TaxTMI Updates e-Newsletter
Mar 27,2020

Detention and seizure under Section 129 of the CGST Act - bona fide dispute on classification and exigibility of tax - limited powers of inspecting/squad officer in transit detentions - remittance of matter to jurisdictional assessing officer for assessment

Detention and seizure under Section 129 of the CGST Act - bona fide dispute on classification and exigibility of tax - limited powers of inspecting/squad officer - Whether the Kerala inspecting/squad officers could detain and continue detention of consignments on the ground of alleged wrong classification where the transporter had valid invoice, e way bill and had paid tax according to his bona fide classification. - HELD THAT: - The Court held that Section 129, though commencing with a non obstante clause, does not authorise prolonged detention where there exists a genuine dispute on classification and the exigibility or rate of tax. Applying the reasoning in J.K. Synthetics Limited and Rams as adopted in Synergy Fertichem Pvt. Ltd. and the Kerala High Court decision in N.V.K. Mohammed Sulthan Rawtger , the Court observed that when documents (invoice, returns, e way bill) consistently reflect the assessee's classification and tax paid bona fide, the inspecting officer's recourse is limited to short detention only for preparing papers and transmitting a report to the jurisdictional assessing authority. Detention beyond a reasonable period or use of Section 129 as a mechanism to resolve a bona fide classification dispute is impermissible; at best the squad may intercept briefly, verify documents and forward the matter to the assessing officer for adjudication. [Paras 6, 7, 8]

Impugned detention and consequential notices quashed; goods to be released to the petitioner.

Remittance of matter to jurisdictional assessing officer for assessment - preparation and transmission of report by inspecting authority - Whether the inspecting authority in Kerala should forward a report to the jurisdictional assessing officer in Karnataka for appropriate action instead of proceeding with detention and confiscation. - HELD THAT: - The Court directed that the Kerala inspecting authority prepare a report and transmit the same to the Karnataka assessing officer for such action as may be appropriate in accordance with law. This direction follows the principle that classification disputes should be resolved by the assessing authority having jurisdiction over the dealer, and that the squad's role is limited to short detention for documentary verification and transmission of records rather than extended seizure or penal action. [Paras 7, 8]

Inspecting authority to prepare report and submit it to the assessing authority, Karnataka; release of goods ordered.

Final Conclusion: Detention and consequential notices set aside; goods released. Inspecting authority of Kerala to prepare and forward a report to the jurisdictional assessing officer in Karnataka for further action in accordance with law.

Summary order. Writ petition dismissed as withdrawn with liberty to challenge the assessment order in accordance with law.

Supply of copies of seized documents - Right to obtain copies during ongoing investigation or proceedings - Non-release of seized material while proceedings are pending - Obligation to cooperate with tax authorities

Supply of copies of seized documents - Right to obtain copies during ongoing investigation or proceedings - Petitioner's entitlement to obtain copies of documents seized by the CGST authority while proceedings are pending and the procedure to obtain them. - HELD THAT: - The Court recorded that certain documents called for by the OGST authority had been seized by the CGST authority in connection with an intelligence-based proceeding and therefore could not be released to the petitioner during the currency of the proceeding. The CGST counsel, however, assured the Court that copies of the seized documents could be supplied to the petitioner if he applied for them in accordance with law. In view of these facts, the Court directed the petitioner to apply to the CGST authority for copies within fifteen days and directed the CGST authority to supply the copies sought within three weeks of such application. The direction preserves the CGST authority's refusal to release original seized material during ongoing proceedings while ensuring the petitioner's access to copies through the prescribed process.

Petitioner to apply for copies within 15 days; CGST authority to supply copies within three weeks of the application.

Obligation to cooperate with tax authorities - Inter-departmental compliance for early disposal of proceedings - Petitioner's duty to cooperate with both CGST and OGST authorities for expeditious disposal of the pending proceedings. - HELD THAT: - Alongside the directions regarding copies, the Court expressly directed the petitioner to cooperate with both the CGST and OGST authorities to facilitate early disposal of the respective proceedings. This admonition functions as an operative expectation from the petitioner and supports the remedial direction to obtain copies without impeding the ongoing investigations or proceedings.

Petitioner directed to cooperate with both CGST and OGST authorities for early disposal of proceedings.

Final Conclusion: Writ petition disposed of by directing the petitioner to apply for copies of the documents seized by the CGST within fifteen days and directing the CGST authority to supply the copies within three weeks of the application; petitioner also directed to cooperate with both CGST and OGST authorities for early disposal of the proceedings.

Zero Rated Supply - Refund of IGST paid on export - Option to pay integrated tax and claim refund - Affording opportunity of hearing before adjudication of refund claim

Zero Rated Supply - Refund of IGST paid on export - Affording opportunity of hearing before adjudication of refund claim - Claim for refund of IGST paid on goods exported as zero rated supplies was to be taken up and decided by the competent authority after affording the petitioner a reasonable opportunity of hearing within a specified short timeline. - HELD THAT: - The petitioner, a manufacturer and exporter of polypropylene matting, asserted entitlement to refund of IGST on exports treated as Zero Rated Supply and relied on shipping and export documentation as foundation for the refund claim. The writ petition sought a mandamus directing sanction and refund of the claimed IGST. Having regard to the pleadings and materials on record, the Court did not adjudicate the merits of the refund claim on the papers but directed the 3rd respondent or the competent authority to take up the claim referred in Ext.P5, afford the petitioner a reasonable opportunity of being heard, and take a considered decision thereon without undue delay. The Court fixed a preferably short timeline of three to four weeks from production of a certified copy of the order for disposal of the claim.

The competent authority is directed to consider and decide the petitioner's refund claim for IGST on zero rated exports after hearing the petitioner, preferably within three to four weeks from production of a certified copy of this order.

Final Conclusion: Writ petition disposed directing the respondent authority to take up the petitioner's refund claim for IGST on zero rated exports, afford a hearing, and decide the claim expeditiously (preferably within three to four weeks).

Summary order. Notice issued on the petition challenging an apparent error in the High Court's order dated 16-4-2018; matter listed for return on 6-12-2019.

Regular bail under Section 439 of the Code of Criminal Procedure - exercise of judicial discretion having regard to nature and gravity of offence and stage of investigation - undertaking restraining alienation of immovable property pending determination by authority under the Central Goods and Services Tax Act, 2017 - conditional bail including execution of bond, local sureties, surrender of passport, restriction on leaving State and periodic attendance

Regular bail under Section 439 of the Code of Criminal Procedure - exercise of judicial discretion having regard to nature and gravity of offence and stage of investigation - Application for regular bail in offences under the Central Goods and Services Tax Act, 2017 was allowed and the applicant enlarged on bail subject to conditions. - HELD THAT: - The Court considered the nature of the offences alleged under the Central Goods and Services Tax Act, 2017 and the stage of proceedings. Noting that the maximum sentence for the offences is five years, that the applicant had been in custody since 21.07.2019 for about 55 days, that no complaint had yet been filed by the complainant and that no remand had been sought, and that investigation was almost complete, the Court exercised its discretion to grant bail. The grant was made on the basis that the applicant would not misuse liberty and would comply with specific conditions imposed to protect the interests of the prosecution and the investigatory process. The Court also made clear that its preliminary observations on evidence are not binding on the trial court. [Paras 6, 7, 8]

Applicant ordered released on bail on executing a bond with two local sureties and subject to conditions including surrender of passport, restriction on leaving the State, periodic attendance, furnishing residence details and cooperation with investigation; trial court free to act on any breach and to modify conditions in accordance with law.

Undertaking restraining alienation of immovable property pending determination by authority under the Central Goods and Services Tax Act, 2017 - conditional bail including filing of undertaking and supply of details of immovable properties - Applicant directed to file an undertaking not to transfer, alienate or create third party rights over his immovable properties and to supply details of such properties to the Directorate General of GST Intelligence. - HELD THAT: - As a specific condition of bail and to safeguard the recovery of any tax liability that may be ascertained by the competent authority under the Central Goods and Services Tax Act, 2017, the Court required the applicant to file an undertaking before the Court and the complainant by a specified date. The undertaking must state that the immovable properties will not be transferred or alienated until the authority determines any tax liability. This condition is imposed to prevent dissipation of assets while preserving the applicant's right to bail. [Paras 7, 8]

Applicant to furnish the undertaking and property details to the Directorate General of GST Intelligence and to the Court by the stipulated date, failing which the bail conditions may be acted upon by the Sessions Judge.

Final Conclusion: Bail application allowed: the applicant is released on bail subject to execution of bond and two local sureties and to the stated conditions, including an undertaking restraining alienation of immovable property pending determination by the GST authority; the trial court may act on breaches and is not bound by the Court's preliminary observations.

Quashing of criminal proceedings under Section 482 Cr.P.C. - Prosecution for failure to remit TDS - Sanction to prosecute under Section 279 of the Income Tax Act - Principles of natural justice - Delay in payment of TDS and criminal liability - Reliance on Madhumilan Syntex Ltd. principle

Prosecution for failure to remit TDS - Sanction to prosecute under Section 279 of the Income Tax Act - Delay in payment of TDS and criminal liability - Principles of natural justice - Reliance on Madhumilan Syntex Ltd. principle - Validity of the sanction to prosecute and maintainability of criminal proceedings for non-remittance of TDS - HELD THAT: - The petitioners admitted deduction of TDS but failed to remit the same within the prescribed time; only partial payment (with interest) had been made and coercive measures had resulted in recovery. A pending representation did not, per se, prevent the competent authority from granting sanction to prosecute. Applying the principle in Madhumilan Syntex Ltd., the Court held that where a statute prescribes a time for payment, non-payment within that period constitutes default and appropriate action, including prosecution after sanction, is permissible. The impugned sanction and consequent criminal proceedings were not found to be violative of principles of natural justice and therefore there was no ground to quash the prosecution under Section 482 Cr.P.C. [Paras 3, 4, 5, 6]

Criminal Original Petitions dismissed; prosecution not quashed.

