TaxTMI Updates e-Newsletter
Mar 22,2023

Stay of recovery on deposit under Section 112(9) of the B.G.S.T. Act - requirement of payment of twenty percent under Section 112(8) of the B.G.S.T. Act - effect of non constitution of the Appellate Tribunal on statutory right of appeal - limitation for filing appeal to the Appellate Tribunal and commencement upon President/State President entering office - clarificatory notification issued under Section 172 for removal of difficulties

Stay of recovery on deposit under Section 112(9) of the B.G.S.T. Act - requirement of payment of twenty percent under Section 112(8) of the B.G.S.T. Act - effect of non constitution of the Appellate Tribunal on statutory right of appeal - Entitlement to the statutory stay of recovery under Section 112(9) of the B.G.S.T. Act where the Appellate Tribunal has not been constituted, upon deposit of the statutory amount required by Section 112(8). - HELD THAT: - The Court held that the petitioner cannot be deprived of the statutory benefit of stay under Sub Section (9) of Section 112 merely because the Appellate Tribunal under Section 109 has not been constituted by the State. If the petitioner deposits a sum equal to twenty percent of the remaining amount of tax in dispute, in addition to any amount deposited earlier under Sub Section (6) of Section 107, the recovery proceedings for the balance amount shall be deemed stayed as envisaged by Section 112(9). The stay is granted because the impediment arises from non constitution of the Tribunal by the respondent Authorities and not from any fault of the petitioner. The Court balanced equities by making the grant of stay conditional on the specified deposit and by attaching a temporal and procedural obligation on the petitioner to pursue the appellate remedy once the Tribunal is constituted.

Deposit of twenty percent of the disputed tax (in addition to earlier deposit) entitles the petitioner to the stay under Section 112(9) until further steps as directed; recovery proceedings shall be deemed stayed upon such deposit.

Limitation for filing appeal to the Appellate Tribunal and commencement upon President/State President entering office - clarificatory notification issued under Section 172 for removal of difficulties - Effect of the State's clarificatory notification on limitation and the petitioner's right to prefer an appeal despite non constitution of the Tribunal. - HELD THAT: - The Court noted the notification issued under Section 172 which clarifies that, for calculation of the three month limitation in Sub Section (1) of Section 112, the period shall begin on the later of the date of communication of the order or the date on which the President or State President of the Appellate Tribunal enters office after constitution. The effect is that the statutory right to prefer an appeal survives and the limitation period is deferred until the Tribunal becomes functional. Consequently, the petitioner retains the right to file an appeal once the Tribunal is constituted and the President or State President enters office, subject to observing the statutory requirements then in force.

The clarificatory notification preserves the petitioner's right to appeal and defers commencement of the limitation period until the Tribunal's constitution and the President/State President entering office.

Obligation to file appeal once the Tribunal is constituted - consequence of failure to file appeal after constitution of Tribunal - Court's directions regarding the petitioner's obligation to file the appeal when the Tribunal is constituted and consequences if the petitioner does not do so. - HELD THAT: - To balance equities and avoid an open ended stay, the Court directed that the petitioner must present/file his appeal under Section 112 once the Tribunal is constituted and the President or State President enters office, observing the statutory requirements for filing an appeal. The Court made clear that if the petitioner elects not to avail the remedy of appeal by filing within the period that may be specified upon constitution of the Tribunal, the respondent Authorities would be at liberty to proceed further in accordance with law. Thus the stay granted on deposit is tied to the petitioner's future compliance in instituting the appellate proceeding when the forum becomes available.

Petitioner must file the appeal before the Tribunal after its constitution within the period to be specified; failure to do so will permit respondent Authorities to proceed in accordance with law.

Final Conclusion: Writ petition disposed of with directions that upon deposit of twenty percent of the disputed tax (in addition to any earlier deposit) the recovery proceedings shall be deemed stayed under Section 112(9); the petitioner retains the right to prefer an appeal which must be filed once the Appellate Tribunal is constituted and the President/State President enters office, failing which the authorities may proceed as permitted by law.

Attachment of bank accounts under Section 83 of the CGST Act - recovery of erroneously granted refund under Sections 73 and 74 of the CGST Act - review by the Commissioner under Section 107(2) of the CGST Act - statutory time limit for attachment (one year)

Attachment of bank accounts under Section 83 of the CGST Act - statutory time limit for attachment (one year) - Whether the respondent can indefinitely block the petitioner's bank account under the order of attachment. - HELD THAT: - The Court held that the power to freeze or attach bank accounts is exercised under Section 83 of the Act and is subject to the statutory discipline embedded in that provision. In particular, sub-section (2) of Section 83 provides that an order of attachment ceases to be operative on expiry of one year from its date. The respondents are therefore bound by that temporal limit and cannot maintain an indefinite block on the petitioner's bank account beyond the statutory period. [Paras 12]

Attachment cannot be indefinite; it is subject to the one-year limit prescribed by Section 83 and the respondents must adhere to that discipline.

Recovery of erroneously granted refund under Sections 73 and 74 of the CGST Act - Appropriate statutory mechanism for recovery if a refund has been erroneously granted. - HELD THAT: - The Court observed that where a refund is thought to have been erroneously granted, the statutory remedies under Sections 73 and 74 of the Act provide the appropriate route for recovery. The respondents, if of the view that the refund was erroneously granted, are required to take action under those provisions rather than maintain an open-ended blockade of funds without following the recovery procedure prescribed by the statute. [Paras 11]

Recovery of an erroneously granted refund must be effected by invoking Sections 73 or 74 of the Act.

Review by the Commissioner under Section 107(2) of the CGST Act - recovery of erroneously granted refund under Sections 73 and 74 of the CGST Act - Whether the respondents were required to file a review or take recourse to Section 107(2) to reopen the refund order. - HELD THAT: - The Court noted the petitioner's submission that the respondents should have immediately filed a review or appealed the refund order under Section 107(2). The Court found this submission prima facie not merited: recourse to Section 107(2) is necessary only where the Adjudicating Authority has adjudicated a contentious issue which the Commissioner considers requires review. Independent of Section 107(2), the statutory recovery routes in Sections 73 and 74 remain available for erroneous refunds. [Paras 4, 10, 11]

Immediate invocation of Section 107(2) is not mandatory in every case; recovery, if warranted, is to follow Sections 73/74 unless a review under Section 107(2) is specifically called for.

Attachment of bank accounts under Section 83 of the CGST Act - Whether the block on the petitioner's bank account should be continued or lifted in the present circumstances. - HELD THAT: - Having noted that the petitioner had complied with an auditor's direction by depositing the smaller sum found to be erroneously refunded, the Court directed the respondents to reconsider the petitioner's request for lifting the block. The respondents are to continue the block only if satisfied that the conditions justifying attachment under Section 83 continue to exist. This requires fresh administrative reconsideration in the light of the audit and steps already taken by the petitioner. [Paras 13]

Respondents directed to reconsider lifting the block and to continue it only if the statutory conditions under Section 83 persist.

Final Conclusion: The petition is disposed of by directing the respondents to reconsider the request to lift the block on the petitioner's bank account; attachment under Section 83 is subject to the one-year limit and, where a refund is suspected to be erroneous, recovery must follow Sections 73/74 unless a review under Section 107(2) is specifically warranted.

Refund of tax/claim for refund - matching of tax periods in GSTR-1 and refund applications - monthly versus quarterly returns reconciliation - production of documents for verification of turnover - remand for fresh consideration - directions for expeditious disposal

Refund of tax/claim for refund - remand for fresh consideration - directions for expeditious disposal - Impugned orders rejecting refund applications and appeals were set aside and the matter remanded for fresh consideration. - HELD THAT: - The Court recorded that the refund applications had been rejected because the period covered in the refund applications (monthly) did not match the tax period for which GSTR-1 was filed (quarterly). The respondents informed the Court that they are willing to process the petitioner's refund claims subject to the petitioner furnishing certain information. The petitioner undertook to provide the required information within one week. In view of these developments the Court set aside the Order-in-Original and the Order-in-Appeal and remanded the matter for reconsideration. The Court directed the respondents to consider the petitioner's claim for refund in accordance with law and to do so expeditiously, preferably within four weeks.

Orders rejecting the refund applications and the appeals are set aside and the claims are remanded for fresh consideration; respondents to decide the refund claims as per law expeditiously, preferably within four weeks.

Matching of tax periods in GSTR-1 and refund applications - monthly versus quarterly returns reconciliation - production of documents for verification of turnover - Respondents may process monthly refund applications only after verification that monthly turnover of inverted rated supplies matches outward supplies shown in quarterly GSTR-1, subject to petitioner producing invoices. - HELD THAT: - The respondents' affidavit (paragraph 5) explained the method for calculating monthly turnover of inverted rated supplies and adjusted total turnover: the petitioner may be required to furnish duly self-attested copies of supply invoices so that total such supplies on a monthly basis can be matched with outward supplies shown in the quarterly returns. The Court accepted the respondents' position as the procedural basis on which the department may proceed in the present case and directed that the petitioner's monthly refund applications may be processed further on that basis once the required documentation and reconciliation are furnished and verified.

Monthly refund claims may be processed only after the petitioner produces the required self attested invoices and the department verifies that the monthly figures reconcile with the quarterly GSTR-1 filings.

Final Conclusion: The writ petition is allowed: the orders rejecting the petitioner's refund applications and the appeals are set aside; the petitioner shall furnish the required information within one week and the respondents shall reconsider and decide the refund claims in accordance with law, preferably within four weeks.

Cancellation of GST registration for non-filing of returns - right to be heard / audi alteram partem - defective show cause notice (absence of date and time of personal hearing) - restoration of registration subject to regularisation of filings - preservation of respondents' right to recover tax, interest and penalty

Defective show cause notice (absence of date and time of personal hearing) - right to be heard / audi alteram partem - Validity of the Show Cause Notice dated 18.11.2020 and whether cancellation could be sustained when the notice did not specify the date and time for personal hearing and the petitioner was not afforded sufficient opportunity to be heard. - HELD THAT: - The Show Cause Notice called upon the petitioner to file a reply within seven working days and to appear for personal hearing, but did not state the appointed date or time for that hearing. The cancellation order dated 27.11.2020 was passed without affording the petitioner sufficient opportunity to be heard. Having considered the mitigating circumstances pleaded by the petitioner, including illness and the contemporaneous COVID-19 pandemic, the Court found that the petitioner could not reasonably be expected to have responded to the defective notice. For these reasons the Show Cause Notice and the consequent cancellation could not be sustained. [Paras 6, 7, 9, 10, 11]

The Show Cause Notice dated 18.11.2020 and the cancellation order dated 27.11.2020 are set aside on account of the defective notice and denial of an effective opportunity to be heard.

Cancellation of GST registration for non-filing of returns - restoration of registration subject to regularisation of filings - Whether the petitioner's GST registration should be restored and the temporal consequences of restoration. - HELD THAT: - In view of the invalidity of the Show Cause Notice and cancellation order, the Court directed restoration of the petitioner's GST registration expeditiously and, in any event, within one week. The petitioner was directed to regularise GST compliance by filing the necessary up-to-date returns within four weeks thereafter. The Court's order restores legal status subject to the condition of subsequent compliance by the petitioner. [Paras 11, 12, 13]

Registration is to be restored within one week; the petitioner must file up-to-date returns within four weeks of restoration.

Preservation of respondents' right to recover tax, interest and penalty - Whether restoration of registration precludes the respondents from initiating proceedings for recovery of tax, interest or penalty. - HELD THAT: - The Court clarified that restoration of the petitioner's registration does not inhibit the respondents from initiating or continuing appropriate proceedings for recovery of any tax, interest or penalty if otherwise due, in accordance with law. The decision to set aside the cancellation was limited to procedural infirmity and did not adjudicate or foreclose substantive liability for tax dues. [Paras 14]

Restoration is without prejudice to the respondents' right to recover tax, interest or penalty in accordance with law.

Final Conclusion: The Show Cause Notice of 18.11.2020 and the cancellation order of 27.11.2020 were set aside for being defective and for denial of effective hearing; the petitioner's GST registration is restored within one week, subject to the petitioner filing up-to-date returns within four weeks, and the respondents remain entitled to pursue recovery of any tax, interest or penalty in accordance with law.

Cancellation of registration - retrospective cancellation - effective date of cancellation - applicant-initiated cancellation - power to initiate recovery of tax, interest and penalty despite cancellation

Cancellation of registration - retrospective cancellation - effective date of cancellation - applicant-initiated cancellation - Validity and temporal effect of the impugned order cancelling the petitioner's GST registration and the appropriate effective date of cancellation - HELD THAT: - The Court accepted that the petitioner's registration required cancellation and noted that the petitioner itself had applied for cancellation stating cessation of business. Although the Respondent had rejected the petitioner's cancellation application and subsequently issued an order cancelling the registration retrospectively from 01.07.2017, the respondents' counsel consented to fixing the effective date of cancellation from 11.01.2020 as prayed by the petitioner. In view of the concession and the factual posture that the petitioner had sought cancellation, the Court directed that the cancellation take effect from 11.01.2020, thereby displacing the retrospective effect awarded by the impugned order. The Court expressly preserved the respondents' statutory right to initiate proceedings for recovery of any tax, interest or penalty as may be due in accordance with law, notwithstanding the direction on the effective date of cancellation. [Paras 9, 11, 12, 13]

Cancellation of the petitioner's GST registration is to take effect from 11.01.2020; the respondents remain entitled to pursue recovery of tax, interest and penalty in accordance with law.

Final Conclusion: The petition is disposed of by directing that the petitioner's GST registration shall be cancelled with effect from 11.01.2020, without precluding the respondents from initiating recovery proceedings for any tax, interest or penalty due.

Detention, seizure and release of goods in transit - Confiscation of goods or conveyances and levy of penalty - Adjudicatory proceedings under section 130 - Release of goods on deposit and furnishing of bond - Opportunity of being heard before penalty or confiscation - Interim release subject to conditions - Prematurity of adjudication on merits pending show cause proceedings

Detention, seizure and release of goods in transit - Release of goods on deposit and furnishing of bond - Interim release subject to conditions - Release of seized and confiscated goods and conveyance subject to specified deposits, penalty payment and furnishing of bond. - HELD THAT: - The Court found the petitioner's prayer for release of goods reasonable and, following precedent, directed interim release subject to stricter conditions securing tax and penalty. The order records that goods detained/confiscated pursuant to the impugned order dated 25.11.2022 shall be released on deposit of the interest and penalty amounts specified and on furnishing a bond equivalent to the secured amount. The Court relied on earlier High Court authority where release on conditions was permitted and applied that approach here while emphasising that such release is conditional and does not preclude continuation of proceedings under section 130. The directions are intended as an interim measure to secure State's revenue while permitting the petitioner temporary possession upon compliance with conditions. [Paras 5, 6]

Goods and conveyance to be released subject to deposit of interest and penalty and furnishing of bond as specified.

Confiscation of goods or conveyances and levy of penalty - Adjudicatory proceedings under section 130 - Opportunity of being heard before penalty or confiscation - Prematurity of adjudication on merits pending show cause proceedings - Adjudicatory proceedings under section 130 shall continue and the merits of the show cause notice shall be decided by the competent authority after giving opportunity to the petitioner. - HELD THAT: - The Court held that the adjudication on the notice issued under section 130 is not to be prematurely determined by the writ court. Relying on the Apex Court's approach in similar circumstances, the High Court declined to go into merits of alleged evasion and directed that the competent authority proceed with adjudication in accordance with law, granting reasonable opportunity including to file a reply. The Court imposed a timeline of ten weeks from receipt of the order for completion of the adjudicatory exercise, thereby remanding the substantive determination to the statutory authority. [Paras 5, 6, 7]

Proceedings under section 130 to continue; competent authority to adjudicate merits after hearing the petitioner within ten weeks.

