TaxTMI Updates e-Newsletter
Apr 04,2022

Validity and expiry of e-way bill - Seizure of vehicle and goods on account of expired e-way bill - Free movement of goods and services under GST - Release of goods and vehicle on furnishing of undertaking/bond - Intimation to assessing officer and post-release compliance

Validity and expiry of e-way bill - Seizure of vehicle and goods on account of expired e-way bill - Free movement of goods and services under GST - Whether a vehicle and goods in transit may be seized at State entry for an e-way bill which expired before entry when the transaction between two registered dealers is genuine - HELD THAT: - The Court found that where the movement is between two registered dealers and the transaction's genuineness is not in doubt, mechanical stoppage and seizure of the vehicle and goods solely because the e-way bill expired immediately prior to entry would unduly impede the free-flow of goods and services. While rule-making and enforcement under the GST regime may require an e-way bill and permit stoppage for compliance checks, those powers must be balanced against the objective of facilitating interstate movement. In such circumstances, instead of seizure, the proper course is to permit continuation subject to safeguards that enable tax authorities to verify compliance and to initiate appropriate action if irregularity is subsequently found. The Court emphasised that the assessing officers of the buyer and seller should be informed so that corrective steps or enforcement can follow, preserving both regulatory oversight and the unhindered movement of goods. [Paras 5, 6]

Where the transaction is between registered dealers and genuineness is not disputed, vehicles carrying goods for which the e-way bill has expired just prior to entry should not be seized merely on that ground; stoppage should be avoided and alternative safeguards employed.

Release of goods and vehicle on furnishing of undertaking/bond - Intimation to assessing officer and post-release compliance - What remedial mechanism should be adopted at the check gate when an e-way bill has expired but the transaction is bona fide - HELD THAT: - The Court directed that the check gate officer shall accept an undertaking or bond from the buyer or seller and, upon receiving such undertaking, release the vehicle and goods. Simultaneously the check gate officer must inform the assessing officers of both parties so that those officers may require appearance and enable taking of corrective measures or initiating appropriate proceedings if non-compliance is discovered. This approach preserves enforcement rights of revenue authorities while preventing avoidable disruption to interstate commerce and enabling ease of business. [Paras 6, 8]

The vehicle and goods shall be released on the furnishing of an undertaking or bond at the check gate and intimation shall be sent to the assessing officers of the seller and buyer to enable subsequent compliance or action.

Final Conclusion: Writ petition disposed of by directing the petitioner to appear before the check gate officer, furnish an undertaking or bond for release of the vehicle and goods, and for the check gate officer to inform the assessing officers of both parties so that appropriate post-release compliance or action may be taken.

Vague show cause notice - suspension of GST registration - restoration of registration - interim stay of administrative action - procedural fairness in tax administration - violation of Article 19(1)(g) - challenge to Rule 21A of the CGST Rules

Vague show cause notice - suspension of GST registration - restoration of registration - interim stay of administrative action - procedural fairness in tax administration - violation of Article 19(1)(g) - Validity of the impugned show cause notice dated 14th February, 2022 and the continuation of suspension of the petitioner's GST registration; entitlement to interim restoration of registration. - HELD THAT: - The show cause notice impugned in the petition recites the ground for initiating cancellation proceedings only as "OTHERS" and does not specify any reason, facts or material on which the proceedings are founded. The petitioner's GST registration has remained suspended for more than forty days on the basis of that notice. The lack of stated grounds renders the notice bereft of particularity and militates against procedural fairness in tax administration, and, in the factual matrix, has occasioned serious interference with the petitioner's ability to carry on business invoking concerns under Article 19(1)(g). Having regard to these facts and the need to prevent irreparable prejudice pending adjudication on merits, the Court exercised its power to grant interim relief by staying the impugned notice and ordering immediate restoration of the petitioner's GST registration. The Court directed service of notice and filing of a counter-affidavit within four weeks and permitted rejoinder, preserving the question of the merits for subsequent hearing.

Impugned show cause notice dated 14th February, 2022 stayed and the petitioner's GST registration restored forthwith; notice issued and counter-affidavit directed.

Final Conclusion: Bench granted interim relief by staying the impugned show cause notice and directing immediate restoration of the petitioner's GST registration on the ground that the notice was vague and suspension had persisted for over forty days; merits to be considered subsequently after filing of affidavits.

Issuance of notice in GST DRC-01 versus manual issuance - laches - statutory appeal under Section 107 of the Goods and Services Tax Act, 2017 - mandatory pre-deposit

Laches - issuance of notice in GST DRC-01 versus manual issuance - The writ petitions challenging the impugned orders dated 27.01.2021 and 29.01.2021 were not maintainable on account of inordinate delay and laches. - HELD THAT: - The petitioner challenged the mode of issuance of notice (GST DRC-01 instead of manual issuance) but filed the writ petitions long after the impugned orders were passed. The Court applied the principle that unexplained or inordinate delay and laches disentitle a party to equitable relief by way of writ when an alternative statutory remedy exists, relied upon earlier orders of this Court and declined to entertain the writ petitions on that ground. [Paras 4]

Writ petitions dismissed on account of delay and laches.

Statutory appeal under Section 107 of the Goods and Services Tax Act, 2017 - mandatory pre-deposit - The petitioner was granted liberty to pursue the statutory remedy of appeal and the Appellate Authority was directed to entertain and decide such appeal on merits if filed with mandatory pre-deposit within the stipulated time. - HELD THAT: - Instead of quashing the impugned orders, the Court afforded the petitioner a statutory route by permitting filing of appeals before the Deputy Commissioner (Goods and Services Tax Appeals) under Section 107 of the Goods and Services Tax Act, 2017. The Court conditioned this relief on filing the appeals together with the mandatory pre-deposit within thirty days from receipt of the copy of the order and directed that the Appellate Authority shall entertain the appeals and dispose of them on merits and in accordance with law. [Paras 4]

Liberty granted to file statutory appeals with mandatory pre-deposit within thirty days; appellate authority to entertain and decide on merits.

Final Conclusion: The writ petitions are dismissed for delay and laches, but the petitioner is granted liberty to file statutory appeals under Section 107 of the Goods and Services Tax Act, 2017 with the mandatory pre-deposit within thirty days, and the Appellate Authority is directed to entertain and decide those appeals on merits.

Bail under Section 439 Cr.P.C. - economic offender doctrine - gravity of offence and threat to national economy - parity in grant of bail - deposit condition for bail

Bail under Section 439 Cr.P.C. - economic offender doctrine - gravity of offence and threat to national economy - parity in grant of bail - deposit condition for bail - Whether the petitioner is entitled to bail under Section 439 Cr.P.C. in the case alleging substantial GST tax evasion and economic offence. - HELD THAT: - The court noted the admitted position that the petitioner was a Director of M/s Miraj Products Private Limited and that the prosecution alleges tax evasion of Rs. 869 Crores with involvement in creation of fake firms; a truck was seized at the premises. Relying on the principle that economic offenders are to be treated differently because they run parallel economies and pose a serious threat to the national economy, and having regard to the similarity of facts with the matter of Vinaykant Ameta (where bail was dismissed by the High Court and later granted by the Supreme Court on deposit of Rs. 200 crores), the court held that the seriousness and magnitude of the alleged offence weigh against enlargement on bail. The court declined to grant bail on parity with other orders relied upon by the petitioner, observing that the factual matrix and the gravity of allegations do not make this a fit case for bail, and without expressing any opinion on the merits of the prosecution, refused to exercise discretion under Section 439 Cr.P.C. [Paras 7, 8]

Bail application dismissed and petitioner not enlarged on bail.

Final Conclusion: On the admitted allegations of large-scale GST evasion and having regard to the economic-offender principle and the seriousness of the offence, the High Court dismissed the petitioner's application for bail under Section 439 Cr.P.C.

Refund under Section 54(3) of the CGST Act, 2017 - inverted tax structure - circulars issued under Section 168(1) of the CGST Act, 2017 - circular cannot supplant statutory provisions

Refund under Section 54(3) of the CGST Act, 2017 - inverted tax structure - circulars issued under Section 168(1) of the CGST Act, 2017 - circular cannot supplant statutory provisions - Whether a Board circular which denies refund of accumulated input tax credit where input and output supplies are the same can validly restrict the statutory refund available under Section 54(3) of the CGST Act, 2017. - HELD THAT: - The petitioners claimed refund of unutilised input tax credit accumulated on account of the rate on inputs (LPG in bulk at 18%) being higher than the rate on certain output supplies (LPG in small containers to domestic consumers at 5%) for the period 01.10.2018 to 31.12.2018. The adjudicating and appellate authorities rejected the claim relying on CBIC Circular No.135/2020-GST dated 31.03.2020, which bars refunds under clause (ii) of Section 54(3) where input and output supplies are the same. Section 168(1) permits the Board to issue orders or directions for uniformity in implementation of the Act. The Court held that such executive directions, issued for uniform implementation, cannot introduce or impose restrictions inconsistent with the clear and unambiguous provisions of the statute. Section 54(3) expressly permits refund where credit has accumulated because the rate of tax on inputs is higher than on outputs, without distinguishing cases where inputs and outputs are the same. A circular that effectively curtails a statutory entitlement by creating an excluded class (supplies where input and output are the same) overreaches the Board's power under Section 168(1). Reliance on precedents (including authority cited in the judgment) supports the principle that subordinate executive instruments cannot travel beyond or repugn the enabling statute. Applying these principles, the Court found the Circular insofar as it denies refund in cases where input and output supplies are the same to be impermissible, and the authorities erred in rejecting the petitioners' refund claim on that ground.

Circular No.135/2020-GST to the extent it precludes refund under Section 54(3) where input and output supplies are the same is not a permissible limitation on the statute; the impugned orders rejecting the petitioners' refund claim are set aside and the petitioners are entitled to the refund claimed for the period 01.10.2018 to 31.12.2018.

Final Conclusion: The High Court quashed the adjudicating and appellate orders rejecting the refund claim and held that the Board's circular cannot deny the statutory refund under Section 54(3); the petitioners are entitled to the refund for the period 01.10.2018 to 31.12.2018.

Anticipatory bail - custodial interrogation - serious economic offence - beneficiary of fraudulent input tax credit - failure to cooperate with investigation - previous similar offences - recovery of electronic evidence

Anticipatory bail - custodial interrogation - serious economic offence - beneficiary of fraudulent input tax credit - failure to cooperate with investigation - previous similar offences - recovery of electronic evidence - Anticipatory bail sought by the accused Vikas Jain was refused. - HELD THAT: - The application for anticipatory bail was considered in the context of allegations that the applicant, along with co-accused, had facilitated large-scale fraudulent availment and passing-on of ineligible input tax credit and was part of a syndicate creating fake firms. The prosecution relied on the need for custodial interrogation arising from searches and the ongoing investigation, including the requirement to recover electronic evidence such as hard disks and servers. The court noted the accused's partial cooperation - initial joining of investigation followed by failure to appear later - and the prosecution's contention of his prior involvement in a similar fraud registered by another agency. Although co-accused have been granted bail after arrest, the court held that anticipatory bail is not appropriate where the gravity of the alleged economic offence, the accused's asserted role as a beneficiary and manager of the fraudulent scheme, the need for further interrogation and evidence recovery, and past similar allegations weigh against pre-arrest relief. Consequently no ground for anticipatory bail was made out.

Application for anticipatory bail dismissed.

Final Conclusion: Anticipatory bail was refused on the grounds of the seriousness of the alleged GST fraud, the accused's asserted role and past allegations, his failure to fully cooperate with the investigation, and the prosecution's need for custodial interrogation and recovery of electronic evidence.

Notice under Section 148 of the Income Tax Act - notice issued to non-existing company is invalid - cessation of amalgamating entity on sanction of scheme of amalgamation - substantive illegality as distinct from procedural defect - curability under Section 292-B of the Income Tax Act

Notice under Section 148 of the Income Tax Act - notice issued to non-existing company is invalid - cessation of amalgamating entity on sanction of scheme of amalgamation - substantive illegality as distinct from procedural defect - curability under Section 292-B of the Income Tax Act - Validity of the notice dated 30.06.2021 issued under Section 148 to Scope Pvt. Ltd., an entity that had ceased to exist by virtue of an NCLT-sanctioned scheme of amalgamation with the petitioner for AY 2016-17. - HELD THAT: - The Court held that once the scheme of amalgamation was sanctioned and Scope stood dissolved with the appointed date, Scope ceased to exist as an independent taxable entity. A notice under Section 148 issued to an entity that has ceased to exist is not a mere procedural irregularity but a substantive defect in the basis on which jurisdiction is assumed. Relying on the Apex Court's decision in Principal Commissioner of Income Tax v. Maruti Suzuki India Ltd., and the view followed by this Court in Alok Industries Ltd. v. Dy. CIT, the Court concluded that such a notice cannot be rendered valid by treating the defect as curable under Section 292-B. The Assessing Officer's subsequent statement of future communications being issued to the petitioner did not cure the foundational illegality that the reopening had been initiated by issuing notice to a non-existent amalgamating entity. Accordingly the notice and the order rejecting objections were quashed.

Notice dated 30.06.2021 issued to Scope Pvt. Ltd. and the order dated 03.02.2022 rejecting objections are quashed for being issued to a non-existing entity; reopening held invalid.

Final Conclusion: The petition is allowed; the notice under Section 148 dated 30.06.2021 and the order dated 03.02.2022 are quashed for having been issued to an entity that had ceased to exist following the sanction of the scheme of amalgamation.

Deduction under Section 80P of the Income tax Act - Scope and applicability of Section 80P(4) to cooperative credit societies - Existence of concurrent statutory appeals and writ petitions - direction to pursue statutory appeals and adjudication on merits by appellate authority

Deduction under Section 80P of the Income tax Act - Scope and applicability of Section 80P(4) to cooperative credit societies - Effect of higher court decisions on pending statutory appeals - Entitlement of cooperative credit societies to claim deduction under Section 80P and direction as to disposal of pending statutory appeals in light of higher court precedents. - HELD THAT: - The writ court noted that the assessments for AY 2016-2017 disallowed the claim under Section 80P and that the assessees had filed statutory appeals which remain pending. The Court observed that a Division Bench of this Court had earlier held that Section 80P(4) does not exclude cooperative credit societies from the benefit of Section 80P, and that the Supreme Court subsequently permitted withdrawal of a challenge to that view while leaving questions of law open. The Supreme Court decision in Mavilayi Service Co operative Bank Ltd. was also placed before the Court, which affirmed the principle that Section 80P should be construed liberally in favour of cooperative societies and that Section 80P(4) operates as a proviso excluding RBI licensed cooperative banks, not all cooperative credit societies. In view of these authorities and since statutory appeals are pending, the Court directed that the respondents should press all contentions, including eligibility under Section 80P, before the appellate authority and that the appellate authority shall decide the appeals on merits and in accordance with law and in the light of the Supreme Court's decision relied upon. [Paras 5, 7, 8, 10]

The impugned assessment orders are modified to the extent that the respondents are directed to raise all contentions in their pending statutory appeals; the appellate authority is directed to decide those appeals on merits and in accordance with law, having regard to the Supreme Court decision referenced; writ appeals are disposed accordingly.

Final Conclusion: Writ appeals dismissed with modification: respondents to pursue and press all points, including claim under Section 80P, in their pending statutory appeals; appellate authority to decide the appeals on merits and in accordance with law and in light of the Supreme Court decision; impugned orders stood modified and appeals disposed of. No costs.