Quashing of criminal proceedings under Section 482 Cr.P.C. - Procedural liberty to seek dispensation from personal appearance - Whether personal appearance of two petitioner-directors before the trial court may be dispensed with - HELD THAT: - The Court granted procedural relief by permitting petitioners 2 and 3 to apply to the trial Magistrate under Section 205 Cr.P.C. for dispensation from personal appearance. The learned Magistrate was directed to consider any such application and pass appropriate orders in accordance with law. [Paras 7, 8]

Petitioners 2 and 3 granted liberty to file an application under Section 205 Cr.P.C.; Magistrate to consider and decide appropriately.

Final Conclusion: The petitions challenging the sanction and seeking quashing of criminal proceedings are dismissed; the petitioners retain procedural liberty to seek dispensation from personal appearance by applying under Section 205 Cr.P.C., to be considered by the trial Magistrate.

Exercise of writ jurisdiction under Article 226 - Interference with Magistrate's order regarding custody of seized property - Right of claimant to seek release of seized property from Revenue on proof and security - Administrative centralization proceedings by Income Tax Department

Exercise of writ jurisdiction under Article 226 - Interference with Magistrate's order regarding custody of seized property - Whether this Court should, in exercise of its writ jurisdiction under Article 226, interfere with the Magistrate's order placing interim custody of seized money with the Income Tax Department. - HELD THAT: - The Single Judge's conclusion that the Magistrate's order is already the subject of a pending revision before the Sessions Court and that identical relief should not be granted by this Court under Article 226 was upheld. Given that the Income Tax Department is in possession pursuant to the Magistrate's order and that criminal and departmental proceedings (including centralization proceedings) are pending, the High Court declined to exercise its discretionary constitutional jurisdiction to direct release of the money at this stage. The Court observed that interference by writ jurisdiction would be inappropriate absent prior consideration by the appropriate authority or final adjudication in the proceedings already instituted, and that the petitioner has alternative remedies (revision and departmental claim proceedings) which should be pursued first. [Paras 3, 6]

Writ interference declined; no direction for release of the seized money under Article 226 at this stage.

Right of claimant to seek release of seized property from Revenue on proof and security - Administrative centralization proceedings by Income Tax Department - Whether the petitioner may seek release of the seized money by approaching the Income Tax authorities and pursue available remedies. - HELD THAT: - The Court recorded that the Income Tax Department has initiated centralization and assessment proceedings and is the current custodian pursuant to the Magistrate's order. It noted that the petitioner had not approached the departmental authority for release and that if the petitioner claims ownership it must present its claim, adduce proof and, if necessary, furnish security before the appropriate Income Tax authority (Principal Commissioner/Deputy/Assistant Commissioner) for consideration. The Court also noted the pending revision remedy before the Sessions Court and reserved liberty to pursue those remedies; accordingly the matter was not finally determined on merits by this Court but left to the appropriate fora for adjudication. [Paras 5, 6]

Petitioner directed to pursue claim before the appropriate Income Tax authority and may prosecute the pending revision; liberty reserved to seek appropriate reliefs from the competent authority or court.

Final Conclusion: The writ appeal is dismissed. The High Court will not, at this stage, exercise its Article 226 jurisdiction to order release of the money; the petitioner may pursue claim and security-based release before the Income Tax authorities and prosecute the pending revision in the Sessions Court.

Notice under Section 148 and re-opening of assessment - Assessing Officer's obligation to record and communicate reasons for reopening - first proviso to Section 147 - full and true disclosure as pre-condition for reopening after four years - change of opinion doctrine as a constraint on re-assessment - scope of judicial review under Article 226 in re-assessment proceedings

Notice under Section 148 and re-opening of assessment - Assessing Officer's obligation to record and communicate reasons for reopening - change of opinion doctrine as a constraint on re-assessment - scope of judicial review under Article 226 in re-assessment proceedings - Validity of the notice dated 30.03.2017 under Section 148 and the communication dated 24.11.2017 overruling the objection to reopening - HELD THAT: - The Court held that issuance of a notice under Section 148 is governed by the requirement that the Assessing Officer record reasons (following GKN Driveshafts) and that communication of those reasons enables the assessee to participate in reassessment proceedings; such communication is not itself an order under Section 147. While earlier precedents on non-disclosure (Calcutta Discount; Lakhmani Mewal Das) remain relevant for the limited purpose of satisfying jurisdictional tests, the present statutory scheme and subsequent amendments require application of the proviso to Section 147 when reopening beyond four years. The Court noted the salutary caution in Kelvinator that a mere change of opinion cannot by itself justify reassessment, and observed that if reassessment truly rests on mere change of opinion the Assessing Officer must drop proceedings. However, whether the present notice was based on mere change of opinion or on failure to make full and true disclosure is a factual determination for the Assessing Officer in proceedings under Section 147 and not for a writ court to decide by way of roving inquiry. Accordingly the Court declined to quash the notice or the communication and directed the assessee to raise its submissions before the Assessing Officer who must decide on merits in accordance with law. [Paras 30, 36, 37, 38, 39]

Notice and communication not quashed; assessee relegated to pursue objections before the Assessing Officer who shall decide merits in accordance with law.

First proviso to Section 147 - full and true disclosure as pre-condition for reopening after four years - change of opinion doctrine as a constraint on re-assessment - Whether the question of 'full and true disclosure' and 'change of opinion' should be examined by the Assessing Officer and whether the matter should be remitted - HELD THAT: - The Court held that the decisive question of whether there was full and true disclosure (so as to bar action under the first proviso to Section 147) and whether the reassessment rests on a mere change of opinion must be determined by the Assessing Officer while passing the assessment/reassessment order. The petitioner may demonstrate before the Assessing Officer that the material furnished earlier satisfies the requirement of full and true disclosure; if the Assessing Officer concludes that only a change of opinion is involved, the proceedings must be dropped as per Kelvinator. Given the limited scope of judicial review under Article 226 in such factual enquiries, the Court remitted these issues for fresh consideration and directed the Assessing Officer to decide the matter on merits within the timeframe specified by the Court. [Paras 35, 36, 37, 39, 40]

Issues of full and true disclosure and whether reopening is a mere change of opinion remitted to the Assessing Officer for determination; petitioner permitted to file representations/objections and Assessing Officer directed to decide on merits within the time ordered.

Final Conclusion: Writ petition dismissed; notice under Section 148 and communication overruling objection not quashed. Petitioner directed to file representations/objections within thirty days and Assessing Officer to decide the reassessment on merits (including whether there was full and true disclosure or only a change of opinion) and pass appropriate orders within sixty days for Assessment Year 2012-2013.

Independent enquiry - enhancement of income based on information from another authority - opportunity of personal hearing - consideration on merits - filing of objections

Independent enquiry - enhancement of income based on information from another authority - filing of objections - consideration on merits - opportunity of personal hearing - Petitioner's challenge to the notice was not finally adjudicated on merits and the matter was remanded for fresh consideration after the petitioner files objections. - HELD THAT: - The petitioner contended that the impugned notice for enhancement of income was arbitrary because it was issued by the respondent without applying independent mind and merely relied on the Assessing Officer's report based on information received from Customs Authorities. The respondent, however, accepted that on receipt of the petitioner's objections the matter would be considered afresh and an independent order passed. In view of these concessions and the need to afford the assessee an opportunity to be heard, the Court did not decide the substantive controversy but directed that the petitioner be permitted to file objections within two weeks. Thereafter the respondent is to consider those objections, provide an opportunity of personal hearing, and pass appropriate orders independently on merits and in accordance with law within four weeks of receipt of the objections. The Court thereby remitted the matter for fresh adjudication rather than quashing or upholding the impugned notice on merits.

Petitioner permitted to file objections within two weeks; on receipt the respondent to consider afresh, grant personal hearing and pass independent orders on merits within four weeks; writ petition disposed.

Final Conclusion: Writ petition disposed by remitting the matter to the respondent for fresh consideration: petitioner to file objections within two weeks and respondent to decide afresh after personal hearing within four weeks; no costs.

Interest on compensation or enhanced compensation treated as income from other sources - characterisation of interest under Section 28 of the Land Acquisition Act as part of compensation - applicability of Sections 56(2)(viii) and 57(iv) w.e.f. 1.4.2010 - deeming provision of Section 145A(b) regarding year of taxation of interest on compensation - literal construction of unambiguous fiscal enactments

Interest on compensation or enhanced compensation treated as income from other sources - characterisation of interest under Section 28 of the Land Acquisition Act as part of compensation - applicability of Sections 56(2)(viii) and 57(iv) w.e.f. 1.4.2010 - deeming provision of Section 145A(b) regarding year of taxation of interest on compensation - Interest received under Section 28 of the Land Acquisition Act is to be taxed under the head 'Income from other sources' and not as part of 'Capital gains' after the insertion of Sections 56(2)(viii) and 57(iv) w.e.f. 1.4.2010. - HELD THAT: - The Court examined the post 2010 statutory scheme: Section 145A(b) deems interest on compensation or enhanced compensation to be income in the year of receipt; Section 56(2)(viii) expressly brings such interest within the head 'Income from other sources'; and Section 57(iv) grants a 50% deduction for income of that nature. The absence of any amendment to Section 10(37) does not alter the characterization, because section 10(37) does not define what constitutes 'capital gains' but only excludes certain capital gains from total income. Reliance on pre 2010 authorities (including Ghanshyam) does not assist the petitioner in the face of the clear legislative change. The Court rejected the petitioner's selective reliance on Circular No.5/2010, noting that the circular itself records both the deeming of the year of receipt and the legislative decision to tax such interest as 'income from other sources'. Applying the principle that fiscal statutes with plain and unambiguous language must be given their ordinary meaning, the Court concluded that the newly inserted provisions govern the chargeability of interest on compensation.

The interest under Section 28 is chargeable under 'Income from other sources' and not under 'Capital gains'.

Final Conclusion: Writ petition dismissed; the interest received on compensation/enhanced compensation (received in the tax period under consideration) is taxable as income from other sources in the year of receipt pursuant to Sections 145A(b), 56(2)(viii) and 57(iv) of the Income tax Act, and cannot be treated as part of capital gains for the purposes of the assessment in question.