Final Conclusion: Writ petition partly allowed: seized/confiscated goods and conveyance ordered released on specified deposit, penalty payment and furnishing of bond; substantive adjudication under section 130 remitted to the competent authority to be concluded after hearing the petitioner within ten weeks.

Violation of principles of natural justice - personal hearing mandatory under Section 75(4) of the GST Act 2017 - quash and remit for fresh consideration

Personal hearing mandatory under Section 75(4) of the GST Act 2017 - violation of principles of natural justice - Impugned assessment order quashed for failure to afford personal hearing as mandated, and matter remanded for fresh consideration. - HELD THAT: - The Court found that an adverse decision was taken against the petitioner in the assessment proceedings relating to the assessment year 2017-18, and that Section 75(4) of the GST Act 2017 requires that personal hearing be afforded to the assessee where an adverse decision is to be taken. On instructions, the respondent conceded that no personal hearing was granted in the impugned proceedings. In view of the mandatory nature of personal hearing under the statute and the consequent breach of principles of natural justice, the impugned assessment order could not be allowed to stand. The appropriate relief is to quash the order and remit the matter to the respondent for fresh adjudication on merits and in accordance with law, with a direction to afford the petitioner the right of personal hearing before passing final orders. [Paras 2, 4, 5, 6]

Impugned assessment order dated 31.10.2022 (assessment year 2017-18) quashed; matter remanded to respondent for fresh consideration after granting personal hearing and adhering to principles of natural justice.

Final Conclusion: The assessment order for AY 2017-18 is quashed for non-compliance with the statutory mandate of personal hearing; the matter is remanded for fresh decision on merits after affording the petitioner a personal hearing in accordance with law.

Blocking of input tax credit - electronic credit ledger - Rule 86A - guidelines under Rule 86A - restriction period of one year - retrospective amendment of Rule 61 - vires of subordinate legislation

Blocking of input tax credit - electronic credit ledger - Rule 86A - guidelines under Rule 86A - restriction period of one year - Unblocking of the petitioner's electronic credit ledger which had been restricted under Rule 86A. - HELD THAT: - The Court noted the Ministry of Finance guidelines under Rule 86A which provide that the restriction on debiting the electronic credit ledger shall cease after the expiry of one year from the date of imposition, allowing the registered person to debit the input tax credit so disallowed thereafter. The petitioner's credit ledger was blocked on 28.01.2020 and, in view of the one year limitation in the guidelines, the Court directed respondents to unblock the petitioner's blocked credit ledger. The Court limited its direction to unblocking and observed that the broader challenge to the vires of the amendment to Rule 61 and related notification would remain open for consideration.

Respondents directed to unblock the petitioner's electronic credit ledger which had been blocked on 28.01.2020, in accordance with the one year restriction period set out in the Rule 86A guidelines.

Retrospective amendment of Rule 61 - vires of subordinate legislation - Challenge to the vires of the amendment to Rule 61 of the CGST Rules, 2017 and the notification dated 10.09.2018 left open for adjudication. - HELD THAT: - Although the petitioner initially challenged the retrospective amendment to Rule 61 and the earlier notification, the learned counsel confined the immediate relief sought to unblocking the credit ledger. The Court therefore disposed of the petition only to the extent of directing unblocking of the ledger and expressly kept the petitioner's challenge to the vires of Rule 61 and the notification dated 10.09.2018 pending, permitting the petitioner to pursue that challenge separately.

Challenge to the vires of the amendment to Rule 61 and the notification dated 10.09.2018 remains open and is not decided.

Final Conclusion: Petition disposed of by directing respondents to unblock the petitioner's electronic input tax credit ledger blocked on 28.01.2020 in light of the one year restriction in the Rule 86A guidelines; the petitioner's challenge to the vires of the amendment to Rule 61 and the earlier notification is left open for adjudication.

Stay of recovery proceedings under statutory appeal provision - compliance with deposit conditions for preferring an appeal - non-constitution of Appellate Tribunal and consequent deprivation of statutory remedy - removal of difficulties notification under power to remove difficulties - preservation of limitation where tribunal not constituted

Compliance with deposit conditions for preferring an appeal - stay of recovery proceedings under statutory appeal provision - non-constitution of Appellate Tribunal and consequent deprivation of statutory remedy - Whether recovery proceedings could be continued against the petitioner despite his having deposited the amount required under Section 112(8) and the Appellate Tribunal not being constituted, and whether interim stay of the impugned recovery notice should be granted. - HELD THAT: - The Court found on the pleadings that the petitioner had deposited amounts in excess of those required for preferring an appeal under Section 112(8) (including amounts corresponding to sub-Section (6) of Section 107 where relevant). The Appellate Tribunal under Section 109 had not been constituted, thereby depriving the petitioner of the statutory forum to prefer the appeal and to seek the benefit of sub-Section (9) of Section 112 which deems recovery proceedings to be stayed where the amounts in sub-Section (8) are paid. The State itself acknowledged the difficulty by issuing a notification under the power to remove difficulties. In these circumstances the Court was prima facie satisfied that it would be unjust to permit recovery of the balance amount when the authorities had not constituted the Tribunal and the petitioner had complied with the deposit conditions; accordingly, the balance recovery proceedings were stayed by interim order.

Impugned notice for recovery stayed; interim relief granted as petitioner satisfied deposit conditions but could not file appeal due to non-constitution of the Appellate Tribunal.

Removal of difficulties notification under power to remove difficulties - preservation of limitation where tribunal not constituted - Whether the petitioner's right to prefer an appeal under Section 112 was barred by limitation, given non-constitution of the Appellate Tribunal. - HELD THAT: - The Court noted the State's notification issued under the power to remove difficulties which specified that the period for filing an appeal under Section 112 would commence from the later of communication of the order or the date on which the President or State President of the Appellate Tribunal enters office after constitution. That clarification acknowledged the practical difficulty arising from non-constitution of the Tribunal and operated to preserve the petitioner's statutory right to prefer an appeal. On that basis the Court concluded that the right to prefer an appeal survives and is not barred by limitation.

Petitioner's right to prefer an appeal under Section 112 is preserved and not barred by limitation in view of the State's removal-of-difficulties clarification.

Final Conclusion: On the petitioner's prima facie showing that he had deposited the sums required for preferring an appeal but was prevented from filing it by the non-constitution of the Appellate Tribunal, and in view of the State's clarification preserving the limitation period, the Court granted interim relief by staying the impugned recovery notice and directed filing of a counter-affidavit; the matter was listed for further hearing.

Condonation of delay - appeal barred by limitation - remand for fresh adjudication on merits - ex parte order - stay on coercive recovery measures - pre-deposit as condition precedent to hearing - de-freezing/de-attachment of bank accounts - principles of natural justice and opportunity to place documents - requirement of a speaking order - expeditious disposal

Condonation of delay - appeal barred by limitation - remand for fresh adjudication on merits - ex parte order - Impugned ex parte appellate order rejecting the appeal as time-barred was quashed and the appeal was restored for fresh disposal on merits with direction to condone the delay. - HELD THAT: - The Court found that the delay in preferring the appeal was satisfactorily explained having regard to COVID-19 restrictions and, on the Revenue's statement of no objection, set aside the ex parte order which had rejected the appeal as barred by limitation. The appeal was restored to its original file and number and remitted to the Appellate Authority to be decided afresh on merits while the ground of delay shall not be taken into account. The Court expressly refrained from expressing any opinion on the merits and limited its intervention to quashing the impugned order and directing fresh adjudication.

Impugned order dated 17.08.2022 quashed; appeal restored and remanded to the Appellate Authority to condone delay and decide on merits.

Stay on coercive recovery measures - de-freezing/de-attachment of bank accounts - During pendency of the remanded appeal no coercive steps shall be taken and any bank accounts attached in relation to the proceedings shall be de-frozen immediately. - HELD THAT: - The Court directed that while the appeal is pending before the Appellate Authority, respondents are restrained from taking coercive action for recovery of tax, interest or penalty arising from the impugned order. Further, if the writ-petitioner's bank accounts were attached in connection with the subject proceedings, those attachments are to be removed immediately. These interim protections were granted to preserve the petitioner's position during adjudication of the appeal.

No coercive steps to be taken during pendency of the appeal; attached bank accounts to be de-frozen immediately.

Pre-deposit as condition precedent to hearing - The petitioner's assertion that the required ten per cent pre-deposit has already been made is accepted for purposes of hearing; if not deposited, it must be deposited before the next date; deposit is without prejudice and excess, if any, shall be refunded. - HELD THAT: - The Court recorded the petitioner's statement that the condition precedent of depositing ten per cent of the total amount for hearing had been complied with and directed that if such deposit has been made the appeal shall be heard on merits. If the deposit has not in fact been made for any reason, the petitioner must make it before the next date. The court clarified that the deposit is without prejudice to the parties' respective rights and, if ultimately found in excess, shall be refunded within two months of the Appellate Authority's order.

Pre-deposit accepted for hearing; if not made must be deposited before next date; deposit without prejudice and excess refundable.

Principles of natural justice and opportunity to place documents - requirement of a speaking order - expeditious disposal - The Appellate Authority is directed to afford full opportunity of hearing, permit filing/placement of essential documents, pass a speaking order assigning reasons, and to decide the appeal expeditiously. - HELD THAT: - The Court mandated that the Appellate Authority must comply with principles of natural justice in the remanded proceedings by giving the parties an opportunity to be heard and to place on record any essential documents or materials. The Appellate Authority must pass a reasoned (speaking) order, supply copies to the parties, and endeavour to decide the appeal preferably within two months from the petitioner's appearance. The Court also encouraged use of digital mode for proceedings.

Appellate Authority to afford hearing, allow documents, pass a speaking order with reasons and decide the appeal expeditiously, preferably within two months.

Final Conclusion: The High Court set aside the ex parte appellate order rejecting the appeal as time barred, restored and remitted the appeal for fresh adjudication on merits with directions to condone delay, stay coercive recovery and de-freeze bank accounts during pendency, accept or mandate the ten per cent pre-deposit as a condition for hearing subject to refund if excess, and require the Appellate Authority to afford full opportunity, pass a speaking order and decide the matter expeditiously.

Section 197 of the Income Tax Act - Article 12 of the Indo-US DTAA - Fees for Included Services - Royalty - Equalisation Levy - Engineering Analysis Centre of Excellence (P.) Ltd.

Section 197 of the Income Tax Act - Article 12 of the Indo-US DTAA - Engineering Analysis Centre of Excellence (P.) Ltd. - Fees for Included Services - Royalty - Impugned withholding tax certificate and communication were set aside and the matter remanded for fresh adjudication in light of Article 12 of the Indo US DTAA and the Supreme Court judgment in Engineering Analysis Centre of Excellence (P.) Ltd. - HELD THAT: - The court observed that the order under challenge contains no discussion of Article 12 of the Indo US DTAA or the Supreme Court decision in Engineering Analysis Centre of Excellence (P.) Ltd., both of which are directly material to the petitioner's claim that receipts under reseller agreements are not taxable as Royalty or FTS. In view of this omission, the officer who passed the impugned certificate must re examine the petitioner's application filed under Section 197 of the Act, consider Article 12 and the Engineering Analysis Centre of Excellence (P.) Ltd. decision, and advert to other decisions cited by the petitioner. The court directed a fresh exercise to be carried out within two weeks, with an opportunity of hearing to the petitioner or its authorised representative (hearing may be by video conferencing), and indicated that the fresh order should be passed after such reconsideration. [Paras 8, 9, 10, 11]

Impugned certificate dated 03.08.2022 and communication dated 17.08.2022 set aside; matter remanded for fresh decision within two weeks with a hearing to the petitioner.

Final Conclusion: The writ petition is disposed by setting aside the withholding tax certificate and related communication and by directing the assessing officer to re examine the Section 197 application in light of Article 12 of the Indo US DTAA and the Supreme Court judgment in Engineering Analysis Centre of Excellence (P.) Ltd., to consider other cited authorities, and to pass a fresh order within two weeks after affording a hearing (which may be by video conferencing).

Notice under Section 148 of the Income Tax Act - Notice under Section 148A as amended by the Finance Act, 2021 - Reassessment proceedings - Mootness/maintainability of challenge to earlier notice - Notice served on a deceased person and alleged voidity - Threshold and limitation under Section 148A

Notice under Section 148 of the Income Tax Act - Mootness/maintainability of challenge to earlier notice - Notice served on a deceased person and alleged voidity - Notice under Section 148A as amended by the Finance Act, 2021 - Whether the writ petition challenging the notice dated 03.05.2021 issued under Section 148 (addressed to the deceased assessee) was maintainable or had become bereft of purpose in view of subsequent notices and orders under Section 148A. - HELD THAT: - The Court held that the challenge to the earlier notice dated 03.05.2021 does not survive because subsequent proceedings were initiated and completed under Section 148A (notice dated 06.06.2022 and the order rejecting objections dated 28.07.2022), which have not been challenged. The order explains that where later statutory notices and an adjudicatory order stand unchallenged, a collateral attack upon the earlier notice is rendered academic and non-justiciable in the writ petition before the High Court. The Court therefore confined its decision to dismissing the petition insofar as it sought to impugn the notice dated 03.05.2021, while expressly leaving open the right of the petitioner to challenge the later order dated 28.07.2022 or any proceedings emanating from the 03.05.2021 notice, including any contention of voidity arising from service on a deceased person. [Paras 6, 7, 8]

Writ petition challenging the notice dated 03.05.2021 dismissed as the challenge no longer survives in view of subsequent unchallenged Section 148A notices/orders; petitioner left free to challenge the later order(s).

Final Conclusion: The writ petition attacking the notice dated 03.05.2021 is dismissed as academic in view of subsequent Section 148A proceedings and the unchallenged order dated 28.07.2022; the petitioner remains at liberty to assail the later order(s) or proceedings, including any plea that the earlier notice was void for having been served on a deceased person.

Reasonable period for exercise of statutory power where no period of limitation is prescribed - deeming a person to be an assessee in default under Section 201(1) of the Income Tax Act for failure to deduct tax at source - application by analogy of limitation prescribed for residents to transactions with non-residents - retrospective operation of procedural/limitation amendments - judicial determination of a normative limitation where legislative silence exists

Reasonable period for exercise of statutory power where no period of limitation is prescribed - judicial determination of a normative limitation where legislative silence exists - Power of the High Court under Article 226 to determine what constitutes a reasonable period for passing orders under Section 201(1) of the Income Tax Act in respect of payments to non-residents - HELD THAT: - The Court held that where the statute prescribes no time-limit for exercise of a statutory power, the action must be taken within a reasonable period and it is for the High Court in exercise of its writ jurisdiction to determine that reasonable period rather than leaving that norm-setting task to the statutory authority. The Court relied on authoritative precedent establishing that absence of a statutory limitation does not permit indefinite exercise of power and that the reasonable period must be informed by the statutory scheme and relevant authorities. The Court also noted policy considerations of certainty and finality in fiscal matters and the existence of divergent judicial views as additional justification for judicial determination of the reasonable period in this class of cases. (See paras 7, 8, 8.1, 8.2, 8.3.) [Paras 7, 8]

High Court may determine what constitutes a reasonable period for passing orders under Section 201(1) of the Act in respect of payments to non-residents.

