of TRAN 1 on transfer of un utilised cenvat credit to the GST regime - authority to direct disbursement of refund with interest

Eligibility to avail cenvat credit on excisable goods removed under exemption to a Mega Power Project - application of Rule 6(6)(vii) of the Cenvat Credit Rules and exclusion of sub rules (1) to (4) - Appellant was entitled to take cenvat credit despite clearing finished goods under exemption to a Mega Power Project - HELD THAT: - The Tribunal found that the appellant manufactured dutiable finished goods which were cleared without payment of duty under Notification No. 12/2012 CE to a Mega Power Project awarded through tariff based competitive bidding. In view of Rule 6(6)(vii) of the Cenvat Credit Rules the operation of sub rules (1), (2), (3) and (4) of Rule 6 is excluded for excisable goods removed without payment of duty when supplied to such Mega Power Projects. Applying that provision to the admitted facts, the Tribunal held that the restrictions in sub rules (1) to (4) did not operate to deny the credit claimed by the appellant and therefore the cenvat credit was rightly taken. [Paras 8]

Cenvat credit taken by the appellant is valid because Rule 6(6)(vii) excludes the applicability of sub rules (1) to (4) where goods are supplied to a Mega Power Project.

Entitlement to refund of un utilised cenvat credit under the transitional provisions of the CGST Act (transfer of un utilised credit on transition) - effect of non filing of TRAN 1 on transfer of un utilised cenvat credit to the GST regime - Appellant entitled to refund of un utilised cenvat credit as on the transition date because it did not migrate the credit to GST by filing TRAN 1 - HELD THAT: - The Tribunal recorded that the appellant's un utilised cenvat credit was lying in its books as on 30.06.2017, the day before the GST regime commenced w.e.f. 01.07.2017. Since the appellant did not avail itself of the transitional mechanism to transfer un utilised cenvat credit to the GST regime by filing form TRAN 1, the transitional provisions embodied in Section 142(2) and (6) of the CGST Act entitled the appellant to a refund of that un utilised credit. The Tribunal therefore concluded that refund, rather than transfer, was the appropriate relief in the circumstances. [Paras 9, 10]

Appellant is entitled to refund of the un utilised cenvat credit as per the transitional provisions of the CGST Act because the credit remained un utilised on 30.06.2017 and was not carried forward via TRAN 1.

Authority to direct disbursement of refund with interest - Tribunal directed adjudicating authority to disburse the refund with interest within a specified period - HELD THAT: - Having held the appellant entitled to refund of the un utilised credit, the Tribunal exercised its remedial power to direct the Adjudicating Authority to disburse the refund amount with interest in accordance with rules. A specific time limit of 60 days from receipt/service of the order was fixed for completion of the disbursement. [Paras 11]

Adjudicating Authority directed to disburse the refund with interest within 60 days from service/receipt of the order.

Final Conclusion: Miscellaneous application by the appellant allowed and the Revenue's application disposed of: the Tribunal held that Rule 6(6)(vii) precluded denial of cenvat credit on goods supplied to a Mega Power Project, that the un utilised credit as on 30.06.2017 is refundable under the transitional provisions of the CGST Act where TRAN 1 was not filed, and directed refund with interest to be paid by the Adjudicating Authority within 60 days.

Denial of additional input tax credit on supplier's reassessment - levy of interest under the Act for understated output tax liability - imposition of penalty for understatement of tax and overstatement of input tax credit - effect of appellate rectification/modification of tax rate on liability to interest and penalty - classification of commodity for rate of tax and its bearing on output tax understatement

Levy of interest under the Act for understated output tax liability - imposition of penalty for understatement of tax and overstatement of input tax credit - effect of appellate rectification/modification of tax rate on liability to interest and penalty - Whether the Tribunal was justified in setting aside the levy of interest and penalty where there was no understatement of output tax liability or overstatement of input tax credit following modification of the tax rate. - HELD THAT: - The Tribunal found that, having regard to the Tribunal's rectification/modification of the rate of tax on Margarine (from 12.5% to 5.5%) and the earlier conclusion in M/s Pioneer Marketing that Nutralite fell under the III Schedule attracting a lower rate, there was no understatement of output tax liability or overstatement of entitlement to input tax credit in the returns filed by the assessee. The Tribunal therefore set aside the levy of interest and penalty, while reserving liberty to the revenue to impose interest and penalty if a violation of Sections 36 and 72(2) was found after recomputing turnover. The High Court declined to express any opinion on the precise correct rate of tax modified by the Tribunal but agreed with the Tribunal's conclusion that, on the facts and the modification made, no ground existed for imposing interest and penalty. Consequently the Court answered the question of law against the Revenue and found no exception to the Tribunal's view that interest and penalty were not justified in the circumstances. [Paras 6, 8]

Tribunal correctly set aside the levy of interest and penalty; High Court upholds that view and dismisses the revision petition on this point.