Registration under section 12A - charitable purpose - genuineness of activities - reversionary clause in gift deed - incidental commercial activity / paying guest accommodation

Registration under section 12A - charitable purpose - genuineness of activities - incidental commercial activity / paying guest accommodation - Assessee-society entitled to registration under section 12A on the basis of its objects and activities. - HELD THAT: - The Tribunal examined the objects in the Memorandum and the factual report of the ITO(Exemptions), which established that the society runs an old age home providing free shelter, food and medical aid to destitutes (about 50 inmates), conducts charitable schemes such as free schooling and disaster relief, and receives donations and interest income to meet its expenditure. Payments collected for paying-guest accommodation are from relatives and serve the admitted persons; no profit-making activity is carried out and all funds are applied for benefit of the inmates. On this factual matrix the Tribunal concluded that the society exists solely for charitable purposes and its activities are genuine and charitable in character, entitling it to registration under section 12A. [Paras 5]

Registration under section 12A granted as the society's objects and activities are charitable and genuine.

Reversionary clause in gift deed - registration under section 12A - Rejection of 12A registration solely on the ground of a reversionary clause in the gift deed was erroneous. - HELD THAT: - The Commissioner (Exemptions) refused registration by relying on a clause in the gift deed stating that land would revert to the heirs on dissolution. The Tribunal held that the ld. CIT(E) did not examine the assessee's activities or the overall charitable character before rejecting the application and that picking an isolated clause in the gift deed, without assessing the substantive charitable activities, was not a valid basis to deny registration. Therefore the reliance on the reversionary clause as decisive was incorrect. [Paras 6]

Rejection of registration on the sole ground of the gift deed clause set aside; such clause was not a proper basis to deny 12A registration.

Final Conclusion: Appeal allowed: 12A registration granted to the assessee-society on findings that its objects and activities are charitable and genuine; the prior rejection based solely on a reversionary clause in the gift deed was set aside.

Validity of notice issued under section 148 on a deceased person - Jurisdictional requirement of 'reasons to believe' for reopening assessment - Borrowed satisfaction from investigation report versus independent application of mind

Validity of notice issued under section 148 on a deceased person - Notice issued under section 148 in the name of the deceased assessee is bad in law and is quashed. - HELD THAT: - The AO issued notice dated 21-03-2018 proposing reopening in the name of Late Sushila Choudhari despite the department being informed of her death and having acknowledged Shri Ravi Choudhary as her legal heir in correspondence dated 09-01-2014. The Tribunal observed that issuance of a statutory notice on a dead person, when the department was aware of the death and the legal heir, is legally impermissible. Consequently the notice under section 148, being addressed to the deceased and issued after the department had notice of the death, cannot be sustained. [Paras 2, 7]

Notice under section 148 issued in the name of the deceased is bad in law and is quashed.

Jurisdictional requirement of 'reasons to believe' for reopening assessment - Borrowed satisfaction from investigation report versus independent application of mind - Reasons recorded for reopening do not satisfy the jurisdictional requirement of 'reason to believe'; reopening is invalid for lack of independent satisfaction by the AO. - HELD THAT: - The AO relied on an investigation report from the Pr. DIT(Inv.) indicating suspected rigging in penny-stock transactions and, without conducting any preliminary enquiry, recorded satisfaction to reopen the assessment. The Tribunal held that information from the Investigation Wing may trigger a reason to suspect but cannot substitute for the AO's own reason to believe; there must be some independent material or inquiry to warrant belief that income has escaped assessment. The reasons recorded were held to reflect non-application of mind and amounted to a borrowed satisfaction from the investigation report rather than the AO's independent satisfaction required under section 147. Therefore the AO lacked jurisdiction to reopen the assessment. [Paras 5, 6, 7]

Reopening under section 147 based on the recorded reasons is invalid for lack of requisite 'reason to believe' and is quashed.

Final Conclusion: The Tribunal allowed the appeal, quashing the notice under section 148 issued in the name of the deceased and holding the reopening under section 147/148 invalid for want of the AO's independent reason to believe; the reassessment and consequent additions were set aside.

Deduction under Section 80P(2) of the Income Tax Act - Concept of mutuality - Nominal members as 'members' under the Co-operative Societies Act - Chargeability of interest income as 'income from other sources' versus business income - Remand for verification of eligibility and facts

Nominal members as 'members' under the Co-operative Societies Act - Deduction under Section 80P(2) of the Income Tax Act - Whether nominal (D Class) members fall within the definition of 'member' for claiming deduction under Section 80P(2). - HELD THAT: - The Tribunal held that the question whether nominal members qualify as 'members' for the purposes of Section 80P(2) must be examined in light of the relevant State Co-operative Societies Act and the society's by laws, and that precedents of coordinate Benches and the jurisdictional High Court support treating nominal members as eligible for the benefit where the State Act/by laws include them within the definition of member. The Tribunal found the facts of the present case to be similar to those authorities and therefore restored the issue to the file of the Assessing Officer for verification of eligibility of nominal members under the Karnataka Co operative Societies Act, 1959, directing that the assessee be given an opportunity to produce relevant information and cooperate in the verification exercise. [Paras 5]

Issue remitted to the Assessing Officer for fresh examination and verification of the eligibility of nominal members under the Karnataka Co operative Societies Act, 1959, with opportunity to the assessee to be heard.

Chargeability of interest income as 'income from other sources' versus business income - Deduction under Section 80P(2) of the Income Tax Act - Concept of mutuality - Whether interest earned on deposits/investments is business income (entitling to deduction under Section 80P(2)) or income from other sources. - HELD THAT: - The Tribunal observed that the classification of interest on investments as business income or as income from other sources is governed by established precedents (including the Supreme Court decision in Totgar's Co operative Sales Society Ltd. and subsequent High Court and Tribunal authorities) and that the factual matrix must be examined by the Assessing Officer in the light of those decisions. Finding the present facts to engage the same controversy, the Tribunal restored the matter to the Assessing Officer for fresh adjudication regarding the nature of the interest income and the applicability of Section 80P(2), directing application of the cited precedents and providing the assessee an opportunity to lead material. [Paras 5]

Disputed issue restored to the Assessing Officer for fresh decision on classification of interest income and applicability of Section 80P(2), in accordance with relevant judicial decisions.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes and remitted the substantive issues to the Assessing Officer for fresh consideration: (a) verification of whether nominal members qualify as 'members' under the Karnataka Co operative Societies Act, 1959 for Section 80P(2) purposes; and (b) fresh adjudication of the characterisation of interest income (business income versus income from other sources) in light of applicable precedents, with opportunity to the assessee to be heard.

Deduction under section 80P of the Income-tax Act - Income from other sources versus profits and gains of business - Operational income requirement for claiming deduction - Interest on surplus investments not attributable to members

Deduction under section 80P of the Income-tax Act - Interest on surplus investments not attributable to members - Income from other sources versus profits and gains of business - Operational income requirement for claiming deduction - Whether interest earned by the co-operative society on fixed deposit receipts and savings bank accounts is eligible for deduction under section 80P for the assessment year 2014-15. - HELD THAT: - The Tribunal held that the issue is governed by the decision of the Hon'ble Supreme Court in Totgar's Co-operative Sale Society Ltd. v. ITO, which distinguishes interest earned on funds not immediately required for business purposes and invested as surplus from the operational profits of the co-operative activity. Such interest arises on retained amounts or surplus invested in short-term deposits and securities and is not interest received from members for providing credit facilities; it therefore does not constitute "profits and gains of business" attributable to the specified activities in section 80P(2). The Supreme Court treated that interest as falling within "income from other sources" and not as operational income eligible for the chapter VI-A deduction, emphasising that the deduction under section 80P applies to income constituting operational business profits. Applying that reasoning, the Tribunal agreed that the bank interest on FDRs and savings accounts earned by the assessee was not attributable to its core cooperative business and therefore not deductible under section 80P. [Paras 7, 8]

The deduction claimed under section 80P in respect of interest on fixed deposits and savings bank accounts is not allowable; the addition was upheld and the appeal dismissed.

Final Conclusion: The appeal is dismissed; interest earned on fixed deposits and savings bank accounts by the co-operative society does not qualify for deduction under section 80P and is taxable as other income for AY 2014-15.

Liability to penalty under section 221(1) for default in payment of self-assessment tax - Effect of amendment to section 140A(3) w.e.f. 01.04.1989 on levy of penalty - Assessing Officer's recourse to section 221(1) where section 140A(3) has been amended - Requirement of notice of demand under section 156 in relation to tax recovery

Liability to penalty under section 221(1) for default in payment of self-assessment tax - Effect of amendment to section 140A(3) w.e.f. 01.04.1989 on levy of penalty - Assessing Officer's recourse to section 221(1) where section 140A(3) has been amended - Validity of penalty imposed under section 221(1) read with section 140A(3) for alleged default in payment of self-assessment tax for A.Y.2014-15 - HELD THAT: - The Tribunal held that the question is governed by the Coordinate Bench decision in Heddle Knowledge Pvt. Ltd. which interpreted the effect of the 1989 amendment to section 140A(3). The amended section treats an assessee as 'in default' for limited purposes to enable recovery of tax and interest but, having removed the specific penal consequence previously contained in the unamended provision, the legislature did not intend that the Assessing Officer should invoke section 221(1) to levy a penalty for non-payment of self-assessment tax. Section 221(1) remained unchanged, but applying it to a post-amendment default of the type contemplated by section 140A(3) would lead to an unintended overlap and duplication of penal consequences which the amendment sought to avoid. The Tribunal found no distinguishing facts from the Coordinate Bench decision and therefore followed it. Consequently the penalty levied by the Assessing Officer and sustained by the CIT(A) was not justified and was required to be set aside. The Tribunal noted that no special or sufficient reason had been shown to bring the case within the proviso to section 221(1), and that no factual distinction was available to sustain the penalty in the light of the precedent. [Paras 8, 9]

Penalty imposed under section 221(1) read with section 140A(3) is unjustified and is cancelled.