Reopening of assessment - change of opinion - deemed opinion - reason to believe - tangible material - material on record - Section 143(3) assessment - section 147 read with section 148 - section 40(a)(ia)

Deemed opinion - change of opinion - reopening of assessment - Section 143(3) assessment - Whether the assessment order dated 22.11.2016 embodies a deemed opinion of the Assessing Officer on the subcontractor payments and TDS, so that reopening the assessment would amount to an impermissible change of opinion - HELD THAT: - The Court found that the AO had specifically called for details regarding related-party subcontractor payments and taxes withheld, the assessee furnished those party-wise details including the tax withheld for M/s Broadcom Communications Technologies Pvt. Ltd., and the AO thereafter passed the regular assessment order under Section 143(3) on 22.11.2016 without making any addition. On these facts the Court drew the presumption of application of mind to the issue and held that the AO had in effect formed an opinion favourable to the assessee on the question of TDS deduction. Applying the settled principle that a mere change of opinion cannot be the basis for reopening assessment, the Court concluded that reopening thereafter, where it is shown that the AO had considered the issue and made no addition, is impermissible for want of jurisdiction. The Court relied on the line of authorities cited in the judgment and held that the reasons recorded for reopening did not constitute objective subsequent information or tangible material sufficient to displace the deemed opinion recorded by the assessment order. [Paras 16, 17, 19, 20]

The reopening notice and the reassessment order were held to be without jurisdiction and were quashed.

Material on record - tangible material - reason to believe - section 147 read with section 148 - Whether reassessment may in general be founded on material already in the record or on investigation of the original record, and whether that principle justified reopening in the present case - HELD THAT: - The Court reiterated the settled position that information for formation of a reason to believe may, in appropriate cases, be obtained from the record of the original assessment or from investigation or research into the materials on record, and that reopening on such material is not per se impermissible. However, this general proposition is subject to the limitation that if the AO had already considered the material in the original assessment and formed an opinion thereon (even if reasons were not recorded), reopening solely on the basis of a subsequent change of that opinion is barred. Applying that principle to the present facts, the Court held that although reassessment can be based on material on record in general, the circumstances here showed prior consideration by the AO and thus reopening could not be sustained. [Paras 11, 12, 13]

While acknowledging that material on record can supply 'information' for reassessment in general, the Court held that principle inapplicable here because the AO had already considered and accepted the assessee's material in the original assessment.

Final Conclusion: The writ petition is allowed. The notice dated 28.03.2019 under Section 148 read with Section 147 and the order dated 23.08.2019 are quashed for want of jurisdiction, the Court holding that the AO had formed a deemed opinion in the assessment order of 22.11.2016 and reopening on the basis of a mere change of opinion was impermissible.

Deduction for bad debts written off under Section 36(1)(vii) - deduction for provision for bad and doubtful debts under Section 36(1)(viia) - proviso to Section 36(1)(vii) and interplay with Section 36(1)(viia) - computation of aggregate average advances under Rule 62ABA / Rule 6ABA - remand for quantification and verification by Assessing Officer

Deduction for bad debts written off under Section 36(1)(vii) - proviso to Section 36(1)(vii) and interplay with Section 36(1)(viia) - Allowability of bad debts written off in respect of non-rural advances under Section 36(1)(vii) despite the proviso read with Section 36(1)(viia). - HELD THAT: - The Court, applying earlier decisions of this Court and the Supreme Court reproduced in the judgment, held that Sections 36(1)(vii) and 36(1)(viia) are distinct and operate in their respective fields. The proviso to Section 36(1)(vii) prevents double deduction only insofar as it relates to debts for which a provision under clause (viia) has already been allowed; it does not bar deduction of bad debts written off which relate to advances other than those covered by clause (viia). Having regard to the precedents cited and the Tribunal's finding that no deduction for the same rural debts had been claimed earlier, the Tribunal correctly upheld the allowance of the claim in respect of non-rural bad debts written off, and that conclusion is sustained. [Paras 9, 10, 11]

Claim for bad debts written off in respect of non-rural advances is allowable under Section 36(1)(vii); the Tribunal's upholding of that allowance is affirmed.

Deduction for provision for bad and doubtful debts under Section 36(1)(viia) - computation of aggregate average advances under Rule 62ABA / Rule 6ABA - remand for quantification and verification by Assessing Officer - Allowability of deduction claimed under Section 36(1)(viia) for provision for bad and doubtful debts and the need for proper computation of the quantum. - HELD THAT: - The Court accepted the legal proposition in favour of the assessee as laid down in earlier decisions that a deduction under Section 36(1)(viia) can be claimed subject to the computation prescribed by the Rules (Rule 62ABA / Rule 6ABA). However, on the material on record the assessing officer's computation of the allowable deduction was not based on adequate branch-wise or advances-related documentation and neither the CIT(A) nor the Tribunal examined these aspects. In view of that factual deficiency the Court directed that the matter be remitted to the Assessing Officer for quantification of the deduction, affording the assessee an opportunity to produce oral and documentary evidence and for the Assessing Officer to pass orders on merits in accordance with law. [Paras 10, 11, 12]

Deduction under Section 36(1)(viia) is permissible in principle, but the quantum is remitted to the Assessing Officer for fresh computation and verification in accordance with law.

Final Conclusion: The Tribunal's order upholding allowances under Sections 36(1)(vii) and 36(1)(viia) is set aside in part: the legal conclusions in favour of the assessee are affirmed on authority, but the assessment is remitted to the Assessing Officer for quantification and verification of the deduction under Section 36(1)(viia); the Assessing Officer shall complete the exercise after affording opportunity to the assessee and pass appropriate orders within three months.

Unexplained cash credit under Section 68 - identity, creditworthiness and genuineness of creditor - opening balance not taxable as credit in the relevant previous year - onus of proof under Section 68 - reliance on precedent decisions of the Tribunal/CIT(A)

Unexplained cash credit under Section 68 - opening balance not taxable as credit in the relevant previous year - identity, creditworthiness and genuineness of creditor - reliance on precedent decisions of the Tribunal/CIT(A) - Deletion of addition of Rs. 41,49,500 made by the Assessing Officer under Section 68 was sustainable. - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the addition under Section 68 on the factual and legal finding that the amounts of Rs.13,91,000 and Rs.27,58,000 in the books related to opening balances carried forward from earlier years and were not credits introduced in the previous year relevant to AY 2005-06. Section 68 applies only to unexplained credits of the relevant previous year; since the loan/liability entries were shown as brought forward and ledger accounts and confirmations were placed on record evidencing that they remained static and were opening balances as on 01.04.2004, the Assessing Officer's addition could not be sustained. The Tribunal further noted that the CIT(A) relied on earlier Tribunal/CIT(A) decisions involving the same creditors and similar factual matrix, and no legal or factual infirmity was shown in that approach. Information pointing to alleged bogus transactions (from investigative agencies) did not alter the legal requirement that the AO must demonstrate that the credits arose in the previous year; the AO himself recorded that the balances were brought forward and age-wise particulars were not shown, but that did not convert earlier-year balances into unexplained credits of the relevant year. For these reasons the CIT(A)'s conclusion deleting the Section 68 addition was affirmed. [Paras 9, 10]

Order of the CIT(A) deleting the addition under Section 68 is confirmed.

Set-off of brought forward losses - deletion of contested addition renders claim academic - Direction of CIT(A) to allow set-off of brought forward losses after verification became infructuous once the addition under Section 68 was deleted. - HELD THAT: - The assessee's additional ground before the CIT(A) sought set-off of brought forward business losses against the additions made under Section 68. As the Tribunal has confirmed deletion of those additions, the question of allowing set-off against such additions no longer arises and is therefore academic. Consequently the Revenue's challenge to the CIT(A)'s direction on set-off is disposed of as infructuous. [Paras 11, 13]

Ground challenging the CIT(A)'s direction on set-off is disposed of as academic/infructuous.

Final Conclusion: The Tribunal dismisses the Revenue's appeal against deletion of the Section 68 addition for AY 2005-06 and confirms the CIT(A)'s order; the challenge to the direction on set-off is dealt with as infructuous. Appeal partly allowed for statistical purposes.

Penalty u/s 271(1)(c) for concealment or furnishing inaccurate particulars - Deletion of additions in quantum proceedings vitiating penalty - Penalty cannot survive independently once foundation of assessment order is overturned

Penalty u/s 271(1)(c) for concealment or furnishing inaccurate particulars - Deletion of additions in quantum proceedings vitiating penalty - Validity of the penalty imposed under section 271(1)(c) where the additions on which penalty was founded were deleted in the quantum appeal. - HELD THAT: - The Tribunal noted that in the separate quantum appeal (ITA No. 2656/Del/2017 for AY 2011-12) the Tribunal directed the Assessing Officer to allow the deduction claim under section 54, thereby removing the additions which had been the foundation for issuance of the penalty show-cause notice. The Revenue did not controvert this fact. Relying on established precedent that where additions made in the assessment order and constituting the basis for levy of penalty are subsequently deleted or altered by the appellate authority, the basis for penalty proceedings ceases to exist, the Bench held that the penalty could not be sustained. The Tribunal applied the principle that a penalty under section 271(1)(c) cannot stand independently when the assessment order's additions, on which the penalty was predicated, are set aside, and accordingly set aside the penalty orders passed by the AO and confirmed by the FAA. [Paras 5, 6, 7]

Penalty orders under section 271(1)(c) imposed by the AO and confirmed by the FAA are set aside as the additions forming their foundation were deleted in the quantum proceedings.

Final Conclusion: The appeal is allowed; the penalty imposed under section 271(1)(c) and confirmed on appeal is cancelled because the Tribunal in the quantum proceedings directed allowance of the deduction under section 54, removing the foundational basis for the penalty.

Violation of principles of natural justice - ex-parte appellate order - remand for fresh adjudication - appeal allowed for statistical purpose

Violation of principles of natural justice - ex-parte appellate order - remand for fresh adjudication - Whether the order of the Commissioner of Income Tax (Appeals) is liable to be set aside and the matter remanded where the CIT(A) disposed of the appeal ex parte and did not consider the written submissions and documents filed by the assessee. - HELD THAT: - The Tribunal found that the CIT(A) had disposed of the appeal ex parte and had not considered the assessee's written submissions and supporting papers which were placed before the appellate authority. The assessee's representative explained difficulties in obtaining records from the chartered accountant and sought time to file details; those submissions and materials were not considered and the CIT(A)'s order records that no further arguments or submissions were placed. In these circumstances the Tribunal held that the principles of natural justice were not observed by the CIT(A). The Revenue representative agreed that the matter could be adjudicated on merits. Giving effect to these conclusions, the Tribunal set aside the CIT(A)'s order and remitted the matter to the file of the CIT(A) for fresh adjudication on merits in accordance with law. [Paras 2, 3]

CIT(A)'s order set aside and matter remanded to the CIT(A) for fresh adjudication; appeal allowed for statistical purpose.

Final Conclusion: The Tribunal set aside the ex parte order of the CIT(A) for failure to consider the assessee's submissions and remanded the matter to the CIT(A) for fresh adjudication on merits; the appeal is allowed for statistical purposes (Assessment Year 2014-15).

Condonation of delay for substantial justice - credit of tax deducted at source as a mode of tax payment - entitlement to TDS credit notwithstanding nil assessable income in the year - claim for refund arising from excess TDS - verification of prior years' disclosure as precondition for allowance of TDS credit - disallowance of interest consequent upon reversal of primary addition

Condonation of delay for substantial justice - Whether the delay of 337 days in filing the appeal should be condoned. - HELD THAT: - The Tribunal accepted the appellant's explanation that the Indian subsidiary had ceased business activity and the parent company was considering winding up, which limited the resources and delayed managerial decisions on litigation. The bench noted the Covid-19 pandemic surfaced by end of December 2019 and held that, in the circumstances, sufficient cause existed and substantial justice required the appeal to be heard on merits. Reliance on the principle that technical delay should not defeat adjudication on merits was applied to permit condonation. [Paras 2]

Delay condoned and appeal admitted for hearing on merits.

Credit of tax deducted at source as a mode of tax payment - entitlement to TDS credit notwithstanding nil assessable income in the year - claim for refund arising from excess TDS - Whether the assessee was entitled to credit of TDS of Rs. 18,06,910 for AY 2015-16 despite not showing corresponding income in the Profit & Loss account for that year. - HELD THAT: - The Tribunal examined Section 199 and Rule 37BA and held that TDS operates as a mode of payment of tax on behalf of the deductee and that the statutory provisions do not mandate that credit for TDS can be allowed only if corresponding income is offered to tax in the same year. The bench observed that TDS gives rise to a claim for refund even where assessable income in that year is nil. The assessee had shown corresponding receipts in earlier years (accepted by revenue) and Form 26AS recorded the TDS for the year under consideration; therefore credit by way of refund was due, subject to verification of earlier years' disclosures as directed by the FAA. [Paras 8, 10]

Assessee entitled to TDS credit/refund for AY 2015-16 subject to verification as directed; the FAA erred in making allowance of credit dependent solely on offering income in that year.

Verification of prior years' disclosure as precondition for allowance of TDS credit - Whether the AO should verify that the income corresponding to the TDS had been offered to tax in earlier years before allowing the TDS credit for AY 2015-16. - HELD THAT: - The Tribunal noted the FAA had directed the AO to verify that the appellant had disclosed the relevant receipts as revenue in earlier years and to allow the claim if satisfied. The bench recorded that the assessee had offered revenue in AY 2012-13 and AY 2013-14 (accepted by revenue) which corresponded to amounts reflected in Form 26AS, subject to a small discrepancy already upheld as an addition. Consequently the Tribunal confirmed the need for the AO to verify the earlier years' disclosures as per the FAA's directions and to allow the credit upon satisfaction. [Paras 7, 8, 10]

AO directed to verify earlier years' revenue disclosure and, if satisfied, to allow the TDS credit for AY 2015-16.

Disallowance of interest consequent upon reversal of primary addition - Whether interest under section 234D should be sustained where the primary disallowance/issue has been decided in favour of the assessee. - HELD THAT: - The Tribunal held that because the issues disallowing TDS credit were decided in favour of the assessee, there was no justification for upholding the levy of interest under section 234D. The bench therefore allowed the ground relating to interest for statistical purposes. [Paras 9]

Levy of interest under section 234D set aside as consequential to allowing the TDS credit.

Final Conclusion: Delay in filing the appeal was condoned; on merits the assessee is entitled to the TDS credit/refund of Rs. 18,06,910 for AY 2015-16, subject to verification by the AO of earlier years' disclosures as directed by the FAA; consequential interest under section 234D is set aside.

Validity of notice under section 271(1)(c) read with section 274 - Requirement of specific satisfaction/precise charge for levy of penalty under section 271(1)(c) - Penalty under section 271(1)(c) for concealment of income or furnishing inaccurate particulars of income - Objection to the notice at the earliest opportunity and its effect on maintainability of challenge to the notice

Validity of notice under section 271(1)(c) read with section 274 - Requirement of specific satisfaction/precise charge for levy of penalty under section 271(1)(c) - Penalty under section 271(1)(c) for concealment of income or furnishing inaccurate particulars of income - Whether penalty under section 271(1)(c) could be sustained where the initiating notice did not record any specific satisfaction or strike out the precise charge of concealment of income or furnishing inaccurate particulars of income. - HELD THAT: - The Tribunal examined the notice issued under section 274 read with section 271(1)(c) and found that the assessing officer had not indicated the precise charge - whether for concealment of income or for furnishing inaccurate particulars. Relying on the Madras High Court's decision in Babuji Jacob (which distinguished Sundaram Finance Ltd. and followed precedent that both limbs of section 271(1)(c) must be attracted for valid issuance of a penalty notice), the Tribunal held that where there is no basis for issuance of the notice because neither limb is attracted and the notice does not specify the charge, penalty proceedings are not sustainable. The Tribunal noted that the Madras High Court has treated the validity of such a notice as vitiated in comparable circumstances and, respectfully following that decision, concluded that the penalty levied and confirmed by the CIT(A) must be deleted. The Tribunal thereby accepted the assessee's jurisdictional objection that initiation of penalty proceedings without recording specific satisfaction as to the charge was bad in law. [Paras 6, 7]

Penalty under section 271(1)(c) deleted as the initiating notice did not record the specific charge and both limbs of section 271(1)(c) were not shown to be attracted.

