TaxTMI Updates e-Newsletter
Mar 23,2022

Anticipatory bail under Section 438 Cr.P.C. - investigation under the Central Goods and Services Tax Act, 2017 - cooperation with investigation as factor against arrest - personal liberty under Article 21 of the Constitution - protection until conclusion of inquiry or assessment - conditional grant of pre-arrest relief

Anticipatory bail under Section 438 Cr.P.C. - cooperation with investigation as factor against arrest - protection until conclusion of inquiry or assessment - conditional grant of pre-arrest relief - Whether the applicant, who is implicated in an investigation under the CGST Act and has cooperated with the authorities, is entitled to anticipatory bail and on what terms. - HELD THAT: - The Court found that the applicant has consistently cooperated with the respondents by responding to summons, providing documents and submitting to recording of statement; there are no prior criminal antecedents disclosed against him. While the allegations may attract cognizable and non-bailable offences under the CGST Act if established, personal liberty under Article 21 does not mandate arrest in every case. In such circumstances, and having regard to the applicant's cooperation and assurance to continue to cooperate, the Court concluded that custodial arrest is not necessary for the purpose of investigation. The Court therefore exercised the jurisdiction under Section 438 Cr.P.C. to grant limited pre-arrest protection until completion of the inquiry by the Proper Officer under Section 70(1) of the CGST Act or until assessment is made, whichever is earlier. The relief was made conditional: execution of a personal bond and two sureties, availability for interrogation, prohibition on tampering with witnesses, restriction on leaving India without prior permission (and deposit of passport), filing and verification of a computer-generated copy of the order, and automatic rejection of the anticipatory bail in case of failure to appear before the Proper Officer. The Proper Officer was left free to apply for cancellation of the protection if unforeseen circumstances arise, and the inquiry was directed to continue unimpaired by the order.

Limited anticipatory bail granted to the applicant until conclusion of the inquiry or assessment, subject to specified conditions including personal bond, sureties and cooperation with the Proper Officer; protection to cease on failure to comply and available cancellation on application by the Proper Officer.

Final Conclusion: The anticipatory bail application is allowed: the applicant is entitled to conditional pre-arrest protection until the inquiry under Section 70(1) of the CGST Act concludes or assessment is made, subject to the Court's specified conditions and the liberty of the Proper Officer to seek cancellation if warranted.

Limitation - deemed service - suspension of limitation - condonation of delay - service through common portal - appeal under Section 107 of the U.P. GST Act, 2017 - remand for fresh adjudication on merits

Deemed service - suspension of limitation - limitation - appeal under Section 107 of the U.P. GST Act, 2017 - Whether the appeal was erroneously dismissed as time-barred in view of deemed service of the cancellation order and the suspension of limitation. - HELD THAT: - The Court found that the cancellation order dated 17.9.2019 was passed ex parte after notice purportedly served via the common portal and that a physical copy was never served on the petitioner. Government Order No. 792 dated 29.7.2020 treated service in such cases as occurring on 31.8.2020. Further, the period of limitation was suspended from 15.3.2020 to 14.3.2021 by orders of the Supreme Court and this Court. Since the period of limitation to file a first appeal under Section 107 was three months with one month condonable delay, taking the deemed service date as 31.8.2020 and accounting for the suspension, the limitation to file the appeal effectively commenced from 15.3.2021. The appeal filed on 19.3.2021 therefore fell within the extended/suspended time-frame and could not be treated as time-barred. On that basis the appellate authority's dismissal of the appeal as barred by limitation was unsustainable. [Paras 3, 4, 5]

Impugned order dismissing the appeal as time-barred set aside; appeal to be treated as filed within time.

Remand for fresh adjudication on merits - Direction as to further proceedings following the finding that the appeal was within time. - HELD THAT: - Having determined that the appeal was filed within time, the Court directed that the matter be remitted to the appellate authority to hear and decide the appeal on merits. The appellate authority is required to proceed with adjudication of the appeal dated 19.3.2021 treating it as having been filed within time, thereby permitting consideration of the substantive challenge to the cancellation of registration. [Paras 5]

Matter remitted to the appeal authority for hearing and decision on merits of the appeal dated 19.3.2021.

Final Conclusion: Writ petition allowed; impugned order dated 16.07.2021 set aside and the appeal dated 19.3.2021 directed to be heard and decided on merits treating it as filed within time.

Conditions of use of amount available in electronic credit ledger - Reason to believe - Rule 86A of the CGST Rules - Recording reasons in writing - Post-decisional (remedial) hearing - Principles of natural justice - Eligibility and conditions for taking input tax credit under Section 16 - Blocking of electronic credit ledger as protective revenue measure - Non-notification of Section 43A and consequence for vicarious liability

Rule 86A of the CGST Rules - Reason to believe - Recording reasons in writing - Blocking of electronic credit ledger as protective revenue measure - Post-decisional (remedial) hearing - Principles of natural justice - Validity of blocking the petitioner's electronic credit ledger under Rule 86A in the absence of recorded reasons and pre-decisional hearing - HELD THAT: - Rule 86A permits disallowing debit from the electronic credit ledger where the Commissioner or an authorised officer has "reasons to believe" that credit has been fraudulently availed or is otherwise ineligible; the rule also requires reasons to be recorded in writing. The Court held that "reason to believe" requires a subjective satisfaction grounded in objective material and that the twin pre-requisites of (i) satisfaction on material and (ii) recording reasons in writing must be fulfilled before blocking. Given the civil consequences of blocking (temporary deprivation of usable ITC), the power must be exercised reasonably and in conformity with principles of natural justice. Although Rule 86A may have been drafted for urgent protective action, the Court read a requirement of a post-decisional (remedial) hearing into the scheme so that the affected person can seek redress; such hearing should ordinarily be afforded within a reasonable period (not beyond two weeks from the blocking order). The impugned portal entry in this case contained no reasons and thus manifested an absence of required satisfaction on objective material; accordingly the exercise was arbitrary and contrary to the statutory scheme and principles of fairness. [Paras 17, 18, 20, 23, 25]

Impugned order blocking the petitioner's ECL was quashed as made without the mandatory satisfaction and recorded reasons; post-decisional hearing must be afforded before any fresh confirmation of blocking.

Eligibility and conditions for taking input tax credit under Section 16 - Non-notification of Section 43A and consequence for vicarious liability - Blocking of electronic credit ledger as protective revenue measure - Whether Rule 86A can be validly invoked to penalise or deprive a bona fide recipient on account of supplier's default or non-existence when Section 43A is not notified - HELD THAT: - The Court noted Section 16 sets out conditions for entitlement to ITC. Although Section 43A contemplates joint and several liability of supplier and recipient, that provision has not been notified and therefore cannot be relied upon to justify equating a bona fide recipient's liability with the supplier's default. The sequencing-notification of Rule 86A prior to Section 43A-and the present absence of system-based ITC-matching mechanisms mean that recipients are entitled to claim ITC provisionally based on invoices unless material establishes collusion or fraud. Precedents cited indicate a consistent rule that a bona fide purchaser should not be made to suffer for supplier's failure unless there is evidence of fraud/connivance. [Paras 24]

Rule 86A cannot be invoked, in the absence of material of fraud or collusion and absent notification of Section 43A, to deprive a bona fide recipient of ITC merely on account of a supplier's default; the blocking in this case lacked statutory justification.

Final Conclusion: Writ petition partly allowed; the impugned order blocking the petitioner's electronic credit ledger is quashed and set aside. Respondents are at liberty to pass a fresh order under Rule 86A after recording reasons in writing, on the basis of objective material, and only after providing or allowing a post-decisional hearing within a reasonable period and otherwise in accordance with law.

Admissibility of application under the first proviso to Section 98(2) of the CGST Act, 2017 - advance ruling jurisdiction where the question is already pending or decided in proceedings - identical question in pending assessment/notice

Admissibility of application under the first proviso to Section 98(2) of the CGST Act, 2017 - identical question in pending assessment/notice - Application for advance ruling on applicability of GST to Brindavan Garden entrance fee and bridge toll is inadmissible under the first proviso to Section 98(2) of the CGST Act, 2017. - HELD THAT: - The Authority examined whether the question raised in the application was already pending or decided in any proceedings in the case of the applicant under the Act as required by the first proviso to Section 98(2). The applicant filed the advance ruling application on 06.12.2021 seeking clarity on taxability of entrance fee to Brindavan Gardens and toll for bridge. Earlier, an assessment order in FORM GST ASMT-15 and a notice under Sections 67 and 122 dated 02.11.2021 had been issued to the applicant raising the same question regarding applicability of GST on those receipts. The Authority found that the issues in the advance ruling application are identical to the issues already the subject of the assessment and notice. As all conditions of the proviso are satisfied, the Authority held that it cannot admit the application and therefore the application is liable to be rejected as inadmissible. [Paras 10, 11, 12, 13]

Application rejected as inadmissible under the first proviso to Section 98(2) of the CGST Act, 2017.

Final Conclusion: The Authority refused to admit the advance ruling application and rejected it as inadmissible because the same question was already the subject of pending proceedings (assessment order and notice), bringing the case within the first proviso to Section 98(2) of the CGST Act, 2017.

Value of taxable supply - transaction value - Guidance value - Section 15 of the CGST Act, 2017 - valuation in case of transfer of land - one third rule - admissibility under Section 97(2)(c)

Transaction value - value of taxable supply - Section 15 of the CGST Act, 2017 - Guidance value - Determination of taxable value for construction and sale of immovable property where guidance value exceeds sale consideration. - HELD THAT: - The GST law treats the transaction value - the price actually paid or payable - as the value of a supply, subject to the statutory exceptions and rejection procedure under Section 15. A guidance value prescribed under the Stamp Act is the minimum value for registration purposes and has legal force for stamp duty, but it is not automatically to be treated as the value of supply for GST. Where the transaction value is bona fide, it is the taxable value; only if the transaction value is disputed or found unacceptable under Section 15 does the authority proceed to determine value by applying the valuation principles in Section 15. Thus a higher guidance value does not supplant the transaction value for GST unless the transaction value is rejected after examination under Section 15. [Paras 5, 10, 11]

Taxable value shall be the transaction value (price actually paid or payable); where that value is not acceptable, value must be determined in accordance with Section 15 of the CGST Act, 2017.

Valuation in case of transfer of land - one third rule - notification no. 11/2017 - valuation rule - Valuation treatment where supply involves transfer of land/undivided share along with construction (apartments). - HELD THAT: - For supplies involving transfer of land or undivided share with construction of apartments, the specified valuation rule in the relevant notification applies: the value of such transfer of land/undivided share shall be deemed to be one third of the total amount charged for the supply, and the value of the service is total consideration less the deemed land value. In such cases the land value must be computed as per that notification and no other value for the land component is acceptable for GST valuation. [Paras 6, 11]

Where the notified one third mechanism applies to transfer of land with construction (apartments), the land component shall be valued as one third of the total amount and the service value determined accordingly.

Final Conclusion: The Authority ruled that taxable value of construction and sale of immovable property without completion/occupancy certificate is the transaction value; a higher statutory guidance value does not automatically replace the transaction value for GST unless the transaction value is rejected under Section 15, and where the notified one third valuation for land applies, the land component must be valued accordingly.

Registration under Section 12AA - genuineness of activities of a trust - conformity of activities with objects of the trust - scope of inquiry at registration stage - remand for fresh adjudication on registration

Genuineness of activities of a trust - conformity of activities with objects of the trust - scope of inquiry at registration stage - Whether the Commissioner of Income Tax (Exemptions) was justified in rejecting the assessee's application for registration under Section 12AA on the ground that the trust's activities were not genuine. - HELD THAT: - The Tribunal examined Section 12AA which requires satisfaction about the objects of the society or institution and the genuineness of its activities on the basis of such inquiries as the Commissioner deems necessary (para 9). The Tribunal found that the assessee is running nursery, primary and higher secondary schools and that the identification of the trust and its objects were not in dispute (para 10). The CIT(E) had rejected registration alleging lack of genuineness but did not point to material establishing that conclusion; moreover, post-application inquiries and documentary material did not disclose irregularities that would defeat genuineness (para 10, 10.1). The Tribunal further noted that assessments and the documents placed on record (including approvals from the State education authority and filed financial statements) supported existence, activity and genuineness of the trust (para 11). Relying on the limited scope of the registration-stage inquiry-focused on genuineness of activities and consistency with the trust objects-the Tribunal held that mere facts such as application after survey or temporary operation of receipts through a trustee's account (explained on record) are not by themselves sufficient to justify rejecting registration under Section 12AA (para 10.1, para 11). [Paras 9, 10, 11]

The rejection of the application under Section 12AA on the ground of lack of genuineness was not sustained because the registering authority did not point to material justifying that conclusion and the record showed activities consonant with the trust's objects.

Registration under Section 12AA - remand for fresh adjudication on registration - What consequential direction should be given where rejection under Section 12AA is unsustainable on the existing record. - HELD THAT: - Having found that the CIT(E)'s order refusing registration was not supported by material and that the trust's activities and objects were established on the record (paras 10-11), the Tribunal directed that the application for registration be restored to the file of the CIT(E) for fresh adjudication. The remand contemplates reconsideration in accordance with the statutory scope of Section 12AA and the Tribunal's observations and authorities relied upon by the assessee (para 12). The Tribunal's direction confines the matter to fresh adjudication rather than deciding entitlement to exemption under Sections 11/12, leaving assessment-stage issues (including alleged misuse or application of funds) to the assessing authority as appropriate. [Paras 12]

The application under Section 12AA is restored to the file of the CIT(E) for fresh adjudication in accordance with the Tribunal's observations.

Final Conclusion: The Tribunal allowed the appeal, holding that the CIT(E) had not shown material to justify refusal of registration under Section 12AA; the matter is remitted to the CIT(E) for fresh adjudication of the registration application in accordance with law.