Requirement of notice of demand under section 156 in relation to tax recovery - Whether absence of processing under section 143(1) and non-issuance of a demand notice under section 156 precluded imposition of penalty under section 221(1) - HELD THAT: - The CIT(A) had held that levy of penalty under section 221(1) is independent of processing under section 143(1) and that an assessee may be liable to penalty notwithstanding absence of an intimation under section 143(1) or a notice under section 156. The Tribunal did not rest its decision on this technical point because it disposed the appeal on the broader legal ground that, following the Coordinate Bench decision (Heddle Knowledge), the amended section 140A(3) excludes levy of penalty by recourse to section 221(1) for the self-assessment default. The Tribunal therefore set aside the penalty without requiring determination of the demand-notice point; no separate remand was directed on the section 156 contention.

The question of non-issuance of notice under section 156 was not determinative; penalty was cancelled on the ground that the amended section 140A(3) excludes imposition of penalty under section 221(1).

Final Conclusion: Following the Coordinate Bench decision in Heddle Knowledge Pvt. Ltd., the Tribunal set aside the orders of the AO and the CIT(A) and cancelled the penalty imposed under section 221(1) read with section 140A(3) for A.Y.2014-15; the appeal is allowed for statistical purposes.

Disallowance of interest under Section 36(1)(iii) - diversion of funds / lack of commercial expediency - cash payments and applicability of Section 40A(3) - business expenditure deductible under Section 37

Disallowance of interest under Section 36(1)(iii) - diversion of funds / lack of commercial expediency - Validity of disallowing interest expenditure where assessee borrowed interest bearing funds but advanced interest free loans to a related sister concern - HELD THAT: - The Tribunal observed that the assessee borrowed interest bearing funds and claimed interest as expenditure but advanced substantial interest free amounts to its sister concern without demonstrating commercial expediency or any benefit flowing to the assessee. The Assessing Officer found, and the CIT(A) upheld subject to verification, that the funds advanced were used by the sister concern for its project and that there was no record of supply of goods/services or other consideration to the assessee. In absence of material establishing that the interest free advances were commercially expedient or for the assessee's business benefit, the disallowance of proportionate interest as made by the AO and sustained by the CIT(A) was held to be justified. The Tribunal however adopted the CIT(A)'s direction to verify the percentage of interest to be disallowed on the facts of the case and confirmed the disallowance subject to that verification. [Paras 6]

Disallowance of interest under Section 36(1)(iii) upheld for lack of demonstrated commercial expediency in advancing interest free funds to the sister concern; confirmation is subject to verification as directed by the CIT(A).

Cash payments and Section 40A(3) applicability - Whether specified cash payments incurred by the assessee are allowable or hit by Section 40A(3) - HELD THAT: - The AO identified several cash payments and disallowed them under Section 40A(3). On review, the Tribunal examined the nature of the payments: small value Pooja expenses, gifts for Ayudha Pooja, certain cash purchases and local contractor payments were found to be business related and made in cash for valid business reasons; such items were allowed. However, payments to specified contractors and persons which the assessee failed to establish as not attracting Section 40A(3) were sustained as disallowances. The Tribunal thus differentiated between cash expenditures that could be justified as business expenses and those which lacked necessary proof to avoid the statutory disallowance. [Paras 9]

Pooja expenses, gift purchases for Ayudha Pooja, cash purchases and certain identified contractor payments allowed as business expenditure; disallowances under Section 40A(3) in respect of specified contractor/payments where no adequate proof was furnished are confirmed.

Business expenditure deductible under Section 37 - Allowability of claimed donations and related payments as business expenditure under Section 37 - HELD THAT: - The AO disallowed amounts claimed as donations and related promotional payments. The assessee produced receipts and maintained that payments (including donation to Institute of Town Planners and a contribution to an 80G recognized institution) were incurred wholly and exclusively for business purposes and as part of publicity/advertisement for its project. The Tribunal found the expenditure genuine and business related and accepted that the lower authorities had not disputed genuineness; consequently the disallowance was not warranted and the amounts were directed to be allowed under Section 37. [Paras 11]

Disallowance of the impugned donations and related payments set aside; such expenses held to be deductible as wholly and exclusively for business under Section 37.

Final Conclusion: The appeal is partly allowed: the disallowance of interest for advancing interest free funds to a sister concern is upheld subject to the verification directed by the CIT(A); certain cash payments are allowed while specified payments attracting Section 40A(3) are confirmed as disallowances; the claimed donations and related business expenses are allowed under Section 37.

Writ of Certiorari - Writ of Mandamus - Discretionary jurisdiction under Article 226 - Hierarchy of remedies - Short-circuiting judicial process - Custody of seized property under Section 451 Cr.P.C. and Section 132 of the Income tax Act, 1961

Discretionary jurisdiction under Article 226 - Hierarchy of remedies - Short-circuiting judicial process - High Court's refusal to entertain writ petitions seeking quashing of notice and release of seized money while a criminal revision against the magistrate's order on custody is pending before the Sessions Court. - HELD THAT: - The Court held that where the legality of the magistrate's order transferring custody of seized money to the Income Tax Department has been challenged by the petitioner by way of a criminal revision pending before the Sessions Court, it would be improper for the High Court to exercise its discretionary jurisdiction under Article 226 to grant relief which would short circuit the statutory hierarchy of remedies. The appropriate forum for redress is the pending criminal revision; thereafter, if grievances persist, other remedies (including a petition under Section 482 Cr.P.C.) remain open. In view of the availability of these remedies and the pendency of the revision, the Court declined to exercise extraordinary writ jurisdiction to quash the notice or direct release of the seized amount.

Writ petition dismissed as not a fit case for exercise of discretionary jurisdiction under Article 226; petitioner directed to pursue remedies in the Sessions Court and other available remedies.

Writ of Mandamus - Custody of seized property under Section 451 Cr.P.C. and Section 132 of the Income tax Act, 1961 - Whether the High Court should grant mandamus restraining the Income tax Department or directing release of the seized money during the pendency of criminal proceedings where custody was accorded to the Department under proceedings under Section 451 Cr.P.C. and Section 132 Income tax Act. - HELD THAT: - The Court decided that it would not grant mandamus to release the seized amount or to restrain further proceedings by the respondents while the issue of custody-formerly determined by the learned Magistrate in favour of the Income tax Department-is under challenge in the Sessions Court. The availability of an effective alternative remedy before the Sessions Court and the existence of statutory procedures for custody of seized property militated against interference by this Court in exercise of writ jurisdiction at this stage.

Prayer for mandamus to release the money or restrain respondents refused; petitioner to pursue the challenge in the pending criminal revision and other appropriate remedies thereafter.

Final Conclusion: The writ petition is dismissed: the High Court declined to exercise its discretionary Article 226 jurisdiction to quash the notice or order release/ restraint while a criminal revision challenging the magistrate's custody order is pending before the Sessions Court; the petitioner is directed to pursue the pending revision and other available remedies.

Benami transaction - interpretation of the words 'paid or provided' in Section 2(a) of the Benami Act - scope of Sections 3 and 4 of the Prohibition of Benami Transactions (Prohibition) Act, 1988 - summary rejection under Order VII Rule 11 CPC - application under Order XIV Rule 2 CPC

Benami transaction - interpretation of the words 'paid or provided' in Section 2(a) of the Benami Act - scope of Sections 3 and 4 of the Prohibition of Benami Transactions (Prohibition) Act, 1988 - Whether the plaint, which pleads that the advance was given to the plaintiff by his father, discloses a benami transaction attracting the prohibitions of the Benami Act. - HELD THAT: - The plaint only states that the advance was provided by the father of plaintiff no.1 and does not allege that the father had entered into the agreement to purchase the property in the name of plaintiff no.1. The court applied the legal principle that the words 'paid or provided' in Section 2(a) must be read disjunctively as referring to consideration 'paid' or consideration 'provided' for the transfer itself; assistance or financial help from a third party to make up consideration does not automatically convert a transaction into a benami transaction. Reliance was placed on the reasoning in Pawan Kumar Gupta v. Rochiram Nagdeo that money provided by a third party (for example, a bank loan or aid from a relative) to make up purchase consideration does not of itself render the transfer benami. Applying that principle, mere allegation that the father supplied money for entering into the agreement does not bring the agreement within the forbidden ambit of Sections 3 and 4 of the Benami Act.

The plaint does not disclose a benami transaction and therefore the matter is not barred by the Benami Act.

Summary rejection under Order VII Rule 11 CPC - application under Order XIV Rule 2 CPC - Whether the trial court committed illegality in dismissing the applicant's plea under Order XIV Rule 2 read with Order VII Rule 11 CPC seeking rejection of the plaint as barred by the Benami Act. - HELD THAT: - Because the plaint failed to allege facts sufficient to show that the transaction was benami, the trial court correctly declined to reject the plaint at the pleading stage. The court held that the legal threshold for summary rejection under Order VII Rule 11 was not met as the averments merely showed financial assistance from the father and not that the property was held benami. Consequently, there was no error in the trial court's order dismissing the application under the said procedural provisions.

The trial court did not commit any illegality in rejecting the application under Order XIV Rule 2 read with Order VII Rule 11 CPC; its order is affirmed.

Final Conclusion: The High Court affirmed the trial court's order dated 7/1/2020; the plaint did not disclose a benami transaction merely because the plaintiff received financial assistance from his father, and the application for summary rejection under Order VII Rule 11 CPC was rightly dismissed. The revision petition is dismissed.

Dismissal of plaint or counter-claim under Order 7 Rule 11(d) of C.P.C. where suit appears to be barred by law - Benami Transactions (Prohibition) Act, 1988 - applicability of Section 4 and scope of prohibition - mixed question of law and fact requiring evidence before adjudication - maintainability of suit or counter-claim raising benami plea

Dismissal of plaint or counter-claim under Order 7 Rule 11(d) of C.P.C. where suit appears to be barred by law - Benami Transactions (Prohibition) Act, 1988 - applicability of Section 4 and scope of prohibition - mixed question of law and fact requiring evidence - Whether the trial Court erred in refusing to strike out the respondent's counter-claim under Order 7 Rule 11(d) on the ground that it was barred by the Benami Transactions (Prohibition) Act, 1988. - HELD THAT: - The Court held that invocation of Section 4 of the Benami Transactions Act raises mixed questions of law and fact which cannot be finally resolved merely by examination of the pleadings. The determination whether a transaction is benami and whether the sale consideration was paid by the alleged real purchaser involve factual inquiries into intention, source of consideration and the parties' respective claims. Reliance on precedents indicates that where the facts do not conclusively show benami character, the issue is to be adjudicated after evidence is led and appropriate issues are framed. Consequently, a counter-claim pleading benami status is not, as a rule, amenable to being defeated at the preliminary stage under Order 7 Rule 11(d) without trial of relevant evidence. [Paras 10, 11, 14]

The application under Order 7 Rule 11(d) to dismiss the counter-claim as barred by the Benami Transactions Act was correctly declined by the trial Court because resolution of the benami plea requires evidence and cannot be disposed of at the preliminary stage.