Final Conclusion: Following the Madras High Court's recent authoritative view that a penalty notice under section 271(1)(c) read with section 274 is invalid where no specific satisfaction or precise charge is recorded and neither limb of the provision is attracted, the Tribunal allowed the appeal and deleted the penalty for assessment year 2011-12.

Ex parte order - opportunity of hearing - remand for fresh consideration - reopening of assessment and best judgment assessment - addition on account of unexplained investment in immovable property

Ex parte order - opportunity of hearing - remand for fresh consideration - Whether the orders of the Assessing Officer and the Commissioner of Income Tax (Appeals) were vitiated for being passed ex parte without giving the assessee adequate and reasonable opportunity of hearing, requiring restoration of the appeal to the first appellate authority. - HELD THAT: - The Tribunal observed that there was apparent ambiguity and error in the postal addresses used in departmental proceedings-likely arising from merger and change of name of the assessee-so that notices issued by the Assessing Officer were served on incorrect/ambiguous addresses. The First Appellate Authority recorded only an e mail notice issued on 28.08.2018 and concluded the appeal for non prosecution while also entering into merits, thereby manifesting procedural infirmity. In these circumstances the Tribunal found that the assessee was not given adequate and reasonable opportunity of hearing before either forum. Because the absence of hearing was material to the fairness of adjudication, the Tribunal held that the appeal must be restored to the files of the Commissioner (Appeals) for fresh disposal after giving the assessee a proper hearing; the assessee was directed to appear before the FAA on the first working day of May, 2022. [Paras 10, 11, 12, 13]

Appeal allowed on ground of denial of opportunity; appeal restored to the Commissioner of Income Tax (Appeals) for fresh decision after hearing.

Addition on account of unexplained investment in immovable property - reopening of assessment and best judgment assessment - Disposition of the addition of Rs. 1,27,50,000 made by the Assessing Officer on account of investment in immovable property and sustained by the Commissioner (Appeals). - HELD THAT: - The Tribunal noted that the Assessing Officer reopened the assessment on information that the assessee had made the stated investment and, on the assessee's non attendance and non furnishing of explanation, made the addition by issuing a best judgment assessment under the reopening. The First Appellate Authority sustained the addition both on ground of non prosecution and on merits. However, because the Tribunal has remanded the appeal for fresh adjudication on account of denial of hearing, the Tribunal did not decide the merits of the addition itself and directed that the First Appellate Authority decide the issue afresh after affording opportunity to the assessee to explain the source and nature of the investment. [Paras 6, 8, 12, 13]

Issue of addition remanded to the Commissioner of Income Tax (Appeals) for fresh consideration on merits after providing the assessee an opportunity of hearing.

Final Conclusion: The Tribunal allowed the appeal on the ground that the assessee was not afforded adequate hearing, set aside the impugned appellate order, and restored the appeal to the files of the Commissioner of Income Tax (Appeals) for fresh decision on merits (including the question of addition for unexplained investment) after giving the assessee a reasonable opportunity to be heard; direction given for appearance on the first working day of May, 2022.

Deduction under Section 80P(2)(a)(i) - exclusion under Section 80P(4) - co-operative bank - co-operative credit society - banking business (acceptance of deposits from the public) - licence from the Reserve Bank of India

Deduction under Section 80P(2)(a)(i) - exclusion under Section 80P(4) - co-operative bank - co-operative credit society - banking business (acceptance of deposits from the public) - licence from the Reserve Bank of India - Whether the assessee, a co-operative credit society, is to be treated as a co-operative bank and thereby excluded from claiming deduction under Section 80P(2)(a)(i) by reason of Section 80P(4). - HELD THAT: - The Tribunal held that Section 80P(2)(a)(i) allows deduction in respect of profits attributable to specified activities of a co-operative society, and the exclusion introduced by Section 80P(4) (w.e.f. 01.04.2007) applies only to co-operative banks other than specified agricultural/co-operative rural development banks. Applying the three-fold test adopted by higher courts, an entity qualifies as a co-operative bank for this purpose only if (i) the principal business or primary objective is banking; (ii) paid-up share capital and reserves meet the statutory threshold; and (iii) its bye laws do not permit admission of other co-operative societies as members. The Tribunal adopted a functional understanding of "banking" as acceptance of deposits from the public for lending or investment with withdrawal facilities. A co-operative credit society that accepts funds only from its members and not from the public does not satisfy the primary-business requirement and, absent recognition or licence from the Reserve Bank of India and without having undertaken the activities of a co-operative bank, cannot be equated to a co-operative bank under Section 80P(4). On the facts, the assessee operated only as a co-operative credit society providing credit to members, was not authorised by the RBI as a bank, and therefore was not hit by the exclusion in Section 80P(4); its interest income claim under Section 80P(2)(a)(i) could not be disallowed on that ground. The Tribunal accordingly set aside the findings of the Assessing Officer and the CIT(A) rejecting the deduction. [Paras 5, 6, 7]

Assessee is a co-operative credit society and not a co-operative bank for the purposes of Section 80P(4); deduction under Section 80P(2)(a)(i) on interest income allowed and disallowance vacated.

Final Conclusion: Appeal allowed: the disallowance of the claimed deduction under Section 80P(2)(a)(i) is set aside because the assessee, being a co-operative credit society not licensed or recognised as a co-operative bank by the Reserve Bank of India and not carrying on banking business for the public, is not covered by the exclusion in Section 80P(4).

Allowability of employees' provident fund and ESI contributions if paid before due date of filing return - limitations on adjustments in intimation under section 143(1) - treatment of debatable issues in processing adjustments - interpretation of section 36(1)(va) and section 43B

Limitations on adjustments in intimation under section 143(1) - treatment of debatable issues in processing adjustments - Adjustment made by CPC in intimation under section 143(1) disallowing employees' PF and ESI contributions was unsustainable and deleted. - HELD THAT: - The Tribunal held that processing adjustments under section 143(1) do not permit making debatable adjustments which require verification with relevant documents. Following this principle and the Tribunal's earlier decision in Andhra Trade Development Corporation, the addition made by the CPC in the intimation under section 143(1) in respect of employees' contribution to PF/ESI was beyond the scope of section 143(1) and therefore unsustainable. The Revenue did not demonstrate compliance with the proviso to section 143(1)(a) requiring prior intimation proposing such adjustments. Consequently the deletion of the addition by the lower appellate authority was upheld. [Paras 6, 7]

Addition made by CPC in intimation under section 143(1) deleted; appeal allowed on this ground.

Allowability of employees' provident fund and ESI contributions if paid before due date of filing return - interpretation of section 36(1)(va) and section 43B - On merits, employees' contributions to PF and ESI are allowable as deduction where paid on or before the due date for filing the return of income under section 139(1). - HELD THAT: - The Tribunal followed coordinate and higher court decisions holding that 'contribution' under the Provident Fund statutory scheme encompasses both employer and employee shares, and that the proviso to section 43B extends the time for payment up to the due date for filing the income-tax return. Where the employees' share was deposited on or before the due date of filing the return, no disallowance under section 36(1)(va) or section 43B could be made. Divergent precedents were considered, but in line with the Supreme Court principle favouring the assessee where two reasonable constructions exist, the Tribunal preferred authorities allowing deduction and applied them to the facts of this case. [Paras 8]

Employees' contributions to PF/ESI paid on or before the due date for filing return are allowable; on merits the assessee succeeds and the addition is deleted.

Final Conclusion: The Tribunal allowed the appeal of the assessee for A.Y. 2019-20, deleted the addition made by the CPC in the intimation under section 143(1) disallowing employees' PF and ESI contributions, and held on merits that such contributions are deductible if paid on or before the due date for filing the return under section 139(1).

Penalty under Section 271(1)(c) - Show-cause notice - Failure to specify which limb of Section 271(1)(c) applies (concealment v. furnishing inaccurate particulars) - Printed omnibus/standard proforma notice and non-application of mind - Quashing of penalty for defective notice

Penalty under Section 271(1)(c) - Show-cause notice - Failure to specify which limb of Section 271(1)(c) applies (concealment v. furnishing inaccurate particulars) - Printed omnibus/standard proforma notice and non-application of mind - Validity of penalty levied under Section 271(1)(c) where the show-cause notice did not specify whether proceedings were for concealment of income or for furnishing inaccurate particulars of income, and where printed/omnibus notices were used without deleting inapplicable portions. - HELD THAT: - The Tribunal found that the notice issued by the Assessing Officer did not record a clear satisfaction as to whether penalty proceedings under Section 271(1)(c) were for concealment of particulars of income or for furnishing inaccurate particulars of income (para 13). Relying on the decision of the Hon'ble Delhi High Court in PCIT v. Sahara India Life Insurance Co. Ltd., which followed Karnataka High Court precedents, the Tribunal observed that a notice failing to specify the limb of Section 271(1)(c) is bad in law (para 14). The Tribunal further relied on the Hon'ble Bombay High Court's exposition in Mohd. Farhan A. Sheikh that use of a printed omnibus notice without striking off inapplicable portions indicates non-application of mind and renders the notice invalid (para 15). Revenue did not place any material to show these decisions have been stayed or overruled; nor did it produce contrary binding authority. Applying the above authorities and principles, the Tribunal held that the Assessing Officer was not justified in levying the penalty and set aside the penalty confirmed by the Commissioner (para 16). Because the parties admitted that facts and issues in the other appeals were identical, the same conclusion was applied to those appeals as well (para 18). [Paras 13, 14, 15, 16]

The penalty levied under Section 271(1)(c) was set aside as the show-cause notice was defective for not specifying the limb of the section and for being an omnibus printed notice indicative of non-application of mind; appeals allowed.

Final Conclusion: Following precedents holding that omnibus or non-specific show-cause notices betray non-application of mind and are legally defective, the Tribunal set aside the penalties under Section 271(1)(c) in the present consolidated appeals and allowed the assessees' appeals.

Addition under section 68 as unexplained cash credit - long term capital gains claimed on sale of shares - requirement of cogent material to treat share transactions as bogus - onus on assessing officer to establish collusion or accommodation entries - adequacy of documentary evidence: contract notes, demat records and banking channel - reopening of assessment under section 147/148

Addition under section 68 as unexplained cash credit - long term capital gains claimed on sale of shares - adequacy of documentary evidence: contract notes, demat records and banking channel - requirement of cogent material to treat share transactions as bogus - onus on assessing officer to establish collusion or accommodation entries - Deletion of addition of sale proceeds of shares treated as unexplained cash credit and taxed under section 68 was sustainable. - HELD THAT: - The Assessing Officer treated the entire sale proceeds as the assessee's own unaccounted funds routed through alleged price manipulation in a penny stock and added the sale consideration to income under section 68. On the material on record, the assessee had held the shares of the listed company for a substantially long period (acquisitions from 1994 to 2007) and sold them on the recognised stock exchange; purchase was not doubted by the AO. The transactions were supported by contract notes, demat account entries and payments through banking channels. The AO did not produce any evidence showing how the assessee's unaccounted money was introduced, nor statements identifying persons or brokers through whom such accommodation entries were effected, nor any cogent material demonstrating collusion or a live link between the assessee and a scheme of bogus entries. The Tribunal applied the settled principle that suspicion, price volatility or isolated allegations of price rigging are insufficient; the revenue must bring evidence to controvert documentary records and to establish accommodation entry/connivance. Reliance was placed on precedents holding that where the assessee discharges onus by producing contract notes, demat and banking proofs, the AO must produce cogent contrary material to sustain an addition. In these circumstances the Commissioner (Appeals) was correct in deleting the addition and the Tribunal finds no infirmity in that conclusion.

Addition made by the AO under section 68 on account of sale proceeds of shares is deleted; the CIT(A)'s order deleting the addition is upheld.

Reopening of assessment under section 147/148 - requirement of cogent material to initiate reassessment - Cross objection contesting the validity of reopening the assessment under section 148/147 was allowed. - HELD THAT: - The reasons recorded for reopening relied upon investigation information identifying a different penny stock group, whereas the impugned sale related to a company not named in the reasons; the assessee also produced material showing the company was not in the list relied upon. Having found on merits that no cogent material supports the AO's allegation of bogus transactions or accommodation entries, the Tribunal accepted the assessee's contention that the reassessment was founded on assumptions and inadequate material. For these reasons the cross objection challenging the reassessment proceedings was allowed.

Cross objection filed by the assessee against reopening of assessment is allowed.

Final Conclusion: The appeal filed by the Revenue is dismissed and the assessee's cross objection is allowed: the addition under section 68 in respect of long term capital gains on sale of shares (AY 2013-14) is deleted and the reassessment proceedings are not sustained.

Revision under section 263 - Assessment under section 153A - Unabated assessment - Incriminating material in search proceedings - Scope of assessment under section 153A limited to search-related income - Order prejudicial to the interest of revenue

Revision under section 263 - Assessment under section 153A - Unabated assessment - Incriminating material in search proceedings - Scope of assessment under section 153A limited to search-related income - Validity of exercise of revisionary jurisdiction under section 263 to set aside the assessment framed under section 153A r.w.s.143(3) for failure to make an addition where the assessment was unabated and no incriminating material was found during search. - HELD THAT: - The Tribunal held that the Pr. CIT exceeded his jurisdiction under section 263. On the facts, search under section 132 did not reveal any incriminating material in respect of the assessee and the assessment for the year in question was unabated on the date of search. Reliance was placed on the view of the Bombay High Court in Continental Warehousing Corporation (Nhava Sheva) Ltd., which confines the scope of assessments under section 153A to search-related undisclosed income and recognizes that where no incriminating material is found the Assessing Officer is not warranted in making additions in respect of an unabated assessment. Applying that principle, the Tribunal found no infirmity in the Assessing Officer's decision not to make the addition of the difference between the sale-deed consideration and market value, and concluded that the Pr. CIT could not, by invoking section 263, characterise that assessment order as erroneous and prejudicial to the revenue. [Paras 9]

Order under section 263 quashed and the assessment order passed under section 153A r.w.s.143(3) dated 28.11.2016 restored.

Final Conclusion: The revisionary order of the Pr. CIT under section 263 dated 27.09.2018 was set aside and the assessment order dated 28.11.2016 under section 153A r.w.s.143(3) was restored; the appeal is allowed.

Entitlement to exemption as on date of filing Bill of Entry - refund of tax and interest collected without authority of law - - exemption for imports under Advance Authorisation

Entitlement to exemption as on date of filing Bill of Entry - exemption for imports under Advance Authorisation - Entitlement to exemption from IGST (and other duties) is determined with reference to the date of filing of the Bill of Entry and not by the date of subsequent reassessment. - HELD THAT: - The Tribunal found that the exemption under the relevant notification applied to the appellant's imports filed on 14.03.2018 and 31.03.2018, and that the lower authorities erred in denying exemption on the ground that reassessment was finalised after 31.03.2018. The determinative legal principle adopted is that entitlement to exemption is judged as on the date of filing of the Bill of Entry; a later reassessment date does not defeat an exemption available on the filing date. The Tribunal also noted the subsequent withdrawal of the pre-import condition by a later amending notification as additional context supporting the appellant's position. [Paras 15]

The exemption under the notification applied to the Bills of Entry filed on 14.03.2018 and 31.03.2018; the Commissioner (Appeals) erred in rejecting exemption because reassessment occurred after 31.03.2018.