Deduction under section 80IC - direct and first degree nexus with manufacturing activity - foreign exchange fluctuation as business income - refund of excise duty as reimbursement linked to manufacturing activity - income from sale of scrap derived from industrial undertaking - effect of disallowance under section 40(a)(ia) on Chapter VI-A deductions - application of administrative circulars in appeal strategy

Deduction under section 80IC - foreign exchange fluctuation as business income - direct and first degree nexus with manufacturing activity - Assessee entitled to claim deduction under section 80IC in respect of foreign exchange gains arising from exports. - HELD THAT: - The Tribunal examined whether foreign exchange gains arising in relation to exports constitute income "derived from" the industrial undertaking and thus qualify for deduction under section 80IC. Relying on authorities and reasoning that foreign exchange fluctuations are inextricably linked to export sales and reduce cost or form part of sale proceeds, the Tribunal held such gains have an immediate and direct nexus with the manufacturing activity. The Tribunal applied precedents holding that where foreign exchange fluctuation arises on account of export or trading transactions, the resulting gain is trading/manufacturing receipt and eligible for 80IC deduction, and therefore found no infirmity in the CIT(A)'s deletion of the disallowance. [Paras 5, 6]

Ground dismissed; foreign exchange gains qualify for deduction under section 80IC.

Deduction under section 80IC - refund of excise duty as reimbursement linked to manufacturing activity - direct and first degree nexus with manufacturing activity - Assessee entitled to claim deduction under section 80IC in respect of export benefits in the form of excise duty refunds. - HELD THAT: - The Tribunal considered whether excise duty refunds paid in consequence of exemptions applicable to the assessee's manufacturing unit constitute income "derived from" the industrial undertaking and therefore eligible for section 80IC deduction. The Tribunal relied on judicial reasoning that such refunds are administrative mechanisms implementing the exemption, are linked to the manufacturing activity, and reduce cost of production; where they arise only because of manufacturing activity they bear the requisite nexus. In view of authorities treating similar refunds/subsidies as directly connected to industrial activity, the Tribunal upheld the CIT(A)'s allowance of the claim. [Paras 7, 9, 10]

Ground dismissed; export benefits (excise duty refunds) qualify for deduction under section 80IC.

Deduction under section 80IC - income from sale of scrap derived from industrial undertaking - direct nexus with manufacturing profits - Assessee entitled to claim deduction under section 80IC in respect of income from sale of scrap generated in manufacturing. - HELD THAT: - The Tribunal examined whether scrap sale proceeds, arising proximate to and in the course of the manufacturing process, form profits derived from the industrial undertaking for purposes of section 80IC. Considering judicial decisions treating scrap proceeds as gains derived from manufacturing (and thus eligible for related deductions), the Tribunal found no infirmity in the CIT(A)'s deletion of the disallowance. The Tribunal accordingly held that scrap income has the requisite nexus with manufacturing activity and is eligible for 80IC deduction. [Paras 12, 14]

Ground dismissed; scrap income qualifies for deduction under section 80IC.

Deduction under section 80IC - effect of disallowance under section 40(a)(ia) on Chapter VI-A deductions - application of administrative circulars in appeal strategy - Assessee eligible to claim section 80IC deduction even where expenses are disallowed under section 40(a)(ia); revenue's appeal on this point dismissed. - HELD THAT: - The Tribunal addressed whether a disallowance under section 40(a)(ia) (non-deduction of TDS) precludes claiming the consequential Chapter VI-A deduction. The Tribunal referred to CBDT Circular No. 37/2016 and precedents acknowledging that where a disallowance enhances business profits but the enhanced profits remain within the ambit of eligible business profits for Chapter VI-A, the deduction is allowable and appeals on such points need not be pursued. Applying that principle and relevant Tribunal decisions, the Tribunal upheld the CIT(A)'s deletion of the disallowance and allowed the assessee to claim 80IC on the enhanced profits. [Paras 17, 18]

Ground dismissed; disallowance under section 40(a)(ia) does not deny consequential 80IC deduction in the circumstances.

Deduction under section 80IC - income from sale of scrap derived from industrial undertaking - For A.Y. 2010-11, deletion of disallowance of scrap income upheld by applying the decision in A.Y. 2009-10. - HELD THAT: - The Tribunal recorded that the facts and legal issue for A.Y. 2010-11 (scrap income) are similar to those decided for A.Y. 2009-10 and, after applying the reasoning and outcome reached earlier, dismissed the revenue's ground challenging the deletion of the disallowance. [Paras 21, 23]

Ground dismissed by applying the decision in ITA No. 1366/Ahd/2015.

Deduction under section 80IC - effect of disallowance under section 40(a)(ia) on Chapter VI-A deductions - For A.Y. 2010-11, deletion of disallowance attributable to section 40(a)(ia) upheld by applying the decision in A.Y. 2009-10. - HELD THAT: - The Tribunal noted that the issue concerning allowance of 80IC deduction despite an addition under section 40(a)(ia) for A.Y. 2010-11 is identical to that decided for A.Y. 2009-10, and accordingly applied the earlier conclusion - relying on CBDT Circular No. 37/2016 and relevant Tribunal precedents - to dismiss the revenue's ground. [Paras 22, 23]

Ground dismissed by applying the decision in ITA No. 1366/Ahd/2015.

Final Conclusion: All grounds of the revenue appeals in ITA Nos. 1366/Ahd/2015 (A.Y. 2009-10) and 1780/Ahd/2015 (A.Y. 2010-11) are dismissed; the Tribunal sustained the CIT(A)'s deletions and held that the assessee is entitled to claim section 80IC deductions in respect of foreign exchange gains, excise duty refunds (export benefits), scrap income, and consequentially on profits enhanced by disallowance under section 40(a)(ia), applying the CBDT circular and relevant precedents.

Violation of principles of natural justice in revisionary proceedings under Section 263 - Scope and limits of jurisdiction under Section 263 - interference only where order is erroneous and prejudicial to the interests of revenue - Requirement that revisional authority must point out specific error prejudicial to revenue and not merely re appraise evidence - Distinction between revisional power under Section 263 and reopening under Section 147

Violation of principles of natural justice in revisionary proceedings under Section 263 - Requirement that revisional authority must point out specific error prejudicial to revenue and not merely re appraise evidence - Whether the order passed by the Pr. CIT under Section 263 was vitiated for want of adequate opportunity and was a mechanical/arbitrary exercise of revisional power requiring quashing of the 263 order. - HELD THAT: - The Tribunal found on the admitted record that the show cause notice dated 23.11.2020 gave the assessee only four days to reply and that the assessee did in fact file a response on the Departmental portal seeking additional time and informing the authority about opting for the Vivad Se Vishwas Scheme. The Pr. CIT recorded that no reply was received, sat over the matter for months and passed the revisionary order on the last permissible date without issuing any further notice, making enquiries, or pointing to any fresh information showing error prejudicial to revenue. Whether the Pr. CIT had seen and treated the portal reply as irrelevant or had not noticed it, the consequence was the same: no effective opportunity of being heard was afforded and no independent enquiries were undertaken before upsetting the assessment. Relying upon the established jurisprudence that Section 263 requires a revisional authority to point out specific errors and to afford a full opportunity to controvert facts relied upon, and that mere re appraisal of evidence or taking a different possible view is impermissible, the Tribunal concluded that the exercise of power was arbitrary and violative of audi alteram partem. Consequently the 263 order was quashed on legal grounds and the Tribunal did not adjudicate the merits of the underlying additions. [Paras 8, 10, 11, 12]

The order passed by the Pr. CIT under Section 263 is quashed for denial of adequate opportunity and arbitrary exercise of revisional power; appeal allowed.

Final Conclusion: The Tribunal allowed the assessee's appeal, quashed the revisionary order passed by the Pr. CIT under Section 263 on grounds of denial of effective opportunity and mechanical/arbitrary exercise of power, and declined to decide the merits of the assessment.

Reopening of assessment - failure to disclose material facts - claimed weighted deduction under section 35(2AB) - assessment order reliance to justify reopening - quashing of notice under section 148 - objection to reopening

Reopening of assessment - failure to disclose material facts - claimed weighted deduction under section 35(2AB) - assessment order reliance to justify reopening - objection to reopening - Validity of the notice issued under section 148 and the order rejecting objections to reopening for AY 2016-17 insofar as reopening was premised on non-disclosure of the disallowed portion of the claimed section 35(2AB) deduction. - HELD THAT: - The Court examined the reasons recorded for reopening alongside the assessment order of 22.12.2017 (annexed) and found that the Jurisdictional Assessing Officer's premise was factually erroneous. The assessment order itself records that DSIR approval in Form 3CL approved capital expenditure in full and approved a lesser amount of revenue expenditure, and that the assessee thereafter offered the unapproved excess revenue expenditure to tax at 100% under business expenditure provisions during assessment proceedings. The JAO's reasons alleged that the assessee had claimed the DSIR-disallowed sum as a section 35(2AB) weighted deduction and had failed to disclose material facts; however, the assessment record shows the amount was added to income in the assessment and that the assessee had made the corrective offer. Given this contradiction, the statutory satisfaction for reopening was vitiated and the officer erred in not addressing the assessee's substantive submissions in disposing of objections. [Paras 4, 5, 6, 7, 8]

The notice under section 148 dated 30.03.2021 and the order dated 24.01.2022 rejecting objections are quashed insofar as they rest on the alleged non-disclosure of the DSIR-disallowed amount; the petition is allowed.

Final Conclusion: The High Court allowed the petition, quashed the reopening notice dated 30.03.2021 and the subsequent order dated 24.01.2022 in relation to AY 2016-17, and disposed of the petition with no order as to costs.

Interest under Section 234B - Rectification under Section 154 for mistake apparent on record - Liability to deduct tax at source and consequences of payer's default - Penalty for concealment of income - Debatable question of law as bar to penalty

Interest under Section 234B - Rectification under Section 154 for mistake apparent on record - Liability to deduct tax at source and consequences of payer's default - Whether interest under Section 234B was liable to be charged despite the Tribunal holding that the assessee had no taxable business income in India and relying on precedent that non-deduction by the payer does not make the non-resident liable to pay advance tax. - HELD THAT: - The Tribunal relied on the Delhi High Court decision in Director of Income Tax vs. Jacabs Civil Incorporated and subsequent confirmation in Director of Income Tax, New Delhi vs. M/s Mitsubishi Corporation, treating the payer's default in TDS as actionable against the payer and holding that the non-resident assessee was not liable to pay advance tax thereby negating interest under Section 234B. The Revenue contended that interest under Section 234B is consequential and mandatory and that omission to levy interest despite a direction in the assessing order was a mistake apparent rectifiable under Section 154. This Court noted the Tribunal's reliance on the cited High Court decision (confirmed by the Supreme Court) and accepted the Tribunal's conclusion that, on the facts found (no taxable business income/absence of permanent establishment), interest under Section 234B was not chargeable, and there was no substantial question of law warranting interference. [Paras 3]

Tribunal's conclusion that interest under Section 234B did not arise in the circumstances was upheld; no substantial question of law made out for interference.

Penalty for concealment of income - Debatable question of law as bar to penalty - Whether the penalty could be sustained where the quantum assessment itself had been set aside or was the subject of a debatable appeal. - HELD THAT: - This Court agreed with the Tribunal that penalty can be levied only where concealment of income is established. Where the quantum order has been set aside or the matter is the subject of an appeal admitting substantial questions of law, the existence of concealment is not finally established and imposition of penalty cannot be justified. The Court relied on its prior orders holding that admission of appeals and framing of substantial questions demonstrates that the issue was debatable and accordingly supports deletion of penalty. [Paras 4]

Penalty sustained by the assessing officer could not survive where the quantum was disputed and the issue was debatable; deletion of penalty affirmed.

Final Conclusion: No substantial question of law arises; the Tribunal's conclusions on non-liability for interest under Section 234B and on deletion of penalty were affirmed. The appeal is dismissed.

Payment for use of computer software distributed under EULAs/distribution agreements not taxable as 'royalty' - distinction between transfer of copyright and mere licence to use - application of DTAA definition where it is more beneficial than wider domestic explanation - TDS liability under section 195 in relation to payments to non-resident software suppliers - precedent of Engineering Analysis Centre of Excellence governing software licensing transactions

Payment for use of computer software distributed under EULAs/distribution agreements not taxable as 'royalty' - distinction between transfer of copyright and mere licence to use - precedent of Engineering Analysis Centre of Excellence governing software licensing transactions - TDS liability under section 195 in relation to payments to non-resident software suppliers - Licensing/distribution of computer software by the respondent to users/distributors in India was not taxable in India as 'royalty' and did not attract TDS obligations under section 195. - HELD THAT: - The Court applied the Supreme Court's decision in Engineering Analysis Centre of Excellence, which held that amounts paid by resident Indian end-users/distributors to non-resident software manufacturers/suppliers as consideration for resale/use of computer software governed by EULAs/distribution agreements do not constitute 'royalty' for the use of copyright. The reasoning recognizes that a licence conferring only the right to use software (as under an EULA) does not transfer proprietary rights enumerated in the Copyright Act and therefore does not amount to transfer of copyright. Further, where the DTAA definition is more beneficial to the taxpayer, the wider domestic explanations cannot be used to impose tax inconsistent with the DTAA. Applying that principle, the Tribunal's view to the contrary was displaced by the Supreme Court's authoritative ruling, which also set aside conflicting AAR conclusions. As the payments do not constitute royalty, persons referred to in section 195 were not liable to deduct TDS in respect thereof. The Court also noted that the Revenue had previously conceded that earlier years were decided in favour of the assessee and, in light of the binding Supreme Court precedent, found no substantial question of law to entertain.

The licensing/distribution payments in question are not 'royalty' taxable in India and do not attract TDS under section 195; the appeal is dismissed.

Final Conclusion: In view of the Supreme Court's decision in Engineering Analysis Centre of Excellence and consistent High Court rulings, the impugned finding that the respondent's software licence/distribution receipts were taxable as 'royalty' is unsustainable; no substantial question of law arises and the appeal is dismissed.