Maintainability of suit or counter-claim raising benami plea - mixed question of law and fact requiring evidence - Whether the revisional Court should interfere with the trial Court's order declining to strike out the counter-claim. - HELD THAT: - Applying the principle that questions involving mixed law and fact necessitate trial-level appreciation of evidence, the High Court found no illegality or perversity in the trial Court's conclusion that the benami plea could not be decided on the pleadings alone. The High Court noted binding and persuasive authorities to the effect that benami character is to be determined on evidence and that summary rejection is inappropriate where factual controversies remain. In these circumstances the revisional jurisdiction ought not to be exercised to upset the trial Court's order. [Paras 15]

No interference was warranted; the civil revision is dismissed.

Final Conclusion: The High Court upheld the trial Court's refusal to strike out the counter-claim under Order 7 Rule 11(d) because the question of benami character involves mixed questions of law and fact requiring evidence; finding no illegality or perversity, the revision petition is dismissed.

Alternative and inconsistent pleas under Order VII Rule 7 of the Code of Civil Procedure - Benami transaction - Burden of proof in benami allegations - Bar under Section 51C of the West Bengal Land Reforms Act, 1955 - Civil Court jurisdiction to determine title despite entries in the Record of Rights

Alternative and inconsistent pleas under Order VII Rule 7 of the Code of Civil Procedure - Maintainability of a suit where the plaintiff pleads title and also relies on a registered patta (alternative/inconsistent pleas). - HELD THAT: - Order VII Rule 7 CPC permits a plaintiff to claim reliefs in the alternative, including inconsistent reliefs, but each such plea must be shown to be maintainable on the facts pleaded. The plaint in paragraphs 8 and 12 alleges payment from joint family funds and records that defendant No.1 executed a registered deed of patta settling 2/3rd of the relevant share to the plaintiff and proforma defendant. The Court accepted that the respondent based his title to 1/3rd share on the registered deed of settlement and that this constituted a distinct and maintainable basis for the claim. Consequently the mere existence of alternative pleas did not render the suit incompetent where the plaintiff had pleaded and relied on a registered settlement deed as the foundation of his title. [Paras 25]

The suit was maintainable despite alternative/inconsistent pleas because the plaintiff's claim rested on a registered deed of settlement which constituted a maintainable basis for declaration of title.

Benami transaction - Burden of proof in benami allegations - Which party bore the burden of proof on the allegation that the registered patta was a benami transaction. - HELD THAT: - The defendant in his written statement alleged that the registered patta was a benami transaction. Where a defendant specifically pleads that an instrument is benami, the burden lies on that defendant to prove the allegation. The courts below placed the onus upon the defendant to establish that the registered deed of patta was benami; the defendant failed to discharge that burden on the evidence. The trial and first appellate courts' finding of title in favour of the plaintiff was therefore sustained on that basis. [Paras 20]

Burden to prove that the registered patta was benami lay on the defendant who pleaded it; having failed to prove benami, the defendant's challenge to the patta failed.

Bar under Section 51C of the West Bengal Land Reforms Act, 1955 - Civil Court jurisdiction to determine title despite entries in the Record of Rights - Whether the Civil Court was barred by the provisions concerning entries in the Record of Rights (Section 51C) from adjudicating the plaintiff's suit for declaration of title. - HELD THAT: - The Court examined whether finally published entries in the Record of Rights ousted the civil court's jurisdiction to decide title. Relying on precedents of this Court, it was held that notwithstanding adverse entries, a suit for declaration of title based on an independent cause of action is maintainable and the civil court may determine title on the basis of title deeds. Entries in the Record of Rights are not themselves conclusive documents of title but operate as evidence of possession and attract presumptions; they do not preclude a civil suit to determine title where an independent cause of action exists. [Paras 26, 27, 28]

Civil Court is not barred by entries in the Record of Rights or by the statutory provision relied upon from entertaining and deciding a suit for declaration of title founded on title deeds; the suit was therefore maintainable.

Final Conclusion: No substantial question of law was found to invalidate the concurrent findings of title; the appeal is dismissed on contest without costs and the judgments and decrees of the courts below affirming the trial court are upheld.

Initiation of corporate insolvency resolution process - decree-holder as creditor - limitation for filing application under Section 7 - joint and several liability of principal borrower and guarantor - burden of proof for pendency of review application - inadmissibility of adverse inference for non-prosecution where petition is within limitation

Burden of proof for pendency of review application - inadmissibility of adverse inference for non-prosecution where petition is within limitation - Whether the Adjudicating Authority rightly rejected the Section 7 petition on the basis that a review application was pending and because the petitioner had not prosecuted the decree since 2015. - HELD THAT: - The Tribunal found that the Adjudicating Authority erroneously premised rejection on the supposed pendency of a review application although no document proving such pendency was placed on record by the Corporate Debtor. The Court accepted the Appellant's evidence that the review application filed on 13th December 2018 was taken back on 17th December 2018 and was not thereafter re-filed. The Adjudicating Authority wrongly drew an adverse inference against the petitioner for not prosecuting the decree despite the petition being filed within the statutory period of limitation; when a petition under Section 7 is filed within limitation, inaction between the decree and filing cannot properly justify rejecting the petition. The burden lay on the party asserting pendency to prove it, which was not discharged by the Corporate Debtor.

Impugned rejection on the ground of a purported pending review and for not prosecuting the decree was unsustainable; the Adjudicating Authority erred in rejecting the Section 7 petition on those bases.

Limitation for filing application under Section 7 - inadmissibility of adverse inference for non-prosecution where petition is within limitation - Whether the petition under Section 7 was barred by limitation. - HELD THAT: - The Tribunal accepted that the right to apply under Section 7 accrued on default, which first occurred on 07th July 2015 (first instalment) and alternatively on 06th August 2015 when the modification was refused and the decree was finalised. Applying the Limitation Act, the three-year period for an Article 137 claim runs from when the decree became enforceable. The Section 7 petition filed on 27th June/August 2018 was therefore within three years of the accrual of the right to apply. Consequently, limitation did not operate to bar the petition.

The Section 7 petition was filed within the period of limitation and cannot be dismissed on limitation grounds.

Decree-holder as creditor - initiation of corporate insolvency resolution process - Whether a decree-holder is entitled to file an application under Section 7 without first obtaining execution of the decree in a civil court. - HELD THAT: - The Tribunal noted that the definition of 'creditor' under the Code includes a decree-holder. The mere fact that a decree exists and the petitioner seeks realization of the decretal amount entitles the decree-holder to invoke Section 7. The Adjudicating Authority was not justified in requiring the petitioner to first initiate execution proceedings as a precondition for filing under the Code. Once the ingredients of Section 7 are satisfied, the petition is maintainable irrespective of whether execution steps in civil court have been taken.

A decree-holder qualifies as a creditor under the Code and may maintain a Section 7 petition without first filing execution proceedings in civil court.

Joint and several liability of principal borrower and guarantor - initiation of corporate insolvency resolution process - Whether invoking the Code only against the corporate debtor while other joint and several obligors remain was impermissible. - HELD THAT: - The Tribunal reiterated that where liabilities are joint and several, the creditor may choose against which liable party to proceed. The plaintiff had obtained a decree against the principal borrower, guarantors and the corporate guarantor jointly and severally, and was entitled to pursue the corporate debtor alone. The Adjudicating Authority's view that invoking the Code only against the corporate debtor was untenable was therefore incorrect.

Invoking Section 7 against the corporate debtor alone was permissible despite other joint and several obligors having been decreed against.

Final Conclusion: The appeal is allowed. The impugned order rejecting the Section 7 petition is set aside. The Adjudicating Authority is directed to admit the petition under Section 7 of the Code and proceed with initiation of the corporate insolvency resolution process.

Approval of resolution plan under section 31(1) of the Insolvency and Bankruptcy Code, 2016 - Compliance of resolution plan with section 30(2) of the Insolvency and Bankruptcy Code, 2016 - Certification by Resolution Professional under regulation 39(4) of the CIRP Regulations - Mandatory contents of resolution plan under regulations 38 and 39 of the CIRP Regulations - Binding effect of an approved resolution plan on stakeholders - Cessation of moratorium under section 14 upon approval of resolution plan

Compliance of resolution plan with section 30(2) of the Insolvency and Bankruptcy Code, 2016 - Mandatory contents of resolution plan under regulations 38 and 39 of the CIRP Regulations - Modified resolution plan submitted by Atyant Capital India Fund-1 complies with the requirements of section 30(2) of the IBC and regulations 38 and 39 of the CIRP Regulations - HELD THAT: - The Tribunal examined the modified plan against the criteria in section 30(2) - payment of insolvency resolution process costs, repayment of operational creditors not less than liquidation value, post-approval management and implementation, non-contravention of law and other Board-specified requirements - and recorded specific plan provisions meeting each sub-clause. The Tribunal further checked the plan against regulations 38 and 39 (identification of funding sources for IRP costs and payments to operational creditors, treatment of stakeholders, term and implementation schedule, management and supervision arrangements, details of resolution applicant and connected persons) and found that the plan contains the mandatory information and arrangements required by those regulations, including an implementation scheme by amalgamation and monitoring provisions. [Paras 22, 24, 25, 26, 27]

The modified resolution plan meets the statutory and regulatory requirements and is found in conformity with section 30(2) of the Code and regulations 38 and 39 of the CIRP Regulations.