Refund of tax and interest collected without authority of law - pre-import condition and its vires - Refund of the interest paid under compulsion on account of IGST collected without authority of law was allowable and claim must be granted. - HELD THAT: - Having held that the IGST exemption applied as at the dates of filing the Bills of Entry, the Tribunal concluded that the IGST and related levy collected and the interest demanded were without authority of law insofar as the appellant's imports were concerned. The appellant had confined its refund claim to the interest component which had been paid after insistence by Revenue; the Tribunal directed the Adjudicating Authority to grant refund of the claimed interest together with interest as per rule. The order therefore affords relief by restoring the refund claim which had been rejected by the authorities. [Paras 15, 16]

Refund of Rs. 97,032/- (being interest paid) was directed to be granted, with interest as per rule, and the impugned order set aside.

Final Conclusion: Appeal allowed. The Tribunal held that exemption under the notification applied to the Bills of Entry filed on 14.03.2018 and 31.03.2018 and directed refund of the interest paid (claimed amount) with interest as per rule within 45 days.

Penalty under Section 112 of the Customs Act - Reliance on statements recorded under Section 108 of the Customs Act - Requirement of corroborative evidence for imposition of departmental penalty - Confession of a co-accused not substantive evidence against others - Preponderance of probabilities as test for civil/departmental findings - Disjunctive construction of statutory limbs where provision uses 'or'

Penalty under Section 112 of the Customs Act - Reliance on statements recorded under Section 108 of the Customs Act - Requirement of corroborative evidence for imposition of departmental penalty - Confession of a co-accused not substantive evidence against others - Preponderance of probabilities as test for civil/departmental findings - Sustainability of penalties (Sections 112(a)/112(b)/114A/114AA) imposed on the appellants in the absence of corroborative evidence and on the basis of statements recorded under Section 108. - HELD THAT: - The Tribunal examined whether penalties imposed on the appellants could be sustained when the Revenue's case rested largely on statements recorded under Section 108/108 ibid. It held that the impugned order relied principally on inconsistent, retracted and uncorroborated statements and that no independent eyewitness or documentary evidence was produced to establish ownership, receipt or dealing in the smuggled gold. The Tribunal applied the principles that a confession or statement of a co-accused cannot be treated as substantive evidence against others without corroboration, and that departmental adjudication must satisfy the standard of preponderance of probabilities. Where statements were inconsistent, retracted, or inculpatory of others while exculpating the maker (including the case of voluntary statements by third parties not put on notice), the Tribunal found such material unreliable and inadequate to found penalties. The Tribunal further noted procedural gaps and lack of follow-up investigation on leads (for example, no enquiry into the seized letter or call records), and divergent treatment of similarly placed persons, which undermined the adjudicating authority's conclusions. On the statutory point, the Tribunal held that Section 112's limbs (a) and (b) are disjunctive and cannot be read conjunctively; penalties framed as under both (a) and (b) simultaneously were therefore unsustainable. Applying these legal principles to the material, the Tribunal found absence of the ingredients required to impose penalties under the cited provisions and allowed the appeals. [Paras 47, 48, 49, 56, 58]

Penalties imposed under Sections 112(a)/112(b)/114A/114AA set aside; appeals allowed for the appellants named in the order.

Final Conclusion: On the facts and evidence adduced, the Tribunal held that the Revenue's case rested on inconsistent and uncorroborated statements which did not satisfy the required standard of proof or the need for corroboration of confessional material; consequentially penalties imposed on the listed appellants were quashed and the appeals allowed.

Provisional release under Section 110A of the Customs Act - burden to prove licit source for notified goods under Section 123 of the Customs Act - relevance of statements recorded under Section 108 and Section 138B of the Customs Act - balance of convenience in provisional release

Provisional release under Section 110A of the Customs Act - balance of convenience in provisional release - burden to prove licit source for notified goods under Section 123 of the Customs Act - Provisional release of the seized gold bars to the appellant subject to conditions - HELD THAT: - The Tribunal examined whether the seized gold bars could be released provisionally in view of the invoice produced by the appellant and the surrounding investigative material. Noting the supplier's statement that the description on the invoice did not match markings on the recovered bars, the Tribunal observed that identity and whether the recovered bars are the same as those invoiced is a matter for adjudication and requires determination by the adjudicating authority. Applying the ratio in Its My Name Pvt. Ltd. (as approved by higher courts), and on balancing convenience (including impact on the appellant's livelihood and working capital), the Tribunal held that provisional release is justified. The Tribunal therefore directed provisional release on fulfillment of conditions: bond for full value and a bank guarantee equal to 30% of the value with auto-renewal in favour of the Revenue Authority, and ordered release within seven working days subject to these conditions. [Paras 6, 7, 12, 13, 14]

Provisional release allowed on furnishing bond for full value and bank guarantee of 30% of value with auto-renewal; Revenue to release seized gold within seven working days on compliance.

Relevance of statements recorded under Section 108 and Section 138B of the Customs Act - burden to prove licit source for notified goods under Section 123 of the Customs Act - Statements recorded during investigation under Section 108 cannot, without being admitted in adjudication proceedings under Section 138B, be the sole basis to refuse provisional release - HELD THAT: - Relying on the pronouncements reproduced from the Delhi High Court (and Its My Name reasoning), the Tribunal held that statements recorded under Section 108 acquire the requisite relevance in adjudication only after the procedural safeguards of Section 138B are satisfied (including examination as witness and opportunity for cross examination) unless the limited exceptions apply. Consequently, allegations in the show cause notice and recorded investigative statements, which have not been admitted in adjudication, cannot by themselves justify refusal of provisional release. At the same time, the Tribunal recognised that for notified goods the burden lies on the claimant to explain licit procurement under Section 123; here the appellant produced a tax invoice but identity of the recovered bars vis-a -vis the invoice remains for adjudication. [Paras 8, 11]

Investigative statements not admitted in evidence cannot alone defeat an application for provisional release; burden to prove licit source remains on appellant and is a matter for adjudication.

Final Conclusion: The appeal is allowed insofar as provisional release of the seized gold bars is directed; release is ordered on execution of a bond for full value and a bank guarantee of 30% of the value (with auto renewal), and the adjudicating authority remains free to decide confiscation or other consequential issues after due adjudication.

Violation of principles of natural justice - right to cross-examination - verbatim adoption of show cause notice in adjudication order - requirement of application of mind in adjudication - remand for de novo adjudication

Violation of principles of natural justice - right to cross-examination - verbatim adoption of show cause notice in adjudication order - requirement of application of mind in adjudication - Impugned adjudication order set aside for violation of natural justice where cross examination of persons whose statements were relied upon was denied and the adjudication order reproduced the show cause notice verbatim without addressing the appellants' defence. - HELD THAT: - The Tribunal examined the show cause notice and the adjudication order and found that the 'finding' portion of the adjudication order was verbatim to the allegations in the show cause notice and did not contain clear findings addressing the defence advanced by the appellants. Further, the adjudicating authority had refused the appellants' request for cross examination of the persons whose statements formed the basis of the charge. On these facts the Tribunal held that principles of natural justice were breached. Because the denial of cross examination and the absence of an application of mind in the adjudication were material defects affecting the fairness of the proceeding, the impugned order could not stand and required re adjudication. [Paras 6, 7]

Impugned order set aside and matter remanded for de novo adjudication after granting cross examination of the persons whose statements were relied upon and after considering the appellants' replies, with directions to record detailed findings on the defences.

Final Conclusion: Appeals allowed by way of remand: the impugned adjudication order is set aside and the matter is remitted to the adjudicating authority for fresh adjudication in accordance with the directions to permit cross examination, consider the appellants' submissions, and record detailed findings.

Representative sampling for laboratory testing - provisional release under section 110A of Customs Act, 1962 - classification dispute between chapter 21 and chapter 8 / sub-heading 0802 80 of the First Schedule to Customs Tariff Act, 1975 - role of Food Safety and Standards Authority of India in certification of fitness for human consumption - competent testing protocol and involvement of accredited laboratory - association of an independent agency in testing process

Representative sampling for laboratory testing - competent testing protocol and involvement of accredited laboratory - role of Food Safety and Standards Authority of India in certification of fitness for human consumption - association of an independent agency in testing process - Direction to draw representative samples and carry out testing in accordance with customs and FSSAI protocols and to associate an independent agency - HELD THAT: - The Tribunal accepted the appellant's submission that proper resolution of the classification and of any contention about fitness for human consumption requires testing of representative samples drawn in accordance with prescribed procedure and with appropriate involvement of the competent person from FSSAI. The Tribunal observed that prior tests and communications relied upon by the customs authorities were contested on grounds of furtive drawal and lack of representativeness and that certification as to fitness for human consumption is a matter for FSSAI and not to be presumed by customs. In the interests of facilitating credible expert opinion and preserving the condition of the goods, the Tribunal directed immediate drawal of representative samples in the presence of the importer, compliance with testing protocols under the Customs Act, 1962 and the Food Safety and Standards Act, 2006, testing at an accredited laboratory at Nagpur to avoid delay, involvement of the competent person of FSSAI, and association of M/s SGS India Ltd with the process; the testing was to be completed not later than 14th February 2022 so that reports could be filed before the next date fixed by the Tribunal. [Paras 7]

Respondent-Commissioner directed to ensure drawal of representative samples, compliance with customs and FSSAI testing protocols, testing at an accredited Nagpur laboratory with involvement of FSSAI and association of M/s SGS India Ltd, to enable filing of reports.

Provisional release under section 110A of Customs Act, 1962 - classification dispute between chapter 21 and chapter 8 / sub-heading 0802 80 of the First Schedule to Customs Tariff Act, 1975 - role of Food Safety and Standards Authority of India in certification of fitness for human consumption - Adjournment for filing of test reports and further disposal of appeal pending compliance with directed testing - HELD THAT: - The Tribunal adjourned the matter to enable the respondent-Commissioner to implement the directions for representative sampling and testing and to file the resulting reports before the Tribunal. The Tribunal recorded that certification by FSSAI is material to the question of fitness for human consumption, while classification between the competing tariff entries may depend on the outcome of appropriate tests; accordingly the matter was kept pending to permit adjudication on the basis of those expert reports. [Paras 9]

Matter adjourned to 9th March 2022 and respondent-Commissioner directed to carry out the testing directions and file compliance and reports before that date.

Final Conclusion: The Tribunal directed immediate drawal of representative samples and credible testing at an accredited Nagpur laboratory with FSSAI involvement and association of M/s SGS India Ltd, ordered compliance not later than 14th February 2022, and adjourned the appeal to 9th March 2022 for filing of the test reports and further disposal.

Scheme of Amalgamation - Sanction under Sections 230-232 of the Companies Act, 2013 - Dispensing with meetings of shareholders and creditors - Transfer of assets and liabilities pursuant to sanctioned scheme - Appointed Date - Continuance of pending proceedings against transferee - Transfer of employees - Set-off of fees on enhancement of authorized capital - Statutory compliance with Registrar, Regional Director and Official Liquidator - Protection of revenue's right to recover tax dues - Compliance with Indian Accounting Standards (Ind AS)

Scheme of Amalgamation - Sanction under Sections 230-232 of the Companies Act, 2013 - Sanction of the Scheme of Amalgamation between the petitioner transferor companies and the transferee company. - HELD THAT: - Having considered the petitions, the statutory compliances, the affidavits of service and publication, the report of the Registrar of Companies/Regional Director, the report of the Official Liquidator and the response of the Income Tax Department, and in the absence of any objection before the Tribunal, the Scheme as appended to the petition is prima facie in compliance with the requirements of the Companies Act, 2013. The Tribunal accordingly sanctions the Scheme of Amalgamation. The sanction is subject to the preservation of rights of statutory authorities to take action in accordance with law where any deficiency or violation is subsequently found. [Paras 11, 12, 13]

Scheme sanctioned by the Tribunal as prima facie compliant with statutory requirements, subject to statutory rights being preserved.

Statutory compliance with Registrar, Regional Director and Official Liquidator - Protection of revenue's right to recover tax dues - Compliance with Indian Accounting Standards (Ind AS) - Satisfaction of objections or requirements raised by statutory authorities and adequacy of scheme provisions to protect revenue and other statutory interests. - HELD THAT: - The Registrar of Companies/Regional Director's observations regarding filing and disclosures were addressed by the petitioner companies through an affidavit confirming compliance with the applicable provisions. The Official Liquidator raised no adverse observations given the scheme contemplates cancellation of intra-group shareholdings without allotment. The Income Tax Department indicated certain demands but raised no objection to the scheme provided outstanding demands and liabilities stand transferred to the transferee; the petitioners have accepted that liabilities would be transferred subject to lawful contest in appropriate fora. The Tribunal found the clauses of the scheme sufficient to protect the legitimate interests of the tax authorities and noted that their rights to recover dues by due process remain intact. The statutory auditors' certificate confirming compliance of accounting treatment with Ind AS is on record. [Paras 8, 10]

Observations of ROC/RD and Official Liquidator are satisfied; scheme's provisions and undertakings are adequate to protect revenue and statutory interests.

Transfer of assets and liabilities pursuant to sanctioned scheme - Appointed Date - Continuance of pending proceedings against transferee - Transfer of employees - Set-off of fees on enhancement of authorized capital - Dissolution of transferor companies without winding up - Consequences of the sanction: vesting of assets and liabilities, appointed date, continuance of proceedings, employees' transfer, set-off of fees and dissolution of transferor companies. - HELD THAT: - On sanction, all properties, rights and powers of the transferor companies shall, without further act or deed, vest in the transferee company and all liabilities and duties shall stand transferred to the transferee. The Scheme's appointed date is 01.04.2020. Proceedings pending by or against the transferor companies shall continue by or against the transferee company. The employees of the transferor companies shall be transferred to the transferee in terms of the Scheme. Fees paid by transferor companies on their authorized capital shall be set off against any fees payable by the transferee consequent to enhancement of its authorized capital, and the transferee is directed to file revised constitutional documents with the Registrar and make requisite payments after set-off. Upon filing of certified copy of this order with the Registrar, the transferor companies shall be dissolved without undergoing winding up and relevant files shall be consolidated. [Paras 8, 15]

Assets, liabilities, employees and proceedings stand transferred to the transferee with appointed date as specified; fees to be set off and transferor companies to be dissolved on filing of certified copy.

Dispensing with meetings of shareholders and creditors - Procedural compliance under Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Validation of First Motion dispensation of meetings and completion of second motion formalities for sanction. - HELD THAT: - The Tribunal records that in the earlier first motion order the meetings of equity shareholders, secured and unsecured creditors and certain other classes were dispensed with for reasons recorded therein. In the second motion proceedings the petitioner companies complied with directions regarding publication and service of notices, filed compliance affidavits and completed the formalities required under the Rules, leading to consideration and sanction of the Scheme. [Paras 3, 4, 6, 7]

Dispensation of meetings as ordered in first motion is maintained and statutory publication/service formalities for second motion are accepted as complied with.

Post-sanction formalities and costs - Directions regarding post-sanction filings, deposits and issuance of formal orders. - HELD THAT: - The Tribunal directed the transferee to file revised memorandum and articles with the Registrar, to make requisite payments after set-off, to deposit specified amounts in favour of the Tribunal Bar Association and the Pay & Accounts Office of the Regional Director within prescribed time, to deliver a certified copy of the order to the Registrar for registration and dissolution of the transferor companies, and to file Form CAA.7 and schedule of properties for issuance of formal orders. The Tribunal further directed supply of certified copies subject to compliance with formalities and called upon concerned regulatory authorities to act on authenticated copies. [Paras 15, 16, 17, 18]

Petitioners directed to complete post-sanction filings, deposits and formalities within stipulated timelines; formal orders to follow on compliance.

Final Conclusion: The Tribunal, having found statutory compliance and no outstanding objections warranting refusal, sanctions the Scheme of Amalgamation between the petitioner transferor companies and the transferee company, with the appointed date and consequential vesting, transfer and post-sanction directions as ordered, while preserving the rights of statutory authorities to pursue their claims in accordance with law.