Re-opening of assessment - proviso to Section 147 - failure to truly and fully disclose material facts - notice under Section 148 - deemed dividend under Section 2(22)(e)

Re-opening of assessment - notice under Section 148 - proviso to Section 147 - failure to truly and fully disclose material facts - Validity of the notice dated 25th January, 2014 under Section 148 for reopening assessment for A.Y. 2008-09 - HELD THAT: - The Court examined the reasons recorded for reopening and the Revenue's contemporaneous stance in earlier proceedings. The re-opening rested on the conclusion that an amount earlier treated as deemed dividend ought to be assessed in the hands of the petitioner and had therefore escaped assessment. However, the reasons do not allege, nor do they permit an inference of, any failure on the part of the petitioner to truly and fully disclose material facts relevant to assessment. As the proposed reassessment was issued after the four-year period from the end of the relevant assessment year, the proviso to Section 147 applies and requires the Revenue to demonstrate that there was a lack of true and full disclosure by the assessee. The material on record-including prior orders and the Revenue's earlier submissions-showed inconsistent positions, and the reasons for reopening do not satisfy the statutory requirement under the proviso to Section 147. In these circumstances the formation of a reason to believe that income had escaped assessment is unsustainable. [Paras 6, 8, 9]

Notice under Section 148 for A.Y. 2008-09 quashed for failure to satisfy proviso to Section 147; reassessment proceedings set aside.

Deemed dividend under Section 2(22)(e) - Whether the amount treated as deemed dividend ought to be assessed in the hands of the petitioner or the company - HELD THAT: - The Court noted the factual and adjudicatory history: the company had earlier been assessed and an addition as deemed dividend was deleted by the Commissioner (Appeals), who held that the amount should be taxed in the hands of the petitioner as a person with substantial interest; the ITAT and this Court in an earlier appeal affirmed that conclusion. Notwithstanding earlier contentions by the Revenue in other fora that the deemed dividend should be taxed in the hands of the company, the jurisdictional Assessing Officer's reasons for reopening accepted the appellate view that the amount was taxable in the hands of the petitioner. That factual and legal backdrop undermines the contention that income had escaped assessment attributable to nondisclosure by the petitioner. [Paras 4, 5, 6]

Earlier appellate findings that the amount was taxable in the hands of the petitioner were acknowledged; this background further negated any sustainable basis for reopening the assessment.

Final Conclusion: Writ petition allowed; impugned notice under Section 148 dated 25th January, 2014 and the order rejecting objections set aside, and reassessment proceedings for A.Y. 2008-09 quashed for lack of valid reasons under the proviso to Section 147.

Rectification under Section 154 for mistake apparent on the face of the record - Mistake apparent on the face of the record - Narrow scope of rectification jurisdiction under Section 154 - addition on account of unexplained cash credits - disallowance under Section 40(a)(ia) as mistake apparent on record - availability of statutory appellate remedy against assessment

Rectification under Section 154 for mistake apparent on the face of the record - disallowance under Section 40(a)(ia) as mistake apparent on record - Validity and effect of the rectification order dated 29.11.2021 in respect of disallowance under Section 40(a)(ia). - HELD THAT: - The Assessing Officer examined the rectification petition and the material on record (including Forms 24Q and 26Q) and concluded that the disallowance of 30% of certain expenditures under Section 40(a)(ia) was a mistake apparent on the face of the record. Accordingly the Assessing Officer, by the rectification order, deleted the disallowance and reduced the assessed income. The High Court held that the Assessing Officer had gone into the grievance and validly rectified the assessment to the extent indicated, and that the rectification order dated 29.11.2021 must be read with the earlier order of 28.08.2021 to understand the composite action taken by the authority. [Paras 8, 10]

Rectification dated 29.11.2021 insofar as it deleted the disallowance under Section 40(a)(ia) is valid and the assessment stands rectified to that extent.

Addition on account of unexplained cash credits - Narrow scope of rectification jurisdiction under Section 154 - availability of statutory appellate remedy against assessment - Whether the addition made on account of unexplained cash credits could be set aside by rectification under Section 154. - HELD THAT: - The Assessing Officer treated the addition on account of unexplained cash credits as not constituting a mistake apparent from the record and therefore declined to rectify that part of the assessment. The Court reiterated the settled principle that rectification under Section 154 is confined to obvious errors apparent on the face of the record and does not extend to grievances requiring detailed inquiry or determination after hearing. The Court also noted that if the assessee remains aggrieved by the rectified assessment, the statutory appellate remedies are available and have been availed by the petitioner. [Paras 8, 11, 12]

Addition for unexplained cash credits was not a mistake apparent on the face of the record and was rightly not rectified; aggrieved assessee may pursue appellate remedies.

Final Conclusion: The High Court found that the Assessing Officer had considered the rectification application: the disallowance under Section 40(a)(ia) was rightly corrected as a mistake apparent, while the addition for unexplained cash credits under Section 69 was not amenable to rectification under Section 154; the writ petition was dismissed and the petitioner remains entitled to pursue statutory appeals.

Penalty for furnishing inaccurate particulars under section 271(1)(c) of the Income Tax Act, 1961 - Bonafide reliance on tax practitioner as defence to penalty - Remand for fresh adjudication to examine responsibility of tax consultant

Penalty for furnishing inaccurate particulars under section 271(1)(c) of the Income Tax Act, 1961 - Bonafide reliance on tax practitioner as defence to penalty - Remand for fresh adjudication to examine responsibility of tax consultant - Penalty imposed on the assessee under section 271(1)(c) was not finally adjudicated by the Tribunal and is remanded to the CIT(A) for fresh consideration. - HELD THAT: - The Tribunal noted that in the quantum proceedings the assessee accepted the addition on the footing that he was misled by an income tax practitioner, Mr. Nagesh Shastry, who had filed the revised return containing false claims. The Tribunal observed that those facts and the defence of bonafide reliance on the tax practitioner were not considered in the penalty proceedings. Since penalty under section 271(1)(c) turns on whether the assessee willfully furnished inaccurate particulars or, alternatively, acted bona fide relying on a tax practitioner, the Tribunal considered it proper to direct a fresh adjudication. The matter is remitted to the file of the CIT(A) with a direction to consider the role of the tax consultant and the assessee's plea of bonafide reliance, to afford the assessee an opportunity of being heard, and to decide the issue afresh in accordance with law. [Paras 8, 9]

Penalty proceedings under section 271(1)(c) remitted to the CIT(A) for fresh consideration of whether the tax consultant alone was instrumental and whether the assessee acted bona fide; appeal treated as allowed for statistical purposes.

Final Conclusion: The Tribunal remitted the penalty issue under section 271(1)(c) to the CIT(A) for fresh adjudication on the question of the tax consultant's role and the assessee's bonafide reliance; the appeal is treated as allowed for statistical purposes.

Additions in proceedings under section 153A must be founded on incriminating/seized material - treatment of declared agricultural income as income from other sources when not supported by seized material - disallowance of loss from house property where not based on seized material - application of the ratio in CIT v. Kabul Chawla that scope of assessment under section 153A is confined to income revealed by search/seized material

Treatment of declared agricultural income as income from other sources when not supported by seized material - additions in proceedings under section 153A must be founded on incriminating/seized material - Whether agricultural income offered in returns could be treated as income from other sources in assessments completed under section 153A when no incriminating/seized material supported such treatment. - HELD THAT: - The Tribunal examined the assessment orders and the material on record and concluded that the Assessing Officer's treatment of the agricultural income as income from other sources was not based on any incriminating or seized material found as a result of the search. Applying the territorial ratio relied upon from the jurisdictional High Court in CIT v. Kabul Chawla , the Tribunal held that additions in proceedings under section 153A must be founded on seized/incriminating material discovered during the search. Because the addition was not traceable to any such material, it could not be sustained in the section 153A assessment. [Paras 5]

The addition treating agricultural income as income from other sources is deleted.

Disallowance of loss from house property where not based on seized material - scope of proceedings under section 153A - Whether the disallowance of loss claimed against house property in the section 153A assessment could be sustained when not corroborated by seized/incriminating material. - HELD THAT: - On review of the assessment record the Tribunal found that the disallowance of the house property loss was not made with reference to any material seized during the search. In light of the same legal principle drawn from CIT v. Kabul Chawla , the Tribunal held that in proceedings under section 153A additions or disallowances must relate to evidence unearthed by the search; absent such nexus the disallowance could not stand. [Paras 5]

The disallowance of the loss claimed against house property is deleted.

Final Conclusion: Appeals allowed; additions and disallowance made in assessments for AYs 2008-09, 2009-10 and 2010-11 in respect of the agricultural income and the house property loss are deleted as they were not founded on incriminating/seized material discovered during the search.

Treatment of unutilized CENVAT credit - deductibility of sundry balances written off as business expenditure - loss on account of rate differential between input and output excise duties - onus of proof for non-recoverability of duty from Government

Treatment of unutilized CENVAT credit - deductibility of sundry balances written off as business expenditure - loss on account of rate differential between input and output excise duties - onus of proof for non-recoverability of duty from Government - Whether writing off unutilized CENVAT credit (AED recoverable) as a sundry balance written off is allowable as a deduction from business income. - HELD THAT: - The Tribunal examined the commercial and CENVAT mechanism applicable to the manufacturing assessee: CENVAT is paid on inputs and adjusted against excise on finished goods; where input duty rates exceed output/basic duties, an unavoidable unutilized CENVAT receivable may arise. The Tribunal noted that such unutilized CENVAT credit, when surrendered or rendered unusable (for example on cessation of ability to utilize the credit), represents a loss attributable to the business and is regularly claimed as revenue expenditure. The Tribunal observed that the Department had allowed similar treatment in an earlier year (A.Y. 2010-11) and that the practice of claiming the difference arising from the rate differential is common in the manufacturing sector. While the Assessing Officer and CIT(A) emphasised absence of documentary proof regarding non-recoverability from the Government and whether the amount had been credited to profit and loss, the Tribunal accepted the assessee's explanation that the amount represented CENVAT receivable which could no longer be utilized and therefore was properly written off as a business expenditure. On that basis the addition was deleted and the write-off was held deductible. [Paras 7, 8]

The write-off of the unutilized CENVAT credit (AED recoverable) is allowable as a deduction; the assessee's appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal and deleted the addition: the unutilized CENVAT credit written off was held to be a permissible business deduction, reflecting loss on account of input-output excise rate differential and regular commercial practice.

Cost of acquisition including integral building, plant and fittings - allowability of indexed cost in computation of long term capital gains - acceptance of photocopies and corroborative evidence in substantiation of expenditure - disallowance for non-production of original bills

Cost of acquisition including integral building, plant and fittings - allowability of indexed cost in computation of long term capital gains - Whether the Assessing Officer was justified in excluding the cost attributable to building, plant and fittings from the cost of acquisition while computing long term capital gain on sale of land. - HELD THAT: - The Tribunal found as a fact that the assessee paid a composite consideration for acquisition which included land and the building with its plant and fittings and that there was no proof that the building or fittings had been dismantled, demolished or otherwise realized separately. The Assessing Officer could not simply ignore the portion of consideration attributable to assets integral to the property where it was not shown that those assets were written off, demolished or separately realized; nor was it alleged that depreciation had already been claimed on those assets. In these circumstances the cost incurred to acquire the integral assets must be taken into account in computing indexed cost of acquisition for capital gains. The CIT(A)'s deletion of the addition was held to be correct and the Revenue's ground was rejected. [Paras 4, 5, 6]

Addition was rightly deleted; cost of acquisition including building, plant and fittings is allowable for computing indexed cost and long term capital gain.

Acceptance of photocopies and corroborative evidence in substantiation of expenditure - disallowance for non-production of original bills - Whether amounts paid to M/s. Bharath Polymers and M/s. Devi Designers & Decorations could be disallowed solely because original bills were not produced. - HELD THAT: - The Tribunal noted that the assessee furnished photocopies of the supplier bills together with corroborative materials such as tender documents, letter of intent/work order and evidence of construction activity. The Assessing Officer's sole reason for disallowance was non-production of originals without conducting further enquiry (for example summoning the supplier) or pointing to any contradiction in the corroborative material. Where duplicate documentation is supported by surrounding evidence demonstrating incurrence of the expenditure and performance by the contractor/supplier, denial exclusively on the ground of non-production of originals is unsustainable. On that basis the CIT(A)'s direction to allow the claimed expenditure was upheld and the Revenue's grounds were rejected. [Paras 7, 8, 9]

Disallowance was not justified; deduction permitted based on photocopies supported by corroborative evidence.

Final Conclusion: The appeal filed by the Revenue is dismissed; the Tribunal upheld the CIT(A)'s deletions both in respect of the exclusion of building, plant and fittings from the cost of acquisition and the disallowance of payments for lack of original bills, directing that the costs be allowed in computing capital gains.

Invocation of section 69 in respect of recorded investments - application of section 69A to receipts in Specified Bank Notes during demonetisation - legal effect of the appointed day under the Specified Bank Notes (Cessation of Liabilities) Act, 2017 - admission of additional evidence by appellate authority and remand under Rule 46A

Invocation of section 69 in respect of recorded investments - Whether unexplained investment provisions could be invoked against sale of shares when the investments were recorded in the books and disclosed in the computation of income. - HELD THAT: - The Tribunal accepted the assessee's contention that section 69 cannot be invoked where the investment has been recorded in the books of account and disclosed in the computation of income and offered to tax. The appellate authority's finding that the investment was captured in the accounts and the income disclosed was sustained, and consequently the addition under unexplained investment was held not sustainable. [Paras 6]

Section 69 was not attracted as the investment was recorded and disclosed and the income was offered to tax; the CIT(A)'s deletion of the addition was upheld.