Certification by Resolution Professional under regulation 39(4) of the CIRP Regulations - Eligibility under section 29A and Form-H certification - The resolution professional's certification under regulation 39(4), including certification in Form-H regarding eligibility under section 29A and feasibility and viability of the modified resolution, is accepted - HELD THAT: - The resolution professional submitted the required affidavit certifying that the improved resolution plan meets the requirements of the IBC and the Regulations and produced the compliance certificate in Form-H certifying the resolution applicant's eligibility under section 29A and the feasibility and viability of the modified plan. The Tribunal recorded that these certifications were placed on record and relied upon in its scrutiny of the plan. [Paras 22, 23]

The RP's certification under regulation 39(4) and the Form-H compliance certificate regarding section 29A and feasibility/viability are accepted for the purposes of approval.

Approval of resolution plan under section 31(1) of the Insolvency and Bankruptcy Code, 2016 - Binding effect of an approved resolution plan on stakeholders - Cessation of moratorium under section 14 upon approval of resolution plan - The modified resolution plan is approved under section 31(1) of the IBC; the approved plan is binding on stakeholders and the moratorium under section 14 ceases on approval - HELD THAT: - After finding that the modified plan satisfied statutory and regulatory requirements and noting that it was approved by the committee of creditors with the requisite voting, the Tribunal formally approved the plan. The Tribunal directed that the approved plan shall be binding on the corporate debtor, its employees, members, creditors, guarantors and other stakeholders, and that the moratorium previously in force under section 14 shall cease to have effect upon approval. The Tribunal also directed the resolution professional to forward records to the IBBI. [Paras 18, 19, 28, 29]

The modified resolution plan is approved; it is binding on all stakeholders and the moratorium under section 14 ceases to have effect.

Final Conclusion: The Tribunal approved the modified resolution plan submitted by Atyant Capital India Fund-1 as meeting the requirements of section 30(2) of the IBC and regulations 38 and 39 of the CIRP Regulations, accepted the RP's certifications including Form-H, declared the approved plan binding on all stakeholders and ordered that the moratorium under section 14 ceases to have effect; the matter is disposed of.

Specification of organisation of a political nature - prohibition on foreign contribution to organisations of a political nature - vagueness doctrine - uncanalised executive power - reading down - citizenship requirement for Article 19 - procedural safeguards under Section 5

Citizenship requirement for Article 19 - Whether the Appellant-organisation could invoke rights under Article 19 of the Constitution. - HELD THAT: - The Court held that Article 19 guarantees rights to 'all citizens' and an organisation cannot itself be a citizen for the purposes of Article 19. No individual member of the organisation was impleaded in the petition or this appeal. Consequently the organisation cannot enforce the freedoms under Article 19 and the related challenge based on Article 19 was not maintainable. [Paras 15]

Article 19 rights cannot be invoked by the Appellant-organisation; the Article 19 challenge is not maintainable.

Specification of organisation of a political nature - vagueness doctrine - uncanalised executive power - procedural safeguards under Section 5 - Whether Section 5(1) and the procedure in Section 5 (including notice and opportunity to represent) are void for vagueness or confer uncanalised power in violation of Article 14. - HELD THAT: - The Court agreed with the High Court that the terms 'activities of the organisation, the ideology propagated by the organisation and the programme of the organisation' are expansive but not vague or uncertain. Sufficient guidance is provided by Parliament in Section 5 and the statute prescribes procedural safeguards (notice, opportunity to represent, reasons for order). The Court therefore found no vice of vagueness in Section 5(1) rendering it violative of Article 14. Section 5(4) similarly could not be struck down merely because the authority to whom representations are forwarded is not specified, particularly since the appellant made no serious attack on that provision. [Paras 11, 13, 18]

Section 5(1) does not suffer from vagueness and is not unconstitutional; Section 5(4) is not declared unconstitutional on the pleaded ground.

Prohibition on foreign contribution to organisations of a political nature - Whether Rule 3(i) is vague or overbroad and therefore ultra vires the Act. - HELD THAT: - Rule 3(i) applies to an organisation having avowed political objectives in its memorandum or bylaws. Given the legislative intent to exclude organisations engaged in active or party politics from receiving foreign funds, an association that avows political objectives of the kind that seek to play a role in active politics is properly within the rule. The provision is not ambiguous when read in light of the Act's object and cannot be struck down as vague. [Paras 18]

Rule 3(i) is valid and not ultra vires.

Vagueness doctrine - reading down - Whether Rule 3(v) (organisations whose objectives include advancement of 'political interests') is void for vagueness and, if so, whether it can be saved by reading down. - HELD THAT: - The Court accepted that the phrase 'political interests' in Rule 3(v) is capable of vague application and susceptible to misuse. However, possible abuse alone is not a ground for striking down the provision. Applying the doctrine of reading down in light of the Act's object, the Court construed 'political interests' to mean interests connected with active politics or party politics. This construction preserves legitimate voluntary organisations working for social and economic welfare from being arbitrarily brought within the rule while giving effect to the statute's purpose of preventing foreign influence in active politics. [Paras 19, 20, 21]

Rule 3(v) is read down to apply only to organisations connected with active politics or party politics and is thereby saved from being declared unconstitutional.

Vagueness doctrine - reading down - Whether Rule 3(vi) (organisations habitually employing common methods of political action such as bandh, hartal, etc.) is unconstitutional as overbroad and whether it can be confined by reading down. - HELD THAT: - While legitimate public-cause protest employing methods like bandh or hartal cannot by themselves deprive an organisation of foreign funding, the Court interpreted Rule 3(vi) in a manner consistent with the Act's objective. Rule 3(vi) is confined to organisations that have a connection with active politics or take part in party politics. Organisations not involved in active or party politics therefore do not fall within Rule 3(vi). The Court also clarified that organisations used as conduits for political parties cannot escape the Act if there is concrete material and the prescribed procedure is followed. [Paras 22]

Rule 3(vi) is read down to cover only organisations connected with active politics or party politics and is thereby saved from invalidation.

Final Conclusion: The High Court's dismissal of the writ petition is upheld. The Article 19 challenge by the organisation is not maintainable; Section 5(1) and Section 5(4) are not struck down for vagueness; Rule 3(i) is valid; Rules 3(v) and 3(vi) are read down to apply only to organisations connected with active politics or party politics, thereby preserving lawful voluntary organisations while enabling the statute to prevent foreign influence in active politics.

Continuing contravention under Section 10(6) of the FEMA Act - liability of persons in charge under Section 42 of the FEMA Act - deeming provision in Section 10(6) - obligation to surrender foreign exchange within prescribed period under Regulation 6 of the FEMA (R, R & S) Regulations, 2000 - civil penalty regime - mens rea not required for breach of civil obligations

Continuing contravention under Section 10(6) of the FEMA Act - deeming provision in Section 10(6) - obligation to surrender foreign exchange within prescribed period under Regulation 6 of the FEMA (R, R & S) Regulations, 2000 - Whether Section 10(6) of the FEMA Act is attracted where foreign exchange was remitted for import but goods remained in bonded warehouse and the bill of entry was not submitted - HELD THAT: - The Court held that Section 10(6) is a deeming provision and is attracted where a person who acquired foreign exchange does not use it for the declared purpose or does not surrender it within the specified period. In the present case the remittance and import occurred in 2000 but the bill of entry was not submitted and the goods remained warehoused; thus the import formalities were not completed and the foreign exchange was not applied to the declared purpose. Regulation 6 prescribes surrender within sixty days and, while non-compliance does not extinguish liability after that period, it results in a continuing deemed contravention until rectified. The adjudicating authority's finding that Section 10(6) applied was consequently upheld. [Paras 10]

Section 10(6) of the FEMA Act is attracted as the import formalities remained incomplete and the foreign exchange was not used or surrendered as required; the deemed contravention continued until rectified.

Liability of persons in charge under Section 42 of the FEMA Act - civil penalty regime - mens rea not required for breach of civil obligations - Whether the appellant, who became Managing Director after the initial import and who was aware of the default, could be held liable under Section 42 of the FEMA Act for the continuing contravention - HELD THAT: - Section 42 makes every person who, at the time the contravention was committed, was in charge of and responsible for the conduct of the company's business, liable; the proviso permits exculpation only upon proof that the contravention occurred without knowledge or despite exercise of all due diligence. The Court agreed with the High Court's view that contravention under Section 10(6) is a continuing offence; therefore, liability persists until corrective steps are taken. The appellant took over management on 22.10.2001 and was aware of the warehoused goods and default yet did not take effective corrective measures; no specific plea or proof of absence of knowledge or of due diligence was made. Given that penalties under the scheme are civil in nature (where mens rea is not an essential element), the adjudicating authority and the appellate fora rightly held the appellant liable and confirmed the penalty imposed. [Paras 11, 15]

The appellant is liable under Section 42 for the continuing contravention because he became the person in charge, was aware of the default, did not exercise or demonstrate due diligence to prevent or rectify it, and thus the penalty imposed on him was justified.

Final Conclusion: The Court dismissed the appeal; the adjudicating authority's finding that the company contravened Section 10(6) and the imposition of penalty on the company and on the appellant under Section 42 were affirmed.

Summary order. Appeals dismissed and delay condoned.

Summary order. The appeals are dismissed and pending interlocutory applications, if any, are disposed of.

Limitation for refund claims before revenue authorities - statutory time bar under refund provisions - non availability of general law of limitation to statutory refund applications - refund of tax paid under mistake of law not exempting claim from statutory limitation

Limitation for refund claims before revenue authorities - refund of tax paid under mistake of law not exempting claim from statutory limitation - Whether the appellant's refund claim for service tax paid during September, 2012 to August, 2014 is barred by statutory limitation and therefore liable to be rejected. - HELD THAT: - The Tribunal applied settled precedents holding that refund claims made before departmental authorities are governed by the statutory time limits and the general law of limitation is not available to extend those limits. The decision in Porcelain Electric Magg. Co. establishes that refunds before revenue authorities must comply with the statute's limitation. The Tribunal also relied on the Madras High Court decision in Assistant Commissioner of Service Tax v. Nataraj & Venkat Associates that a claim beyond the prescribed limitation period is barred even where tax was paid under a mistake of law. The lower authorities found that the available challans related to periods prior to one year from the date of the refund claim, making the claim time barred; the Tribunal found no reason to interfere with that conclusion in view of the cited authorities and the statutory rule on limitation. [Paras 3, 5, 6, 7]

The refund claim for the period September, 2012 to August, 2014 is time barred and the appeal is rejected.