Investigation under Section 213 of the Companies Act, 2013 - Tribunal's discretionary power under Section 213 - Requirement of prima facie materials to order investigation - Locus standi of a stranger/non-member to seek investigation - Limitation, delay and laches as bar to relief - Referral to Central Government and role of Inspectors vis-a -vis SFIO - Public interest threshold for ordering investigation

Investigation under Section 213 of the Companies Act, 2013 - Requirement of prima facie materials to order investigation - Public interest threshold for ordering investigation - Whether the petition disclosed sufficient circumstances to warrant an investigation into the affairs of the 1st Respondent under Section 213(b) of the Companies Act, 2013. - HELD THAT: - The Tribunal examined the averments and documents filed by the petitioner and found that the allegations of fraudulent conduct, land alienation and tax evasion were not substantiated by corroborative material. Section 213(b) requires that the Tribunal be satisfied that there are circumstances suggesting conduct amounting to intent to defraud, fraud, misfeasance or withholding of information; mere allegations, conjecture or suspicion are insufficient. An investigation may be ordered where a prima facie case affecting members' or public interest is made out, but the materials placed before the Tribunal must be such as to justify a deeper probe. On the material before it the Tribunal concluded that no such prima facie case was established and therefore the petition fails to meet the statutory threshold for directing an investigation under Section 213. [Paras 20, 21, 22, 47, 50]

Petition did not disclose prima facie circumstances warranting investigation under Section 213(b) and is liable to be dismissed.

Locus standi of a stranger/non-member to seek investigation - Investigation under Section 213 of the Companies Act, 2013 - Whether the petitioner, being a stranger who is not a member, creditor or otherwise connected to the company, had locus to invoke Section 213. - HELD THAT: - The Tribunal emphasised that statutory provisions envisage petitions by persons with a legal stake (for example members as defined under the Act) or by persons who can show they are aggrieved. A person not on the register of members or lacking any recognised proprietary or statutory interest cannot invoke the remedial machinery under the Companies Act merely as a stranger. The petitioner did not establish membership, creditor status or any other legal interest entitling him to maintain the petition. [Paras 38, 39, 61, 65]

Petitioner, being not shown to be a member, creditor or person connected to the company, has no locus to maintain the petition under the Companies Act.

Limitation, delay and laches - Doctrine of laches and equitable consideration - Whether delay and laches barred the petitioner from seeking relief by way of investigation. - HELD THAT: - Although Section 213 does not prescribe a specific limitation period, Section 433 makes the Limitation Act applicable as far as may be. The Tribunal observed that equitable doctrines of laches and undue delay apply where a person with knowledge of facts sleeps on rights; delay commences from date of knowledge. The petition related to events predating 1996 and the petitioner failed to offer any satisfactory explanation for the inordinate delay in filing the petition. In the circumstances the petition suffered from delay and laches and was not maintainable. [Paras 22, 42, 43, 66]

Petition is barred by unreasonable delay and laches and is not maintainable on that ground.

Tribunal's discretionary power under Section 213 - Referral to Central Government and role of Inspectors vis-a -vis SFIO - Scope of the Tribunal's powers under Section 213 and whether it can directly refer matters to the Serious Fraud Investigation Office (SFIO). - HELD THAT: - The Tribunal explained that it may, upon being satisfied that the statutory circumstances exist, order that the affairs of a company be investigated by inspectors appointed by the Central Government; such order would oblige the Central Government to appoint competent inspectors. Section 212 (SFIO) is a separate provision and the Tribunal cannot itself direct SFIO to investigate; rather the proper course is for the Tribunal to refer the matter to the Central Government under Section 213 if a prima facie case is made out, and the Central Government may thereafter decide whether SFIO should be engaged. The power under Section 213 is discretionary, to be exercised on honest formation of opinion and on materials placed before the Tribunal. [Paras 31, 32, 42, 43]

Tribunal cannot directly order SFIO investigation; it may, if satisfied on materials, refer the matter to the Central Government to appoint inspectors, and the Central Government may then decide on involvement of SFIO.

Final Conclusion: The Appellate Tribunal affirmed that the Company Petition under Section 213 was not maintainable: the petitioner failed to establish locus, failed to place prima facie materials warranting investigation, and the petition was barred by delay and laches; accordingly the Company Appeal is dismissed and the petition before the Tribunal is held not maintainable.

Initiation of Corporate Insolvency Resolution Process under operational creditor petition - existence of operational debt and default - absence of pre-existing dispute - admission of petition and imposition of moratorium - appointment of Interim Resolution Professional and vesting of management in IRP - public announcement and invitation of claims - operational creditor to deposit interim expenses and Registrar of Companies update

Existence of operational debt and default - absence of pre-existing dispute - initiation of Corporate Insolvency Resolution Process under operational creditor petition - The petition under the Code filed by the Operational Creditor is complete and the Corporate Debtor is in default of an operational debt with no pre-existing dispute, warranting admission of the section 9 petition. - HELD THAT: - The Adjudicating Authority considered the statutory demand in FORM 3, the engagement letter and the invoices raised by the Operational Creditor, and noted that the Corporate Debtor did not dispute the services or the outstanding dues in its reply dated 24.05.2019 but admitted willingness to settle. The Corporate Debtor also failed to file a vakalatnama or affidavit-in-reply and remained absent after undertaking to do so, resulting in the matter being heard ex parte. On these facts the petition fulfilled the requirements of law, demonstrated a debt due and payable above the statutory minimum, and disclosed no pre-existing dispute which would bar admission. [Paras 9, 11]

The section 9 petition by the Operational Creditor was held to be complete and admitted as the Corporate Debtor was in default and no pre-existing dispute existed.

Admission of petition and imposition of moratorium - appointment of Interim Resolution Professional and vesting of management in IRP - public announcement and invitation of claims - operational creditor to deposit interim expenses and Registrar of Companies update - Consequential directions upon admission: imposition of moratorium, appointment of an Interim Resolution Professional (IRP) with vesting of management, requirement for public announcement and claims invitation, deposit of interim expenses by Operational Creditor, and communication to stakeholders including the Registrar of Companies. - HELD THAT: - Following admission of the petition, the Authority directed that a moratorium operate from the date of the order until completion of CIRP or approval of a resolution plan or liquidation. An Interim Resolution Professional was appointed to perform functions under the Code, with management of the Corporate Debtor to vest in the IRP; officers were directed to furnish documents and information. The IRP was directed to cause immediate public announcement and invite claims as prescribed, and the Operational Creditor was ordered to deposit an interim sum to meet publication and claims-invitation expenses, subject to CoC approval. The Court Officer and the Operational Creditor were directed to communicate the order to relevant parties and the Registrar of Companies for updating master data and compliance reporting. [Paras 12]

Upon admission, moratorium was imposed; an IRP was appointed and management vested in the IRP; public announcement and claims invitation were ordered; interim expenses were directed to be deposited by the Operational Creditor; and communications to stakeholders including the Registrar of Companies were mandated.

Final Conclusion: The Company Petition under the Code was admitted; moratorium was declared; an Interim Resolution Professional was appointed with management vested in the IRP; public announcement, claims invitation and interim expense deposit were ordered; and directions were given for communication of the order and Registrar of Companies update.

Threshold requirement for allottees under the Insolvency and Bankruptcy Code (Amendment) Act, 2020 - maintainability of insolvency application filed by an allottee - status of the creditor as an allottee versus a standalone financial creditor - treatment of subsequent settlement/mutual agreement vis-a -vis original allotment agreement

Threshold requirement for allottees under the Insolvency and Bankruptcy Code (Amendment) Act, 2020 - maintainability of insolvency application filed by an allottee - Whether the Section 7 application filed by the applicant-allottee was maintainable after the IBC (Amendment) Act, 2020 in the absence of modification to meet the mandatory threshold for allottees. - HELD THAT: - The Tribunal examined the statutory provision introduced by the IBC (Amendment) Act, 2020 which mandates that applications by financial creditors who are allottees in a real estate project must be filed jointly by not less than one hundred such allottees or by not less than ten percent of the total number of such allottees, whichever is less. Where an application by an allottee had been filed before commencement of the Amendment and not admitted, it was required to be modified within thirty days of commencement to comply with this threshold, failing which it shall be deemed to be withdrawn. The Tribunal found that the origin of the applicant's claim was as an allottee and that the applicant failed to modify the application to meet the mandatory threshold within the prescribed or extended period. On that basis the Tribunal concluded that the application could not be allowed to proceed and is not maintainable under the statutory scheme introduced by the Amendment Act. [Paras 7, 8]

Application dismissed as not maintainable for failure to comply with the mandatory threshold for allottees under the IBC (Amendment) Act, 2020.

Status of the creditor as an allottee versus a standalone financial creditor - treatment of subsequent settlement/mutual agreement vis-a -vis original allotment agreement - Whether the subsequent mutual settlement executed between the parties converted the applicant's claim into a standalone financial debt independent of his original status as an allottee. - HELD THAT: - The Tribunal held that the mutual agreement was a consequence of the Corporate Debtor's failure to deliver possession under the original allotment agreement and therefore must be read in light of the original Space Buyer Agreement. The settlement was not treated as an ab initio standalone agreement; the origin of the claim remained the allottee relationship. The Tribunal also observed that the mutual agreement did not incorporate an independent component of interest as contended by the applicant and that the applicant had, after the Amendment, shifted his reliance to the subsequent settlement without effecting the required modification to his Section 7 application. [Paras 6, 9]

Mutual agreement is not a standalone agreement severing the applicant's original status as an allottee; the claim's origin remains in the allotment transaction and is subject to the Amendment Act's requirements.

Final Conclusion: The Tribunal dismissed the Section 7 application: the applicant's claim originated as that of an allottee, the subsequent mutual settlement did not convert it into a standalone financial creditor claim for the purpose of evading the Amendment Act threshold, and the application was not modified to meet the mandatory threshold prescribed by the IBC (Amendment) Act, 2020.

Liquidation - dissolution of the corporate debtor - liquidation estate - public announcement and invitation of claims - sale of assets to successful bidder - compliance certificate under Form H - final report and account of liquidation - distribution in order of priority under section 53 of the Code - closure of liquidation bank account

Liquidation - final report and account of liquidation - compliance certificate under Form H - distribution in order of priority under section 53 of the Code - dissolution of the corporate debtor - Affairs of the Corporate Debtor have been completely wound up and the Corporate Debtor is ordered to be dissolved. - HELD THAT: - The Tribunal examined the liquidation process and records filed by the Liquidator, including public announcements inviting claims, formation of the liquidation estate, valuation reports, sale procedure and outcome, receipt and publication of the single claim, preliminary and progress reports, the Asset Memorandum, the Account of Liquidation and the compliance certificate in prescribed Form H. The Tribunal noted that assets were realised and distributed in accordance with the order of priority mandated by the Code, the bank account opened for liquidation has been closed, and no liabilities of stakeholders remain unsatisfied. Having perused the documents annexed to the application and heard the Liquidator's counsel, the Tribunal found no impediment to dissolution and concluded that the affairs of the Corporate Debtor have been completely wound up. [Paras 11, 12, 13, 14]

The Corporate Debtor is dissolved; the Liquidator is directed to serve a copy of the order on the Registrar of Companies, Jharkhand, within fourteen days.

Final Conclusion: Application under section 54 of the Code is allowed: the Tribunal holds that the liquidation process is complete and orders dissolution of Maa Tara Ferrotech Private Limited; the Liquidator to serve the order on the Registrar of Companies, Jharkhand, and the related proceedings are disposed of in accordance with the directions.

Voluntary liquidation - Declaration of solvency - Liquidator's final report - Public announcement and claims verification - List of stakeholders (nil stakeholders) - Dissolution under Section 59(8) of the Insolvency and Bankruptcy Code, 2016 - Communication to Registrar of Companies and statutory authorities

Voluntary liquidation - Declaration of solvency - Public announcement and claims verification - List of stakeholders (nil stakeholders) - Liquidator's final report - Dissolution of the petitioner company under the voluntary liquidation route of the Code. - HELD THAT: - The Tribunal examined the liquidator's compliance with the statutory and regulatory requirements for voluntary liquidation. The board passed a resolution for voluntary liquidation and filed the declaration of solvency; the members in the EOGM approved voluntary liquidation and appointed the liquidator; the liquidator made the public announcement, fixed the last date for claims, received no claims and prepared a list of stakeholders recording 'Nil'; audited financial statements and the preliminary and final reports were filed and served on RoC and IBBI; statutory authorities (RoC, IBBI, Income Tax Department) reported no adverse information. On the material placed on record, the Tribunal found that the statutory prerequisites for dissolution under the voluntary liquidation process were satisfied and that the liquidator had completed the liquidation process and prepared and filed the final report. [Paras 8, 9, 12, 17, 18]

The petitioner company is dissolved in terms of Section 59(8) of the Insolvency & Bankruptcy Code, 2016 with effect from the date of the order.

Communication to Registrar of Companies and statutory authorities - Obligation on the liquidator to communicate the dissolution order to statutory authorities. - HELD THAT: - The Tribunal directed the liquidator to communicate a copy of the dissolution order to the Registrar of Companies where the registered office was situated within fourteen days from receipt of the certified copy of the order, and also to inform the IBBI and other statutory authorities. This direction is procedural and flows from Section 59(9) of the Code as recorded in the order. [Paras 19]

Liquidator to communicate the order to the concerned RoC within 14 days of receipt of certified copy and to notify IBBI and other statutory authorities.

Final Conclusion: The Company Petition under Section 59 of the Code is allowed: the company is dissolved with effect from the date of the order, and the liquidator is directed to communicate the order to the Registrar of Companies, IBBI and other statutory authorities within the stipulated period.

Principles of natural justice - Duty of ex-management to cooperate with the Resolution Professional - Section 19(1) and Section 19(2) of the Insolvency and Bankruptcy Code - Validity of service by email - Power of the Adjudicating Authority to issue directions including assistance of local police

Principles of natural justice - Section 19(1) and Section 19(2) of the Insolvency and Bankruptcy Code - Validity of service by email - Duty of ex-management to cooperate with the Resolution Professional - Power of the Adjudicating Authority to issue directions including assistance of local police - Whether the order in IA No. 326/2021 dated 14.07.2021 is liable to be set aside on the ground that the respondent therein was not heard before disposal. - HELD THAT: - The Tribunal evaluated Section 19(2) in light of Section 19(1) and concluded that ex-management are statutorily bound to cooperate with the Resolution Professional to enable completion of the CIRP. The record, including minutes of the CoC meetings, showed repeated undertakings by the Director to supply financial statements and other documents which were not complied with, justifying the Resolution Professional's application. The Adjudicating Authority relied upon the proof of non-cooperation and, without adjudicating contested allegations, directed handing over of records to enable the time-bound process. The Tribunal recognised that notice by email is an accepted mode of service under the IBC adjudicatory procedure; the email of 03.07.2021 was produced and the Applicant did not dispute the email address, hence there was valid service. Given the statutory duty to cooperate and the established non-compliance, disposal without a personal appearance did not amount to a breach of natural justice. The Tribunal's direction permitting the Resolution Professional to seek assistance of local police to secure documents was treated as within the powers of the Adjudicating Authority under Section 19 to ensure compliance with its directions. The application to set aside the order was therefore held to be without merit. [Paras 18, 19, 20, 22, 23]

The challenge to IA No. 326/2021 dated 14.07.2021 is dismissed; the impugned order is upheld and the application to set it aside is rejected.

Final Conclusion: The application to set aside the Tribunal's order dated 14.07.2021 in IA No. 326/2021 is dismissed. The Tribunal found valid email service, established non-cooperation by the suspended management under Section 19, and held that the Adjudicating Authority acted within its powers in directing handover of documents and permitting recourse to local police; costs were imposed on the applicant.