Application of section 69A to receipts in Specified Bank Notes during demonetisation - legal effect of the appointed day under the Specified Bank Notes (Cessation of Liabilities) Act, 2017 - Whether cash sales realised in Specified Bank Notes after 08.11.2016 could be treated as illegal and liable to be treated as unexplained money under section 69/69A. - HELD THAT: - The Tribunal noted that the Statute defines the "appointed day" as 31.12.2016 and that until that date the guarantee/liability in respect of Specified Bank Notes continued. Having found that the assessee had sufficient cash balance as on the demonetisation date and that receipts in SBNs were not rendered illegal by operation of the Act before the appointed day, the receipt of SBNs from cash sales could not be treated as unlawful or as unexplained money under section 69A. The Revenue's contention to the contrary was dismissed. [Paras 9]

Receipts in Specified Bank Notes during the demonetisation period were not illegal for the purpose of invoking section 69A, and the Revenue's ground was dismissed.

Admission of additional evidence by appellate authority and remand under Rule 46A - Whether the CIT(A) erred in admitting documents produced before it without remitting the matter to the Assessing Officer under Rule 46A for examination. - HELD THAT: - Although Rule 46A ordinarily requires that additional evidence allowed by an appellate authority be referred to the AO for examination, the Tribunal found that in this case the documents before the CIT(A) merely verified the authenticity of claims already disclosed in the return. The AO had earlier afforded opportunities to the assessee but the assessee failed to produce cogent evidence before the AO; nevertheless the CIT(A)'s verification did not amount to admission of entirely new evidence requiring remand. On this basis the Tribunal held there was no requirement to remit the matter back to the AO under Rule 46A and dismissed the Revenue's contention. [Paras 12, 13]

No remand under Rule 46A was necessary; the CIT(A)'s admission/verification of the documents was upheld and the Revenue's grounds on this point were dismissed.

Final Conclusion: The revenue's appeal is dismissed and the CIT(A)'s order is upheld; the assessee's cross objections are rendered infructuous.

Allowability of interest on share capital as business deduction - appropriation of profits versus deductible business expense - TDS exemption for interest paid by cooperative societies to their members - applicability of section 194A(3)(v) vis-a -vis provisos interpreting TDS obligation - amortisation of premium on Government securities held under HTM category - binding effect of CBDT instructions on tax treatment of HTM premium - deductibility of premium paid to life insurer for gratuity fund pending approval - precedent and coordinate bench consistency in income tax appeals

Allowability of interest on share capital as business deduction - appropriation of profits versus deductible business expense - precedent and coordinate bench consistency in income tax appeals - Interest paid on share capital to members is allowable as a deduction and not to be treated as appropriation of profits. - HELD THAT: - The Tribunal, following earlier decisions of the coordinate bench in appeals arising from the assessee's own and closely related cases, accepted the view that interest on share capital paid to members of the co operative bank is not an appropriation of profit but falls to be treated as an allowable charge in computing income. Having regard to the consistent view taken by the Visakhapatnam Bench in the cited matters, the Tribunal found no error in the CIT(A)'s deletion of the addition and dismissed the Revenue's grounds on this point. [Paras 9]

Revenue's appeal on this issue dismissed; addition deleted and interest allowed as deduction.

TDS exemption for interest paid by cooperative societies to their members - applicability of section 194A(3)(v) vis-a -vis provisos interpreting TDS obligation - precedent and coordinate bench consistency in income tax appeals - Interest paid to members by the cooperative bank is exempt from TDS under the exemption applicable to cooperative society members; disallowance under section 40(a)(ia) deleted. - HELD THAT: - The Tribunal relied on its coordinate bench decisions and the CBDT clarification which states that clause (v) of sub section (3) of section 194A exempts income by way of interest credited or paid by a cooperative society to a member from TDS. Applying that clarification and the earlier Tribunal rulings, the CIT(A)'s deletion of the disallowance under section 40(a)(ia) was upheld and the Revenue's challenge was dismissed. [Paras 18]

Revenue's appeal on TDS disallowance dismissed; disallowance under section 40(a)(ia) deleted.

Amortisation of premium on Government securities held under HTM category - binding effect of CBDT instructions on tax treatment of HTM premium - rule of consistency in successive assessments - Amortisation of premium on Government securities classified as HTM is allowable in accordance with CBDT Instruction No.17/2008. - HELD THAT: - The Assessing Officer treated the amortised premium as contingent and disallowed it. The CIT(A) applied CBDT Instruction No.17/2008 which directs that premium on investments classified under HTM be amortised over the remaining period to maturity. The Tribunal found the CIT(A)'s conclusion in conformity with the CBDT instruction and with prior appellate decisions, and therefore found no infirmity in deleting the addition. [Paras 26]

Revenue's appeal on amortisation of HTM premium dismissed; amortisation claim allowed in accordance with CBDT Instruction.

Deductibility of premium paid to life insurer for gratuity fund pending approval - precedent and coordinate bench consistency in income tax appeals - Premiums paid to LIC towards gratuity fund (policy unapproved as on date of contribution) were accepted in the facts of this case following coordinate bench precedent; disallowance by Assessing Officer sustained no further. - HELD THAT: - The Tribunal examined the facts-payment made directly to LIC based on actuarial valuation and an application for approval of the gratuity fund pending with the CIT-and followed the coordinate bench decision cited by the assessee. Distinguishing the authority relied on by the Revenue as not factually identical, the Tribunal concurred with the CIT(A)'s allowance and dismissed the Revenue's ground. [Paras 29]

Revenue's appeal on disallowance of gratuity fund premium dismissed; CIT(A)'s allowance sustained.

Final Conclusion: Following coordinate bench authority and applicable CBDT guidance, the Tribunal dismissed the Revenue's appeals for A.Y. 2014-15 in respect of (i) interest on share capital (allowed as deduction), (ii) TDS disallowance under section 40(a)(ia) in view of the exemption for cooperative society members, (iii) amortisation of HTM premium (allowed per CBDT Instruction No.17/2008), and (iv) premium paid to LIC for gratuity fund (allowed on the facts and precedent). Appeals and cross objections disposed of accordingly.

Protective assessment under section 68 - creditworthiness and source of funds - acceptance in substantive assessment precluding protective addition - treatment of cash deposits during demonetisation

Protective assessment under section 68 - acceptance in substantive assessment precluding protective addition - creditworthiness and source of funds - Deletion of the protective addition of Rs. 1,74,52,500/- made in the hands of the assessee under section 68. - HELD THAT: - The Tribunal upheld the view of the CIT(A) that the protective addition could not survive where the identical receipt had been examined and the source and creditworthiness were proved in the substantive assessment of the company. The Assessing Officer did not reject the company's explanation in terms and the company had furnished documentary evidence in the substantive proceedings verifying the source of the funds deposited during the demonetisation period. The assessee had offered explanation, admitted real estate income, filed revised returns and discharged tax liability; therefore the conditions for sustaining a protective addition under section 68 were not satisfied. Consequently the protective addition lacked foundation and was deleted. [Paras 3, 6]

Protective addition of Rs. 1,74,52,500/- deleted; order of CIT(A) upheld.

Creditworthiness and source of funds - treatment of cash deposits during demonetisation - Validity of the assessee's claim that Rs. 5.20 crores was advanced to M/s Gowtham Buddha Textile Park Pvt. Ltd. and shown as investment in his books. - HELD THAT: - The Tribunal found on record that the assessee had shown the amount as investment in his books and had recorded the fact in his sworn statement under section 131 during scrutiny of Gowtham Buddha Textile Park Pvt. Ltd. The Revenue's challenge lacked merit in view of these admissions and documentary record; the Tribunal dismissed the ground raised by the Revenue. [Paras 7]

Revenue's ground with respect to the alleged Rs. 5.20 crores advance dismissed.

Final Conclusion: The Revenue's appeal is dismissed; the deletion of the protective addition is sustained and the assessee's cross objections are rendered infructuous.

Mis-declaration of import consignment - confiscation and penalty under the Customs Act, 1962 - sale and assessment by weight - comparison of declared net weight with actual net weight - consequential benefits on restoration of goods

Mis-declaration of import consignment - comparison of declared net weight with actual net weight - sale and assessment by weight - confiscation and penalty under the Customs Act, 1962 - Whether the respondent mis-declared the import consignment of gold/silver dore bars thereby justifying confiscation and imposition of penalty - HELD THAT: - The Tribunal accepted the admitted factual position that the bill of entry, packing list and assay certificate recorded a gross weight which, after deduction of packing material, produced a net metal weight that matched the actual net weight found on examination. Although the number of bars recovered (76) differed from the packing list (74), the determinative measure for gold is weight and not piece-count. On that basis the Tribunal held that there was no mis-declaration of quantity or weight and that the proceedings for confiscation and penalty were founded solely on an incorrect inference from the difference in number of pieces. The Tribunal therefore concluded that the order-in-original for confiscation and penalty was misconceived and not sustainable. [Paras 7, 8, 9]

Appeal dismissed; order-in-original dated 14.08.2020 and the impugned order-in-appeal set aside; respondent entitled to consequential benefits in accordance with law.

Final Conclusion: On the admitted record that the declared net weight of metal corresponded with the actual net weight found, the Tribunal found no mis-declaration and set aside the confiscation and penalty orders, allowing consequential relief to the respondent.

Transaction value under Section 14 - rejection of declared transaction value - contemporaneous imports as basis for valuation adjustment - assessable value - reliance on market publications (London Metal Bulletin) - burden of proof on revenue to demonstrate undervaluation - valuation date - date of contract versus date of bill of lading

Transaction value under Section 14 - burden of proof on revenue to demonstrate undervaluation - contemporaneous imports as basis for valuation adjustment - Validity of the Department's rejection/enhancement of the importer's declared transaction value and whether the assessing authority had sufficient contemporaneous material to discard the declared price. - HELD THAT: - The Tribunal held that the transaction value declared by the importer ordinarily forms the basis for assessable value and can be rejected only if the revenue produces cogent contemporaneous evidence showing that identical or similar imports were at a higher price. The assessing authority must have material on which a reason to doubt the declared value can be formed; mere suspicion or reliance on non-contemporaneous indicia is insufficient. In the present case the revenue did not produce evidence of contemporaneous imports at a higher value; on the contrary, appellants produced a Bill of Entry showing the same goods imported from the same supplier in the same vessel assessed at a lower declared value. The Tribunal therefore found no justification for rejecting the declared transaction value and enhancing assessable value. [Paras 4]

The rejection/enhancement of the declared transaction value was unsupportable in absence of contemporaneous evidence; the transaction value declared by the appellant should not have been discarded.

Reliance on market publications (London Metal Bulletin) - valuation date - date of contract versus date of bill of lading - assessable value - Whether reliance on London Metal Bulletin prices dated near the Bill of Lading to enhance value was justified as against the contractual price fixed earlier. - HELD THAT: - The Tribunal recognised that market publications may be relevant, but emphasized that prices for valuation must be tested against the price prevailing on the date of the transaction/contract and not by reference to subsequent market movements unless demonstrably contemporaneous. The appellant's contract was dated 19-01-2012 and the contract price exceeded the Metal Bulletin appraisal for that earlier period; the Department relied on a later LMB issue dated 26-03-2012 to justify enhancement. The Tribunal held that using LMB issues of a subsequent date to displace a bona fide contractual price without contemporaneous corroboration was unsustainable and cannot justify enhancement of assessable value. [Paras 4]

Reliance on a later-dated London Metal Bulletin to enhance value was improper; the contract date and contemporaneous market evidence should govern, and therefore the enhancement based on the later LMB was unjustified.

Final Conclusion: The Tribunal set aside the impugned order sustaining the value enhancement, accepted the appellant's transaction value for assessment, and allowed the appeals.

Registration under the Goods and Services Tax - liquidator as distinct person of the corporate debtor - Notification No. 11/2020 and Notification No. 39/2020 (registration of IRP/RP) - discretion of the proper officer to register despite delay - effect of COVID-19 pandemic and statutory/administrative extensions

Registration under the Goods and Services Tax - liquidator as distinct person of the corporate debtor - Notification No. 11/2020 and Notification No. 39/2020 (registration of IRP/RP) - discretion of the proper officer to register despite delay - effect of COVID-19 pandemic and statutory/administrative extensions - Whether the respondent was justified in rejecting the petitioner's application for GST registration and whether the liquidator was entitled to registration despite alleged non-compliance with timeline in the notifications - HELD THAT: - The Court found that the respondent's rejection of the petitioner's GST registration application was unsustainable. The notifications relating to registration of IRP/RP treat those office-holders as a distinct person of the corporate debtor required to obtain new registration within certain timelines, but the liquidator's functions differ from IRP/RP and, in any event, the notifications (and subsequent administrative clarifications) could not be applied so rigidly as to ignore the realities of the pandemic and extensions granted. Section 25(8) of the GST law permits the proper officer to proceed to register a person who is otherwise liable but delayed in applying; a penalty may be imposed separately. The Court noted that the petitioner had produced the NCLT liquidation order and had sought registration to carry out time bound statutory duties in liquidation; the respondent's reliance on technical defects and timelines (including alleged non-uploading of the full order and the filing formalities of the appeal) did not justify denial of registration. In view of the pandemic, related extensions and administrative clarifications, and the statutory discretion to register notwithstanding delay, the respondent ought to have granted registration instead of directing the petitioner to reapply or treating the application as time barred. The Court therefore directed registration, while leaving any penalty power of the authority intact. [Paras 6, 7, 9, 10, 12]

Petition allowed; respondent directed to grant GST registration to M/s. Stratus Foods Private Limited (under liquidation) within two weeks of receipt of the writ, and the petitioner granted immunity insofar as delay beyond six months is concerned.

Final Conclusion: Writ petition allowed. The High Court directed the GST authority to grant registration to the company under liquidation within two weeks and held that the authority's technical refusal based on timelines and formal defects, without resort to the discretion under Section 25(8) and without regard to pandemic-related extensions and the liquidator's statutory role, was contrary to law; the petitioner was protected from penal consequence for delay beyond six months.