Deeming a person to be an assessee in default under Section 201(1) of the Income Tax Act for failure to deduct tax at source - application by analogy of limitation prescribed for residents to transactions with non-residents - retrospective operation of procedural/limitation amendments - What constitutes a reasonable period for issuing orders under Section 201(1) in respect of payments to non-residents - HELD THAT: - The Court concluded that the limitation periods introduced by Parliament for orders under Section 201(1) in respect of payments to residents are the appropriate indicia of what constitutes a reasonable period for analogous orders relating to non-residents. The Court reasoned that the object of TDS is common for residents and non-residents, legislative action prescribing and then extending limitation for residents carries a presumption of reasonableness, and legislative extensions (from four to six and then seven years) reflect experience and the need for a longer period. Treating limitation as procedural/adjectival, the Court held the extended period is available retrospectively for proceedings not already time barred (it will not revive a dead claim). Applying these principles, the Court held that w.e.f. 01.04.2010 the reasonable period is seven years from the end of the financial year in which payment is made or credit given. (See paras 9-11, 11 I-VI, 11 VI, 12.) [Paras 9, 10, 11, 12]

Reasonable period for passing orders under Section 201(1) in respect of payments to non-residents is the same as the limitation prescribed for residents; accordingly, w.e.f. 01.04.2010 the reasonable period is seven years from the end of the financial year in which the payment is made or credit is given.

Leave to raise merits in appeal subject to clarified limitation position - Whether the writ petitions decide merits of the departmental orders - HELD THAT: - The Court confined its decision to the question of limitation only and left open all merits of the assessment/orders under Section 201(1). The petitioner was permitted to file appeals; time spent in the writ petitions shall be excluded for limitation calculation and appellate/authorities shall decide merits (including any limitation plea) in accordance with the legal position clarified by this Court. Reference to reliefs such as reliance on Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance, 2020 and Supreme Court directions was left open. (See paras 12-13.) [Paras 12, 13]

Merits of the orders are not adjudicated; petitioner may file appeals and the appellate authority shall decide merits in accordance with this Court's clarification on limitation; time spent in writ petitions excluded for reckoning limitation.

Final Conclusion: The writ petitions were entertained on the limited question of limitation. The High Court held that it may determine a reasonable period where the statute is silent; applied the limitation prescribed for residents by statute as the appropriate reasonable period for non-resident cases and held that w.e.f. 1.4.2010 the reasonable period is seven years from the end of the financial year in which payment is made or credit is given. The petitions were disposed of accordingly, leaving merits open and permitting appeals, with the time spent in these writ petitions excluded for purposes of limitation.

Principles of natural justice - Show Cause Notice under Section 143(3) of the Income tax Act - limitation prescribed under Section 153B of the Income tax Act - remand for fresh consideration - grant of personal hearing

Principles of natural justice - Show Cause Notice under Section 143(3) of the Income tax Act - Whether the impugned assessment orders violated the principles of natural justice by failing to consider the petitioner's request for additional time to furnish documents called for in the Show Cause Notice. - HELD THAT: - The Court found that the petitioner's reply dated 17.05.2022 sought two weeks' time to furnish voluminous documents called for by the Show Cause Notice dated 10.05.2022, and that the impugned assessment orders did not record any reason for rejecting that request. The absence of communication that the request was refused deprived the petitioner of an opportunity to take steps in relation to that rejection. The petitioner also furnished the requested documents to the respondent during the pendency of these writ petitions (08.07.2022). Having regard to these facts, the Court concluded that principles of natural justice were breached and that the assessment orders could not stand. [Paras 6, 7, 8, 9]

The impugned assessment orders are quashed on the ground of violation of the principles of natural justice and the matters are remanded for fresh consideration.

Remand for fresh consideration - grant of personal hearing - Scope and manner of remand: the temporal direction for re invigoration of proceedings, limits on further documentary submissions, and entitlement to personal hearing. - HELD THAT: - The Court directed that the respondent shall reconsider the matters on merits and in accordance with law within eight weeks from receipt of the order, after adhering to principles of natural justice including the grant of personal hearing to the petitioner's authorised representative. The Court recorded that the petitioner has already furnished the documents on 08.07.2022 and expressly prohibited the petitioner from filing any further documents before the respondent once the assessments are redone, while directing the petitioner to cooperate and not protract the proceedings. [Paras 8, 9, 10]

Assessments remanded for fresh adjudication within eight weeks with adherence to natural justice and grant of personal hearing; petitioner barred from submitting further documents beyond those furnished on 08.07.2022.

Final Conclusion: Impugned assessment orders dated 30.05.2022 for AYs 2019 20 and 2020 21 are quashed for breach of natural justice and remitted to the respondent for fresh consideration on merits and in accordance with law; respondent to pass final orders within eight weeks after granting personal hearing, and petitioner is precluded from filing further documents beyond those already furnished on 08.07.2022.

Summary order. Notice issued to the Advocate General (with courtesy copy to the Additional Solicitor General); delay in filing the affidavit in reply condoned and the affidavit to be filed in the Registry; rejoinder permitted by 13th February 2023; the previous ad interim order of 26th September 2022 to continue until the next date (20th February 2023).

Disclosure of material and information relied upon in a show-cause notice under Section 148A(b) - Right of assessee to meaningful opportunity to reply where material relied upon is furnished - Treatment of notices issued under unamended Section 148 after 01.04.2021 as notices under substituted Section 148A - Remand for supply of relevant documents and fresh decision under Section 148A(d)

Disclosure of material and information relied upon in a show-cause notice under Section 148A(b) - Right of assessee to meaningful opportunity to reply where material relied upon is furnished - Whether the notices under Section 148A(d) and Section 148 were vitiated by non-supply of the material and information relied upon, and whether relief should follow. - HELD THAT: - The Court found that the petitioner had specifically requested particulars of the information and documents said to form the basis of the reassessment notice and that those materials were not supplied by the department despite being referred to in the initial notice. The absence of the relevant documents and information meant the petitioner could not be expected to furnish a reasonable explanation or make a meaningful response at the Section 148A stage. Relying on the reasoning in the decisions of the Delhi High Court and the principles endorsed in the subsequent Supreme Court direction, the Court concluded that procedural fairness required supply of the material before a final order under Section 148A(d) could be made. For these reasons the impugned notices were set aside and the matter remitted for compliance with the duty to disclose and for fresh consideration. [Paras 7, 10]

Notices dated 15.07.2022 (Section 148A(d)) and 19.07.2022 (Section 148) quashed; matter remitted to the department with direction to furnish the information and material relied upon and to pass a fresh order after giving the petitioner an opportunity to reply.

Treatment of notices issued under unamended Section 148 after 01.04.2021 as notices under substituted Section 148A - Remand for supply of relevant documents and fresh decision under Section 148A(d) - Whether the Supreme Court's directions in Union of India v. Ashish Agrawal apply and require the department to supply the relied-upon material and proceed under the substituted Section 148A scheme. - HELD THAT: - The Court noted and applied the Supreme Court's order which directed that reassessment notices issued under the unamended Section 148 after 01.04.2021 be deemed issued under Section 148A and that assessing officers provide the information and material relied upon so the assessee can reply. In light of that authoritative direction and the consistent approach adopted by the Delhi High Court, the Court held the present facts fell squarely within that scheme and directed compliance with the Supreme Court's procedure: supply of relevant material referred to in the Section 148A(b) notice and a fresh decision under Section 148A(d) after consideration of the petitioner's submissions. [Paras 8, 9, 10]

The Supreme Court's directions in Union of India v. Ashish Agrawal apply; the department is directed to furnish the material referred to in the notice under Section 148A(b) and thereafter to pass a fresh order under Section 148A(d) after considering the petitioner's response.

Final Conclusion: Writ petition allowed; impugned notices under Section 148A(d) and Section 148 quashed and matter remitted to the department with directions to supply the information/material relied upon (as referred to in the Section 148A(b) notice) and to pass a fresh order after considering the petitioner's response in accordance with the Supreme Court's guidance.

Condonation of delay in filing income-tax returns - sufficient cause for delay - bonafide reasons and unavoidable circumstances - justice-oriented exercise of discretion - acceptance of belated return upon judicial condonation

Condonation of delay in filing income-tax returns - sufficient cause for delay - bonafide reasons and unavoidable circumstances - justice-oriented exercise of discretion - Validity of the order rejecting the petitioner's application under Section 119(2)(b) seeking condonation of delay in filing returns for assessment year 2020-21 and whether the petitioner's delay should be condoned and returns permitted to be filed. - HELD THAT: - The Court examined the petitioner's application dated 14.12.2021 which stated that the delay in filing returns for assessment year 2020-21 arose from change of auditors and the prevailing COVID-19 pandemic. Finding the delay to be less than one year and not long or inordinate, and having regard to the asserted bonafide reasons and unavoidable circumstances, the Court applied a justice-oriented approach to the discretionary power to condone delay. The Court concluded that the respondents had adopted an unduly technical stance in rejecting the condonation request and that, on the material before it, sufficient cause existed to justify condonation. Exercising its jurisdiction, the Court set aside the impugned order and permitted the petitioner to file the belated returns within a stipulated short period, directing respondents to accept the returns without taking the condoned delay into account.

Impugned order dated 03.05.2022 set aside; petitioner permitted to file returns for assessment year 2020-21 within three weeks, and respondents directed to accept them without regard to the condoned delay.

Final Conclusion: Writ petition allowed; order rejecting condonation set aside and petitioner permitted to file belated returns for assessment year 2020-21 within three weeks, respondents to accept the returns without taking the condoned delay into account.

Notice under Section 148A(b) - order under Section 148A(d) - prima facie satisfaction of escaped assessment - genuineness of transaction - reliance on VAT returns - absence of transport details, purchase contracts and bills - opportunity to produce evidence before Assessing Officer

Notice under Section 148A(b) - order under Section 148A(d) - prima facie satisfaction of escaped assessment - genuineness of transaction - reliance on VAT returns - absence of transport details, purchase contracts and bills - Validity of the notice dated 18.05.2022 under Section 148A(b) and the order dated 26.07.2022 under Section 148A(d) in respect of the assessment for AY 2014-15 - HELD THAT: - The Court examined the material relied upon by the Assessing Officer and the investigation findings which indicated that M/s Seema Enterprises was not engaged in any real business and that its proprietor had accepted non engagement in real business activities. The Court held that mere filing of DVAT returns and matching of Forms 2A/2B did not, by itself, establish the genuineness of the transactions, particularly in the absence of any indication that the VAT authority conducted a physical or spot enquiry. Further, neither party produced transport details, purchase contracts or bills before the Assessing Officer to substantiate the alleged purchases. On this basis the Court was satisfied that there was a prima facie case of income having escaped assessment and found no error in the impugned notice and order. [Paras 3, 4]

The impugned notice and order were upheld; the Court found no error in the Assessing Officer's prima facie satisfaction that income had escaped assessment.

Opportunity to produce evidence before Assessing Officer - Whether the petitioner should be permitted to place on record documents and urge contentions before the Assessing Officer - HELD THAT: - Although the Court sustained the impugned order on prima facie grounds, it granted the petitioner liberty to file all relevant documents and to urge all contentions and submissions before the Assessing Officer so that the Assessing Officer may consider the material afresh and decide in accordance with law. [Paras 5]

Writ petition disposed of while permitting the petitioner to produce evidence and press its contentions before the Assessing Officer for consideration.

Final Conclusion: The High Court dismissed the challenge to the notice and order under Section 148A(b) and Section 148A(d) for AY 2014-15, finding prima facie that income had escaped assessment; the petitioner was, however, granted liberty to file relevant documents and urge its contentions before the Assessing Officer for fresh consideration.

Penalty under Section 271(1)(c) of the Income-tax Act - Concealment and furnishing inaccurate particulars of income - Strict liability for penalty - Inaccurate particulars includes false or bogus claims - Reported losses fall within the ambit of "income" for levy of penalty

Penalty under Section 271(1)(c) of the Income-tax Act - Inaccurate particulars - False claim of deduction for Research and Development - Strict liability - Validity of the penalty levied under Section 271(1)(c) in respect of the disallowance of claimed Research and Development expenditure - HELD THAT: - The Tribunal's restoration of the penalty was upheld. The assessing officer and the Tribunal found as a fact that the assessee was not carrying on business during the relevant year and had sold fixed assets, rendering the claim of Research and Development expenditure untenable and therefore false. Section 271(1)(c) penalises concealment of particulars or furnishing inaccurate particulars; it operates on a strict liability basis and does not require proof of mens rea. An inaccurate particular is one that does not reflect the true state of affairs; a bogus claim of expenditure which is contrary to the factual findings amounts to furnishing inaccurate particulars. The inability to produce supporting documents, together with the factual findings that no R&D activity existed, justified the imposition of penalty. The reasoning of the Tribunal was consistent with binding precedent holding that wilful concealment is not an essential ingredient for civil liability under Section 271(1)(c). [Paras 5, 6, 7, 10, 12]

Penalty under Section 271(1)(c) sustained as the claim of expenditure was false/bogus and therefore constituted furnishing inaccurate particulars attracting strict liability.

Reported losses and levy of penalty - Explanation 4 and inclusion of losses within "income" - Whether reporting losses precludes levy of penalty under Section 271(1)(c) - HELD THAT: - The submission that the assessee's reporting of losses precludes penalty was rejected. The court relied on authority and the statutory scheme which treat 'income' for the purpose of Section 271(1)(c) as including losses; an amendment and explanatory provisions clarify that penalty may be levied even where additions reduce a returned loss. Thus, reporting of losses does not immunise an assessee from penalty where inaccurate particulars or concealment are established. The Tribunal's application of law on this point was affirmed. [Paras 11]

Reporting of losses does not preclude imposition of penalty under Section 271(1)(c); penalty remains leviable where inaccurate particulars or concealment are found.

Jurisdictional aspect of invoking penalty when validity of Section 153C is questioned - Whether the Tribunal erred in not addressing the jurisdictional challenge to invoking Section 271(1)(c) when the validity of assessment under Section 153C was questioned - HELD THAT: - The appellant indicated at the hearing that issues relating to the challenge of the assessment under Section 153C were not being pursued in these appeals and confined arguments to the penalty. The court therefore proceeded to consider the penalty question on the factual findings recorded by the assessing officer and the Tribunal. There was no remand or requirement to decide the invoked-jurisdiction point afresh in these appeals. [Paras 2, 3]

No fault found with the Tribunal's approach in the circumstances; the penalty question was properly decided on the factual findings and legal principles.

Final Conclusion: The appeals are dismissed; the Tribunal's orders confirming levy of penalty under Section 271(1)(c) are affirmed. The questions of law are decided in favour of the revenue.

Agency versus ownership - delivery of possession - deemed transfer under section 2(47)(v) - long term capital gains - substitution of consideration under section 50C

Agency versus ownership - delivery of possession - deemed transfer under section 2(47)(v) - long term capital gains - Whether the assessee was a purchaser/owner who took possession and thus liable to tax on long term capital gains arising from the transfer, or merely a GPA/agent on behalf of the original owners. - HELD THAT: - The Tribunal examined the recitals in the registered sale agreement-cum-GPA dated 04.04.2007 and the registered sale deed dated 04.01.2011. The recitals in the agreement state that the schedule property was sold to and delivered to the assessee. The sale deed records receipt of consideration by the second party and describes the circumstances of sale and payment. There is no recital in the sale deed indicating that the assessee acted as a GPA on behalf of the original owners or that the sale consideration was received on their behalf, nor has the assessee produced evidence of repayment to the original owners. On these facts the Tribunal concluded that the assessee purchased and took possession of the property and subsequently sold it in his capacity as owner; the contention that he was only an agent was rejected. Consequently, capital gains arising on transfer dated 04.01.2011 are chargeable to tax in the hands of the assessee. [Paras 8]

Assessee was owner (not merely GPA/agent); long term capital gains on transfer chargeable to the assessee.