Denial of additional input tax credit on supplier's reassessment - classification of commodity for rate of tax and its bearing on output tax understatement - Whether the denial of the assessee's claim for input tax credit to the full extent of 12.5% (being the additional tax paid by the supplier) was sustainable. - HELD THAT: - In reassessment proceedings the assessing authority rejected the assessee's claim for input tax credit on the additional tax paid by its supplier and levied tax at 12.5% on the assessee's sales, along with interest and penalty. The first appellate authority confirmed that order. The Tribunal, however, denied the claim for additional input tax credit of 12.5% and upheld allowance of input tax credit only to the extent consistent with the levy ultimately sustained; it observed that the reassessment order allowing input credit of 4% on purchases from the supplier had been upheld and that in consequence there was no overstatement of input tax credit by the assessee. The High Court accepted that the Tribunal correctly denied the additional input tax credit claim and that, on the facts and in view of the Tribunal's modification of the tax rate, the assessee had not understated its output tax or overstated input credit. [Paras 3, 6, 7]

Denial of the claimed additional input tax credit was sustained; there was no overstatement of input tax credit requiring disallowance beyond that denial.

Final Conclusion: Revision petition dismissed; question of law answered against the Revenue and in favour of the assessee, upholding the Tribunal's setting aside of interest and penalty and its denial of the additional input tax credit claim in the circumstances of the case.

Alternate remedy - non-consideration of objections and documentary evidence - remand for fresh consideration - opportunity of personal hearing

Non-consideration of objections and documentary evidence - remand for fresh consideration - Revised assessment order was passed without reference to or consideration of the objections and documents filed by the assessee and consequently requires fresh consideration. - HELD THAT: - The respondent candidly admitted that the assessee filed objections and produced documents (26AS, month-wise purchase and sales, contract receipt details, software development payment details) prior to passing the revised assessment order dated 19.07.2021, yet the order contains no reference to such objections or documentary evidence. Non-consideration of material objections and documents by the assessing authority amounts to failure to consider relevant material. In the interest of justice and to afford the assessee a fair opportunity, the impugned orders are set aside and the matter remitted to the respondent for fresh consideration on merits after taking into account the objections and documents already filed and after affording an opportunity of personal hearing to the assessee. [Paras 6, 7]

Impugned orders set aside; matter remanded to the respondent for fresh consideration on merits and in accordance with law after affording personal hearing.

Opportunity of personal hearing - alternate remedy - Procedural consequences and timeline for fresh consideration following remand, including filing of outstanding bank statements. - HELD THAT: - The court directed that because the respondent stated no bank statement had been received, the assessee shall file the bank statement along with a copy of the objections and documents already submitted on 15.07.2021 within two weeks from receipt of the order. Thereafter the respondent is to consider the materials and pass appropriate orders on merits and in accordance with law, after affording an opportunity of personal hearing to the assessee, within four weeks. The court preserved the availability of the alternate statutory remedy but declined to sustain the earlier dismissal that relegated the assessee solely to that remedy without ensuring consideration of materials. [Paras 7]

Assessee to file bank statement within two weeks; respondent to consider and pass orders after personal hearing within four weeks; remand without prejudice to statutory appeal.

Final Conclusion: The High Court set aside the revised assessment order and the writ decision that dismissed the petition on the ground of alternate remedy, remitted the matter for fresh consideration on merits after the assessee files the outstanding bank statement within two weeks, and directed the assessing authority to decide the matter after affording personal hearing within four weeks; connected petition closed, no costs.

Section 138 of the Negotiable Instruments Act - Section 139 of the Negotiable Instruments Act - probable defence - reverse onus - scope of interference under Article 136 - substitution of sentence

Section 139 of the Negotiable Instruments Act - probable defence - reverse onus - Whether the accused successfully rebutted the presumption under Section 139 by establishing a probable defence - HELD THAT: - The Court summarised the law that Section 139 creates a rebuttable presumption that a cheque was issued for discharge of liability and that the accused need only raise a probable defence on the preponderance of probabilities. Applying those principles to the conspectus of evidence, the Court noted that the appellant did not set up in the reply to the statutory notice the case that the complainant lacked wherewithal, no complaint was made to bank or police about loss of cheque leaf contemporaneously, and the appellant did not contend that the signature was not his. Although the defence led bank officers as witnesses to challenge aspects of the complainant's version, the Court found that the totality of evidence did not show that the case of the complainant was in peril; the appellant failed to establish the asserted defence on the requisite preponderance. Consequently the presumption under Section 139 remained unrebutted and the finding of guilt under Section 138 sustained. [Paras 7, 9, 10]

The accused did not rebut the presumption under Section 139 and a probable defence was not established; the conviction under Section 138 is upheld.

Section 138 of the Negotiable Instruments Act - substitution of sentence - scope of interference under Article 136 - Whether the conviction and sentence should be interfered with and whether imprisonment should be substituted with fine and compensation - HELD THAT: - The Court observed that interference under Article 136 is extraordinary and must be exercised sparingly; while three courts had earlier convicted the appellant, the Supreme Court examined the matter on merits and found no ground to overturn the conviction. However, in exercise of appellate discretion the Court directed modification of the sentence: the sentence of one year simple imprisonment was vacated and substituted with a monetary sentence. The Court directed the appellant to pay a fine (depositable in the trial court within one month, default attracting one month simple imprisonment) and further directed payment of additional compensation to the complainant to be deposited within four weeks, noting that the cheque amount's compensation had already been deposited in the trial court. [Paras 11, 12, 13]

Conviction under Section 138 is upheld; imprisonment of one year is set aside and substituted with a fine and an order for additional compensation as directed.

Final Conclusion: Appeal partly allowed: conviction under Section 138 of the Negotiable Instruments Act is affirmed; the sentence of one year imprisonment is vacated and substituted with a fine (to be paid within one month, default one month imprisonment) and an additional sum as compensation to the respondent to be deposited within four weeks.