Corporate Insolvency Resolution Process - operational creditor - claim barred by limitation - settlement agreement - doctrine of estoppel - part payment and fresh cause of action - appointment of Interim Resolution Professional - moratorium

Claim barred by limitation - settlement agreement - doctrine of estoppel - part payment and fresh cause of action - The Section 9 petition is maintainable and not barred by limitation; the corporate debtor is estopped from objecting to initiation of CIRP. - HELD THAT: - The Tribunal examined the settlement agreement dated 27.01.2018 and held that the corporate debtor expressly undertook that all liability would be discharged by 31.03.2018 and that the operational creditor would be at liberty to revive or re-file insolvency proceedings with the corporate debtor having no objection in case of default. The operational creditor had withdrawn an earlier petition relying on that promise; having acted upon that representation, the operational creditor cannot now be prejudiced. Applying the principles of estoppel, the corporate debtor is precluded from raising the objection. The Tribunal further noted that partial payments were made by the corporate debtor after filing of IB 1394/ND/2018 and that each such payment gave rise to a fresh cause of action under the Limitation Act; consequently the claim is not time-barred. The Tribunal distinguished the case relied upon by the corporate debtor where settlement preceded issuance of a demand notice, finding it inapplicable here where settlement followed earlier proceedings and contained an explicit waiver of objection to revival of proceedings. On these grounds the petition was held maintainable and the objection of limitation rejected. [Paras 12, 13, 14, 15, 16]

The petition under Section 9 is admitted and CIRP is initiated against the corporate debtor.

Appointment of Interim Resolution Professional - deposit for IRP expenses - public announcement - moratorium - Appointment of an Interim Resolution Professional, directions for deposit, public announcement and imposition of moratorium were ordered. - HELD THAT: - As the applicant had not proposed an IRP, the Tribunal appointed Mr. Rahul Jain as Interim Resolution Professional subject to the usual conditions and required disclosures. The operational creditor was directed to deposit a sum to meet IRP expenses within one week, subject to adjustment by the Committee of Creditors. The IRP was directed to make the public announcement immediately as prescribed by the IBBI Regulations. Pursuant to admission, the statutory moratorium under Section 14 was declared and its statutory consequences were set out, with usual exceptions noted by amendment and regulation. The Tribunal recorded obligations upon the IRP and the corporate debtor's personnel to cooperate and preserve the corporate debtor's assets. [Paras 19, 20, 21, 22, 23]

Mr. Rahul Jain is appointed as Interim Resolution Professional; operational creditor to deposit the directed amount; public announcement to be made and moratorium declared.

Final Conclusion: The Section 9 petition by the operational creditor is admitted; CIRP is initiated against the corporate debtor, an Interim Resolution Professional is appointed with directions for deposit and public announcement, and moratorium is declared.

Default - Corporate Insolvency Resolution Process - demand notice - admission of petition - debt acknowledgment - appointment of Interim Resolution Professional - moratorium

Default - Corporate Insolvency Resolution Process - demand notice - admission of petition - debt acknowledgment - Whether the Operational Creditor proved that the Corporate Debtor committed default of the claimed debt and whether the petition for initiation of CIRP is admissible. - HELD THAT: - The Tribunal found as a matter of record that the Operational Creditor supplied goods to the Corporate Debtor and that the Corporate Debtor admitted the purchases covered by the 284 invoices for the period 14.11.2017 to 30.11.2019. Documentary material, including email correspondence and ledger statements, showed separate accounts and a closing balance in favour of the Operational Creditor as on the relevant date. The Tribunal rejected the weight of the auditor's certificate relied upon by the Corporate Debtor because there was no evidence establishing the auditor's authority or the evidentiary basis of that certificate. The defence that transactions were mistakenly clubbed with a sister concern was contradicted by the Corporate Debtor's own emailed account statements showing separate accounts. The Corporate Debtor also failed to reply to the statutory demand notice. On these findings the Tribunal held that the Operational Creditor established existence of the debt and default.

Company Petition admitted; CIRP to be initiated against the Corporate Debtor.

Appointment of Interim Resolution Professional - moratorium - Whether an Interim Resolution Professional should be appointed and moratorium declared consequent to admission of the petition. - HELD THAT: - The Operational Creditor had proposed a named Insolvency Resolution Professional. The Tribunal noted no pending disciplinary proceedings against the proposed professional on the IBBI website and, in exercise of its powers on admission of the petition, appointed the proposed professional as Interim Resolution Professional. The Tribunal directed the IRP to take charge of the management and to perform statutory functions under the Code and Rules. The Tribunal also declared moratorium under the Code and directed cooperation from the Corporate Debtor's management and communication of the order to concerned parties.

The proposed Ms. Narala Varalakshmi is appointed as Interim Resolution Professional and moratorium under the Code is declared; IRP to take charge and proceed with CIRP.

Final Conclusion: The Tribunal admitted the Company Petition on proof of debt and default, initiated the Corporate Insolvency Resolution Process against the Corporate Debtor, appointed the proposed Interim Resolution Professional, and declared the moratorium, directing the IRP and the Corporate Debtor's management to comply with the Code.

Compliance with Section 30(2) requirements - approval of resolution plan under Section 31 - opportunity to revise resolution plans - re-verification of creditor claims - treatment of avoidance transaction amounts for payment to operational creditors - commercial wisdom of the Committee of Creditors

Opportunity to revise resolution plans - re-verification of creditor claims - Whether only one resolution applicant (Jagriti Plastics Limited) was permitted to revise its resolution plan and whether the Resolution Professional wrongly admitted or failed to re-verify the claim of Jagriti Plastics Limited. - HELD THAT: - The Tribunal examined the minutes of the 12th and 13th CoC meetings and emails placed on record from all resolution applicants. The contemporaneous minutes and email communications demonstrate that other resolution applicants were given the opportunity to revise their offers, and several confirmed that their earlier proposed amounts remained final. The applicant failed to place any authenticated material to show that pages of a plan were altered by the Resolution Professional or that unequal opportunity was afforded. As to re-verification of the claim, the record shows claims were verified earlier by the erstwhile IRP; no material was produced to establish wrongful admission by the RP. The Tribunal therefore found the contention of procedural unfairness and wrongful admission/re-verification to be without merit. [Paras 13]

The objection that only Jagriti Plastics Limited was allowed to revise its plan and the prayer for re-verification of its claim is rejected.

Treatment of avoidance transaction amounts for payment to operational creditors - Whether the Resolution Plan improperly allocated amounts recoverable under avoidance applications (Sections 43-51 and 66) in a manner that would unduly benefit the successful resolution applicant. - HELD THAT: - The Resolution Applicant amended clause 1.13 of the approved plan to stipulate that amounts received pursuant to avoidance actions would be utilised first for payment of outstanding amounts of operational creditors as per the settlement schedule and any excess would vest in the Corporate Debtor, subject to NCLT orders. The Resolution Professional and the successful resolution applicant filed affidavits reflecting this amendment. Given this express provision directing recovered sums to operational creditors before vesting any surplus in the corporate debtor, the Tribunal held that the objection based on alleged undue benefit to the Resolution Applicant no longer survives. [Paras 14, 15, 16]

The objection concerning the effect of pending avoidance proceedings is disposed of in light of the amended clause; the challenge does not survive.

Compliance with Section 30(2) requirements - approval of resolution plan under Section 31 - commercial wisdom of the Committee of Creditors - Whether the Resolution Plan approved by the CoC satisfies the statutory and regulatory requirements under Section 30(2) of the Code and Regulations 38 and 39 of the CIRP Regulations, such that it may be approved under Section 31. - HELD THAT: - The Tribunal reviewed the Resolution Professional's examination and certification in Form H and the Resolution Plan's provisions. It found specific compliance: provision for CIRP costs (Part II, clause 1 read with Part III); provision for payment to operational creditors not less than amounts in liquidation (Part II, clause 2 read with Part III) as certified in Form H; management and control arrangements (clause 5.1, Part II); implementation and supervision by a Monitoring Committee (clause 5.1.1, Part II); and a declaration addressing contraventions of law (clause 7, Part II). The Tribunal noted the CoC's unanimous approval (100% votes) and applied the principle that the commercial wisdom of the CoC is central to selection of the best plan. Satisfied that Section 30(2) and relevant regulations are met and that sufficient provisions for implementation exist as required by the proviso to Section 31(1), the Tribunal approved the plan. [Paras 25, 26, 27, 28, 30]

The Resolution Plan meets the requirements of Section 30(2) and Regulations 38/39 and is approved under Section 31; the CoC-approved plan is sanctioned.

Final Conclusion: I.A. 265/ND/2021 is rejected; the procedural and claim-related objections against Jagriti Plastics Limited were dismissed and objections regarding avoidance transaction receipts were obviated by amendment of the plan. I.A. 85/ND/2021 - the Resolution Plan approved by the CoC (100% votes) - is sanctioned under Section 31, the moratorium ceases from the date of the order, and the Resolution Professional shall forward CIRP records to the IBBI.

Initiation of Corporate Insolvency Resolution Process under Section 7 of the Insolvency and Bankruptcy Code - Moratorium under Section 14 of the Insolvency and Bankruptcy Code - Appointment of Interim Resolution Professional - Debt and default established by record of information utility and DRT recovery certificate - Limitation - fresh cause of action arising from a DRT judgment or issuance of a recovery certificate - Reliance on Mobilox principle regarding adjudicating authority satisfying itself from information utility or other documentary evidence - Interaction of SARFAESI/DRT proceedings with initiation of proceedings under the IBC

Debt and default established by record of information utility and DRT recovery certificate - Reliance on Mobilox principle regarding adjudicating authority satisfying itself from information utility or other documentary evidence - Documentary evidence furnished with the application shows that the debt is due and payable and has not been paid. - HELD THAT: - The Tribunal found that availing of credit facilities and the default in repayment were not in dispute and that the Financial Creditor had obtained a recovery certificate from the DRT dated 29.11.2018 and had recorded default in the information utility. Applying the principle in Mobilox Innovations (that the adjudicating authority need only be satisfied from the information utility or other evidence that a default has occurred), the Tribunal was satisfied on the record produced that a debt payable by the Corporate Debtor existed and remained unpaid. The Corporate Debtor's disputes about OTS negotiations and pending challenges to asset sale did not negate the documentary proof of debt and default on the face of the record. [Paras 10]

The documentary evidence establishes that the debt is due and payable and remains unpaid; point (i) is answered in favour of the Financial Creditor.

Limitation - fresh cause of action arising from a DRT judgment or issuance of a recovery certificate - Interaction of SARFAESI/DRT proceedings with initiation of proceedings under the IBC - The financial claim by the Applicant is not barred by limitation. - HELD THAT: - The Tribunal rejected the Corporate Debtor's limitation plea. It observed that the DRT had allowed the recovery application and issued a recovery certificate on 29.11.2018. Relying on the statement in Dena Bank (now Bank of Baroda) v. C. Shivakumar Reddy that a judgment/decree or issuance of a recovery certificate by a court/tribunal gives rise to a fresh cause of action to initiate proceedings under Section 7 of the IBC within three years from the date of such judgment/decree or certificate, the Tribunal held that the petition filed on 26.12.2019 was within limitation. [Paras 12]

The claim is within limitation and the limitation plea is rejected; point (ii) is answered in favour of the Financial Creditor.

Final Conclusion: The Company Petition under Section 7 is admitted; the Tribunal ordered initiation of CIRP, declared moratorium under Section 14, appointed an Interim Resolution Professional, directed immediate public announcement of CIRP and directed the Registry to inform the RoC to mark the Corporate Debtor as being under CIRP.

Corporate Insolvency Resolution Process (CIRP) admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - existence of default by corporate guarantor and threshold debt for initiation of CIRP - appointment of Interim Resolution Professional (IRP) - moratorium and its prohibitions under Section 14 of the Code - duties and powers of the IRP including public announcement and claim verification - obligation of promoters, management and personnel to cooperate with the IRP - continuity of supply of essential goods and services during moratorium

Corporate Insolvency Resolution Process (CIRP) admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - existence of default by corporate guarantor and threshold debt for initiation of CIRP - Admission of the application under Section 7 and initiation of CIRP against M/s. Hind Sintex Ltd. on the ground of default. - HELD THAT: - The Tribunal found that loans sanctioned to Wearit Global Ltd. were guaranteed by M/s. Hind Sintex Ltd., and the Corporate Debtor failed to repay the sanctioned amounts as per the sanction letter dated 26.09.2016. The Financial Creditor issued recall and legal notices, to which the Corporate Debtor did not repay the outstanding amount and had admitted the debt by a letter dated 25.08.2018. The record establishes a default that meets the threshold prescribed under the Code and is within limitation for initiating CIRP. The Tribunal accordingly admitted the petition and initiated CIRP against the Corporate Debtor. [Paras 6, 8, 9]

CP (IB) No. 305 of 2019 is allowed and M/s. Hind Sintex Ltd. is admitted into CIRP under Section 7 of the Code.

Appointment of Interim Resolution Professional (IRP) - duties and powers of the IRP including public announcement and claim verification - Appointment of the Interim Resolution Professional and scope of his functions under the Code. - HELD THAT: - The Tribunal appointed the IRP proposed by the Financial Creditor and directed him to perform all functions under the Code, including making the public announcement and calling for claims. The IRP is to manage the operations, protect and preserve the value of the corporate debtor as a going concern and carry out duties specified in Sections 17, 18, 20 and 21, and to act in accordance with Section 13(1)(c). [Paras 8, 9]

Mr. Samir Kumar Bhattacharyya is appointed as IRP who shall perform the statutory functions including public announcement and claim verification.

Moratorium and its prohibitions under Section 14 of the Code - continuity of supply of essential goods and services during moratorium - Imposition of moratorium and related prohibitions, and protection for supply of essential goods or services. - HELD THAT: - The Tribunal declared the moratorium to operate from the date of the order until completion of CIRP or further order, prohibiting institution or continuation of suits, execution of decrees, transfer or disposition of assets, and enforcement of security interests, including actions under SARFAESI. It also clarified that ongoing supply of essential goods or services shall not be terminated, suspended or interrupted during the moratorium. [Paras 8, 9]

Moratorium under Section 14 is imposed with the stated prohibitions, while protection for continued supply of essential goods or services is maintained.