Substitution of consideration under section 50C - fair market value - Whether the stamp duty (stamp valuation) value could be substituted for the recorded consideration for computation of capital gains under section 50C. - HELD THAT: - The Tribunal noted that though the recorded sale consideration was Rs.17,00,000/-, the stamp duty (stamp valuation) value shown on the sale deed was Rs.20,00,000/-. Applying the provisions of section 50C, where the stamp valuation authority adopts a value higher than the consideration, that value is to be deemed the full value of consideration for computing capital gains subject to the statutory provisos and any reference procedure. On the material before it there was no successful challenge to the stamp valuation and no reference to a Valuation Officer was made. Therefore the Assessing Officer correctly took the stamp valuation value as the full value of consideration and computed long term capital gains after allowing indexed cost of acquisition. [Paras 11]

Stamp valuation value substituted under section 50C; AO correctly computed capital gains on the higher value.

Final Conclusion: The Tribunal dismissed the appeal: the assessee was held to be the owner who took possession and is taxable on the long term capital gains arising on transfer dated 04.01.2011, and the substitution of the stamp valuation value under section 50C for computing capital gains was upheld.

Unexplained money additions - treatment of statements recorded under section 131(1) - addition under section 69A - ownership and source of funds for immovable property - explanation of bank deposits and unexplained cash credits - transfer for capital gains under section 2(47)

Unexplained money additions - treatment of statements recorded under section 131(1) - addition under section 69A - Validity of addition of Rs. 12 lakhs found in assessee's possession as unexplained money - HELD THAT: - The Tribunal upheld the Assessing Officer's finding that the assessee had carried cash of Rs. 12 lakhs and initially denied sources in his statement recorded under section 131(1). Although the assessee later produced bank statements, cash book and a balance sheet before the CIT(A), the AO treated those productions as an afterthought because the assessee had stated during interception and survey that he did not maintain books of account and had refused to give detailed sources. The Tribunal found no reason to interfere with the AO's conclusion that the books were produced belatedly and therefore upheld the addition under section 69A as unexplained money. [Paras 6]

Addition of Rs. 12 lakhs as unexplained money upheld.

Ownership and source of funds for immovable property - unexplained investment under section 69A - Whether two immovable properties registered in the assessee's name should be treated as firm's property and whether investment in those properties was explained - HELD THAT: - The Tribunal examined sale deeds and payments. While cheques from the partnership firm towards the purchase were evidenced, the cash payments of Rs. 30 lakhs (aggregating to two documents) lacked reliable support - the firm's cash book could not be relied upon for receipts from the vendor's power holder. The Tribunal concluded that the sources for the Rs. 30 lakhs cash payments were not satisfactorily explained and therefore upheld the AO's treatment of that portion as unexplained investment under section 69A. However, the Tribunal accepted that the balance amount of Rs. 13,59,500 paid towards registration/stamp duty was demonstrated and need not be taxed as unexplained investment. [Paras 8]

Order of AO upheld for unexplained cash component of Rs. 30 lakhs; remaining amount towards registration charges held explained.

Transfer for capital gains under section 2(47) - short term capital gains - Whether short term capital gains arise on amounts received in respect of an alleged sale/development agreement - HELD THAT: - The Tribunal accepted the assessee's evidence that advances received from M/s. MVV Builders and an individual were repaid, supported by confirmations and other documentary material. Further administrative orders (RDO directing issuance of Ryotwari Patta and its issuance) and the fact that no effective transfer as defined under section 2(47) occurred in the relevant year led the Tribunal to conclude that no transfer giving rise to short term capital gains took place during the assessment year. Consequently, the CIT(A)'s deletion of the addition for short term capital gains was sustained. [Paras 10]

Deletion of short term capital gains addition upheld; no capital gains arose in AY 2011-12.

Explanation of bank deposits and unexplained cash credits - unexplained cash additions - Correctness of additions in respect of unexplained cash and cheque deposits totalling the amounts credited into assessee's bank accounts - HELD THAT: - The Tribunal noted that cheque deposits amounting to Rs. 9,52,700 were satisfactorily explained with supporting details and accepted by the CIT(A). However, substantial cash deposits (Rs. 45,37,100) remained unexplained because the AO treated the books as belated and relied on the assessee's prior statements refusing to explain sources or produce confirmations. Accordingly, the Tribunal upheld the CIT(A)'s acceptance to the extent of the explained cheque deposits but sustained the AO's additions for the unexplained cash deposits. [Paras 12]

Cheque deposits of Rs. 9,52,700 accepted; unexplained cash deposits of Rs. 45,37,100 upheld as additions.

Final Conclusion: The Revenue's appeal is partly allowed: additions in respect of Rs. 12 lakhs unexplained cash and Rs. 45,37,100 unexplained bank cash deposits and Rs. 30 lakhs cash component of property purchase are upheld; deletion of short term capital gains and acceptance of cheque deposits of Rs. 9,52,700 and certain registration charges are sustained.

Unexplained cash deposits under section 69A - deletion of additions where sources are satisfactorily explained - treatment of gifts as explained source - treatment of agricultural income as explained and exempt - admissibility of additional evidence in tax appeals - creditworthiness and substantiation of third party cash contributors - treatment of cash deposits during demonetisation

Treatment of gifts as explained source - deletion of additions where sources are satisfactorily explained - Claim that cash of Rs. 18 lakhs was a gift from mother in law deposited on 30/07/2016 - HELD THAT: - The Tribunal examined bank statements and the translated sale deed and accepted the assessee's consistent explanation that the amount originated from the sale proceeds of the mother in law and was deposited into the assessee's account on 30/07/2016. On this basis the Tribunal held that the source for the deposit was satisfactorily explained and deleted the addition made by the Assessing Officer. [Paras 7]

Addition of Rs. 18 lakhs as unexplained cash deposit deleted; gift accepted as explained source.

Deletion of additions where sources are satisfactorily explained - unexplained cash deposits under section 69A - Addition made in respect of amounts received from farmers on account of sale of paddy, fertilizers and pesticides - HELD THAT: - The assessee produced VAT returns and had disclosed commission income arising from acting as a mediator between farmers and rice millers. The Tribunal found the turnover and commission disclosure credible, noted that the Assessing Officer did not dispute the VAT figures, and concluded that the deposits routing through the assessee's account were explained by the business activity. Consequently the addition based on those receipts was deleted. [Paras 8]

Addition of Rs. 42,50,280 on account of sale of paddy and related receipts deleted.

Treatment of agricultural income as explained and exempt - deletion of additions where sources are satisfactorily explained - Addition of alleged unexplained agricultural income of Rs. 4 lakhs - HELD THAT: - The Tribunal observed that the assessee had disclosed agricultural income of Rs. 5 lakhs in the return which the Assessing Officer had not taken into account. Since the agricultural income had been properly disclosed and claimed as exempt in the return, the Assessing Officer erred in treating part of it as unexplained. [Paras 9]

Addition of Rs. 4 lakhs as unexplained agricultural income deleted.

Deletion of additions where sources are satisfactorily explained - Addition of Rs. 2,50,000 treated as unexplained cash - HELD THAT: - The assessee explained this amount as arising from his own surplus/savings and the Tribunal accepted that explanation as sufficient to discharge the requirement to explain the source of the deposit. [Paras 10]

Addition of Rs. 2,50,000 deleted.

Creditworthiness and substantiation of third party cash contributors - admissibility of additional evidence in tax appeals - unexplained cash deposits under section 69A - treatment of cash deposits during demonetisation - Whether cash deposits aggregating to Rs. 35,40,000 (including Rs. 33,00,000 during demonetisation) introduced as capital by partners of Dhanalakshmi Traders were explained and whether additional evidence proving partners' sources should be admitted - HELD THAT: - The Tribunal examined the partnership deed and the additional evidence. The deed contained no recital of capital contributions and the assessees could not satisfactorily explain why partners' contributions were lodged in the assessee's personal account rather than a firm account. The alleged contributors' creditworthiness and claimed agricultural income were not substantiated. For these reasons the Tribunal rejected the additional evidence and held that the Assessing Officer was justified in treating the cash deposits made into the assessee's personal account during the demonetisation period as unexplained to the extent supported by the material. [Paras 11, 12]

Additional evidence rejected; addition of Rs. 33,00,000 (cash deposits during demonetisation attributed to partners' alleged contributions) upheld.

Treatment of cash deposits during demonetisation - unexplained cash deposits under section 69A - Addition of Rs. 32 lakhs representing cash deposited during demonetisation period in a separate head - HELD THAT: - On review the Tribunal found that the cash deposits of Rs. 32 lakhs treated separately by the Assessing Officer arose from the same alleged partners' contributions which the Assessing Officer had already addressed. The Tribunal considered that those deposits, as explained in the appeal, were not correctly disallowed in that separate head and directed deletion of the addition of Rs. 32 lakhs. [Paras 13]

Addition of Rs. 32 lakhs (cash deposited during demonetisation) deleted.

Final Conclusion: The appeal is partly allowed: additions of Rs. 18 lakhs (gift), Rs. 42,50,280 (paddy/fertiliser receipts), Rs. 4 lakhs (agricultural income) and Rs. 2,50,000 are deleted; additional evidence regarding partners' contributions was rejected and an addition of Rs. 33,00,000 (cash deposits during demonetisation attributed to unsubstantiated partners' contributions) is upheld; an addition of Rs. 32 lakhs representing demonetisation deposits is deleted.

Deduction under section 54F - tenancy rights as capital asset - colourable device - proof of tenancy by rent receipts and bank evidence - continuation of appeal after death under Rule 26 of the ITAT Rules

Tenancy rights as capital asset - proof of tenancy by rent receipts and bank evidence - colourable device - Findings that the assessee and his spouse enjoyed genuine tenancy rights in the old premises and that the tenancy was not a colourable device. - HELD THAT: - The Tribunal accepted the factual material proving occupation and tenancy for over thirty years, including rent receipts and payments made by cheque corroborated by individual bank statements, and the terms of the settlement and arbitral award allotting flats to the tenants. The Assessing Officer's inference that the tenancy was a colourable device because a relative had earlier been a director and because the security deposit was received in the HUF's bank account was rejected. The Tribunal followed the finding of the Commissioner (Appeals) that the corporate existence of the owner and the long-standing occupation by the assessee and spouse, together with documentary evidence and the settlement terms, established bona fide tenancy and negated the AO's allegation of a contrived device to evade tax. [Paras 5, 6, 7]

The tenancy was held genuine and not a colourable device; the assessee and his spouse were in occupation and enjoyed valuable tenancy rights.

Deduction under section 54F - tenancy rights as capital asset - Entitlement of the assessee to claim deduction under section 54F in respect of the consideration represented by the allotment of the flat (assessee's 50% share of flat A-3). - HELD THAT: - Having concluded that the assessee lawfully relinquished tenancy rights in exchange for allotment of the new flat and that the conditions for section 54F were satisfied, the Tribunal sustained the Commissioner (Appeals)'s direction to the Assessing Officer to allow the claimed deduction. The Tribunal noted the valuation by a registered valuer, the inclusion of the flat's value in the assessee's capital account, and the legal character of the settlement/allotment under the arbitral award, and found no infirmity in the CIT(A)'s application of section 54F. [Paras 4, 5, 7]

The assessee was entitled to the deduction under section 54F of the Act for the value of his 50% share in flat A-3; the AO directed to allow the claim.

Continuation of appeal after death under Rule 26 of the ITAT Rules - Adjudication of the appeal despite the death of the assessee without formal substitution of legal representative on record. - HELD THAT: - Noting the Tribunal's power under Rule 26 to continue appeals notwithstanding death, the Bench considered two options - dismiss for want of prosecution or decide on material available. Given completed pleadings, paper book on record filed before the assessee's death, and the authorised counsel's readiness to argue, the Tribunal exercised its discretion to decide the appeal on merits rather than dismiss for want of substitution, observing that the Revenue had been given ample opportunity to place revised Form 36 but had not done so. [Paras 3]

The Tribunal proceeded to adjudicate the appeal on merits despite the assessee's death, exercising the discretion permitted by Rule 26.

Final Conclusion: The revenue's appeal is dismissed: the findings that the tenancy was genuine and not a colourable device are upheld, the assessee is entitled to the deduction under section 54F for the allotted flat, and the Tribunal properly proceeded to decide the appeal on the material on record despite the assessee's death.

Verification of discrepancies between Form 26AS and books of account - Right of assessee to be heard before making additions - Remand to assessing officer for examination and reconciliation - Ad hoc disallowance of expenses without specific documentary defects - Inadmissibility of addition based solely on a slight fall in profit ratios

Verification of discrepancies between Form 26AS and books of account - Remand to assessing officer for examination and reconciliation - Right of assessee to be heard before making additions - Direction to the Assessing Officer to examine the difference between contract receipts as per Form 26AS and the assessee's books after affording the assessee an opportunity of being heard - HELD THAT: - The Assessing Officer had added a sum as difference between receipts shown in Form 26AS and the assessee's books. The Commissioner (Appeals) directed verification of the appellant's claim with Form 26AS and relief if the amount had already been offered to tax in earlier years, and the assessee sought a reconciliation and opportunity to explain the discrepancies. The Tribunal agreed with the limited plea that reconciliation should be carried out and that the assessee be permitted to explain the entries before the AO. Consequently the matter was directed to be examined by the AO after giving the assessee appropriate opportunity of being heard. [Paras 8]

Matter remitted to the Assessing Officer for verification of the differences between Form 26AS and books of account after affording the assessee an opportunity to explain.

Ad hoc disallowance of expenses without specific documentary defects - Inadmissibility of addition based solely on a slight fall in profit ratios - Validity of ad hoc disallowances made from subcontractor charges, establishment expenses and business promotion expenses on account of alleged lack of vouchers and 'plugging leakage of revenue' - HELD THAT: - The Assessing Officer made ad hoc disallowances from various expense heads on the ground that adequate supporting vouchers were not furnished. The Commissioner (Appeals) sustained those disallowances after comparing profit ratios between assessment years. The Tribunal found that the disallowances were made on an ad hoc basis without identification of specific missing documents or cogent reasoning, and that a slight reduction in profit ratios did not justify blanket ad hoc additions. Accordingly, the Tribunal set aside the orders of the authorities below and decided the issue in favour of the assessee. [Paras 15]

Ad hoc disallowances set aside; issue decided in favour of the assessee.

Final Conclusion: The appeal is allowed for statistical purposes: the discrepancy between Form 26AS and books is remitted to the Assessing Officer for verification after giving the assessee an opportunity to explain, and the ad hoc expense disallowances are set aside as unjustified.

Disallowance under section 36(1)(va) - employees' contribution treated as employer's income under section 2(24)(x) - deduction under section 36(1)(va) only if employees' share deposited before due date under relevant Acts - proviso to section 43B permitting deduction if paid before due date for furnishing return - processing of return under section 143(1)(a) - clause (ii) and clause (iv) - disallowance indicated in audit report (point 20(b)) as basis for adjustment under section 143(1)(a)(iv) - precedential effect of Supreme Court decision distinguishing employer's and employees' share (Checkmate Services principle)

Disallowance under section 36(1)(va) - employees' contribution treated as employer's income under section 2(24)(x) - deduction under section 36(1)(va) only if employees' share deposited before due date under relevant Acts - precedential effect of Supreme Court decision distinguishing employer's and employees' share (Checkmate Services principle) - proviso to section 43B permitting deduction if paid before due date for furnishing return - Validity of disallowance in the intimation under section 143(1) for delayed deposit of employees' share of PF/ESI under section 36(1)(va). - HELD THAT: - The Tribunal applied the Supreme Court's principle that employees' contributions constitute the employer's income under section 2(24)(x) but the deduction under section 36(1)(va) is permissible only if the employees' share is credited to the employees' account in the relevant fund on or before the due date prescribed by the relevant Act. The assessee's reliance on section 43B and its proviso (permitting deduction where payment is made on or before the due date for filing the return) cannot override the specific condition in section 36(1)(va) which requires deposit by the statutory due date. The Tribunal further held that the decision in Checkmate Services is declaratory and applies to earlier years; therefore the deduction could not be allowed where the actual deposit to the fund was after the statutory due date. [Paras 7, 10, 11, 15]

Disallowance made in the intimation under section 143(1) for late deposit of employees' share to PF/ESI is sustainable and the appeals raising this ground are dismissed.