Avoidance of undervalued transactions - Vesting of property in corporate debtor under Section 48(a) - Relevant period / look back period for avoidable transactions - Related party transaction - Transaction not in the ordinary course of business - Requirement of independent expert valuation for undervalued transactions - Resolution Plan implementation and ancillary reliefs

Avoidance of undervalued transactions - Relevant period / look back period for avoidable transactions - Related party transaction - Transaction not in the ordinary course of business - Vesting of property in corporate debtor under Section 48(a) - Whether the transfer of the 'right to use' the trade mark 'CONCEPT Educations' constituted an avoidable undervalued transaction and whether the right should be vested in the corporate debtor under Section 48(a) of the Code. - HELD THAT: - The Tribunal found that the partnership agreement (01.02.2019), the subsequent deed (08.02.2019) transferring the 'right to use' the trade mark for 15 years, and related acts occurred within the relevant look back period preceding the insolvency commencement date (26.02.2020). The transfers took place to a party which fell within the ambit of a related party and were not shown to have been in the ordinary course of business. The explanations offered by the respondents - that only a non exclusive 'right to use' was granted and that the consideration and education services justified the arrangement - were not persuasive in light of the sequence of agreements (partnership, transfer, reconstitution and ouster of the corporate debtor) executed within a short span while the corporate debtor was defaulting. The Tribunal also accepted the Resolution Professional's justification for delay in filing the application (Covid restrictions and lack of cooperation from suspended management). In view of the Resolution Plan submitted and its objective of returning the trademark to the corporate debtor, the Tribunal held that the agreements within the look back period stand terminated, the 'right to use' is withdrawn with immediate effect and the trade mark is vested in the corporate debtor in terms of Section 48(a), with the respondent restrained from further use. [Paras 12, 13, 14, 16, 17]

The transfer was treated as avoidable for purposes of implementation of the Resolution Plan; the agreements entered into within the look back period are terminated and the 'right to use' the trade mark is withdrawn and vested in the corporate debtor under Section 48(a).

Requirement of independent expert valuation for undervalued transactions - Resolution Plan implementation and ancillary reliefs - Whether further adjudication on liabilities, non cooperation by the suspended management, and related avoidance claims should proceed immediately or be heard together with other pending applications. - HELD THAT: - The Tribunal observed that while the immediate relief of vesting the trade mark was granted to secure implementation of the Resolution Plan, other matters - including the suspended management's non cooperation, the merits of the agreements for use of the trade mark for Rs. 10 lakhs for fifteen years, and any claims under Sections 19, 43 and 66 - were not finally adjudicated in this IA. Those matters will be heard along with other avoidance applications and related IAs filed by the Resolution Professional. The Tribunal thus limited the present order to cancellation/vesting necessary for the Resolution Plan and directed that remaining issues be taken up in the connected proceedings. [Paras 18, 19]

Return of the trademark to the corporate debtor is ordered for implementation of the Resolution Plan; remaining allegations and avoidance claims, and issues of non cooperation by the suspended management, are to be heard along with other IAs under Sections 19, 43 and 66.

Final Conclusion: IA 24 of 2021 is allowed to the extent that the agreements entered into within the look back period are terminated and the 'right to use' the trade mark 'CONCEPT Educations' is withdrawn and vested in the corporate debtor under Section 48(a) to ensure implementation of the Resolution Plan; ancillary avoidance claims and issues of non cooperation will be heard with the other pending IAs.

Corporate Insolvency Resolution Process - Admission of petition under section 9 - Jurisdiction of the Adjudicating Authority under the IBC - Minimum amount threshold under section 4(1) - Non-existence of pre-existing dispute - Invalidity of proposed Interim Resolution Professional for want of authorisation - Appointment of Interim Resolution Professional - Moratorium under section 14 of the IBC

Jurisdiction of the Adjudicating Authority under the IBC - This Adjudicating Authority has jurisdiction to entertain the petition under the IBC. - HELD THAT: - The Tribunal noted that the registered office of the Corporate Debtor, as per Ministry of Corporate Affairs records, is located at the address within the territorial ambit of this Bench. Under the IBC the term "Adjudicating Authority" is the National Company Law Tribunal constituted under the Companies Act, 2013. Given the Corporate Debtor's registered office falls within this Bench's territorial jurisdiction, the Bench is competent to hear and decide the section 9 petition. The respondent's contention as to district court jurisdiction under the Companies Act was not accepted by the Tribunal in the face of the MCA record on registered office. [Paras 9]

The petition is within the jurisdiction of this Adjudicating Authority and is maintainable before this Bench.

Minimum amount threshold under section 4(1) - Admission of petition under section 9 - The operational creditor established a default and complied with the minimum amount requirement; the petition is complete and admitable under section 9. - HELD THAT: - The Tribunal recorded the total supply, payments made by the Corporate Debtor and the outstanding debt. It observed that the outstanding amount exceeded the minimum statutory threshold and that the petition complied with requirements of the IBC and the corresponding rules. On that basis the Tribunal held that the default was established and there was no reason to deny admission of the petition. [Paras 4, 11, 13]

The petition is admitted under section 9 as the default is established and statutory requirements are satisfied.

Non-existence of pre-existing dispute - No pre-existing dispute was demonstrated by the Corporate Debtor in response to the demand notice. - HELD THAT: - The Tribunal considered the Corporate Debtor's reply to the demand notice and found that it did not disclose any pre-existing dispute as required to resist a section 9 petition. In the absence of material showing a bona fide dispute existing prior to the notice, the Tribunal held that the statutory bar to admission by reason of a pre-existing dispute did not apply. [Paras 10]

The plea of a pre-existing dispute is rejected for want of supporting material; it does not prevent admission.

Invalidity of proposed Interim Resolution Professional for want of authorisation - Appointment of Interim Resolution Professional - The IRP nominated by the Operational Creditor was not authorised to act and therefore could not be appointed; the Tribunal appointed an alternate IRP. - HELD THAT: - On scrutiny of the proposed nominee's credentials, the Tribunal found that the person proposed as IRP did not hold valid authorisation for assignment and therefore could not be validly appointed as Interim Resolution Professional. Consequently, the Tribunal exercised its powers to appoint a different registered insolvency professional as Interim Resolution Professional to carry out functions under the IBC, thereby ensuring that the CIRP could commence with a duly authorised IRP. [Paras 12, 19]

The proposed IRP was rejected for want of authorisation; Mr. Balaji Prithviraj Singh was appointed as Interim Resolution Professional.

Moratorium under section 14 of the IBC - Corporate Insolvency Resolution Process - Admission of the petition triggers the moratorium and other consequences of initiation of CIRP, and public announcement and other statutory steps must follow. - HELD THAT: - Upon admission, the Tribunal declared the moratorium under section 14, specifying its scope including stay of suits, protection against alienation of assets, enforcement of security interests and recovery of property occupied by the Corporate Debtor. It also clarified limited exceptions (continuation of essential supplies and transactions notified by the Central Government) and directed that the moratorium shall remain in force until completion of the CIRP or approval of a resolution plan or liquidation. The Tribunal directed immediate public announcement as prescribed and mandated that officers and managers of the Corporate Debtor cooperate with the IRP and furnish documents, and directed deposit by the Operational Creditor to meet initial CIRP expenses. [Paras 16, 17, 18, 20, 21]

A moratorium is imposed with the statutory scope and exceptions; public announcement, cooperation with the IRP and initial expense deposit are directed to give effect to the CIRP.

Final Conclusion: The Tribunal admitted the section 9 petition and initiated the Corporate Insolvency Resolution Process against the Corporate Debtor, imposed the statutory moratorium, appointed an Interim Resolution Professional in place of the invalidly proposed nominee, directed statutory steps including public announcement and cooperation by the Corporate Debtor's management, and ordered the Operational Creditor to deposit funds for CIRP expenses; Registrar of Companies to update records.

Reversal of CENVAT credit under Rule 6(3A) of CENVAT Credit Rules, 2004 - Exception under Rule 6(5) of CENVAT Credit Rules, 2004 - Quantification of proportionate reversal - Extinguishment of reversal liability by omission to carry forward closing CENVAT credit

Reversal of CENVAT credit under Rule 6(3A) of CENVAT Credit Rules, 2004 - Exception under Rule 6(5) of CENVAT Credit Rules, 2004 - Quantification of proportionate reversal - Extinguishment of reversal liability by omission to carry forward closing CENVAT credit - Whether the appellant was liable to reverse proportionate CENVAT credit for the period October 2010 to September 2011 under Rule 6(3A), having regard to Rule 6(5) credits and the appellant's returns and reversals. - HELD THAT: - The Tribunal examined the ST-3 returns and the calculations placed by both parties. It accepted the appellant's and Revenue's tabulation that credits covered by Rule 6(5) for October 2010 to March 2011 (shown as Rs. 46,387 in the returns) were not required to be reversed for that sub-period, and that amounts reflected in the returns for April 2011 to September 2011 included actual reversals (Annexure II / Rs. 4,12,547). The adjudicating authority had miscomputed the demand by either using incorrect CENVAT figures for sub-periods or by aggregating inconsistent columns, producing differing results across paragraphs of its order. Critically, the Tribunal found on scrutiny of the returns that the appellant did not carry forward the closing CENVAT balance of Rs. 14,41,435 from the return for March 2011 into the subsequent return period; the Tribunal treated that omission as an effective reversal in the appellant's books (an extinguishment of the credit balance) rather than a continuing carried-forward credit. On that factual and accounting basis, and having reviewed the detailed calculations and submissions, the Tribunal concluded there was no further liability to reverse CENVAT credit for the disputed period. The Tribunal therefore set aside the impugned order which had confirmed a demand, interest and penalties to the extent that it maintained a liability to reverse credit. [Paras 5, 6, 7, 9, 10]

The appellant has no further liability to reverse CENVAT credit for October 2010 to September 2011; the impugned order is set aside and the appeal is allowed with consequential relief.

Final Conclusion: The Tribunal held that, on the basis of the ST-3 returns and accepted calculations, the appellant had effectively reversed the relevant CENVAT credit (including credits not carried forward) and therefore had no further liability under Rule 6(3A) for October 2010 to September 2011; the impugned order confirming demand was set aside and the appeal allowed.

Entitlement to refund of Countervailing Duty (CVD) - CENVAT credit for additional duty under section 3 of the Customs Tariff Act - Limitation for refund under section 11B of the Central Excise Act - Relevant date for computing limitation is date of final adjudication - Presumption of correctness of certificate of origin

Entitlement to refund of Countervailing Duty (CVD) - Limitation for refund under section 11B of the Central Excise Act - Relevant date for computing limitation is date of final adjudication - Appellant entitled to refund of CVD paid on 07.03.2005 as the refund claim filed on 18.03.2018 was within one year from the relevant date of the Tribunal's final order dated 04.10.2017. - HELD THAT: - The Tribunal held that while additional duty under section 3 is cenvatable, refund of unutilized CENVAT credit is governed by section 11B of the Central Excise Act which prescribes documentary proof and a one year limitation from the relevant date. Citing precedent and principle, the period for filing the refund is to be counted from the date of final adjudication/adjustment (the relevant date) and not from the provisional payment. The CVD was paid on 07.03.2005 but the Tribunal's final order was dated 04.10.2017; the refund application dated 18.03.2018 therefore fell within one year from the relevant date and complied with the limitation prescribed by section 11B. The refund claim was accordingly allowed and interest ordered from the date of payment, given the delay in final assessment by the department. [Paras 11, 12, 13]

Refund of CVD allowed; claim filed 18.03.2018 held within one year from the Tribunal's final order dated 04.10.2017 and therefore timely.

CENVAT credit for additional duty under section 3 of the Customs Tariff Act - Permissibility of taking CVD as CENVAT credit under Rule 3(vii) of CENVAT Credit Rules, 2004 - Additional duty levied under section 3 of the Customs Tariff Act (CVD) is eligible to be taken as CENVAT credit under Rule 3(vii) of the CENVAT Credit Rules, 2004. - HELD THAT: - A plain reading of Rule 3(vii) shows that the additional duty leviable under section 3 is equivalent to excise duty specified in the rule and is therefore eligible for CENVAT credit by a manufacturer or provider of output service. Sub rule (4) prescribes permissible utilizations of such CENVAT credit. The Tribunal noted and accepted the appellant's reliance on judicial decisions treating the section 3 duty as countervailing in nature and thus CENVAT able, while observing that entitlement to refund of any unutilized credit remains subject to the procedural and limitation requirements of section 11B of the Central Excise Act. [Paras 7, 8, 9, 10]

CVD under section 3 is CENVAT able under Rule 3(vii); entitlement to credit recognised subject to statutory refund procedure.

Presumption of correctness of certificate of origin - Burden to rebut certificate of origin - Department failed to rebut the certificate of origin relied upon by the appellant; absence of departmental evidence on alleged incorrectness supported grant of refund. - HELD THAT: - The show cause alleging incorrect information in the certificate of origin was issued in 2005, but the department produced no evidence to substantiate that allegation before the Tribunal. The certificate of origin and supporting documents (invoices etc.) remained on record and the presumption of correctness attached thereto was not displaced. In these circumstances, the Tribunal concluded that the appellant satisfied the conditions for refund under section 11B and was entitled to repayment of the CVD with interest. [Paras 13]

Department's allegation regarding incorrect certificate of origin not proved; refund claim succeeds on that footing.

Final Conclusion: The appeal is allowed: the impugned orders rejecting the refund are set aside and the appellant is entitled to refund of the CVD paid on 07.03.2005 with interest, the refund claim having been filed within one year from the Tribunal's final order dated 04.10.2017 and the department having failed to rebut the certificate of origin.

CENVAT credit - Input Service Distributor - Service Tax (Registration of Special Category of Persons) Rules, 2005 - registration requirement - procedural irregularity - substantial benefit cannot be denied

CENVAT credit - Input Service Distributor - Service Tax (Registration of Special Category of Persons) Rules, 2005 - procedural irregularity - substantial benefit cannot be denied - Whether CENVAT credit could be retained in respect of input service invoices/debit notes issued prior to registration of the head office as an Input Service Distributor under the 2005 Rules. - HELD THAT: - The Court held that the question is no longer res integra in view of the decision in Dashion Ltd., which recognised that the 2005 Rules do not automatically disentitle an Input Service Distributor from availing CENVAT credit merely because formal registration was not obtained; non-registration is a procedural irregularity which is curable where records are maintained and available for verification. The Department's acceptance of that view by issuing the Circular dated 16.02.2018 was noted and followed. Applying that principle to the facts, the invoices/debit notes issued by the head office during March, July and August 2006 - prior to its registration as ISD on 21.09.2006 - could not result in denial of the CENVAT credit when the irregularity was procedural and the records were available for revenue scrutiny. [Paras 8, 9, 11]

CENVAT credit claimed on invoices/debit notes issued prior to ISD registration could not be denied on account of non-registration alone; the substantial questions of law were answered in favour of the assessee and the Revenue's appeal was dismissed.

Final Conclusion: The High Court dismissed the Revenue's appeal, holding that non-registration of the Input Service Distributor under the 2005 Rules was a procedural irregularity and, following the Gujarat decision and the Departmental Circular, the CENVAT credit claimed prior to formal ISD registration could not be disallowed.