Obligation of promoters, management and personnel to cooperate with the IRP - Obligation of the corporate debtor's promoters, management and personnel to assist and cooperate with the IRP. - HELD THAT: - The Tribunal recorded that all personnel connected with the corporate debtor, its promoters or persons associated with management are under statutory obligation to extend assistance to the IRP under Section 19. The IRP is entitled to approach the Adjudicating Authority for appropriate orders if such assistance or cooperation is not forthcoming. [Paras 8, 9]

Promoters, management and personnel are directed to cooperate with the IRP; non-cooperation may be addressed by application to the Adjudicating Authority.

Payment of interim fees and communication of order - Interim direction for payment to the IRP and administrative directions for communication and commencement of CIRP. - HELD THAT: - The Tribunal directed the Financial Creditor to pay the IRP a stipulated sum as interim fees and expenses until the Committee of Creditors decides on his fees. The Registry was directed to communicate the order to relevant parties and the Registrar of Companies and to upload the order on the website. The Tribunal further declared that the commencement of CIRP shall be effective from the date of the order. [Paras 8, 9]

Financial Creditor to pay interim fees to the IRP; registry to communicate and upload the order; CIRP commences from the date of the order.

Final Conclusion: The Tribunal admitted the Section 7 petition and ordered initiation of CIRP against M/s. Hind Sintex Ltd. on established default by the corporate guarantor, appointed the proposed IRP with directions as to his duties and interim fees, imposed the statutory moratorium with associated prohibitions and safeguards for essential supplies, and directed administrative steps to give effect to the CIRP, with commencement effective from the date of the order.

Admission of Section 7 application under the Insolvency and Bankruptcy Code, 2016 - existence of default and admissibility of claim - limitation defence under the Limitation Act, 1963 to Section 7 proceedings - authority of a director to bind the corporate debtor - jurisdiction of the Adjudicating Authority - appointment and eligibility of Interim Resolution Professional - moratorium under Section 14 of the IBC - requirement of public announcement by the IRP - security for IRP's initial expenses and adjustment by the Committee of Creditors

Existence of default and admissibility of claim - admission of Section 7 application under the Insolvency and Bankruptcy Code, 2016 - The Section 7 petition was admissible and a default had occurred, warranting initiation of CIRP. - HELD THAT: - The Tribunal examined the loan transaction evidenced by the MoU and its addendum, acknowledgements of receipt in the corporate debtor's account and financial statements, the declaration of the account as NPA and the recall notice. On these materials the Tribunal was satisfied that the debt remained unpaid and that the petition was complete in the prescribed form. Consequently the application under Section 7 was admitted and CIRP was initiated. [Paras 2, 3, 10]

Admission of the Section 7 application and initiation of CIRP against the corporate debtor.

Limitation defence under the Limitation Act, 1963 to Section 7 proceedings - The petition was not barred by limitation; date of default was 31.03.2019 and filing on 31.10.2020 was within the limitation period. - HELD THAT: - The Tribunal accepted the petitioner's contention that the date of default was 31.03.2019 and, on that basis, held the Section 7 application filed on 31.10.2020 to be within the allowable period. The plea that the suit was time-barred was rejected for want of merit. [Paras 5, 8]

Limitation defence overruled; petition entertained as within time.

Authority of a director to bind the corporate debtor - The contention that the MoU and addendum were forged and that Mr. Sanjiv Gupta lacked authority to sign was not accepted. - HELD THAT: - While the corporate debtor alleged forgery and absence of board authorisation for Mr. Sanjiv Gupta to sign the documents, the Tribunal observed that the board report listed Mr. Sanjiv Gupta as a director and the balance sheet reflected receipt of the loan. On this material the plea that he was a 'sleeping director' or unauthorised was held to lack legal basis; the Tribunal also noted that such contentions could not defeat the prima facie case established for admission of the Section 7 application. [Paras 3, 4, 7]

Plea of forgery/ want of authority rejected; documents and director's actions treated as supporting the petitioner's claim.

Jurisdiction of the Adjudicating Authority - This Tribunal had jurisdiction to entertain the Section 7 application. - HELD THAT: - The registered office of the corporate debtor was situated in Delhi and, on that basis, the Tribunal concluded that it had territorial jurisdiction to try and dispose of the petition. [Paras 9]

Tribunal is competent to hear and decide the petition.

Appointment and eligibility of Interim Resolution Professional - requirement of public announcement by the IRP - security for IRP's initial expenses and adjustment by the Committee of Creditors - The nominated Insolvency Resolution Professional satisfied eligibility requirements and was appointed; directions issued as to public announcement and deposit for IRP's initial expenses. - HELD THAT: - The Tribunal recorded that the proposed IRP provided the written communication and declarations required by the Regulations and that no disciplinary proceedings were pending against him. He therefore met the conditions of Section 7(3)(b) and was appointed as IRP. The IRP was directed to make the public announcement within three days as clarified by the relevant Regulation. The petitioner was directed to deposit an initial amount with the IRP to meet expenses, subject to adjustment by the Committee of Creditors. [Paras 11, 12, 14]

Appointment of the named IRP with directions for immediate public announcement and deposit for initial IRP expenses.

Moratorium under Section 14 of the IBC - Upon admission, the moratorium under Section 14(1) of the IBC was declared, with the provisos and related provisons to operate as specified. - HELD THAT: - Consequent to admission under Section 7, the Tribunal directed that the moratorium as envisaged under Section 14(1) shall follow in relation to the respondent, with the operation of Sections 14(2) and 14(3) during the moratorium period as applicable. [Paras 13]

Moratorium directed to follow upon admission in accordance with Section 14 of the IBC.

Registry communication and update of corporate status - Registry and Registrar of Companies to be informed and to update records regarding admission of the petition. - HELD THAT: - The Tribunal directed the registry to communicate the order to the parties, the IRP and the Registrar of Companies, NCR, New Delhi within seven days, and directed the Registrar to update the corporate debtor's status on its website to reflect admission of the petition. [Paras 15]

Directions issued for communication of the order and updation of records by the Registrar of Companies.

Final Conclusion: The Section 7 petition was admitted, CIRP against the corporate debtor was initiated, the nominated IRP was appointed and directed to make immediate public announcement; the moratorium under Section 14 was declared; the petitioner directed to deposit initial expenses for the IRP and registry/ROC directed to update records.

Interim release of seized assets to meet operational and statutory expenses - maintaining corporate viability pending availability of appellate remedy - right to prefer appeal to the Appellate Authority under Section 37A(5) of FEMA - confirmation of seizure by the Customs authority and non-argument on merits

Interim release of seized assets to meet operational and statutory expenses - maintaining corporate viability pending availability of appellate remedy - Direction to respondent No.2 to release an amount to the petitioner to meet salaries, taxes, statutory dues and operational expenses. - HELD THAT: - The Court, exercising jurisdiction under Article 226, accepted the petitioner's plea that absence of funds would imperil the company's ability to meet day to day expenses and pay salaries to its employees. Having considered the affidavit setting out expenditure for November and December 2021 and January 2022 and the rejection by respondent No.2 of an earlier request for release, the Court concluded that release of an amount commensurate with that stated in paragraph 9 of the supporting affidavit was necessary in the interest of justice to preserve the petitioner's corporate viability and to enable pursuit of appellate remedies. The Court made the release immediately enforceable and required the petitioner to furnish details of utilisation by affidavit within two weeks of release. [Paras 5, 6]

Respondent No.2 directed to release the specified amount forthwith within one week and the petitioner to file utilisation details within two weeks.

Right to prefer appeal to the Appellate Authority under Section 37A(5) of FEMA - confirmation of seizure by the Customs authority and non-argument on merits - Whether the Court would adjudicate the merits of the seizure orders which have been confirmed by respondent No.3. - HELD THAT: - The Court recorded that respondent No.3/Commissioner of Customs confirmed the seizure orders by a common order dated 04.02.2022 and acknowledged the existence of an appellate remedy under Section 37A(5) of FEMA. In view of that confirmation, the Court refrained from expressing any opinion on the merits of the seizure and expressly left all substantive issues raised in the writ petition open for determination by the appropriate authority or on appeal. The Court also noted that there is presently no Presiding Officer of the Appellate Tribunal under FEMA but proceeded to grant interim relief without prejudice to the appellate or adjudicatory process. [Paras 4, 6]

No adjudication on merits; all issues left open for determination by the appropriate authority and appellate remedy under Section 37A(5) of FEMA preserved.

Final Conclusion: Writ petition disposed by directing respondent No.2 to release the specified sum to the petitioner for operational needs; the substantive validity of the seizure orders remains undecided and is left open for determination by the appropriate authority or on appeal under Section 37A(5) of FEMA.

Reversal of CENVAT credit on write-off or provision for inputs - Partial versus full write-off of inputs - Application of Rule 3(5B) of CENVAT Credit Rules - Temporal scope of statutory amendment (effect from 1.3.2011)

Reversal of CENVAT credit on write-off or provision for inputs - Partial versus full write-off of inputs - Application of Rule 3(5B) of CENVAT Credit Rules - Whether Rule 3(5B) as in force during 2007-08 to August 2009 required reversal of CENVAT credit upon creation of a provision for old and slow-moving inventory where the inputs were not fully written off. - HELD THAT: - The Tribunal examined Rule 3(5B) as inserted with effect from 11.5.2007 and noted that, prior to its amendment effective 1.3.2011, the obligation to pay an amount equivalent to CENVAT credit arose where inputs on which credit had been taken were written off fully or a provision to write off fully had been made in the books. The adjudicatory record and the appellant's balance sheets show creation of a provision for old and slow-moving inventory without evidence of full write-off of the inputs. The department's Show Cause Notice alleged only that a provision had been created and did not allege full write-off. The Tribunal followed earlier decisions holding that the requirement to reverse credit on partial write-off became applicable only after the amendment of Rule 3(5B) with effect from 1.3.2011. Applying that principle to the facts for the period 2007-08 to August 2009, the Tribunal concluded that Rule 3(5B) did not mandate reversal of credit in the absence of full write-off and consequently the confirmed demand could not be sustained. [Paras 11, 12, 13, 14]

Demand confirmed under Rule 3(5B) set aside as the inputs were not shown to be fully written off for the contested period; appeal allowed.

Final Conclusion: For the period 2007-08 to August 2009 Rule 3(5B) required reversal of CENVAT credit only where inputs were fully written off or a provision to write off fully was made; since the appellant's records did not show full write-off, the demand was unsustainable and the impugned order was set aside.

Admissibility of statements recorded under Section 14 - Mandatory procedure under Section 9D(1) for admitting statements recorded during investigation - Relevance and admissibility of computer printouts from electronic devices - Conditions under Section 36B for electronic records - Proof requirement for clandestine removal of goods

Admissibility of statements recorded under Section 14 - Mandatory procedure under Section 9D(1) for admitting statements recorded during investigation - Whether statements recorded during investigation can be relied upon in adjudication without summoning and examining the deponents and complying with Section 9D(1)(b). - HELD THAT: - The Tribunal held that statements recorded during investigation before a gazetted officer are not automatically relevant for proving their contents unless the statutory procedure in clause (b) of Section 9D(1) is followed. That procedure requires (i) summoning and examining the person who made the statement as a witness before the adjudicating authority and (ii) recording reasons that, in the circumstances, the statement should be admitted in the interests of justice. The use of the word 'shall' makes this mandatory except where clause (a) applies. The adjudicating authority's failure to follow Section 9D(1)(b) amounts to giving up reliance on those witnesses and precludes treating their earlier statements as evidence. The Tribunal relied on the principle that evidence-in-chief must precede cross-examination and that non-compliance with the statutory safeguard raises serious doubts about voluntariness and reliability of confessional statements. [Paras 4]

Statements recorded during investigation were not admissible for proving clandestine removal in the absence of compliance with Section 9D(1)(b); reliance upon them was rejected.

Relevance and admissibility of computer printouts from electronic devices - Conditions under Section 36B for electronic records - Whether computer printouts obtained from the USB drive could be relied upon as evidence of purchase/sale and clandestine removal without fulfilling conditions of Section 36B. - HELD THAT: - The Tribunal found that the printouts from the USB drive could not be accepted as reliable evidence because the conditions prescribed under Section 36B (and related statutory safeguards) were not fulfilled. The department opened and retained the USB drive for an extended period before taking prints; no identification or examination of the person who made the entries was produced and no certificate from a responsible official under the statutory scheme was obtained. In those circumstances the computer-generated material could not be treated as admissible corroborative evidence to establish clandestine removals. [Paras 4]

Computer printouts from the USB drive were not admissible as evidence in the absence of statutory compliance with Section 36B and attendant safeguards.

Proof requirement for clandestine removal of goods - Whether the revenue established clandestine removal of goods beyond reasonable doubt on the material brought on record. - HELD THAT: - The Tribunal observed that there was no independent or corroborative material of manufacture and removal - no stock discrepancies, no records of transportation, and no corroborative records from suppliers or buyers produced on evidence. The case rested essentially on the investigation statements and computer printouts, both of which were found unreliable for the reasons stated. The admission of a higher duty figure in investigation vis-a -vis a lower adjudicated demand further cast doubt on the reliability of the confessional statements. On the totality of evidentiary defects, the charge of clandestine removal was not established beyond doubt. [Paras 4, 5]

Clandestine removal was not proved; the adjudication order sustaining demand was therefore unsustainable.

Final Conclusion: The Tribunal set aside the impugned order, holding that the adjudicating authority erred in relying on investigation statements without complying with Section 9D(1)(b) and on computer printouts without meeting Section 36B requirements, and that, in absence of corroborative evidence of manufacture or removal, the charge of clandestine removal was not established.