Processing of return under section 143(1)(a) - clause (iv) - disallowance indicated in audit report (point 20(b)) as basis for adjustment under section 143(1)(a)(iv) - Whether the adjustment in the intimation could be made under clause (iv) of section 143(1)(a) on the basis of the audit report. - HELD THAT: - The Tribunal examined clauses (ii) and (iv) of section 143(1)(a) and Explanation (a). It concluded that where the audit report (point 20(b)) records the sum received from employees, the due date for payment and the actual date of payment, such specific indication of delayed deposit constitutes an indication of disallowance of expenditure within clause (iv). The limbs of clause (iv)-disallowance of expenditure and increase of income-are independent; in these cases the audit report's columns (due date and actual date of payment) clearly indicate contravention of the condition in section 36(1)(va) and therefore permitted adjustment in the intimation under section 143(1)(a)(iv). The Tribunal rejected the contention that the adjustment was not maintainable under section 143(1) because it did not fall within the enumerated adjustments. [Paras 8, 9, 10]

The adjustment in the intimation under section 143(1)(a)(iv) on the basis of the audit report's indication of delayed deposit is justified; the disallowance stands.

Remand for verification of audit report entries - Cases where audit report entries appear to be factually incorrect or conflate employees' and employer's shares - whether they require verification. - HELD THAT: - Two matters were identified with distinct factual irregularities in the audit report: (i) IT Cube Solutions where the auditor appears to have recorded due date and actual date for different years indicating a possible clerical error; (ii) Exfo Electro Optical Engineering where the auditor may have combined employees' and employer's shares. In both instances the Tribunal directed verification by the Assessing Officer and directed that disallowance under section 36(1)(va) be made, if warranted, after factual verification. These appeals were treated differently from the main batch and were allowed for statistical purposes pending compliance with the verification direction. [Paras 17, 18, 19]

Those two appeals are remitted for factual verification by the AO and are allowed for statistical purposes; disallowance to be made only if warranted after verification.

Final Conclusion: The Tribunal dismissed the assessee's appeal against the disallowance of delayed deposit of employees' PF/ESI contributions in the intimation under section 143(1) for Assessment Year 2019-20, holding that deduction under section 36(1)(va) is allowable only where employees' share is deposited by the statutory due date and that an audit report indicating delayed deposit justifies adjustment under section 143(1)(a)(iv); two appeals with specific factual inconsistencies in the audit report were remitted to the AO for verification and allowed for statistical purposes.

Grant of bail under Section 439 Cr.P.C. - Parity with co-accused for grant of bail - Medical grounds for bail - Previous rejection of bail applications as relevant consideration - Gravity of offence and investigation/charge-sheet status - Habitual-offender consideration in bail adjudication

Grant of bail under Section 439 Cr.P.C. - Gravity of offence and investigation/charge-sheet status - Previous rejection of bail applications as relevant consideration - Fourth bail petition under Section 439 Cr.P.C. dismissed and applicant not enlarged on bail. - HELD THAT: - The High Court applied conventional bail principles under Section 439 Cr.P.C., considering the nature and gravity of the offences (alleged clandestine carriage of foreign-origin gold and related customs offences), the fact that the investigation resulted in seizure and a chargesheet has been filed, and that earlier bail applications by the applicant had been rejected on merits. The court recorded that earlier orders dated 18/07/2022 and 07/11/2022 had refused bail after taking into account the facts and submissions, and found no material change in circumstances warranting a different conclusion. The court also noted that whether the applicant is a habitual offender is a matter to be determined at trial, and that the co-accused having been granted bail does not automatically entitle the applicant to parity where factual positions differ. On this composite basis the court refused to exercise its discretion in favour of bail.

Application for bail dismissed.

Parity with co-accused for grant of bail - Previous rejection of bail applications as relevant consideration - Parity with co-accused Shankar Singh Yadav rejected; applicant cannot claim bail merely because a co-accused was granted bail. - HELD THAT: - The court examined the contention that parity should be afforded with co-accused who obtained bail from the Supreme Court, but held that the present applicant's case is factually different from that of the co-accused. The earlier rejections of the applicant's bail applications after merits-based consideration weigh against applying parity. Hence parity was not accepted as a ground for bail.

Parity plea denied.

Medical grounds for bail - Grant of bail under Section 439 Cr.P.C. - Medical ground for bail rejected as insufficient to grant bail. - HELD THAT: - The court considered the medical report from the Central Jail (dated 06/03/2023) and noted that appropriate treatment had been and is being provided, that the applicant was referred and admitted for further procedures but declined surgery, and that required treatment is available in the Government hospital. On these findings the court concluded that the medical condition did not justify release on bail.

Medical plea for bail refused.

Final Conclusion: Having considered the nature and gravity of the alleged offences, the earlier merits-based refusals of bail, the absence of changed circumstances or sufficient medical justification, and the factual distinction from co-accused who obtained bail, the High Court dismissed the fourth bail application under Section 439 Cr.P.C.

Appealability of orders under the Custom Broker Licensing Regulations, 2013 - exclusive remedy under Regulation 21 of the Custom Broker Licensing Regulations, 2013 - complete code doctrine - interpretation of "any person aggrieved" in Section 129A of the Customs Act, 1962

Appealability of orders under the Custom Broker Licensing Regulations, 2013 - exclusive remedy under Regulation 21 of the Custom Broker Licensing Regulations, 2013 - interpretation of "any person aggrieved" in Section 129A of the Customs Act, 1962 - complete code doctrine - Whether the Revenue has a right to prefer an appeal under Section 129A or 129D of the Customs Act, 1962 against an order passed by the Commissioner under Regulations 21 or 23 of the Custom Broker Licensing Regulations, 2013. - HELD THAT: - The Court held that the Custom Broker Licensing Regulations, 2013 (CBLR) constitute a complete code governing disciplinary proceedings and appellate remedy in respect of actions under those Regulations. Regulation 21 confines the right of appeal from an order of the Commissioner to the Custom Broker himself, thereby prescribing the exclusive statutory remedy. Consequently, the general phrase "any person aggrieved" in Section 129A of the Customs Act, 1962 cannot be read to enlarge the class of appellants to include the Revenue where the subject-matter falls within the CBLR. The Court adopted and followed the decisions of the Co-ordinate Bench in Commissioner of Customs (General) v. Falcon India and Commissioner of Customs (General) v. D.S. Cargo Agency, which held that the Revenue is not included within "any person aggrieved" for orders under the CBLR. The Revenue's appeal under Section 129A/129D against the revocation order was therefore not maintainable. [Paras 7, 8, 9]

The appeal by the Revenue was held not maintainable and dismissed.

Final Conclusion: The appeal is dismissed; orders passed by the Commissioner under the Custom Broker Licensing Regulations, 2013 are subject to the appeals regime contained in those Regulations and the Revenue is not entitled to prefer an appeal under Sections 129A/129D of the Customs Act in respect of such orders.

Reassessment under Section 149 of the Customs Act - refund of duty following self-assessment - modification of self-assessment by statutory appeal or other remedial provisions - administrative public notice inconsistent with judicial ratio - applicability of concessional Basic Customs Duty under Notification No.57 of 2018

Reassessment under Section 149 of the Customs Act - refund of duty following self-assessment - modification of self-assessment by statutory appeal or other remedial provisions - Whether the petitioner could seek reassessment and refund under Section 149 despite not having pursued a statutory appeal against self-assessment, and whether the Public Notice barred such reassessment. - HELD THAT: - The Court examined the Supreme Court's pronouncement in ITC Ltd. v. Commissioner of Central Excise (paragraph 47 reproduced in the order) which holds that a claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law, and that such modification may be effected by way of appeal under Section 128 or under other relevant provisions of the Act. The impugned Public Notice (No.88 of 2019) was construed as placing a categorical restriction that reassessment would be allowed only if the order of assessment including self-assessment is modified by way of appeal. The High Court held that this formulation imposes an impermissible restriction because the Supreme Court recognised modification could be achieved by statutory appeal or 'other relevant provisions' of the Act. Accordingly, resort to Section 149 for reassessment and refund is not precluded by the Supreme Court's ratio and the Public Notice's narrower stipulation is inconsistent with that ratio. The Court therefore restored the petitioner's application for consideration under Section 149 for reassessment and refund in accordance with law and the Supreme Court's guidance. [Paras 5, 6, 7, 8]

The Public Notice's restrictive interpretation was held inconsistent with the Supreme Court's ratio; the petitioner may pursue reassessment and refund under Section 149 and the application is restored for consideration.

Applicability of concessional Basic Customs Duty under Notification No.57 of 2018 - administrative public notice inconsistent with judicial ratio - Whether the authority must reconsider the petitioner's claim for concessional BCD under Notification No.57 of 2018 and pass fresh orders. - HELD THAT: - The petitioner had paid Basic Customs Duty at a higher rate and contended entitlement to the concessional rate under the statutory Notification. The Court, noting that the document relied upon is a statutory Notification, directed that the respondent hear the petitioner, examine whether the Exemption/Concessional Notification applies, and pass orders afresh. The direction is to be carried out in conformity with the law, having regard to the correct legal position on reassessment and refund as stated in the earlier issue and the Supreme Court's guidance. The Court also referred to similar liberty granted in a prior order (Hewlett Packard Enterprise) as supporting the approach of permitting consideration under Section 149 with contemporaneous documents. [Paras 10]

Respondent directed to hear the petitioner on applicability of Notification No.57 of 2018 and decide the Section 149 application afresh within four weeks.

Final Conclusion: Writ petitions allowed; the petitioner's application for reassessment and refund restored to the file and the customs authority directed to hear and decide afresh on the applicability of the concessional Notification and the Section 149 claim within four weeks; no costs.

Recovery during investigation without adjudication - payment under protest - voluntary payment versus payment under coercion - pre-deposit - authority to collect tax under Article 265 of the Constitution - entitlement to refund with interest

Recovery during investigation without adjudication - authority to collect tax under Article 265 of the Constitution - The recovery of INR 1.5 crores from the petitioner during the course of search/investigation was without jurisdiction or authority of law and violative of Article 265 of the Constitution. - HELD THAT: - The court found it undisputed that no adjudication or order quantifying any duty/tax preceded the respondents' recovery of the amount on 15.10.2019. The respondents themselves admitted that the petitioner paid the sum under protest. In view of the Board/CBIC instructions and the authorities cited, recovery of tax by coercive measures during search or investigation, in the absence of an adjudication or other statutory liability, cannot be sustained. The court concluded that, on these facts, the respondents lacked jurisdiction to effect the recovery and the collection could not be treated as a lawful appropriation of tax. [Paras 11, 17, 24]

The recovery of INR 1.5 crores was without jurisdiction or authority of law and contravened Article 265; it was not a lawful collection of tax.

Payment under protest - voluntary payment versus payment under coercion - pre-deposit - The payment made by the petitioner was made under protest and lacked voluntariness; it is not to be treated as a voluntary pre-deposit validating the recovery. - HELD THAT: - The record (including the respondents' admission) and the circumstances of collection led the court to conclude the payment was made under protest and not voluntarily. The court applied precedents and administrative instructions addressing deposits during searches, holding that mere receipt of money during investigation does not convert it into a valid voluntary payment where coercion or absence of prescribed procedure exists. Accordingly, the payment retains the character of an unauthorized collection liable to be returned. [Paras 11, 16]

The amount was paid under protest and lacked the element of voluntariness; it cannot be treated as a voluntary pre-deposit.

Entitlement to refund with interest - The petitioner is entitled to a refund of the INR 1.5 crores recovered together with interest at 6% per annum from 15.10.2019 until payment. - HELD THAT: - Having held the recovery to be without authority and the payment to be under protest, the court directed refund as the appropriate relief. The court adopted the interest rate of 6% per annum and specified that interest shall run from the date of recovery (15.10.2019) until actual payment. The court ordered the respondents to refund the amount with interest within three months from receipt of the order, while leaving all substantive disputes arising from the show cause notice and adjudication proceedings open. [Paras 25]

Refund of INR 1.5 crores directed with interest at 6% p.a. from 15.10.2019 until payment; respondents to refund within three months.

Show cause notice and pending adjudication - The pendency of a subsequently issued show cause notice or ongoing adjudication does not validate or preclude the grant of refund for an earlier unauthorized recovery. - HELD THAT: - The court rejected the contention that initiation of adjudication after the date of recovery could legitimize the earlier collection. It observed that subsequent proceedings are independent and cannot be used to deny restitution where the initial recovery lacked statutory authority. The court, however, expressly kept all rival contentions raised in the adjudication proceeding open for determination in the appropriate forum. [Paras 17, 22]

Pending show cause notice or adjudication does not bar the refund of an amount recovered earlier without authority; rival contentions in adjudication are left open.

Requirement of application under Section 27 - Non-invocation of Section 27 of the Customs Act does not preclude grant of refund where the amount collected is an unauthorized pre-deposit. - HELD THAT: - The court examined Section 27 and relevant authorities and concluded that that provision applies where duty has been paid pursuant to an order; it does not govern restitution of amounts collected without any adjudicatory basis. Consequently, the revenue's reliance on absence of a formal refund application under Section 27 was not a ground to deny relief in the present facts. [Paras 21]

Failure to apply under Section 27 is not a bar to refund of an amount collected without adjudication; that contention is rejected.

Final Conclusion: Writ petition allowed. The recovery of INR 1.5 crores from the petitioner during search/investigation was held to be without authority of law and paid under protest; the respondents are directed to refund the amount with interest at 6% per annum from 15.10.2019 until payment within three months. All substantive disputes raised by the show cause notice remain open for adjudication.

Doctrine of unjust enrichment - applicability to pre-legislative refund claims - applicability to capital goods and raw materials/inputs - remand for fresh consideration by original authority

Doctrine of unjust enrichment - applicability to pre-legislative refund claims - Whether the doctrine of unjust enrichment can be applied to refund claims made prior to statutory recognition of the doctrine. - HELD THAT: - The Tribunal had held that in the absence of an express statutory provision the doctrine of unjust enrichment could not be applied to the respondent's refund claims. The High Court found this conclusion erroneous in light of binding Supreme Court authority which recognises that the doctrine is rooted in equity and may be invoked even where legislative recognition followed later. The Court observed that legislative provisions such as Section 11-B (and analogous customs provision) give statutory recognition to the doctrine but do not imply that the doctrine was unavailable before such recognition; accordingly, an assessee seeking refund must satisfy the test that the duty was paid and not passed on. The Court therefore held that the question whether unjust enrichment disentitles the respondent to refund must be examined by the original authority rather than being foreclosed by the absence of an express provision at the time of import. [Paras 7, 8]

The Tribunal's conclusion that unjust enrichment was inapplicable by reason of absence of an express provision was set aside and the matter remanded to the original authority to decide the refund claim applying the doctrine of unjust enrichment after affording opportunity to the respondent.

Doctrine of unjust enrichment - applicability to capital goods and raw materials/inputs - Whether the doctrine of unjust enrichment applies to capital goods and raw materials/inputs for the purpose of testing refund claims. - HELD THAT: - The Tribunal's approach had not tested whether higher duty paid on imported items such as capital goods or raw materials had resulted in higher costing or pricing of the final product. The High Court relied on Supreme Court precedent holding that costs of capital goods and raw materials form part of the product's costing and that unjust enrichment is applicable where such costs would have been passed into price. Consequently, the Court held that claims involving capital goods and raw materials must be examined on the question whether the duty burden was passed on; the Tribunal's contrary view was therefore erroneous. The High Court remanded the claim for fresh consideration by the original authority with directions to apply the principle to these categories after giving the assessee a reasonable opportunity. [Paras 7, 8]

The matter was remanded for the original authority to determine, with opportunity to the assessee, whether duty on capital goods or raw materials/inputs was passed on and therefore whether the doctrine of unjust enrichment precludes the refund.