Pre-show cause notice consultation mandated by CBEC master circular - extended period of limitation under Section 11A(4) of the Central Excise Act - wilful mis-statement or suppression of facts with intent to evade duty - double taxation resulting from demand on successor where predecessor discharged duty - effect of court-sanctioned scheme of demerger on registrations, liabilities and exemptions - maintainability of writ under Article 226 against a show cause notice on jurisdictional grounds

Pre-show cause notice consultation mandated by CBEC master circular - prevention/offence exclusion to pre-SCN consultation - Validity of the show cause notice in view of absence of mandatory pre-show cause consultation - HELD THAT: - The Court held that the Board's master circular mandated pre-show cause notice consultation by the adjudicating authority in cases involving demands above the monetary threshold, and that the department's reliance on the origin of the case in DGGI intelligence did not ipso facto bring the matter within the exception for preventive/offence-related SCNs. A subsequent Board clarification made the exclusion case-specific rather than formation-specific; therefore the failure to undertake the mandatory consultation rendered the proceedings bad in law. The Court relied on binding departmental instructions and precedent treating pre-SCN consultation as mandatory unless the exception clearly applies; mere origin in investigative agency does not satisfy that exception. [Paras 83, 84, 85, 86]

Impugned show cause notice is invalid for failure to carry out the mandatory pre-show cause consultation and is quashed on this ground.

Extended period of limitation under Section 11A(4) of the Central Excise Act - wilful mis-statement or suppression of facts with intent to evade duty - Whether the extended five-year limitation under Section 11A(4) was attractable - HELD THAT: - The Court examined the show cause notice and held that the ingredients required to invoke the proviso to Section 11A(1) (as reproduced in the judgment) - that is, fraud, collusion, wilful mis-statement or suppression of facts or contravention with intent to evade duty - were not made out on the face of the notice. The department's mere recital of those words without positive material was insufficient. Where duty was in fact paid or the department had knowledge of the facts, mere procedural non-compliance did not amount to suppression or wilful mis-statement attracting the extended period. Reliance was placed on Supreme Court and tribunal jurisprudence requiring a positive act or deliberate concealment to invoke the proviso; absent such, the extended period cannot be invoked. [Paras 103, 104, 105, 106, 107]

Extended period under Section 11A(4) did not apply; the notice was therefore, insofar as it sought to rely on the extended limitation, beyond jurisdiction and unsustainable.

Double taxation resulting from demand on successor where predecessor discharged duty - effect of court-sanctioned scheme of demerger on registrations, liabilities and exemptions - Whether the department could demand excise duty from the transferee (successor) for clearances in respect of which the transferor (predecessor) had issued statutory invoices and discharged duty (or availed exemption) - HELD THAT: - The Court found on the admitted facts that the predecessor issued statutory invoices, paid applicable duty and filed ER-1 returns for the dispatches in question, and that the department had accepted those invoices/returns. The sanctioning order of the Bombay High Court and the express terms of the scheme (clauses regarding vesting of licences, treatment of compliances, and saving of concluded transactions) meant that the transferor's registrations, liabilities and exemptions stood vested in the transferee; the transferee had a bona fide belief and acted on the scheme and contemporaneous compliances. Requiring the transferee to pay duties already discharged by the transferor would amount to double taxation of the same taxable event. The Court applied established authorities holding that where a scheme, sanctioned by the court, has effect from the appointed date, taxes/credits paid in the name of the transferor are to be adjusted and cannot be used to create a fresh liability causing double recovery. [Paras 121, 122, 123, 124, 125]

The demand upon the successor for duties already paid or for supplies properly exempted as cleared by the predecessor is unsustainable; such demand would produce double taxation and is quashed.

Maintainability of writ under Article 226 against a show cause notice on jurisdictional grounds - question of limitation as jurisdictional fact - Whether the writ petition challenging the show cause notice at the stage of issuance was maintainable - HELD THAT: - The Court held that though ordinarily writs against show cause notices may not be entertained, where the challenge raises pure questions of law or jurisdictional facts (such as limitation or absence of authority to proceed), the High Court may exercise its writ jurisdiction. The present case involved admitted facts and purely legal questions (applicability of extended limitation, effect of court-sanctioned scheme, failure of mandatory pre-SCN consultation), so the petition was maintainable. The Court relied on precedent that limitation is a jurisdictional issue and that writ relief is appropriate where the notice is ex facie without jurisdiction. [Paras 63, 64, 65, 66, 72]

Writ petition was maintainable and the Court entertained the challenge to the show cause notice on jurisdictional grounds.

Final Conclusion: Both writ petitions were allowed: the High Court quashed and set aside the impugned show cause notices dated 31.12.2018 (covering December 2013 to March 2014) on grounds including failure to conduct mandatory pre-show cause consultation, absence of material to invoke the extended five year limitation under Section 11A(4), and impermissible double taxation contrary to the effect of the court-sanctioned demerger; the petitions were held maintainable under Article 226.

Admissibility of CENVAT credit under Rule 3(7) of the CENVAT Credit Rules, 2004 - operation of the formula in Rule 3(7) limiting credit for supplies from 100% EOU - treatment of education cess and secondary higher education cess in computation of CVD - availment and reversal of excess CENVAT credit - liability to pay interest on excess credit - imposition of penalty where excess credit arose from bona fide interpretation

Admissibility of CENVAT credit under Rule 3(7) of the CENVAT Credit Rules, 2004 - treatment of education cess and secondary higher education cess in computation of CVD - operation of the formula in Rule 3(7) limiting credit for supplies from 100% EOU - Credit for inputs received from a 100% EOU must be determined strictly by the formula in Rule 3(7) and does not permit addition of education cess and secondary higher education cess beyond what the formula contemplates. - HELD THAT: - The Tribunal examined the text and structure of Rule 3(7) and noted that the admissible credit in cases of supplies from units paying duty under serial number 2 of Notification No. 23/2003-C.E. is governed by the prescribed formula (50% of [X*((1+BCD/100)*(CVD/100))] or the alternate expression provided for clearances on/after 1.3.2006). The show-cause was founded on the contention that the formula uses the terms BCD and CVD as ad valorem rates and does not provide scope to separately include education cess and secondary higher education cess. The Tribunal upheld the approach that the rule's formula is the determinative mechanism for admissible credit in such cases and that the appellants could not expand the computation by treating EC and SHEC as independently includible in CVD where the formula and the facts showed otherwise. The Tribunal also observed that earlier decisions cited by the appellant did not have identical factual matrices and that in this case the supplier paid under serial number 2 of the Notification, which made the Jai Corporation line of reasoning inapplicable on facts. The adjudicatory finding is that admissibility is to be ascertained as per Rule 3(7)'s formula and not by addition of cess outside that computation. [Paras 5, 6]

Credit must be determined strictly by Rule 3(7)'s formula; EC and SHEC cannot be separately included beyond what the formula permits.

Availment and reversal of excess CENVAT credit - liability to pay interest on excess credit - The appellants had wrongfully availed excess credit which they subsequently reversed; denial of the excess credit is upheld and interest is payable on the excess. - HELD THAT: - The record showed that the appellants availed credit in excess of the entitlement under Rule 3(7); an admission to that effect was recorded and invoices bore endorsements indicating inclusive treatment of duty and cess. The appellants reversed the excess credit when pointed out by audit. The Tribunal upheld the adjudicating authority's denial of the excess credit but held that interest is nevertheless payable in accordance with settled law (relying on the Apex Court decision in Ind Swift Laboratories Ltd.), because tax/credit wrongly availed attracts interest even where excess is later reversed. [Paras 6, 7]

Denial of the excess credit is upheld; interest is payable on the excess credit.

Imposition of penalty where excess credit arose from bona fide interpretation - availment and reversal of excess CENVAT credit - Penalty imposed on the appellants is set aside because excess credit arose from a bona fide belief about the nature of the levy and the appellants promptly reversed the credit when pointed out. - HELD THAT: - The Tribunal found no evidence of mala fides or deliberate evasion; the appellants promptly reversed the excess credit upon detection and there was no record of protest. The Tribunal noted precedents and reasoning that where ineligible credit arises from confusion or bona fide belief about the composition of the levy, and where the appellant rectifies the position without obfuscation, imposition of penalty is not justified. Applying that principle to the facts, the Tribunal exercised its discretion to set aside the penalty. [Paras 7]

Penalty is set aside on the grounds of bona fide belief and immediate reversal of excess credit.

Final Conclusion: The appeal is partly allowed: the denial of excess CENVAT credit availed by the appellant is upheld with liability to pay interest, while the penalty imposed by the adjudicating authority is set aside.

Fixation of special rate of value addition - limitation for filing application for fixation of special rate (30th September requirement) - directory versus mandatory nature of procedural time-limits - effect of intervening higher court judgment on timing of remedial applications - remand for fresh consideration and speaking order

Fixation of special rate of value addition - limitation for filing application for fixation of special rate (30th September requirement) - effect of intervening higher court judgment on timing of remedial applications - remand for fresh consideration and speaking order - Application for fixation of special value addition rate for the period 2008-09 to 2017-18 (up to June 2017) remitted to the adjudicating authority for fresh consideration in light of the Gauhati High Court observations on limitation and post-judgment applications. - HELD THAT: - The Tribunal examined whether the adjudicating authority was correct in rejecting the appellant's refund application for fixation of a special rate on grounds of limitation. Relying on the reasoning of the Gauhati High Court in M/s. Jyoti Labs Ltd. Vs. UOI (paras. 17-19 reproduced), the Tribunal noted that the requirement to submit the application by 30th September was incorporated to streamline submissions but that, in the factual matrix where appellate and stay proceedings before higher courts precluded meaningful exercise of the remedy, the obligation to apply within that date could not be treated as an absolute bar to later consideration. The Tribunal observed that following the Supreme Court decision which altered the legal landscape, an occasion arose to seek fixation of the special rate and that applications made promptly thereafter deserve consideration. Consequently, the Tribunal remitted the matter to the adjudicating authority to consider the appellant's application on merits in the light of the Gauhati High Court's observations and to pass a speaking order thereon. [Paras 3, 4]

The appeal is allowed by way of remand to the adjudicating authority to decide the application for fixation of special value addition rate on merits in light of the Gauhati High Court observations and to pass a speaking order.

Final Conclusion: Appeal allowed by remand; adjudicating authority directed to reconsider the application for fixation of special value addition rate for 2008-09 to 2017-18 (up to June 2017) in light of the Gauhati High Court observations and to pass a speaking order.

Binding precedent of the Supreme Court - overruling of conflicting High Court decision - application of precedent to dismiss writ petition

Binding precedent of the Supreme Court - application of precedent to dismiss writ petition - Whether the writ petition can be maintained despite the binding decision of the Supreme Court in Union of India v. VKC Footsteps India Private Ltd. - HELD THAT: - The learned counsel for the petitioner candidly accepted that the controversy in the present petition is covered against the petitioner by the Supreme Court's decision in Union of India v. VKC Footsteps India Private Ltd., Civil Appeal No.4810 of 2021 et al., dated 13.09.2021. The petitioner's challenge therefore cannot succeed in face of the binding precedent. The Court also noted that the contrary view taken by the Gujarat High Court in VKC Footsteps India Private Ltd. has been effectively overruled by subsequent authoritative pronouncements, including the Division Bench decision of this Court in Tvl. Transtonnelstroy Afcons Joint Venture v. Union of India, as accepted by the Supreme Court. In these circumstances there is no scope for allowing the present petition and it is dismissed.

Writ petition dismissed on account of the binding Supreme Court precedent; no costs.

Final Conclusion: The petition is dismissed as the issue is governed by the binding decision of the Supreme Court in Union of India v. VKC Footsteps India Private Ltd.; the contrary High Court view has been overruled.

Interest on delayed tax under Section 42(3) of TNVAT Act, 2006 - Self-assessment obligation and payment of differential tax under Section 21 - Deemed assessment and reopening under Section 22(2) of TNVAT Act, 2006 - Time-bar/limitation for demand of interest - Binding effect of departmental circulars - Interest as compensatory and consequential

Interest on delayed tax under Section 42(3) of TNVAT Act, 2006 - Self-assessment obligation and payment of differential tax under Section 21 - Interest as compensatory and consequential - Petitioner is liable to pay interest under Section 42(3) of the TNVAT Act, 2006 on the differential purchase tax for the entire period of default. - HELD THAT: - The Court held that assessment under the TNVAT Act is driven by self-assessment and returns filed under Section 21 read with Rule 7; where an assessee fails to declare correct turnover and differential tax becomes due, interest under Section 42(3) is consequential. Section 42(1) prescribes the time for payment and Section 42(3) provides for interest at 2% per month on amounts unpaid after the specified date. The language of Section 42(3) makes interest payable for the entire period of default from the date tax was originally payable in the return until actual payment. The Court rejected the contention that payment of tax upon revision absolves the dealer from interest, observing there can be no premium for delay and that paying differential tax pursuant to revision does not waive interest liability. Reliance on decisions holding interest compensatory and entitlement to recover it was accepted by the Court. The petitioner was, however, permitted to file replies to the impugned notices on calculations within 30 days and for the respondent to pass final orders thereafter. [Paras 21, 22, 23, 24, 25]

Demand for interest under Section 42(3) is legally sustainable and the writ petitions are dismissed, subject to the petitioner being allowed to reply to the impugned notices.

Time-bar/limitation for demand of interest - Binding effect of departmental circulars - Deemed assessment and reopening under Section 22(2) of TNVAT Act, 2006 - The departmental circular relied upon by the petitioner is not binding on the Court and the challenge that the interest demand is time-barred was rejected. - HELD THAT: - The Court observed that departmental circulars are not binding on the Court and therefore the clarification of the Principal Secretary/Commissioner could not cu u the petitioner. Having considered authorities and principles that, unless a statute prescribes otherwise, limitation applicable to principal amount commonly applies to interest, the Court nonetheless found that in the facts of this case the differential tax arose from failures in self-declaration and subsequent reassessment/revision (including in the context of proviso to Section 22(2)), and the department was entitled to pursue interest for the entire default period. The Court therefore dismissed the contention that the impugned notices demanding interest were time-barred, and held that the petitioner cannot take advantage of lapses in declaration or later procedural history to avoid interest liability. [Paras 19, 24, 25]

Circular relied upon is not binding; the plea of limitation/time-bar to defeat the interest demand is rejected and the notices stand maintainable.

Final Conclusion: Writ petitions dismissed; demands of interest under Section 42(3) for AYs 2008-2009 and 2010-2011 upheld as legally sustainable (petitioner allowed 30 days to reply to calculations; respondent to pass final order thereafter).

Interest under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 - IFST/Deferral Scheme and Eligibility Certificate conditions - calculation of penal interest from date of repayment versus date of violation/default - administrative clarification/circular on interest computation - relevant remand for requantification of interest

Interest under Section 24(3) of the Tamil Nadu General Sales Tax Act, 1959 - IFST/Deferral Scheme and Eligibility Certificate conditions - calculation of penal interest from date of repayment versus date of violation/default - Liability to pay interest where repayment milestones under the Eligibility Certificate were not met and the temporal point from which interest is to be computed. - HELD THAT: - The Court found that there was delay in repayment of tax deferred under the IFST Deferral Scheme and that Clause 5.1 (repayment milestones) and Clause 8 (violation leads to withdrawal) of the Eligibility Certificate were not complied with. Consequently the petitioner is liable to pay interest as a consequence of the delayed repayment. The Court noted the administrative clarification of the Principal Secretary/Commissioner of Commercial Taxes that violations under the deferral scheme may occur at two stages: during the availing period (for which interest is to be calculated from the dates on which returns were due) and during the repayment period (where interest starts from the date of violation or default). Applying that clarification, the Court held that if the concession in the circular is extended, interest must be calculated from the actual date of each default as per the repayment schedule in the Eligibility Certificate rather than from the original date of deferral. The Court therefore directed application of the circular's principles to the facts of the case for computation of interest. [Paras 2, 19, 20, 21]

The petitioner is liable to pay interest for delayed repayment; interest is to be computed by reference to the circular's distinction between availing and repayment periods and, where applicable, from the actual date of each default.