Interpretation of exemption notification - bulk drug versus drug - strict interpretation of exemption - procedure for concessional removal / condition No. 2 - extended period of limitation / proviso to Section 11A - doctrine of substantial compliance - adjustment of amounts paid under CENVAT / Rule 6 - penalty under Section 11AC

Bulk drug versus drug - procedure for concessional removal / condition No. 2 - strict interpretation of exemption - Benefit of exemption under Sl. No. 47(A) was not available for the goods cleared; the goods are bulk drugs covered by Sl. No. 47(B) and exemption under Sl. No. 47(B) requires compliance with the procedure in condition No.2. - HELD THAT: - The Tribunal accepted the factual finding that the product cleared (Amiodarone Hydrochloride) is a bulk drug and not a finished drug capable of direct human consumption. As such it falls under Sl. No. 47(B) of Notification No.4/2006-CE, which makes exemption subject to the procedural condition (Condition No.2) for removals where the use is outside the factory of production. The appellant did not follow the prescribed procedure. The Tribunal applied the settled principle that exemption notifications must be interpreted strictly and that a specific entry cannot be rendered redundant by importing a broader statutory definition from elsewhere; accordingly the specific treatment of bulk drugs in 47(B) prevails over a general characterization. On these grounds entitlement to unconditional exemption under 47(A) was denied and the demand on merits was held maintainable. [Paras 4]

Goods held to be bulk drugs; exemption under Sl. No.47(B) only and not admissible as claimed under Sl. No.47(A) because procedural condition was not followed; demand sustainable on merits.

Extended period of limitation / proviso to Section 11A - doctrine of substantial compliance - Extended period of limitation could not be invoked; demand must be worked out within normal period of limitation. - HELD THAT: - The Tribunal found no satisfaction in the adjudicating authority's order that there was suppression with intent to evade duty such as would justify invoking the extended period under the proviso to Section 11A. The dispute was essentially one of interpretation of the exemption notification and the appellant had put forward an interpretation supported by earlier tribunal decisions. Mere non-acceptance of the appellant's interpretation does not amount to the requisite clandestine conduct or suppression to activate the extended limitation. Therefore invocation of extended limitation was not justified and the demand must be computed for the normal limitation period. [Paras 4]

Extended period not invocable; demand to be limited to normal period of limitation.

Adjustment of amounts paid under CENVAT / Rule 6 - Amounts paid by the assessee at prescribed percentages while claiming exemption (@5%, 8% or 10%) are to be adjusted against the duty demand for the periods where exemption is denied. - HELD THAT: - The Tribunal accepted that the assessee had made payments or reversals in compliance with Rule 6 of the CENVAT Credit Rules when not maintaining separate records for exempt clearances and that such transactions are reflected in the monthly returns. The adjudicating authority's observation that proof of payment was not produced was held erroneous. Accordingly, for the periods where exemption is denied, the sums thus paid or reversed shall be adjusted against the confirmed duty demand. [Paras 4]

Allow adjustment of amounts paid/@reversed under CENVAT rules against the duty demand for periods where exemption is denied.

Penalty under Section 11AC - extended period of limitation / proviso to Section 11A - Penalty under Section 11AC cannot be sustained where the extended period of limitation is not justified; the penalty imposed is set aside. - HELD THAT: - Relying on authoritative jurisprudence, the Tribunal observed that the applicability of Section 11AC is contingent on the conditions that justify invocation of the extended period under Section 11A. Since the Tribunal held that the extended period could not be invoked (there being no finding of suppression with intent), the statutory precondition for imposition of penalty under Section 11AC was absent. Consequently the penalty imposed under Section 11AC (and analogous penalty under the rules as applied by the Additional Commissioner) was set aside. [Paras 4]

Penalty under Section 11AC (and corresponding penalty under rules) set aside as conditions for its imposition are not satisfied.

Final Conclusion: Both appeals were partly allowed: the demand was held maintainable on merits but limited to the normal period of limitation; amounts paid/reversed under CENVAT rules are to be adjusted against confirmed demand; penalties imposed under Section 11AC (and corresponding rule-based penalty) were set aside; matters remanded to the original authority for recomputation in accordance with these directions (to be finalised within three months).

Admissibility of CENVAT credit - documents for availing CENVAT credit - procedural requirement in Rule 9 cannot defeat substantive entitlement under Rule 3 - validity of railway receipts / TR-6 as proper document for credit - service tax certificate for transportation of goods by rail (STTG Certificate)

Admissibility of CENVAT credit - documents for availing CENVAT credit - validity of railway receipts / TR-6 as proper document for credit - service tax certificate for transportation of goods by rail (STTG Certificate) - Cenvat credit availed on the basis of railway receipts containing prescribed particulars could not be denied merely because Rule 9 was later amended to require a STTG Certificate w.e.f. 27.08.2014. - HELD THAT: - The Tribunal held that admissibility of CENVAT credit is governed by Rule 3 of the Cenvat Credit Rules and Rule 9 only prescribes documents for taking credit; a subsequent amendment to Rule 9 adding a specific document (STTG Certificate) w.e.f. 27.08.2014 could not be used to deny credit already taken where the requirements of Rule 3 were satisfied. Rule 9(2) read with Rule 4A treats any document containing the particulars prescribed under Rule 4A as a proper duty-paying document for availment of credit. The Tribunal relied on the reasoning in Essel Propack Ltd. to the effect that procedural requirements in Rule 9 cannot be used to defeat a substantive right to credit where duty payment and receipt of inputs/services are not disputed. Applying these principles, the Tribunal concluded that railway receipts (TR-6) containing the required particulars were proper documents for availing credit and the demand, interest and penalty based on denial of such credit were unsustainable. [Paras 3, 4]

Impugned order confirming demand, interest and penalty set aside; appeal allowed.

Final Conclusion: The appeal is allowed; the order of the Commissioner confirming demand, interest and penalty for denial of CENVAT credit taken on the basis of railway receipts is set aside, with consequential reliefs to the appellant.

Nexus between input service and manufacture of final product - eligibility of cenvat credit for services used in a residential colony - interpretation of Rule 2(l) of the Cenvat Credit Rules - indirect use of input services in or in relation to manufacture - application of judicial precedent in determining input service nexus

Nexus between input service and manufacture of final product - eligibility of cenvat credit for services used in a residential colony - interpretation of Rule 2(l) of the Cenvat Credit Rules - Cenvat credit of service tax paid on maintenance and repair services for a residential colony adjacent to the factory is admissible as input service. - HELD THAT: - The tribunal found on the facts that the residential colony was constructed adjacent to the factory situated in a remote location and that without such residential facilities the appellant would not be able to secure adequate and competent manpower necessary for continuous, round the clock manufacturing operations. Applying the language and intent of Rule 2(l) of the Cenvat Credit Rules, which permits credit of any service used whether directly or indirectly in or in relation to manufacture, the tribunal held that services employed in maintaining the staff colony are directly and intrinsically linked to the manufacturing activity. The tribunal relied on the Andhra Pradesh High Court decision in ITC Ltd. which treated similar residential colony services as input services, and distinguished contrary authorities that focused on a different factual nexus between the service and the finished product. On these determinative findings the impugned order denying credit was set aside and the appeal allowed. [Paras 6, 7, 8, 10, 11]

The denial of cenvat credit was set aside and the appeal allowed; service tax paid on maintenance/repair of the residential colony adjacent to the factory is admissible as input service.

Final Conclusion: The tribunal allowed the appeal, holding that services used in constructing and maintaining a residential colony adjacent to a remote factory satisfy the requisite nexus under Rule 2(l) and qualify for cenvat credit as input services.

Binding effect of approved resolution plan - extinguishment of pre-approval claims including statutory dues - clarificatory nature of 2019 amendment to Section 31 of the I&B Code - tribunal's lack of jurisdiction post-approval of resolution plan

Binding effect of approved resolution plan - extinguishment of pre-approval claims including statutory dues - clarificatory nature of 2019 amendment to Section 31 of the I&B Code - Approved resolution plan binds all creditors and extinguishes claims not part of the plan, including statutory dues, with the 2019 amendment being clarificatory. - HELD THAT: - The Tribunal accepted and applied the authoritative pronouncement in Ghanashyam Mishra & Sons [2021 (9) SCC 657], which held that upon approval of a resolution plan by the Adjudicating Authority under Section 31, the claims provided in the plan stand frozen and binding on the corporate debtor and its creditors, and all claims not included in the plan are extinguished as on the date of approval. The Supreme Court further held that the 2019 amendment to Section 31 is clarificatory and declaratory, effective from the inception of the I&B Code, and that statutory dues not forming part of the approved resolution plan are likewise extinguished and proceedings for recovery in respect of such pre-approval dues cannot be continued. The Tribunal, having recorded that the Revenue's claims were considered in the Resolution Plan which was approved by the NCLT and the NCLAT dismissed the challenge, concluded that the Supreme Court's ratio applies and operates to extinguish any pre-approval claims not included in the plan. [Paras 2, 3]

The Tribunal held that the approved resolution plan is binding and extinguishes pre-approval claims, including statutory dues, relying on the Supreme Court's decision that the 2019 amendment is clarificatory.

Tribunal's lack of jurisdiction post-approval of resolution plan - abatement under procedural rules - Given the extinguishment of claims by the approved resolution plan, the Tribunal has no jurisdiction to entertain the present appeal and the appeal must be abated under Rule 22 of the CESTAT (Procedure) Rules, 1982. - HELD THAT: - Having applied the Supreme Court's determination that claims not part of an approved resolution plan stand extinguished and that no proceedings may be continued in respect of such claims, the Tribunal concluded that it cannot adjudicate or permit continued recovery proceedings in relation to those pre-approval claims. The factual position recorded by the parties - namely, that the Resolution Plan was approved by the NCLT, the Revenue's claims were taken into account, and the NCLAT dismissed the challenge - led the Tribunal to the legal consequence that it lacked jurisdiction to proceed. On that basis, and with the Revenue conceding the factual position, the Tribunal invoked Rule 22 of its Procedure Rules to abate the appeal. [Paras 2, 3]

The Tribunal concluded that it lacks jurisdiction to entertain the appeal in view of the approved resolution plan and abated the appeal under Rule 22 of the CESTAT (Procedure) Rules, 1982.

Final Conclusion: Applying the Supreme Court's ruling in Ghanashyam Mishra & Sons, the Tribunal held that the approved resolution plan is binding and extinguishes pre-approval claims (including statutory dues); accordingly, the Tribunal lacks jurisdiction to entertain the appeal and the appeal is abated under Rule 22 of the CESTAT (Procedure) Rules, 1982.

Registration of premises under the Central Excise Rules, 2002 - Rule 9 of the Central Excise Rules, 2002 - effect of corporate liquidation on legal existence and registration - acquisition of title by purchaser through official liquidator - liability for predecessor's dues following sale in liquidation - priority of government dues vis-a -vis secured creditors in liquidation/SARFAESI context

Rule 9 of the Central Excise Rules, 2002 - registration of premises under the Central Excise Rules, 2002 - effect of corporate liquidation on legal existence and registration - acquisition of title by purchaser through official liquidator - liability for predecessor's dues following sale in liquidation - Whether registration could be refused on the ground that the premises were previously registered in the name of a company which had outstanding excise dues and which ceased to exist after liquidation, and whether two registration certificates for the same premises are prohibited by Rule 9. - HELD THAT: - The Tribunal found that a bare reading of Rule 9 does not prohibit issuance of two registration certificates in respect of the same premises. A company that has undergone liquidation is deemed non-existent; therefore relying on the absence of a request from the previous (now liquidated) company to cancel its registration is irrelevant. The purchaser acquired right, title and interest in the property through the official liquidation process and, by carrying on business from the premises and filing returns, demonstrated entitlement to registration. Questions concerning recovery of the predecessor's outstanding dues or priority between government dues and secured creditors arising out of the liquidation/SARFAESI process were not determinative of the registration issue before the Tribunal. Consequently, the Adjudicating Authority's refusal to grant registration on the stated ground was unsustainable and the Commissioner (Appeals) order setting aside that refusal was correctly upheld. [Paras 6, 7]

Refusal to grant registration was set aside; the purchaser, having acquired the premises through official liquidation and carrying on business therefrom, was entitled to registration and Rule 9 does not bar registration in such circumstances.

Final Conclusion: The appeal is dismissed and the Commissioner (Appeals) order confirming grant of registration to the purchaser is upheld.

Invocation of Rule 41 of the CESTAT (Procedure) Rules, 1982 - payment of confirmed duty under protest - payment of penalty to close long running litigation - modification of appellate order - interest under Section 11AB of the Central Excise Act - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019

Invocation of Rule 41 of the CESTAT (Procedure) Rules, 1982 - payment of penalty to close long running litigation - modification of appellate order - Whether the appellant's request to close the appeal by payment of the penalty and consequent modification of the Commissioner (Appeals) order should be acceded to by invoking Rule 41 of the CESTAT (Procedure) Rules, 1982. - HELD THAT: - The Tribunal noted that the confirmed duty had been paid by the appellant under protest shortly after confirmation by the Commissioner (Appeals). The appellant, facing loss of its previous counsel and inability to immediately engage another, offered to pay the penalty amount to bring finality to litigation that had been pending for over a decade. Having regard to the smallness of interest payable for the intervening period, the availability of a statutory settlement mechanism under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 (which would have reduced the penalty), and the objective of securing the ends of justice by terminating protracted proceedings, the Tribunal exercised its discretionary power under Rule 41 of the CESTAT (Procedure) Rules, 1982 to accept the appellant's offer. On that basis the Tribunal modified the appellate order so as to permit closure of the appeal on payment of the penalty alone and directed compliance within a limited time.

The appeal is dismissed; the appellant is directed to pay the penalty of Rs. 1,45,700/- within three months and the Commissioner (Appeals) order is modified accordingly.