Final Conclusion: The High Court set aside the Tribunal's conclusion that unjust enrichment could not be applied and remanded the refund claims to the original authority for fresh adjudication on the question of unjust enrichment, including claims relating to capital goods and raw materials/inputs, to be completed within twelve weeks after affording the respondent a reasonable opportunity.

Customs duty leviable on imported goods - quantity for valuation at time and place of importation - shore tank quantity as basis for payment of customs duty - transaction value under Customs Valuation Rules - Rule 9 adjustments to transaction value - application of Sections 13 and 23 regarding loss, pilferage or destruction

Shore tank quantity as basis for payment of customs duty - transaction value under Customs Valuation Rules - quantity for valuation at time and place of importation - application of Sections 13 and 23 regarding loss, pilferage or destruction - Rule 9 adjustments to transaction value - Customs duty on imported motor spirit is to be levied on the actual quantity received into the shore tank at the port (quantity at time and place of importation) and not on the invoice/bill of lading transaction quantity. - HELD THAT: - The Tribunal, applying the law laid down by the Hon'ble Supreme Court in Mangalore Refinery & Petrochemicals (supra), held that levy under Section 12 applies only to goods that have been brought into India and that valuation under Section 14 and the Customs Valuation Rules must be made for delivery at the time and place of importation. Rules 4 and 9 of the Customs Valuation Rules must be read together: transaction value relates to imported goods at the place and time of importation and is subject to the adjustments prescribed in Rule 9. Sections 13 and 23 permit remission or non-liability for goods lost, pilfered or destroyed before clearance for home consumption or warehousing; consequently the taxable event and the relevant quantity for duty are those goods actually received into the shore tank and entered for home consumption. The Tribunal rejected the distinction urged by revenue that ad valorem duty requires looking to bill of lading quantities, holding that whether duty is ad valorem or specific does not alter the statutory scheme which fixes valuation and quantity at the time and place of importation.

Appeal allowed: customs duty to be assessed on the actual shore tank quantity received at the port; demand based on invoice/bill of lading transaction quantity not sustainable.

Final Conclusion: The impugned order is set aside and the appeal is allowed to the extent that customs duty on the imported motor spirit shall be levied on the actual quantity received in the shore tank at the port (quantity at time and place of importation) and not on the invoice/bill of lading transaction quantity.

Denaturation requirement and applicability of IS 4117 - denatured ethyl alcohol versus undenatured ethyl alcohol - goods meant for re-export as distinct from clearance for home consumption - confiscation under Section 111(m) and 113(i) of the Customs Act, 1962 - penalties under Sections 112, 114, 114AA and 117 of the Customs Act, 1962 - Board Circular No. 02/2006 regarding denaturants and HSN note on Heading 22.07 - mis-declaration

Denaturation requirement and applicability of IS 4117 - goods meant for re-export as distinct from clearance for home consumption - Board Circular No. 02/2006 regarding denaturants and HSN note on Heading 22.07 - Whether the Board Circular prescribing adherence to IS 4117 for denaturation and related requirement of denaturants applied to the imported consignment which was deposited in a bonded warehouse for re-export. - HELD THAT: - The Tribunal held that Board Circular No. 02/2006 addresses denaturation for consignments of ethyl alcohol permitted clearance for industrial use in India and was issued in the context of ensuring uniformity where goods are cleared for home consumption. The circular and the BIS standard IS 4117 were intended to regulate denaturants where clearance into domestic consumption is sought. In the present case the goods were deposited in a bonded warehouse and were admitted as imported for re-export; there was no case that the goods were cleared for industrial use in India. Consequently the Circular's prescription of IS 4117 for imported consignments meant for domestic clearance does not apply to goods meant for re-export, and non-compliance with IS 4117 cannot be the basis for sustaining charges of mis-declaration or confiscation in this factual matrix. [Paras 5]

Board Circular No. 02/2006 and the IS 4117 requirement are not applicable to the consignment deposited for re-export; that ground cannot sustain confiscation or penalties.

Denatured ethyl alcohol versus undenatured ethyl alcohol - HSN note on Heading 22.07 - mis-declaration - Whether the imported goods were mis-described as denatured ethyl alcohol and liable to confiscation on the basis that they were not denatured as per Indian Standard. - HELD THAT: - The Tribunal examined the Chemical Examiner's report which confirmed that the goods were mixed with Bitrex/Denatonium Benzoate and were therefore denatured. The HSN note requires that spirits be mixed with substances to render them unfit for drinking; it does not prescribe a single mandated methodology. Given the Chemical Examiner's certification that the consignment was denatured with Bitrex and the absence of any allegation that the goods were fit for drinking, the Tribunal concluded there was no mis-declaration of description. The earlier commercial certificate mentioning 'undenatured' was issued prior to denaturation at anchorage and does not negate the post-arrival laboratory certification. [Paras 5]

The finding of mis-declaration is set aside; the goods are to be treated as denatured ethyl alcohol on the record before the Tribunal.

Confiscation under Section 111(m) and 113(i) of the Customs Act, 1962 - penalties under Sections 112 and 114 of the Customs Act, 1962 - Whether confiscation of imported goods and export goods and the penalties imposed under Sections 112 and 114 could be sustained. - HELD THAT: - Confiscation under the cited provisions is permissible only where goods are imported in contravention of prohibition under the Act or other law. The Tribunal found no prohibition or restriction applicable to the import or export of the subject goods in the facts of this case; DGFT clarification supported that FTP restrictions did not apply. As mis-declaration was not proved and the goods were admitted for re-export, the confiscation orders and the consequent penalties under Sections 112 and 114 are unsustainable in law and fact. [Paras 5, 6]

Confiscation and the penalties under Sections 112 and 114 are set aside.

Penalties under Section 114AA - bill of lading date mismatch - Whether penalty under Section 114AA could be imposed for alleged mismatch in the date of bill of lading. - HELD THAT: - The Tribunal recorded that the date appearing on the bill of lading presented by the appellant matched the date reported by the master/agent in the Import General Manifest filed in the department's EDI system. The warehouse bill of entry was assessed after verifying the EDI entry against the bill of lading, and the bill of lading itself recorded loading as part of a larger original lot on a specific date; statements by appellant's representatives corroborated this. In absence of contrary documentary or oral evidence, the allegation of an incorrect date on the bill of lading was unproved. [Paras 5]

Penalty under Section 114AA for mismatch in bill of lading date is not sustainable.

Penalty under Section 117 - failure to produce manufacturer's invoice - Whether inability of the appellant to produce the manufacturer's invoice (because the supplier was unwilling to share it) attracted penalty under Section 117. - HELD THAT: - The Tribunal observed that the supplier's unwillingness to furnish the manufacturer's invoice was beyond the control of the appellant. Given that the Tribunal found no mis-declaration on the facts, mere non-production of the manufacturer's invoice does not, by itself, constitute an offence warranting penalty under Section 117. There was no causal link established between non-production and any wrongful act by the appellant. [Paras 5]

Penalty under Section 117 cannot be imposed on the appellant for non-production of the manufacturer's invoice in these circumstances.

Final Conclusion: The appeal is allowed. The Tribunal set aside the findings of mis-declaration, the orders of confiscation and redemption fines, and the penalties imposed under the Customs Act; consequential relief, if any, is to follow in accordance with law.

Penalty for non-finalisation of provisional assessment - lenient view in imposing penalty - onus on department to establish deliberate delay or mala fide intention - Regulation 5 of Customs (Provisional Duty Assessment) Regulations, 2011

Penalty for non-finalisation of provisional assessment - lenient view in imposing penalty - onus on department to establish deliberate delay or mala fide intention - Whether the Adjudicating Authority was justified in imposing a nominal penalty instead of enhancing it to the maximum prescribed rate in respect of Bills of Entry not finally assessed - HELD THAT: - The Tribunal found that four Bills of Entry remained not finally assessed without any fault on the part of the appellant and that the department had not demonstrated any deliberate delay, mala fide intention or any revenue implication arising from the non-finalisation. The Tribunal relied on the principle that a penal enhancement under the relevant regulation is not warranted where non-finalisation results from absence of documents and not from deliberate default, and that a lenient view taken by the Adjudicating Authority in such circumstances is proper. The decision of the Commissioner (Appeals) to enhance the penalty to the maximum per Bill of Entry was rejected as no grounds were shown to justify departing from the Adjudicating Authority's discretionary leniency; precedent of this Tribunal on similar facts was held to be squarely applicable. [Paras 8, 9]

The Adjudicating Authority was correct in taking a lenient view and imposing a nominal penalty; the enhancement imposed by the Commissioner (Appeals) is set aside.

Final Conclusion: Appeal allowed; penalty of Rs.10,000 imposed by the Adjudicating Authority upheld and the order enhancing the penalty is set aside.

Levy of Customs Education Cess and Higher Education Cess on aggregate customs duties - Inclusion of Clean Energy Cess within aggregate customs duty - Clean Energy Cess as additional duty of customs under Customs Tariff Act - Interpretation of Finance Act provisions regarding Education Cess on imported goods

Levy of Customs Education Cess and Higher Education Cess on aggregate customs duties - Inclusion of Clean Energy Cess within aggregate customs duty - Clean Energy Cess as additional duty of customs under Customs Tariff Act - Whether the Clean Energy Cess component is includible in the aggregate customs duty for the purpose of calculating Customs Educational Cess and Higher Education Cess on imported coal. - HELD THAT: - The Tribunal agreed with the reasoning of the lower authorities that, although the Clean Energy Cess is levied as a duty of excise, it is made applicable to imported goods in the form of an additional duty of customs by operation of the Customs Tariff Act and therefore forms part of the aggregate customs duty. The Finance Act scheme levies Education Cess and Higher Education Cess on the aggregate of duties of customs levied and collected; consequently the Clean Energy Cess (being charged as an additional customs duty on imports) falls within that aggregate. The Tribunal adopted the detailed analysis and illustrative computation given by the original authority, and found no ambiguity in the statutory provisions or relevance in the case law relied upon by the appellant. On that basis the inclusion of the Clean Energy Cess in the customs duty base for calculation of Educational Cess and Higher Education Cess was upheld. [Paras 5, 6]

The Clean Energy Cess is includible in the aggregate customs duty for computation of Customs Educational Cess and Higher Education Cess; appeals dismissed.

Final Conclusion: Appeals dismissed; the Tribunal upheld the view that Clean Energy Cess, as charged on imports in the form of an additional customs duty, is part of the aggregate customs duty for calculation of Customs Educational Cess and Higher Education Cess.

Public policy of India - fraud vitiates all solemn acts - res judicata - Article 141 of the Constitution - Article 144 of the Constitution - Section 34(2)(b) of the Arbitration and Conciliation Act, 1996 - Section 34(2A) - patent illegality - power to amend/introduce grounds in Section 34 petition - causative link between fraud and making of arbitral award

Res judicata - Article 141 of the Constitution - Article 144 of the Constitution - Binding effect of the Supreme Court's findings in Civil Appeal No.5766/2021 on the Section 34 proceedings before the High Court - HELD THAT: - The Court held that the findings of the Apex Court in Civil Appeal No.5766/2021 - particularly the determinations in paragraphs 12 and 13 that Devas was incorporated for fraudulent purposes and its affairs were conducted fraudulently - constitute the ratio of that decision and are binding on the Single Judge and this Court. Applying established tests for ratio and obiter (including the inversion/Wambaugh test and authorities on ratio/obiter), the Court concluded that paragraphs 13.5-13.6 form part of the ratio insofar as they were necessary to uphold the winding up orders. The factual and documental basis for those findings was examined by the Supreme Court and was not challenged as fabricated; consequently those findings are final between the parties. Article 144 requires subordinate authorities to act in aid of the Supreme Court; therefore the Single Judge was entitled, and obliged, to treat those findings as binding when deciding the Section 34 petition. [Paras 56, 74, 80, 81, 114]

Findings in Civil Appeal No.5766/2021 on fraud are binding between the parties and operate as res judicata and under Articles 141/144 must be applied in the Section 34 proceedings.

Section 34(2)(b) of the Arbitration and Conciliation Act, 1996 - public policy of India - fraud vitiates all solemn acts - Validity of setting aside the ICC arbitral award under Section 34 on grounds of fraud, patent illegality and conflict with public policy - HELD THAT: - Having regard to the Supreme Court's conclusive findings that the Devas Agreement and the commercial relationship were a product of fraud and the documentary evidence underpinning those findings, the Court found no error in the Single Judge's conclusion that the ICC Award was vitiated. The court observed that an agreement produced by fraud infects consequent disputes and awards; where fraud goes to the root of the transaction, the award may be in conflict with the fundamental policy of Indian law and basic notions of morality and justice (Explanation 1 to Section 34(2)(b)). The Court, applying precedents on the limited scope of interference with awards (including the post 2015 framing of public policy and patent illegality), concluded that on the peculiar and grave facts established by the Supreme Court the making of the award was induced/affected by fraud and the award could be set aside. The Single Judge had also considered the amendment applications and the surrounding circumstances before arriving at the decision. [Paras 103, 104, 114]

The Single Judge correctly set aside the ICC Award under Section 34 as being tainted by fraud, patent illegality and in conflict with the public policy of India.

Section 34(2A) - patent illegality - power to amend/introduce grounds in Section 34 petition - causative link between fraud and making of arbitral award - Whether a Section 34 court may on its own discover grounds of fraud/public policy and permit or consider belated amendments to introduce such grounds - HELD THAT: - The Court accepted settled principles that while Section 34 proceedings are time barred as to fresh applications, the statutory language - notably the phrase "the court finds that" in Section 34(2)(b) and (2A) - permits the court to examine the award and, in appropriate circumstances, to permit or act upon amendment or suo motu grounds (including patent illegality and fraud) where justice so requires. The Apex Court's decisions (Hindustan Construction; Sal Udyog) recognise that courts have discretion to allow amendments or to invoke Section 34(2)(b)/(2A) even if particulars emerged after the original filing, and may suo motu find patent illegality. The Court further considered the question of causation: although a connection between the alleged fraud and the making of the award is required, the Court found that upon the Supreme Court's conclusive findings the fraud permeated the agreement and thus the causal nexus for annulling the award was established. The Singapore authority relied upon by the appellant (Bloomberry) was held inapplicable to the statutory scheme and facts of the present domestic arbitration. [Paras 96, 100, 101, 114]

A Section 34 court may, in appropriate circumstances, discover and act upon grounds of fraud/public policy and may permit or consider belated amendments; a causative link between fraud and the award is required but was satisfied on the established facts here.

Final Conclusion: The appeal is dismissed. The High Court correctly held that the Supreme Court's findings in Civil Appeal No.5766/2021 on fraudulent incorporation and conduct of Devas are binding and operate as res judicata; the ICC Award was vitiated by fraud, patent illegality and conflict with the public policy of India and was rightly set aside under Section 34; and the Section 34 court was entitled to examine and act upon those grounds (including by considering amendment/suo motu findings) in the interests of justice.