Final Conclusion: The Tribunal dismissed the appeal and upheld the rejection of the refund claim as barred by the statutory limitation applicable to refund claims before revenue authorities.

Service Tax on advance entrance/enrollment fee - mutuality of interest - no transfer of ownership of the service - precedential authority of State of W. Bengal Vs Calcutta Club Ltd. - precedential authority of Ranchi Club Ltd Vs Chief CCE & ST

Service Tax on advance entrance/enrollment fee - mutuality of interest - no transfer of ownership of the service - Liability to pay Service Tax on advance entrance/enrollment fee collected from prospective members. - HELD THAT: - The Tribunal examined whether advance entrance/enrollment fees charged by the club constitute a taxable service. It accepted the assessee's contention in light of binding precedents relied upon in the impugned order, finding that where there is mutuality of interest between the club and its members the transaction does not involve a transfer of ownership of a service. Applying those authorities, the Tribunal concluded that such fees do not attract Service Tax because the essential attribute of taxable service-an identifiable transfer of ownership of service to the recipient-is absent where mutuality exists.

Advance entrance/enrollment fees collected from prospective members are not liable to Service Tax as there is mutuality of interest and no transfer of ownership of the service.

Final Conclusion: The appeal by the assessee is allowed and the cross-appeal by the Revenue (limited to penalty dispute) is dismissed; both appeals disposed of on the basis that advance entrance/enrollment fees are not taxable due to mutuality and absence of transfer of ownership, following the cited precedents.

Section 35F deposit condition - restoration of appeal on deposit - stay of demand notice requires challenge to the notice - maintainability of stay application in absence of substantive challenge

Section 35F deposit condition - restoration of appeal on deposit - Application for direction to Appellate Tribunal to restore an appeal on deposit of requisite amount under Section 35F - HELD THAT: - The petitioner sought an order directing the Appellate Tribunal to restore its appeal upon depositing the amount required by Section 35F of the Central Excise Act, 1944. Counsel for the petitioner conceded that the petitioner was unable to make the requisite deposit. In view of that concession, the Court held there was no basis to grant the relief sought for restoration. The application was dismissed for want of ability to comply with the statutory deposit requirement which was the condition precedent to restoration sought.

IA No. 02 of 2019 dismissed for inability of the petitioner to deposit the amount required under Section 35F.

Stay of demand notice requires challenge to the notice - maintainability of stay application in absence of substantive challenge - Application for stay of a notice of demand that had not been challenged before the Court - HELD THAT: - The petitioner applied for a stay of a notice of demand dated 14.05.2019. The Court noted that the notice of demand was not the subject matter of any challenge before it. Absent any substantive challenge to the notice, the Court found no jurisdictional or procedural basis to grant a stay. Accordingly, the application for an interim stay was dismissed for want of a challenge making the stay application maintainable.

IA No. 04 of 2019 dismissed as a stay could not be granted where the underlying notice of demand had not been challenged.

Final Conclusion: Both interlocutory applications were dismissed: the restoration application was dismissed because the petitioner cannot comply with the statutory deposit requirement under Section 35F, and the stay application was dismissed because the demand notice sought to be stayed had not been challenged before the Court.

Adjustment of sanctioned refund under section 11(1) of the Central Excise Act - sanctioned scheme of the Board for Industrial and Financial Reconstruction (BIFR) - immunity from recovery for liabilities not disclosed to or provided for in the BIFR scheme - cut off date under a BIFR sanctioned rehabilitation scheme - binding effect of unchallenged BIFR orders on revenue authorities

Sanctioned scheme of the Board for Industrial and Financial Reconstruction (BIFR) - immunity from recovery for liabilities not disclosed to or provided for in the BIFR scheme - adjustment of sanctioned refund under section 11(1) of the Central Excise Act - binding effect of unchallenged BIFR orders on revenue authorities - Refund sanctioned to the respondent could not be adjusted against confirmed demands that were not disclosed to or provided for in the BIFR sanctioned scheme. - HELD THAT: - The Tribunal upheld the Commissioner (Appeals)'s finding that the confirmed demands in OIO Nos. 141/2001 and 5/2001 related to periods and liabilities which were neither disclosed to BIFR nor taken into account in the MS 2000 scheme and thus fell within the immunity conferred by the BIFR sanction with cut off date 31.03.2000. The BIFR had directed the Central Excise Department to adhere to the sanctioned scheme and not to raise claims against the new promoter which were not provided for in the scheme; the company was subsequently discharged from SICA with the protection reiterated. The Department did not demonstrate that the dues had been disclosed to or provided for in the sanctioned scheme, and the BIFR proceedings and orders had not been successfully challenged. In those circumstances the Commissioner (Appeals) was correct in holding that the Assistant Commissioner erred in adjusting the sanctioned refund against the confirmed demands, and that the Department was bound by the BIFR sanction and related directions. [Paras 6, 9, 10]

The Commissioner (Appeals)'s order disallowing adjustment of the sanctioned refund against the specified confirmed demands is upheld.

Final Conclusion: The departmental appeal is dismissed; the Tribunal affirms that refunds sanctioned to the assessee could not be appropriated against confirmed demands which were not disclosed to or provided for in the BIFR sanctioned rehabilitation scheme and which fell within the protection of the unchallenged BIFR orders.

Deferment of recovery and coercive measures - interim suspension of enforcement proceedings pending public health emergency - release of seized goods on bank guarantee without encashment until expiry of appeal period - non-availability of limitation objection where assessment deferred - liberty to seek modification of general directions on application with justification

Deferment of recovery and coercive measures - interim suspension of enforcement proceedings pending public health emergency - General direction to defer recovery proceedings and coercive measures by banks, financial institutions and tax and municipal authorities till 06.04.2020. - HELD THAT: - In view of the Covid-19 pandemic and the vulnerability of court staff, advocates and litigants, the Court directed departments concerned, including banks, financial institutions, income-tax authorities, authorities dealing with KVAT/GST, motor vehicles tax and building tax, to defer initiation or continuation of recovery proceedings or coercive measures until 06.04.2020. The order is intended as a general preventive measure to reduce court and public movement and to avoid multiplicity of writs while the public health crisis persists. [Paras 8, 14]

Recovery and coercive proceedings shall be deferred by the specified authorities till 06.04.2020 and adjudicating authorities shall not pass adverse orders in affected matters during this period.

Release of seized goods on bank guarantee without encashment until expiry of appeal period - Direction on release of goods/vehicles seized under Section 129 of the GST Act by furnishing bank guarantees which shall not be encashed while the appeal period subsists. - HELD THAT: - Recognising difficulty in parties appearing during the emergency, the Court held that affected parties may apply for release of seized goods by furnishing bank guarantees including penalty and interest; such guarantees shall not be encashed even if adjudication proceeds, provided the period specified for filing appeal under Section 107 has not lapsed. This balances the requirement of securing departmental interests with the need to mitigate hardship caused by the pandemic. [Paras 13]

Seized goods may be released on furnishing bank guarantees which shall not be encashed until the statutory appeal period has expired.

Non-availability of limitation objection - Assessments required to be completed by 31.03.2020 may be deferred without permitting assessees to raise a limitation objection. - HELD THAT: - The Court permitted deferment of assessment proceedings that were to be completed by 31.03.2020 subject to the Court's order, but clarified that assessees shall not be entitled to object on the ground of limitation as a consequence of such deferment. This preserves departmental timelines while precluding procedural prejudice to authorities arising from the general moratorium. [Paras 12]

Assessment proceedings falling due by 31.03.2020 may be deferred but assessees cannot take advantage by raising limitation objections.

Liberty to seek modification of general directions - Departments and authorities granted liberty to move applications for modification of the general order in individual cases with reasonable justification. - HELD THAT: - The Court expressly provided that departments may apply for modification of the declaratroy moratorium in particular cases where justified, permitting the authorities to seek case-specific relief from the blanket deferment. This preserves flexibility and access to remedy where urgent or exceptional circumstances warrant departure from the general direction. [Paras 11]

Departments are at liberty to move applications for modification of the order in particular cases supported by reasonable justification.

Interim suspension of enforcement proceedings pending public health emergency - Clarification that the general deferment does not impede those willing to avail amnesty schemes or to make voluntary payments pursuant to RBI or departmental directions. - HELD THAT: - To avoid prejudice to persons desirous of availing amnesty schemes or of paying dues voluntarily, the Court clarified that the moratorium will not prevent defaulters from availing any amnesty scheme when promulgated, nor will it prevent bank borrowers or taxpayers from making payments in accordance with RBI or departmental directions. Similarly, departments may relax conditions for accepting payments as per their powers; the order is not intended to bar voluntary compliance. [Paras 9, 10]

The moratorium does not prevent availing amnesty schemes or voluntary payment; departments remain free to accept payments or relax conditions where empowered.

Administrative listing post-moratorium - Registry directed to list matters pending under this roster batch-wise after 06.04.2020. - HELD THAT: - To manage the backlog and consolidate matters arising from similar causes of action, the Court directed administrative listing of the affected matters in batches for hearing after the moratorium expires. This is an administrative measure to streamline post-moratorium adjudication. [Paras 15]

All matters in this roster shall be listed batch-wise after 06.04.2020.

Communication of judicial directions to concerned authorities - Order to communicate these directions to concerned departments, banks and Central Board of Direct Taxes for implementation. - HELD THAT: - The Court ordered that the general directions be communicated to the relevant departments, banks, Chief Judicial Magistrates (for SARFAESI matters) and to the Central Board of Direct Taxes and Customs to ensure compliance and implementation of the moratorium and related clarifications. [Paras 11, 16]

The directions are to be communicated to the concerned departments, banks, Chief Judicial Magistrates and the Central Board of Direct Taxes and Customs for implementation.

Final Conclusion: By reason of the Covid-19 public health emergency, the High Court directed a temporary moratorium until 06.04.2020 on initiation or continuation of recovery and coercive enforcement proceedings by banks, financial institutions and tax and municipal authorities, with specified clarifications regarding voluntary payments, amnesty schemes, release of seized goods on bank guarantees, deferment of assessments without permitting limitation objections, liberty to seek case-specific modification, administrative listing after the moratorium and communication of the directions to concerned authorities.