Final Conclusion: The Tribunal, exercising discretion under Rule 41 of the CESTAT (Procedure) Rules, 1982, allowed the appellant's request to finally settle the dispute by payment of the penalty; the appeal is dismissed and the Commissioner (Appeals) order is modified to the extent directed.

Penalty under Section 54(1)(14) of the Uttar Pradesh Value Added Tax Act, 2008 - intention to evade tax - requirement of recording finding of intention to evade tax before imposing penalty - incomplete Form-38 not by itself sufficient to sustain penalty without a finding of intention - notice under Section 54(1) and adjudicatory requirement of material-based finding

Penalty under Section 54(1)(14) of the Uttar Pradesh Value Added Tax Act, 2008 - intention to evade tax - incomplete Form-38 not by itself sufficient to sustain penalty - Whether a penalty under Section 54(1)(14) could be imposed and sustained without recording any cogent finding as to intention to evade tax. - HELD THAT: - The Tribunal confirmed penalty solely because Column 6 of Form-38 was left blank while transporting taxable goods into the State, without recording any finding as to intention to evade tax. The Court applied the settled principle that imposition of penalty under the specified provision requires a finding of intent to evade payment of tax and that such finding must be based on material before the authority or produced during proceedings. The Court relied on earlier precedents including M/S Rama Pulses Vs State of U.P. & Others and the continued applicability of the ratio in Jain Shudh Vanaspati Ltd. to hold that an incomplete Form-38, though potentially a ground for seizure, does not dispense with the duty to record a cogent finding of intention to evade tax before levying penalty. In the absence of such a finding and where the assessee offered an explanation of inadvertence on the consignor's part, the mechanical imposition of penalty was held to be unsustainable. [Paras 4, 5, 7]

Penalty under Section 54(1)(14) cannot be sustained in the absence of a recorded cogent finding of intention to evade tax; the levy of penalty is quashed.

Final Conclusion: Revision allowed; the penalty imposed under Section 54(1)(14) of the Act is set aside for lack of any cogent finding of intention to evade tax.

Quashing of assessment for jurisdictional error - VAT on works contract - deemed sale under VAT - deletion of CST 'C' form transactions from taxable turnover - application of Builders Association principle to works contracts - remand for fresh assessment complying with precedent

Quashing of assessment for jurisdictional error - VAT on works contract - deemed sale under VAT - application of Builders Association principle to works contracts - Validity of the assessment dated 23.11.2016 in so far as it levied VAT on goods which had already suffered Central Sales Tax and whether such assessment suffered from jurisdictional error. - HELD THAT: - The Court held that the assessment order could not stand because it failed to give effect to the principles laid down by the Supreme Court in Builders Association of India and the Division Bench of this Court in Projects and Services Centre. Transactions supported by CST 'C' forms (inter-state sales) must be excluded from taxable turnover under the State tax regime when the legal tests in the cited precedents are satisfied. The State's contention that the introduction of the State VAT statute and amendments to the CST Act rendered such deletions inapplicable was found to be inconsistent with those precedents. Having found that the assessment did not conform to the binding principles, the Court quashed the assessment and the consequent demand notice. [Paras 5, 6]

The assessment dated 23.11.2016 and the demand notice are quashed for failure to apply the principles of Builders Association and the Division Bench decision; transactions under CST 'C' forms are to be deleted from taxable turnover as required by those precedents.

Remand for fresh assessment complying with precedent - Whether the matter should be remitted for fresh assessment and the terms of such remand. - HELD THAT: - The Court remitted the matter to the Assessing Authority for fresh assessment strictly in accordance with the directions in the Supreme Court and Division Bench decisions. The petitioner was directed to appear before the Assessing Authority on a specified date with a copy of the order, and the Assessing Authority was directed to conclude the fresh assessment within six months from the parties' first appearance. The Assessing Authority was required to strictly comply with the judgments cited and to give effect to deletions and legal tests mandated by those precedents. [Paras 5]

Matter remitted for fresh assessment with directions to the petitioner to appear on 04.04.2022 and to the Assessing Authority to conclude reassessment within six months, complying strictly with the cited precedents.

Final Conclusion: Writ petition allowed: the assessment dated 23.11.2016 and the consequential demand notice are quashed; the matter is remitted for fresh assessment to be completed within six months in accordance with the Supreme Court and Division Bench precedents, with directions as recorded.

Dishonour of cheque under Section 138 of Negotiable Instruments Act - Legally enforceable debt or other liability - Compliance with statutory notice and limitation conditions under Section 138 - High Court's limited jurisdiction in criminal revision - no re-appreciation of evidence

Dishonour of cheque under Section 138 of Negotiable Instruments Act - Legally enforceable debt or other liability - Compliance with statutory notice and limitation conditions under Section 138 - Whether the offence under Section 138 of the Negotiable Instruments Act was made out in respect of the dishonoured cheque given as part payment for purchase consideration. - HELD THAT: - The Court found on the evidence recorded by the courts below that the petitioner admitted purchase of one-third share of the house in the name of his daughter for a specified consideration and that he issued Cheque No. 467136 for part of that consideration which was dishonoured on presentation. The Court applied the statutory ingredients of Section 138, noting that the cheque was drawn for discharge, in whole or in part, of a debt or other liability and that the payee received information of dishonour and served notice; the drawer failed to make payment. The High Court concurred with the trial and appellate courts that these facts satisfied the requirement of a legally enforceable debt or liability and the other statutory requisites for conviction under Section 138, and therefore there was no illegality in sustaining the conviction and sentence (as modified by the appellate court).

Conviction under Section 138 sustained; courts below did not err in holding that the cheque related to a legally enforceable debt and the statutory conditions were satisfied.

High Court's limited jurisdiction in criminal revision - no re-appreciation of evidence - Whether the High Court in criminal revision could re-appreciate evidence and substitute its view for that of the trial and appellate courts. - HELD THAT: - Relying on the settled principle that the High Court's jurisdiction in criminal revision is circumscribed, the Court held that it must not undertake a re-appreciation of evidence where the trial and appellate courts have recorded findings of fact and applied law. The judgment referred to earlier authorities which limit revisional interference to cases of illegality or material irregularity; no such illegality or perversity was found on the record before the High Court. Accordingly, the High Court declined to disturb concurrent findings of the courts below.

High Court declined to re-appreciate evidence and found no jurisdictional or legal error warranting interference in revision.

Final Conclusion: Criminal revision dismissed; concurrent findings convicting the petitioner under Section 138 of the Negotiable Instruments Act are upheld and there is no ground for revisional interference by the High Court.

Criminal misconduct under the Prevention of Corruption Act - Section 13(1)(e) read with Section 13(2) - Gratification other than legal remuneration / public servant obtaining valuable thing - Section 7 / Section 11 (pre 2018) of the Prevention of Corruption Act - Benami property - evidentiary tests and indicia for proving property held in name of ostensible owner - Disproportionate assets - burden to account and standard of proof - Abetment and liability of private persons - Section 109 IPC read with offences under the PC Act - Forfeiture and confiscation under Criminal Law Amendment Ordinance read with Section 5(6) of the Prevention of Corruption Act - CBI investigation practice - role of preliminary inquiry under the CBI Manual (discretionary)

Criminal misconduct under the Prevention of Corruption Act - Section 13(1)(e) read with Section 13(2) - Disproportionate assets - burden to account and standard of proof - Whether A 1 (Swetabh Suman) was guilty of criminal misconduct by possessing pecuniary resources and properties disproportionate to his known sources of income - HELD THAT: - The High Court accepted the trial court's findings after examining the A/B/C/D statements, bank records, inventories recovered on search and other documentary and oral evidence. The court applied settled principles that prosecution must prove the existence and extent of assets and known sources of income beyond reasonable doubt and, once established, the accused must satisfactorily account for the disproportion by a preponderance of probabilities. The court reviewed disputed items (bank balances, household goods, cash and jewellery recovered on search, PPF/interest/dividend receipts and expenditure heads) and found the trial court's valuation and computations to be legally sound on the evidentiary record. The court also examined the ostensible ownership of several properties and applied the Jaydayal Poddar indicia (source of purchase money, possession, conduct of parties, custody of title deeds etc.) to conclude that assets held in the names of others were in substance acquired from A 1's illicit resources.

Conviction of A 1 for criminal misconduct under Section 13(1)(e) read with Section 13(2) is upheld; the court affirmed the trial finding of disproportionate assets in favour of the prosecution and confirmed sentence on that count.

Gratification other than legal remuneration / public servant obtaining valuable thing - Section 7 / Section 11 (pre 2018) of the Prevention of Corruption Act - Whether A 1 was guilty of accepting or attempting to obtain illicit gratification (distinct from the DA computation) and whether conviction may be sustained on the material actually led - HELD THAT: - The court examined the allegations of demands and attempted extortion recorded in the chargesheet and witness testimony. While prosecution did not prove all pleaded instances of obtaining valuable things without consideration, the evidence (notably the complaint and corroborative material in respect of one matter) satisfied the court that A 1 had attempted to obtain gratification other than legal remuneration. The court therefore confirmed culpability under the statutory provision for illicit gratification and, noting the omission in formal charge framing on this precise provision, applied Section 464 CrPC principles (no failure of justice shown) to uphold conviction and alter the sentence to reflect conviction under the relevant pre amendment provision.

Court confirmed conviction of A 1 for illicit gratification (Section 7 / as reflected in the trial) and imposed modified sentence on that count; other pleaded instances under Section 11 were not uniformly proved.

Benami property - evidentiary tests and indicia for proving property held in name of ostensible owner - Source of purchase money as a decisive circumstance - Whether properties held in the names of A 2, A 3, A 4 and others (including Rajpur Road house, Pondha lands, Noida plots, Hotel Uruvela, Noida and Lucknow flats, Honda City car) were benami for A 1 - HELD THAT: - The court applied the recognised indicia for benami transactions (source of purchase money, possession and conduct after purchase, custody of title deeds, relationship and motive) and considered competing valuations and witnesses. For each principal asset the court reviewed documentary proof, valuer reports, search inventories, bank and draft chains, conduct of ostensible owners and intermediaries (property dealers, chartered accountants and acquaintances), and forensic findings (handwriting/ITR material). Where the cumulative proved facts were only consistent with acquisition by A 1 and effectively concealed by transfers into ostensible owners' names, the court treated those properties as benami of A 1. Where prosecution evidence failed, the court declined to make that finding.

Court upheld findings that specified properties (including Rajpur Road house; Pondha land; Plot No. 10, Block C, Sector 50 Noida; Hotel Uruvela International, Bodhgaya; Flat B 122 Panchwati Noida; Flat No. 303 IRS, Lucknow; USHA plot; Honda City Car) were benami acquisitions traceable to A 1 and sustained their treatment in the conviction and confiscation orders where proven.

Abetment and liability of private persons - Section 109 IPC read with offences under the PC Act - Whether A 3 (Arun Kumar Singh) and A 4 (Rajendra Vikram Singh) abetted A 1 in acquiring and holding benami properties and were therefore criminally liable - HELD THAT: - The court considered whether the private persons were charged only for intentional aid or whether the charges encompassed instigation/conspiracy as well; it found that the charges were framed broadly and evidence (possession, conduct, bank draft chains, involvement in transactions and assistance in registration or possession) established that A 3 and A 4 aided and abetted A 1 in the acquisition and concealment of assets. The court applied the standard for abetment under Section 107 IPC and the settled principle that a non public servant may be tried under Section 109 where he is party to conspiracy or abetment of offences under the Prevention of Corruption Act.

Convictions of A 3 and A 4 under Section 109 IPC read with Section 13(1)(e)/13(2) and the relevant provision for illicit gratification were affirmed; sentences on those counts were upheld/modified as stated.

Forfeiture and confiscation under Criminal Law Amendment Ordinance read with Section 5(6) of the Prevention of Corruption Act - Whether the attachment and confiscation order in Miscellaneous Case No. 09 of 2014 (under the Ordinance read with Section 5(6) PC Act) was sustainable as to the properties directed to be confiscated in favour of the Union - HELD THAT: - The court reviewed the application for attachment, the interim order of attachment, the linkage of seized/claimed properties to the offences and the evidence proving benami acquisition and disproportionate assets. Having found that the trial evidence established that the properties were acquired from ill gotten resources and employed in concealment by ostensible ownership, the court held the trial court's exercise of power under the Ordinance read with Section 5(6) to confiscate those properties to be lawful.

Attachment and confiscation orders in the Miscellaneous Case were upheld and confirmed insofar as those properties were shown to be tainted by the offences adjudicated.

CBI Manual - preliminary inquiry not mandatory where information is adequate - Whether failure to conduct a preliminary inquiry under the CBI Manual vitiated the investigation and prosecution - HELD THAT: - The court examined Chapter 9 of the CBI Manual and relevant judicial authority, and accepted that the Manual permits discretion: where information is sufficiently specific and reliable a regular case may be registered without a preliminary inquiry. Applying those principles the court found the source information and subsequent investigation in the matter justified registration of a regular case and that absence of a preliminary inquiry did not invalidate the proceedings.

No vitiation of proceedings on account of absence of a preliminary inquiry; investigation and chargesheet were not declared invalid for that reason.

Abatement of appeal on death of appellant - Effect of death of A 2 (Gulab Devi) on her criminal appeals - HELD THAT: - The court applied Section 394 CrPC: the appeals filed by A 2 abated on her death. The court verified the death through official confirmation and CBI verification; no near relative applied to continue the appeal within the statutory period.

Criminal appeals filed by A 2 are abated on her death.

Final Conclusion: The High Court upheld the trial court's conviction of the public servant (A 1) for criminal misconduct under Section 13(1)(e)/13(2) and sustained findings that numerous assets held in others' names were benami and disproportionate to known income; it confirmed confiscation under the Ordinance read with Section 5(6) PC Act. The court also found attempted illicit gratification (pre amendment Section 7) proved against A 1 and affirmed convictions of A 3 and A 4 for abetment (Section 109 IPC read with the Prevention of Corruption offences), modified sentencing where indicated, and held that appeals by A 2 abated on her death.