Rectification of company name - limitation period for rectification by registered proprietor - knowledge of incorporation versus date of incorporation for commencement of limitation - distinction between remedies under separate clauses of rectification provision - non applicability of limitation under repealed statute after enactment of new law - writ of prohibition for want of jurisdiction where proceedings are time barred

Limitation period for rectification by registered proprietor - knowledge of incorporation versus date of incorporation for commencement of limitation - Whether the application under the rectification provision filed by the registered proprietor in October 2016 was barred by the statutory limitation and whether limitation runs from date of incorporation or from date of knowledge of incorporation. - HELD THAT: - Section 16 provides two distinct modes for rectification: (a) action by the Central Government and (b) action on application by a registered proprietor, with the latter expressly subject to a three year period running from incorporation, registration or change of name. The petitioner was incorporated on 06.08.2009 and the registered proprietor's application was filed in October 2016. The Court rejected the submission that the three year period should run from the date on which the registered proprietor obtained knowledge of the petitioner's incorporation, observing that to read such a qualification into Section 16(1)(b) would amount to re writing the statute. The distinction drawn in earlier law between 'incorporation' and 'coming to notice of registration' demonstrates that the Legislature knows how to provide for a knowledge triggered limitation when intended; no such provision appears in Section 16(1)(b). Accordingly the application filed in October 2016 was time barred under the unambiguous statutory text and scheme. [Paras 24, 25, 26, 29, 30]

The application by the registered proprietor was barred by the three year limitation which runs from date of incorporation/registration/change of name; the contention that limitation commences from date of knowledge is rejected.

Distinction between remedies under separate clauses of rectification provision - rectification of company name - Whether the respondents could invoke the Central Government's power under the other clause of the rectification provision to avoid the limitation applicable to a registered proprietor's application. - HELD THAT: - Section 16 contemplates two separate remedial routes: initiation by the Central Government under one clause without a time limit and initiation by a registered proprietor under another clause subject to a three year limit. The Court held that a third party cannot transmute its application into a Central Government exercise merely to circumvent the time bar applicable to proprietor initiated applications. The fact that the impugned application mentioned Section 16 generally does not convert a proprietor's application into one cognisable under the Central Government clause; the statutory scheme requires that the distinct procedures be followed. [Paras 27, 28, 29, 30, 31]

The remedy available to the Central Government under the separate clause cannot be invoked to rescue a proprietor's time barred application; the distinct routes under Section 16 must be respected.

Non applicability of limitation under repealed statute after enactment of new law - Whether the limitation provisions under the Companies Act, 1956 could be relied upon to extend or revive the period for seeking rectification after repeal and replacement by the Companies Act, 2013. - HELD THAT: - The Court analysed the effect of repeal of the 1956 Act and the coming into force of the 2013 Act. Relying on established principles that a repealed statute's procedural timelines do not continue to benefit parties after replacement, and that a new enactment does not revive 'dead' remedies, the Court held there was no scope to import or revive the five year limitation under the 1956 Act. The 1956 Act ceased to have force save as saved by transitional provisions, and there was no saving which entitled the respondent to the benefit of the earlier limitation for the present application. [Paras 35, 40, 41, 42, 43]

The limitation under the repealed Companies Act, 1956 cannot be invoked to revive or extend the period for seeking rectification after the 2013 Act came into force; that argument is rejected.

Writ of prohibition for want of jurisdiction where proceedings are time barred - rectification of company name - Whether a writ of prohibition should issue to restrain the Registrar/Joint Director from continuing the rectification proceedings on the ground that they are vitiated by want of jurisdiction due to limitation. - HELD THAT: - Having found that the proprietor's application was time barred and that no valid basis existed to treat the application as falling under the Central Government's unconstrained power, the Court addressed the appropriateness of relief by way of prohibition. The Court noted that although the petitioner had participated in the administrative proceedings, it had consistently raised the jurisdictional objection and that the petition had been pending since 2017. The writ of prohibition is a supervisory remedy to prevent an inferior authority from proceeding when it lacks jurisdiction; where the bar of limitation is a jurisdictional fact, prohibition is an appropriate remedy. Applying these principles, the Court concluded that remitting the matter would be unjustified and that prohibition should issue. [Paras 15, 16, 17, 50, 52]

Writ of prohibition issued restraining the Registrar/Joint Director from continuing the rectification proceedings, for want of jurisdiction as the application is time barred; writ petition allowed.

Final Conclusion: The Court held that the proprietor's application for rectification filed in October 2016 was time barred because the three year limitation under the rectification provision runs from the date of incorporation/registration/change of name, not from date of knowledge; the plea to rely upon earlier limitation under the repealed Act was rejected; and a writ of prohibition was granted restraining the Registrar/Joint Director from proceeding further on the time barred application.

Pre-existing dispute - corporate insolvency resolution process - Section 9 of the Insolvency and Bankruptcy Code, 2016 - service of demand notice under Section 8 - acknowledgement of debt - plausible contention test in Mobilox

Pre-existing dispute - plausible contention test in Mobilox - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Existence of a pre-existing dispute between the parties prior to issuance of the demand notice and its effect on maintainability of a Section 9 petition. - HELD THAT: - The Tribunal examined the documentary communications relied upon by the Respondent - emails dated 07.08.2014, 27.03.2015, 01.02.2016, 25.03.2016 and 08.04.2016 - and concluded that these communications indicate complaints about quality, wastage, delay and rejection by the foreign buyer, and a consequent loss claimed by the Respondent. Applying the standard that the adjudicating authority must reject an application under Section 9 if a real pre-existing dispute exists (as clarified by the plausible contention test in Mobilox), the Tribunal found that the material on record showed a dispute prior to issuance of the Section 8 demand notice. The Tribunal noted that discrepancies as to the authenticity of ledgers and the fact of subsequent communications asserting rejection and loss after the ledger entries further supported the existence of dispute. On the totality of these materials the Adjudicating Authority's conclusion that a pre-existing dispute existed was endorsed. [Paras 11, 12]

The existence of a pre-existing dispute was held to be established on the record, rendering the Section 9 petition not maintainable and justifying dismissal of the appeal.

Service of demand notice under Section 8 - Section 8 of the Insolvency and Bankruptcy Code, 2016 - Validity of service of the demand notice under Section 8 where delivery was shown as returned with remark 'Left'. - HELD THAT: - The Tribunal referred to the requirement of 'delivery' of the demand notice under Section 8 and noted judicial authorities holding that return of statutory notice marked 'left' or unclaimed does not constitute valid service. While the Appellant contended the notice was delivered, the Adjudicating Authority and the Tribunal considered the absence of unimpeachable proof of receipt alongside the established pre-existing dispute. The Tribunal observed that, in any event, the pre-existing dispute rendered the Section 9 petition infirm irrespective of the contested service particulars.

Service marked as 'left' was treated as insufficient proof of valid delivery, and combined with the pre-existing dispute the Section 9 petition was held not maintainable.

Acknowledgement of debt - representation of debt in financials - Whether ledger entries and sales tax forms amounted to an acknowledgment of debt sufficient to sustain the Section 9 petition. - HELD THAT: - The Tribunal observed that ledger entries relied upon by the Appellant were challenged as unauthentic and undated, and the seal and signatures were disputed. The Tribunal further referred to precedent that mere representation of debt in financial documents does not necessarily amount to an acknowledgement of debt for the purposes of initiating CIRP. Given the doubts about authenticity of the ledgers and the subsequent communications by the Respondent alleging rejection and loss, the Tribunal upheld the Adjudicating Authority's view that the ledgers and sales tax forms did not conclusively establish an undisputed debt. [Paras 10, 11]

The ledger entries and sales tax forms were held insufficient, in the circumstances, to constitute an unequivocal acknowledgement of debt that would negate the pre-existing dispute.

Final Conclusion: The impugned order of the Adjudicating Authority dismissing the Section 9 petition was affirmed: the record showed a pre-existing dispute which rendered the petition not maintainable, and the appeal is dismissed; I.A., if any, stands disposed of and there is no order as to costs.

Completeness of application under Section 7 of the I&B Code, 2016 - rectification of defects in insolvency applications - requirement of valid authorisation/authority letters and verification - duty to pass a speaking reasoned order - remand for de novo consideration with opportunity of hearing

Completeness of application under Section 7 of the I&B Code, 2016 - rectification of defects in insolvency applications - requirement of valid authorisation/authority letters and verification - duty to pass a speaking reasoned order - Whether the Section 7 application was complete and whether the Adjudicating Authority properly considered and addressed the defects and objections relating to authority letters, signatures, verification and compliance with Form I before admitting the petition. - HELD THAT: - The Tribunal examined the requirements of Section 7, including the proviso mandating an opportunity to rectify defects, and the need for genuine authorisation and proper verification of affidavits and application documents. It held that the Adjudicating Authority's admission order (reproduced at para 15 of the impugned order) was cryptic and did not engage with the objections raised about absence or genuineness of authority letters, signatures differing from sale agreements/PAN, and alleged non-compliance with Form I and verification requirements. Applying the principles that rectification provisions are directory but that an adjudicating authority must record clear reasons and afford opportunity to cure defects, the Tribunal found the impugned order unsustainable on this score. Consequently, the impugned admission was set aside to secure ends of justice and because the defects and objections were not properly considered in a speaking, reasoned order.

Impugned order admitting the Section 7 petition is set aside for failure to consider and reason on the defects and objections; matter remitted for fresh consideration.

Remand for de novo consideration with opportunity of hearing - principles of natural justice and speaking order - Whether the matter should be remitted to the Adjudicating Authority for fresh adjudication on merits and what directions should be given on further proceedings. - HELD THAT: - Having set aside the impugned order on the procedural infirmity described above, the Tribunal declined to express any opinion on the substantive merits of the other contentions (including whether the project should be treated as a single project or distinct phases, and treatment of joint allottees). It directed that the Adjudicating Authority consider all factual and legal aspects afresh, provide adequate hearing to parties, adhere to principles of natural justice, and pass a speaking, reasoned order on merits. The Tribunal further indicated a preferable timeline of deciding the petition de novo within twelve weeks, uninfluenced by observations made in this appellate order.

Proceedings remitted to the Adjudicating Authority for de novo adjudication on merits with directions to give adequate hearing and to pass a speaking, reasoned order preferably within twelve weeks; no opinion expressed on merits.

Final Conclusion: The admission order under Section 7 is set aside for failure to consider and reason on alleged defects and authorisation/verification issues; the petition is remitted to the Adjudicating Authority for fresh, de novo consideration of all factual and legal aspects with opportunity of hearing and for a speaking, reasoned order within the directed timeframe.

Summary order. Delay in Diary No.18113/2021 condoned; no substantial question of law for consideration; appeals dismissed and pending applications disposed of.

Delay in adjudication - principles of natural justice - relegation to appellate remedy - reasoned adjudication - opportunity of hearing - participation in adjudication proceedings

Delay in adjudication - relegation to appellate remedy - Whether the long delay of adjudication of the show cause notice vitiates the order-in-original and warrants quashing of the order. - HELD THAT: - The court found that although there was a protracted delay in adjudication, the petitioner had participated in the adjudication proceedings at various stages and filed substantive submissions. The grounds raised before the adjudicating authority were essentially on merits. In these circumstances the High Court declined to quash the adjudication order on account of delay and instead relegated the petitioner to the statutory appellate remedy under section 35B of the Excise Act, 1944. The court recorded that the appellate forum can consider contentions relating to delay and other grounds available on merits, and that the pendency of the writ petition will be considered by the Tribunal if an appeal is filed. [Paras 10, 11]

Petition dismissed and petitioner relegated to appeal under section 35B of the Excise Act, 1944.

Principles of natural justice - opportunity of hearing - reasoned adjudication - participation in adjudication proceedings - Whether there was any breach of the principles of natural justice or failure to afford an opportunity of hearing justifying interference with the adjudication order. - HELD THAT: - The court observed that the record of the adjudication shows the petitioner was represented, availed personal hearing opportunities, and filed written submissions which the adjudicating authority specifically noted and considered. The impugned order was held to be a reasoned order passed after affording opportunity of hearing. There was no demonstration by the petitioner of any denial of the principles of natural justice that would warrant setting aside the order before entertaining the statutory appeal. [Paras 6, 7, 10]

No breach of principles of natural justice established; no interference with the order on this ground.

Final Conclusion: Writ petition dismissed; petitioner relegated to the appellate remedy under section 35B of the Excise Act, 1944, and the Tribunal is directed to take into account the period during which the petition was pending in this Court if an appeal is filed.

Assessable value determined by sale from depot under Rule 7 - refund of excess excise duty on subsequent discount - order must not travel beyond scope of show cause notice - provisional assessment not a precondition for refund - principle of unjust enrichment and verification by documents

Assessable value determined by sale from depot under Rule 7 - refund of excess excise duty on subsequent discount - Entitlement to refund of excess excise duty where goods were removed from factory on presumptive value but discounts were given at depot, resulting in lower transaction value. - HELD THAT: - The Tribunal found that removals from factory were effected on a presumptive value and the final transaction value crystallised at the time of sale from the depot. The discounts given at the depot were not in dispute as to nature or quantum and therefore were not includible in the assessable value. Consequently, any excess duty paid at factory clearance vis-a -vis the depot sale value prima facie gives rise to a refund claim under the valuation rule envisaging depot sale value as the assessable value. The Tribunal accepted the appellants' contention that the admitted excess payment of duty must be refunded subject to verification of supporting documents and entries, and directed remand for such verification and fresh adjudication. [Paras 4, 5]

Appellant is prima facie entitled to refund of excess duty computed by comparing factory clearance value with depot sale value; matter remanded to Adjudicating Authority for verification and fresh order.

Order must not travel beyond scope of show cause notice - provisional assessment not a precondition for refund - Validity of rejecting the refund claim by relying on the appellant's failure to opt for provisional assessment, when such ground was not taken in the show cause notice. - HELD THAT: - The Tribunal held that the lower authorities erred in rejecting the refund solely because the appellant had not availed provisional assessment, a ground not pleaded in the show cause notice; an adjudicatory order cannot travel beyond the scope of the notice. Further, non-availment of provisional assessment does not alter the statutory valuation provision which prescribes depot sale value under Rule 7 as the basis for duty. Reliance on provisional assessment to deny refund was therefore impermissible and the methodology for adjustment of excess duty could not be impugned on that basis. [Paras 4, 5]

Rejection of refund on ground of non-availment of provisional assessment is unsustainable; matter remanded for fresh consideration without treating provisional assessment as prerequisite.

Principle of unjust enrichment and verification by documents - Application of the principle of unjust enrichment to the refund claim and the requirement of verification of evidence that duty incidence was not passed on. - HELD THAT: - The Tribunal observed that the appellants submitted Chartered Accountant certificate and JV entries to show that the incidence of the duty for which refund was sought was not passed on to any other person. On the question of unjust enrichment, the Tribunal did not finally decide the factual satisfaction but directed that the Adjudicating Authority verify the submitted documents and entries before passing a fresh order, treating the refund as prima facie allowable subject to such verification. [Paras 4, 5]

Principle of unjust enrichment requires verification; refund allowed prima facie subject to verification of the appellants' documents and entries by the Adjudicating Authority.

Final Conclusion: The appeal is allowed by way of remand: the impugned order is set aside and the matter is remitted to the Adjudicating Authority to verify the documents and JV entries, and to pass a fresh order on the refund claim in accordance with the Tribunal's observations that depot sale value under Rule 7 governs assessable value, provisional assessment is not a prerequisite, and unjust enrichment must be examined on the verified material.

Remission of duty - actual physical loss versus volumetric variation due to temperature - contraction and expansion of petroleum products with temperature change - interpretation of conditional permission for storage - unjust enrichment

Actual physical loss versus volumetric variation due to temperature - contraction and expansion of petroleum products with temperature change - Whether the shortfall between loaded and unloaded quantities attracted duty where the difference was attributable to contraction caused by temperature variation and not to physical loss. - HELD THAT: - The Tribunal accepted the appellant's case that the discrepancy in KL arose from contraction due to temperature differences between loading and unloading and not from any diminution in weight; the recorded MT remained virtually unchanged. Board circulars were noted as recognising volumetric variation of petroleum products with temperature. The Commissioner's condition prohibiting remission for loss during handling, transit, storage or in case of accident or natural calamity or "whatsoever" applies to actual loss of goods. Where weight remains intact and the variation is a temperature-driven volumetric contraction, there is no physical loss and thus no occasion for duty to be leviable on that account. Consequently, the duty paid on the alleged shortage was held not sustainable and required to be refunded. [Paras 4]

There was no physical loss; the variation was due to temperature-induced contraction and duty demand on that alleged shortage is unsustainable.