Opportunity of cross-examination - presumption under Section 114(g) of the Indian Evidence Act - judicial review under Article 226 - challenge to assessment order

Opportunity of cross-examination - challenge to assessment order - presumption under Section 114(g) of the Indian Evidence Act - Writ petition seeking quashing of Ext.P16 assessment order dismissed. - HELD THAT: - The Court found that the petitioner had been afforded opportunity to cross-examine the witnesses identified in the assessment proceedings and did in fact cross-examine certain persons, while others could not be located or did not appear. The Court noted that where additional evidence or persons are not produced, the petitioner has the statutory benefit of invoking the presumption in Section 114(g) of the Indian Evidence Act before the appropriate forum or authority. The High Court held that the petitioner's grievance amounted to an attempt to obtain, by writ, relief which should be pursued in the statutory/ appellate process and that the present petition constituted dilatory tactics; there was therefore no justification to interfere with the assessment order by quashing Ext.P16.

Writ petition dismissed; no interference with Ext.P16.

Final Conclusion: The High Court dismissed the petition under Article 226 and declined to quash the assessment order Ext.P16, observing that the petitioner had opportunity to cross-examine witnesses and may invoke Section 114(g) of the Evidence Act before the competent authority rather than seeking relief by way of writ.

Non-speaking order - duty to consider objections and pass a speaking order - remand for reconsideration - fast track assessment - limitation for assessment

Non-speaking order - duty to consider objections and pass a speaking order - Ext.P9 assessment order is vitiated for being non-speaking and for failure to consider and answer the objections raised by the assessee pursuant to the Tribunal's remand. - HELD THAT: - The Tribunal's remand (Ext.P2) expressly required the assessing authority to give the assessee an opportunity to raise contentions with supporting evidence and to redo the assessment based on the factual position. Ext.P9 records the assessee's contentions but does not advert to them or make any findings on their legality or sustainability; it merely confirms the proposal dated 30.05.2014 by stating the reply was verified and there was no reason to deviate. Such treatment does not comply with the remand direction and amounts to a non-speaking order which cannot stand. For these reasons Ext.P9 is liable to be set aside. [Paras 10, 11, 12]

Ext.P9 set aside for being non-speaking and for failure to consider the assessee's objections.

Remand for reconsideration - fast track assessment - The matter is remitted to the Fast Track Assessment Team for fresh consideration in accordance with the Tribunal's directions. - HELD THAT: - Having set aside Ext.P9 for failure to meet the remit of Ext.P2, the Court directs that the Fast Track Assessment Team reconsider the assessment afresh, give the assessee an opportunity to reiterate and support its contentions, and pass a reasoned speaking order dealing with the objections and evidence. The remand contemplates reconsideration on merits by the assessing authority in line with the Tribunal's order. [Paras 12]

Matter remitted to the 3rd respondent (Fast Track Assessment Team) for reconsideration and for passing a speaking order.

Limitation for assessment - The question of limitation for making the assessment is not adjudicated and is left open for consideration on remand. - HELD THAT: - Although the petitioner contended that the assessing authority had no fresh period to complete assessment following remand, and the Revenue relied upon precedents, the Court declined to decide the limitation issue. Since Ext.P9 is set aside and the matter is remitted for fresh consideration, the Court expressly leaves the limitation question open so that it may be addressed by the assessing authority on reconsideration. [Paras 12]

Limitation issue left open for determination on reconsideration.

Final Conclusion: Ext.P9 assessment order is set aside; the matter is remitted to the Fast Track Assessment Team for fresh consideration and for passing a reasoned speaking order dealing with the assessee's objections; the question of limitation is left open for determination on remand.

Levy of interest under Section 24(3) of the TNGST Act - Eligibility for interstate deferral scheme for expansion (deferral of sales tax) - Treating departmental order as a show cause notice - Remand for fresh consideration and verification of production figures

Levy of interest under Section 24(3) of the TNGST Act - Eligibility for interstate deferral scheme for expansion (deferral of sales tax) - Remand for fresh consideration and verification of production figures - Treating departmental order as a show cause notice - Impugned orders levying interest were not finally adjudicated but directed to be reconsidered after verification of production figures; orders treated as show cause notices and remitted for fresh decision. - HELD THAT: - The writ petitions challenged interest levied under Section 24(3) for alleged incorrect availment of deferral for assessment years 2001-02 and 2002-03. The petitioner did not place before the Court the actual production figures for the relevant years to substantiate its claim of eligibility for deferral from the stipulated base period. In view of the factual lacuna and to afford an opportunity of verification, the Court treated the impugned orders as show cause notices and directed the petitioner to submit documents correlating production figures to the respondent within four weeks. The respondent was directed to consider those documents and pass appropriate fresh orders within four weeks of submission. The Court did not rule on the merits of the levy but remitted the matter for fresh consideration in accordance with the directions given. [Paras 6, 7]

Petitions disposed by remitting the matter to the respondent for fresh adjudication after the petitioner files production corroborative documents; impugned orders treated as show cause notices.

Final Conclusion: Writ petitions disposed by directing the petitioner to submit corroborative production documents within four weeks and directing the respondent to reconsider and pass fresh orders within four weeks thereof; no adjudication on merits of interest levy; no costs.

Opportunity of personal hearing under Section 27(2) of the Tamil Nadu Value Added Tax Act - Assessing Officer as a quasi-judicial authority required to independently adjudicate - independent adjudication by Assessing Officer uninfluenced by Enforcement Wing - setting aside assessment for breach of statutory procedure - remand for fresh consideration and verification of buyer-seller transactions

Opportunity of personal hearing under Section 27(2) of the Tamil Nadu Value Added Tax Act - Assessing Officer as a quasi-judicial authority required to independently adjudicate - Whether the assessment orders were vitiated for failure to provide opportunity for production of documentary evidence and for the Assessing Officer not independently adjudicating the objections. - HELD THAT: - The Court found that the pre-revision action originated from Enforcement Wing inspection and that, upon receipt of the petitioner's objections, the Assessing Officer was obliged to independently adjudicate those objections and to afford a reasonable opportunity for production of documents and personal hearing as required by Section 27(2) of the TNVAT Act. The Assessing Officer, however, proceeded without providing the requisite opportunity and was influenced by the Enforcement Wing's proposal. For these procedural defects, the assessment orders could not stand. [Paras 6]

Assessment orders set aside for breach of the duty to provide opportunity and for failure of independent adjudication; matters restored to the Assessing Officer for fresh consideration.

Remand for fresh consideration and verification of buyer-seller transactions - independent adjudication by Assessing Officer uninfluenced by Enforcement Wing - The extent to which the matters are to be remanded for fresh consideration, including verification of buyer and seller transactions left open by the Assessing Officer. - HELD THAT: - The Court directed that the assessment files be restored to the Assessing Officer for a fresh decision on merits. The petitioner was ordered to file documentary evidence within two weeks to substantiate the claim that the transactions were not taxable. The Assessing Officer is required to consider all documentary evidence and objections, afford personal hearing, and pass appropriate orders on merits and in accordance with law within six weeks thereafter. The remand contemplates a full re-adjudication rather than limited ministerial computation. [Paras 7]

Matters remanded to the Assessing Officer for fresh adjudication and verification of buyer-seller transactions after affording opportunity to the petitioner; timetable for filing documents and disposal specified.

Final Conclusion: Writ petitions allowed: impugned assessment orders dated 29.10.2015 set aside and restored to the Assessing Officer for fresh adjudication after the petitioner files documentary evidence within two weeks and after the Assessing Officer affords personal hearing and decides the matters on merits within six weeks; no costs.

Audit of registered dealers - Delegation of power under Section 64(4) of the Tamil Nadu Value Added Tax Act, 2006 - Jurisdictional competence of authority to order audit - Setting aside assessment orders for lack of jurisdiction - Remand for fresh assessment with opportunity of hearing

Audit of registered dealers - Jurisdictional competence of authority to order audit - Delegation of power under Section 64(4) of the Tamil Nadu Value Added Tax Act, 2006 - Validity of the audit/inspection direction issued by a subordinate officer and validity of assessments founded on that audit - HELD THAT: - Section 64(4) empowers the Commissioner to order audit of any registered dealer and requires that such audit be conducted by an officer not below the rank of Deputy Commercial Tax Officer. In the present case the Joint Commissioner (CT) Enforcement I, a subordinate to the Commissioner, directed the audit. The Court found that such direction was contrary to the statutory scheme since the power to order audit under Section 64(4) cannot be delegated or usurped by officers below the designated authority. As the impugned assessment orders were founded on the audit initiated by the subordinate officer, those assessments suffered from lack of jurisdiction and were liable to be set aside. [Paras 10]

Assessments based on the audit/inspection ordered by the subordinate officer were held invalid and the impugned assessment orders set aside.

Remand for fresh assessment with opportunity of hearing - Setting aside assessment orders for lack of jurisdiction - Relief and procedure to be followed after setting aside the impugned orders - HELD THAT: - Having set aside the assessments for want of jurisdiction in initiating the audit, the Court remanded the matters for fresh consideration. The Assessing Authority (first respondent) was directed to issue fresh notices, if required, within two weeks of receipt of the order; alternatively the petitioner was to file objections and documents within three weeks treating the impugned orders as notices. Thereafter the first respondent was directed to pass appropriate orders within six weeks after providing the petitioner a personal hearing. The remand is for de novo consideration consistent with statutory competence and after affording the petitioner opportunity to produce records and file objections. [Paras 11]

Matters remitted for fresh consideration; directions issued for issuance of notices, filing of objections/records, personal hearing and disposal within specified timelines.

Final Conclusion: Writ petitions allowed; impugned assessment orders for AYs 2007-08 to 2013-14 set aside as founded on an audit direction issued by an officer lacking statutory competence under Section 64(4). Matters remanded to the Assessing Authority for fresh consideration after giving the petitioner opportunity to file objections, produce records and be heard, in accordance with the timelines directed by the Court.