Interpretation of conditional permission for storage - remission of duty - unjust enrichment - Whether para 2(v) of the Commissioner's permission letter barred refund in the facts of this case, and whether refund would be barred by unjust enrichment. - HELD THAT: - The Tribunal interpreted para 2(v) as applicable only when there is a real loss of goods; it does not extend to volumetric variation caused by temperature changes where no physical loss has occurred. The Tribunal further recorded that the appellant had reflected the refunded amount in its books and had satisfied the authorities that the incidence of the refund was not passed on to any other person, thereby negating the defence of unjust enrichment. On these bases the impugned orders rejecting the refund claim were set aside and the duty paid was ordered to be refunded. [Paras 4, 5]

Para 2(v) does not bar refund where there is no actual loss; unjust enrichment defence was negatived and refund ordered.

Final Conclusion: Appeal allowed: duty paid on the alleged shortage was refundable because the discrepancy arose from temperature-induced volumetric contraction and not from actual loss; the condition barring remission did not apply and unjust enrichment was not established.

Interpretation of exemption notification - 'in or in relation to the manufacture' and 'ordinarily carried on with the aid of power' - Place of use of power and identity of user irrelevant for exemption - Manufacture-in-relation clause focuses on processes, not manufacturer or factory - Burden of proof on assessee to show applicability of exemption - Exemption notifications to be interpreted strictly (Dilip Kumar principle)

Interpretation of exemption notification - 'in or in relation to the manufacture' and 'ordinarily carried on with the aid of power' - Place of use of power and identity of user irrelevant for exemption - Burden of proof on assessee to show applicability of exemption - Whether the appellants are entitled to exemption under Notification No. 4/2006-CE dated 1.3.2006 for matches when they procured machine-dipped match splints (manufactured with the aid of power) from other manufacturers and thereafter undertook manual box filling and packing. - HELD THAT: - The Tribunal applied the majority view in the earlier Sri Ganapathy Packing reference and held that the exemption at Sl. No. 72 is dependent on the goods being such that none of the listed processes are 'ordinarily' carried on with the aid of power. The notification uses the phrase 'in or in relation to the manufacture' and conditions exemption on absence of power in specified processes; the place where power is used or the identity of the person using power is irrelevant. Reliance was placed on the ratio in Standard Fireworks and the constitutional-bench principle in Dilip Kumar that exemption notifications must be strictly construed and any ambiguity resolved in favour of the revenue. Consequently, where machine-dipped splints (produced with power) form part of the manufacture and one of the listed processes (dipping) is ordinarily carried on with aid of power, the exemption cannot be allowed to a subsequent purchaser who only undertakes manual box filling and packing. The onus remains on the assessee to prove that the listed processes are not ordinarily carried on with power; that burden was not discharged. [Paras 6, 8]

The appellants are not entitled to the benefit of Notification No. 4/2006-CE and the demands confirmed by the impugned orders are sustained; appeals dismissed.

Final Conclusion: Applying the majority reasoning in the tribunal reference and the binding principles in Standard Fireworks and Dilip Kumar, the Tribunal dismissed the appeals and upheld the denial of exemption under Notification No. 4/2006-CE where intermediate processes were ordinarily carried on with the aid of power.

Disallowance of Input Tax Credit due to return mismatch - reversal of Input Tax Credit for alleged non-movement of goods - procedure for verification of mismatch under Circular No.5 of 2021 - awaiting authoritative pronouncement before finalisation of assessments

Disallowance of Input Tax Credit due to return mismatch - procedure for verification of mismatch under Circular No.5 of 2021 - principles of natural justice in show cause proceedings - Assessments which disallowed Input Tax Credit on account of alleged mismatch between returns are to be redone in accordance with the procedure laid down in Circular No.5 of 2021. - HELD THAT: - The Court recorded that the dispute concerning denial of ITC arises from alleged mismatches between returns filed by the petitioners and those filed by counter-parties. The judgment notes that a bench decision in M/s. JKM Graphics Solutions and parts of Circular No.5 of 2021 set out specific steps for verification, reconciliation and enquiry. The assessing authority is directed to follow the circular's prescribed procedure: listing pending mismatch cases, verifying mismatch transaction reports against data at both ends, reconciling clerical or inadvertent errors and dropping action where reconciliation succeeds, issuing notices with opportunity to show cause where reconciliation fails, obtaining requisite verifications from the other-end assessing authority, summoning the other-end dealer where necessary, granting personal hearing (physical or virtual) and otherwise adhering to principles of natural justice. The circular also prescribes timelines and supervisory oversight by Territorial Deputy Commissioners. In view of these directions, the impugned assessments premised on mismatch are set aside and remitted for fresh decision strictly in accordance with Circular No.5 of 2021. [Paras 3, 4, 7]

Assessments disallowing ITC for mismatch set aside and to be redone in accordance with Circular No.5 of 2021, following the verification and hearing procedures therein.

Reversal of Input Tax Credit for alleged non-movement of goods - awaiting authoritative pronouncement before finalisation of assessments - reference to higher court decisions in analogous matters - Assessments or reversals of ITC predicated on alleged non-movement of goods are to be kept in abeyance pending the decision in W.A.No.2607 of 2021 and the Supreme Court's pronouncement in State of Karnataka v Ecom Gill Coffee Trading Pvt. Ltd., and finalised thereafter within a stipulated period. - HELD THAT: - The Court observed that disputes concerning reversal of ITC on the ground of non-movement of goods were the subject of reserved orders in W.A.No.2607 of 2021 and that the Supreme Court has recently considered the question in State of Karnataka v Ecom Gill Coffee Trading Pvt. Ltd. Given these pending authoritative determinations on the same controversy, the assessing authority is directed to await the decision in W.A.No.2607 of 2021. Thereafter, the assessing authority shall complete the assessments in light of the Supreme Court judgment and the Division Bench decision, and finalise the matters within 12 weeks from the date of pronouncement in W.A.No.2607 of 2021. This effectively remits the question for determination after the cited decisions are rendered. [Paras 5, 6, 7]

Proceedings concerning reversal of ITC for alleged non-movement of goods are stayed pending the outcome of W.A.No.2607 of 2021 and to be finalised thereafter in light of the Supreme Court and Division Bench decisions, within 12 weeks of that pronouncement.

Final Conclusion: The impugned assessments are set aside: matters involving mismatched returns are remitted for fresh adjudication in accordance with Circular No.5 of 2021 and associated directions; matters alleging non-movement of goods are to await the decision in W.A.No.2607 of 2021 and the Supreme Court's guidance, and thereafter completed within 12 weeks. Writ petitions disposed of accordingly; no costs.

Power under Section 70(1) - revisionary jurisdiction - opportunity of being heard - non-speaking order - erroneous in so far as it is prejudicial to the interest of revenue

Power under Section 70(1) - revisionary jurisdiction - opportunity of being heard - non-speaking order - erroneous in so far as it is prejudicial to the interest of revenue - Validity of the show-cause notice dated 21.05.2020 and the order dated 10.12.2020 issued by the Commissioner under Section 70(1) of the TVAT Act, 2004 - HELD THAT: - The Commissioner's power under Section 70(1) permits calling for and examining proceedings and, after giving the dealer an opportunity of being heard and making such enquiry as necessary, passing orders that may enhance, modify or cancel an assessment if it is found to be erroneous and prejudicial to the revenue. The revisional order impugned was a non-speaking order passed without affording personal hearing despite the petitioner's request for exemption from personal appearance and without any proper explanation or identification of a jurisdictional error in the original assessment. The Court found no jurisdictional error in the assessing authority's order and concluded that the revisional authority acted beyond the scope of Section 70(1) by suo motu passing an order that remanded the matter without recording reasons and without verification of records. Such casual and arbitrary exercise of revisionary power, motivated by preventing a refund, was held impermissible. In consequence, the notice and order issued under Section 70(1) were quashed for being beyond jurisdiction and non-speaking, and for failing to comply with the requirement of providing a reasoned opportunity to the dealer before altering the assessment. [Paras 11, 12, 13, 14, 15]

The show-cause notice dated 21.05.2020 and the order dated 10.12.2020 issued by the Commissioner under Section 70(1) are set aside as beyond jurisdiction and non-speaking; the writ petition is allowed and costs are imposed on the revisional authority.

Final Conclusion: Writ petition allowed; impugned notice dated 21.05.2020 and order dated 10.12.2020 set aside. Revisional authority directed to pay costs of Rs. 25,000 to the Tripura High Court Bar Association within one month; pending applications, if any, disposed of.

Taxability of superfine kerosene oil (SKO) - penalty under Section 86(17) and Section 86(10) of the DVAT Act - clerical/typographical error in return - admissibility and consideration of revised returns and chartered accountant's certificate - remand to Objection Hearing Authority for fresh determination of turnover

Taxability of superfine kerosene oil (SKO) - penalty under Section 86(17) of the DVAT Act - Levy of tax and penalty in respect of sales of SKO for the period in question. - HELD THAT: - The Appellate Tribunal upheld the assessment treating sales of SKO amounting to the recorded turnover as taxable at the rate of 4% and sustained the levy of penalty equivalent to the tax amount, on the view that the assessee was aware of the taxability since VAT had been paid on purchases in the preceding month. The appellant before this Court did not dispute the Appellate Tribunal's finding on this point. The Court therefore did not revisit the substance of the taxability or the penalty sustained insofar as it relates to the SKO sales and the corresponding amount sustained by the Tribunal. [Paras 16, 17, 21]

The assessment treating SKO sales as taxable and the levy of penalty (to the extent sustained by the Appellate Tribunal) is left intact.

Clerical/typographical error in return - admissibility and consideration of revised returns and chartered accountant's certificate - remand to Objection Hearing Authority for fresh determination of turnover - Whether the reported turnover of Rs.1,38,82,000 was a typographical error and the correct turnover is Rs.13,82,000, and whether the revised returns and CA certificate should have been considered. - HELD THAT: - The Court found that the contention of a typographical error was prima facie not insubstantial because (i) the tax computed in the original returns corresponded to turnover of Rs.13,82,000, (ii) the assessee produced books of account subjected to audit which would disclose the correct turnover, and (iii) the assessee filed a revised return and a chartered accountant's certificate reflecting the lower turnover. The Court held that the Appellate Tribunal erred in disregarding those materials on the ground of belated filing without properly considering their probative value. In view of these facts, the Court could not concur with the Tribunal's outright rejection and directed that the Objection Hearing Authority examine all relevant records, afford the assessee an opportunity to be heard, and determine the correct turnover for the period in question. [Paras 25, 26, 27, 28, 29]

The Tribunal's rejection of the appellant's claim of a clerical error is set aside and the issue is remanded to the OHA for fresh consideration after examining the revised returns, the books of account and the CA certificate and affording the appellant an opportunity to be heard.

Final Conclusion: The appeal is disposed of by upholding the assessment and penalty insofar as they relate to the SKO sales as sustained by the Appellate Tribunal, and by setting aside the Tribunal's rejection of the appellant's claim of a typographical error in reporting turnover of Rs.1,38,82,000 (allegedly Rs.13,82,000) - that issue is remanded to the Objection Hearing Authority for fresh determination after consideration of the revised returns, books of account and CA certificate and after affording the appellant an opportunity of hearing.

Binding effect of a sanctioned rehabilitation scheme under SICA - scope of the term creditors under SICA (including unsecured creditors) - option to opt out of a sanctioned SICA scheme by an unsecured creditor - power of BIFR under Section 18 to scale down/vary dues for financial reconstruction - interaction of suspension of proceedings under Section 22 with finality of sanctioned scheme - constitutional validity under Article 300A of scaling down of dues by a sanctioned scheme - primacy of a special statute (SICA) over general laws in matters of rehabilitation

Binding effect of a sanctioned rehabilitation scheme under SICA - scope of the term creditors under SICA (including unsecured creditors) - power of BIFR under Section 18 to scale down/vary dues for financial reconstruction - The rehabilitation scheme sanctioned by BIFR under Section 18 of SICA binds all creditors, including unsecured creditors, and requires them to accept the scaled down value of their dues as provided in the sanctioned scheme. - HELD THAT: - The legislative scheme and objects of SICA show that BIFR's primary concern is revival of sick industrial companies and that Section 18 empowers preparation and sanction of schemes providing for financial reconstruction, including reduction or variation of creditors' dues. Section 18(7) makes the sanction conclusive evidence and Section 18(8) makes the sanctioned scheme binding on the company and its creditors. Interpreting "creditors" narrowly to exclude unsecured creditors would frustrate the remedial purpose of SICA and render rehabilitation schemes unworkable because revival requires collective sacrifices by concerned parties. As a special statute designed to secure broader public interest, SICA prevails over inconsistent general laws, and permitting unsecured creditors to opt out would enable minority creditors to frustrate sanctioned schemes and the object of the Act. Consequently an unsecured creditor cannot remain outside a sanctioned scheme and later claim full recovery contrary to the scheme. [Paras 11, 12, 15]

The Court held that a sanctioned rehabilitation scheme under Section 18 binds all creditors including unsecured creditors, who must accept the scaled down dues provided by the scheme.

Option to opt out of a sanctioned SICA scheme by an unsecured creditor - interaction of suspension of proceedings under Section 22 with finality of sanctioned scheme - An unsecured creditor does not have an option to opt out of a sanctioned rehabilitation scheme and await recovery of full dues post rehabilitation; the possibility of suspension of proceedings under Section 22 does not entitle a creditor to remain outside the scheme and claim superior rights later. - HELD THAT: - Although Section 22 provides for suspension of legal proceedings while a scheme is under preparation or implementation, that suspension cannot be read as empowerment for unsecured creditors to remain outside the scheme permanently. Allowing such an option would undermine collective sacrifices required for revival and could lead to reversion of a revived company to sickness if full payment to opting-out creditors were later enforced. The scheme's binding effect on creditors is intended to secure revival and prevent minority obstruction; suspension under Section 22 is a protective measure but does not negate the finality and binding nature of a sanctioned scheme under Section 18(8). [Paras 11, 13]

The Court held that unsecured creditors cannot opt out of the sanctioned scheme and later seek full recovery; Section 22's suspension does not confer such an option.

Constitutional validity under Article 300A of scaling down of dues by a sanctioned scheme - primacy of a special statute (SICA) over general laws in matters of rehabilitation - Scaling down of creditors' dues under a rehabilitation scheme sanctioned by BIFR does not amount to unconstitutional deprivation of property under Article 300A, provided the scheme is framed and sanctioned under the statutory procedure in SICA. - HELD THAT: - Deprivation claimed by unsecured creditors is effected by operation of a statutory scheme enacted for public purpose and implemented after the procedure contemplated by Section 18(3) (publication for suggestions and objections) and sanction under Section 18(4). The Court held that such statutory authority for scaling down, exercised by BIFR within the SICA framework, is 'by authority of law' and aimed at rehabilitation in public interest; thus the reduction of dues pursuant to a sanctioned scheme is not a confiscation violative of Article 300A. The special statute character of SICA and its object of preserving employment and productive assets underpin this conclusion. [Paras 11, 14]

The Court held that scaling down of dues by a sanctioned SICA rehabilitation scheme does not violate Article 300A of the Constitution.

Final Conclusion: The judgments of the Delhi High Court in Continental Carbon India Ltd. (which held that unsecured creditors may opt out of sanctioned SICA schemes) and the consequent reliance upon it by other High Courts are quashed and set aside; a rehabilitation scheme sanctioned by BIFR under Section 18 of SICA binds all creditors including unsecured creditors, who must accept the scaled down dues specified in the sanctioned scheme, and such scaling down is not unconstitutional under Article 300A.