Administrative clarification/circular on interest computation - relevant remand for requantification of interest - Remand for requantification and procedural directions for recovery of interest in accordance with the circular. - HELD THAT: - Rather than quashing the demand notices, the Court remitted the matter to the 2nd respondent to apply Paragraph No.4 of the Principal Secretary/Commissioner of Commercial Taxes' letter dated 28.02.2014 and requantify the interest payable by the petitioner in light of the distinction between availing and repayment periods. The Court instructed the 2nd respondent to carry out the requantification within three months from receipt of the order and directed the petitioner to pay the requantified amount within thirty days of receipt, failing which the impugned orders would revive automatically. The remand was therefore for computation and collection in accordance with the clarified administrative position; the merits of liability were not reopened beyond application of that clarification. [Paras 22]

Matter remanded to the 2nd respondent for requantification of interest applying the departmental clarification; requantification to be completed within three months and payment to be made within thirty days, failing which the impugned orders revive.

Final Conclusion: Writ petitions disposed by remanding the matter to the 2nd respondent to requantify the interest payable by the petitioner in accordance with the Principal Secretary/Commissioner of Commercial Taxes' clarification dated 28.02.2014; requantification to be completed within three months and payment made within thirty days, failing which the impugned orders shall revive.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttable statutory presumption and standard of proof by preponderance of probabilities - dishonour of cheque due to insufficient funds and bank memo as evidence - requirement of demand notice and notice receipt for offence under Section 138 - role of evidence to establish factual basis for drawing statutory presumption

Role of evidence to establish factual basis for drawing statutory presumption - The complainant proved that the accused issued the cheque No.445340 dated 08.06.2015 in favour of the complainant for discharge of a debt or liability. - HELD THAT: - The trial court accepted the complainant's evidence and relied on precedent that once the drawer's admission of signature or production of cheque is established the statutory presumption under Section 139 arises as to issuance for discharge of debt or liability. Having examined the record and submissions, this High Court found that the basic ingredients of the transaction, including the relationship between parties and issuance of the cheque, were not disputed and that the trial court's finding that the cheque was issued in discharge of debt was sustainable. [Paras 9, 29]

Finding that the cheque was issued in discharge of debt is affirmed and accepted by this Court.

Dishonour of cheque due to insufficient funds and bank memo as evidence - The cheque was dishonoured on presentation due to insufficiency of funds as evidenced by the bank return memo. - HELD THAT: - The trial court relied on Ext.3, the bank return memo bearing official marks and signatures, invoking the statutory presumption under Section 146 that a cheque shown dishonoured by bank records is presumed so unless disproved. The accused failed to produce evidence to rebut that presumption or to challenge the bank memo in cross-examination. This Court accepted the trial court's conclusion that dishonour due to insufficiency was proved on the record. [Paras 4, 5]

The dishonour of the cheque for insufficiency of funds is held to be proved.

Requirement of demand notice and notice receipt for offence under Section 138 - The complainant served the statutory demand notice and the accused received it but failed to make payment or arrange funds to honour the cheque. - HELD THAT: - The trial court accepted PW 1's testimony together with Exts.4, 5 and 6 (demand notice, postal receipt and AD card) which established issuance and service of the demand notice on the accused. The defence gave no credible suggestion or evidence in cross examination to show non receipt or that payment was made after receipt. This Court found no reason to upset the trial court's finding that the accused, after receipt of the notice, did not pay the amount or make arrangements to honour the cheque. [Paras 6, 7]

Demand notice was duly served and the accused failed to make payment; this element is established.

Presumption under Section 139 of the Negotiable Instruments Act - rebuttable statutory presumption and standard of proof by preponderance of probabilities - The High Court held that the lower appellate court erred in concluding that the complainant failed to establish the factual basis for invoking the presumption under Section 139 and in accepting that the accused had satisfactorily rebutted that presumption. - HELD THAT: - The appellate court had reasoned that the complainant did not prove foundational facts (such as existence of agreement or source of funds) and that those lacunae sufficed to rebut the presumption under Section 139. This Court reviewed the evidence and the legal tests: Section 139 raises a rebuttable presumption as to issuance of cheque for discharge of debt once the factual basis is established, and the accused's burden to rebut is by preponderance of probabilities and may be discharged from materials on record. Having found the foundational facts (issuance, dishonour, service of notice) proved and noting absence of credible material to rebut the presumption, this Court concluded that the appellate court's reliance to acquit was not justified. [Paras 12, 14, 18, 20, 29]

The appellate court's conclusion that the presumption under Section 139 stood rebutted was set aside; the presumption remains unrebuffed on the record.

Presumption under Section 139 of the Negotiable Instruments Act - The criminal revision is allowed, the lower appellate court's order of acquittal is set aside, and the respondent is convicted and sentenced under Section 138 of the Negotiable Instruments Act. - HELD THAT: - On reappraisal of the evidence and legal principles, this Court held that the trial court's conviction under Section 138 was sustainable. Accordingly, the High Court allowed the revision, set aside the order of acquittal passed by the lower appellate court, and imposed sentence consistent with conviction by the trial court but with modification of the fine imposed. [Paras 30, 31]

Criminal revision allowed; appellate order of acquittal set aside and respondent sentenced under Section 138.

Final Conclusion: Criminal revision allowed. The High Court set aside the lower appellate court's order of acquittal, restored the conviction under Section 138 of the Negotiable Instruments Act and sentenced the respondent to pay a fine of Rs. 3,00,000, in default simple imprisonment for one year; the petition is allowed and disposed of.

Compounding of offence under Section 138 of the Negotiable Instruments Act, 1881 - Inherent power of High Court under Section 482 Cr.P.C. to quash criminal proceedings - Offence under Section 138 is primarily compensatory and court may close proceedings on satisfaction of compensation - Power to quash proceedings without remitting to trial court where accused offers full payment and compensation - Summary trial procedure in proceedings under Chapter XVII of the Negotiable Instruments Act

Inherent power of High Court under Section 482 Cr.P.C. to quash criminal proceedings - Power to quash proceedings without remitting to trial court where accused offers full payment and compensation - High Court may exercise its inherent jurisdiction under Section 482 Cr.P.C. to quash pending complaint proceedings under Section 138 of the Negotiable Instruments Act without remitting the matter to the trial court where the accused offers to discharge the legal liability by payment. - HELD THAT: - The Court held that in the facts of these petitions, where the petitioners have offered to pay the amounts due under the dishonoured cheques and additional compensation, it is unnecessary and unjustified to remit the matter to the trial court merely to permit a formal application to be made there. Relying on the principles in Meters and Instruments Pvt. Ltd. v. Kanchan Mehta, the High Court observed that Section 482 may be invoked to prevent abuse of process and to secure ends of justice. Given the compensatory object of Section 138 proceedings and the petitioners' readiness to satisfy the cheque liabilities together with assessed compensation, the Court found no reason to keep prolonged litigation alive or to defer disposal to the trial court. The Court therefore exercised its inherent jurisdiction to quash the pending complaints subject to conditions stipulated by the High Court. [Paras 11, 14, 15]

Petitions under Section 482 Cr.P.C. allowed; proceedings in R.T.Nos.2487A/2004, 917/2004, 1046/2001, 549/2004, 550/2004 and 583/2004 quashed subject to conditions.

Compounding of offence under Section 138 of the Negotiable Instruments Act, 1881 - Offence under Section 138 is primarily compensatory and court may close proceedings on satisfaction of compensation - Summary trial procedure in proceedings under Chapter XVII of the Negotiable Instruments Act - Proceedings under Section 138, being primarily compensatory and normally to be tried summarily, can be closed by the court and the accused discharged where the complainant has been duly compensated; such closure may be ordered even in absence of complainant's consent if the court is satisfied with compensation. - HELD THAT: - The Court applied the ratio of Kanchan Mehta which recognises (i) the primarily compensatory nature of Section 138 offences, (ii) that compounding at initial or later stages is permissible subject to appropriate compensation, and (iii) that a court may, in the interests of justice, discharge the accused after satisfaction of the complainant even without the complainant's consent. The judgment notes the summary trial scheme under Chapter XVII and the availability of compensatory relief under Section 357 Cr.P.C., and concludes that where cheque amounts and assessed compensation are paid, there is no continuing justification for punitive proceedings. [Paras 9, 10, 11, 15]

Court accepted that proceedings under Section 138 can be closed on satisfaction of the cheque liability and adequate compensation; quashing is permissible even without complainant's consent if the court is satisfied.

Compounding of offence under Section 138 of the Negotiable Instruments Act, 1881 - Inherent power of High Court under Section 482 Cr.P.C. to quash criminal proceedings - Quashing of the six pending complaint cases was made conditional upon payment of the cheque amounts and additional compensation and costs as directed by the High Court. - HELD THAT: - Exercising its inherent jurisdiction, the Court imposed specific conditions to ensure the complainant is compensated and the ends of justice are met. The petitions were allowed subject to deposit before the trial court of (a) the amounts involved in the cheques, (b) compensation of Rs. 15,00,000/-, and (c) payment of costs of Rs. 5,00,000/- to the complainant, within the time fixed by the Court. On deposit and payment as directed, the petitioners shall be discharged and the complaint cases stand quashed. [Paras 15, 16]

Proceedings quashed on conditions: deposit of cheque amounts and payment of specified compensation and costs within the period ordered; petitioners to be discharged thereafter.

Final Conclusion: The High Court allowed the petitions under Section 482 Cr.P.C., quashed the six pending complaints under Section 138 of the Negotiable Instruments Act without remanding to the trial court, and directed conditional quashing subject to payment of the cheque amounts, specified compensation and costs within the time ordered.

Rebuttable presumption under Section 139 of the Negotiable Instruments Act - Existence of legally enforceable debt as prerequisite for offence under Section 138 - Burden of proof and shifting of evidential burden in cheque dishonour prosecutions - Standard of proof for rebuttal - preponderance of probabilities - Appellate interference in appeal against acquittal - perversity and very substantial and compelling reasons - Necessity of proving financial capacity and corroborative evidence to establish advance of loan

Appellate interference in appeal against acquittal - perversity and very substantial and compelling reasons - Whether the High Court should interfere with the trial court's acquittal. - HELD THAT: - The High Court considered the settled principles governing appeals against acquittal and observed that although appellate powers are as wide as in appeals against conviction, interference is cautious and justified only where the trial court's findings are perverse, ignore relevant material, consider inadmissible material, are against the weight of evidence, or otherwise suffer from irrationality. On reappraisal of the evidence and legal authorities, the Court found that the Chief Judicial Magistrate had examined the material facts, recorded specific discrepancies in the complainant's case and reached a tenable conclusion. There was no demonstration that the trial court's approach was patently illegal or that its conclusions were unsustainable such as to warrant interference. Consequently, the appeal did not disclose very substantial or compelling reasons to upset the acquittal. [Paras 20, 22, 23]

Appeal dismissed; no interference with the trial court's acquittal.

Rebuttable presumption under Section 139 of the Negotiable Instruments Act - Burden of proof and shifting of evidential burden in cheque dishonour prosecutions - Standard of proof for rebuttal - preponderance of probabilities - Whether the presumption under Section 139 was rightly rebutted and whether the burden shifted to the complainant to prove existence of legally enforceable debt. - HELD THAT: - The Court analysed the law that Section 139 creates a rebuttable presumption that a cheque was issued for discharge of a debt, but the drawer may raise a probable defence which shifts the evidential burden back to the complainant. The required standard for rebuttal is preponderance of probabilities; the accused need not prove the defence beyond reasonable doubt and may rely on materials on record. Applying these principles, the High Court accepted that the accused raised reasonable suspicion by denying the transaction and alleging the cheque was given to a third person for an investment and later misused. In view of the prima facie discrepancies and the defence raised, the burden properly shifted to the complainant to establish that the cheque discharged a pre-existing legally enforceable debt, which the complainant failed to do. [Paras 11, 12, 13, 15, 16]

Presumption under Section 139 was rebutted on the evidence and the complainant failed to prove existence of a legally enforceable debt.

Necessity of proving financial capacity and corroborative evidence to establish advance of loan - Existence of legally enforceable debt as prerequisite for offence under Section 138 - Whether the complainant proved that the alleged loan was actually advanced and corroborated by witnesses and documents. - HELD THAT: - The Court recorded specific deficiencies in the complainant's case: failure to examine the named witnesses who purportedly saw the loan transaction, failure to prove the agreement (Ex.C6) by summoning attesting witnesses, absence of books/accounts or other proof of the transaction, and inconsistencies in the complainant's statements and passbook withdrawals suggesting business transactions. Relying on precedent, the Court held that financial capacity alone does not substitute proof of actual advancement of the amount to the accused and that these lacunae constituted a probable defence for the accused. The trial court's conclusion that the complainant failed to establish that the amount was advanced was therefore sustainable. [Paras 9, 17, 19, 23]

Complainant failed to prove that the loan was advanced or corroborated; the trial court's finding of absence of legally enforceable debt is maintained.

Final Conclusion: The High Court, after reappreciation of the evidence and the applicable law on Section 139/138, found no perversity or legal infirmity in the trial court's conclusion that the complainant failed to prove a legally enforceable debt; the presumption under Section 139 was rebutted on the material, and the appeal against acquittal was dismissed.

Compounding of offence - Section 147 of the Negotiable Instruments Act - court's power to compound after conviction - acquittal on compounding - release of deposited compensation with interest - conditional suspension of sentence pending deposit

Compounding of offence - Section 147 of the Negotiable Instruments Act - court's power to compound after conviction - acquittal on compounding - Prayer for compounding the offence under Section 147 of the Negotiable Instruments Act and consequent acquittal although conviction had been recorded by courts below. - HELD THAT: - The High Court, relying upon the principle laid down in Damodar S. Prabhu v. Sayed Babalal H., held that a court exercising power under Section 147 of the Act may compound the offence even after conviction by the courts below. Where the accused had deposited the entire amount of compensation ordered by the trial court and the complainant gave express consent to compounding upon release of that amount, the court found no impediment to accept the prayer for compounding. In view of the parties' positions and the statutory power to compound post-conviction, the court quashed the convictions and sentences and acquitted the accused on compounding of the offence. [Paras 2, 3]

The offence was compounded under Section 147 of the Act; impugned judgments of conviction and sentence were quashed and the accused was acquitted.

Release of deposited compensation with interest - conditional suspension of sentence pending deposit - Release of the amount of compensation deposited with the trial court to the complainant with upto-date interest and related directions following compounding. - HELD THAT: - The court recorded that the accused had deposited the entire compensation amount as directed earlier and that the accused had no objection to its release. The complainant also consented to compounding provided the compensation was released to him. Consequential to acceptance of the compounding plea, the court directed the learned Judicial Magistrate First Class, Kangra to release the entire deposited amount, with upto-date interest, by remitting it into the complainant's savings account upon furnishing account details within one week. Earlier conditional suspension of sentence, effected on deposit, remained effective and bail bonds, if any, were discharged. [Paras 4, 5]

The deposited compensation is to be released to the complainant with upto-date interest and remitted to his bank account; bail bonds discharged.

Final Conclusion: The criminal revision was allowed by compounding the offence under Section 147 of the Negotiable Instruments Act after deposit of the awarded compensation and with the complainant's consent; convictions and sentences recorded by the courts below were quashed and set aside, the accused was acquitted, the deposited compensation with upto-date interest was directed to be released to the complainant, and bail bonds, if any, were discharged.

Cognizance under Section 138 of the Negotiable Instruments Act - vicarious liability under Section 141 of the Negotiable Instruments Act - effect of civil injunction on criminal prosecution - scope of High Court's power under Section 482 Cr.P.C. to quash criminal proceedings - inadmissibility of adjudicating disputed factual issues at the quashing stage

Cognizance under Section 138 of the Negotiable Instruments Act - scope of High Court's power under Section 482 Cr.P.C. to quash criminal proceedings - Validity of the impugned order taking cognizance under Section 138 N.I. Act and issuance of process against the petitioners - HELD THAT: - The High Court examined the chronology of cheque presentation, dishonour, service of notices and filing of the complaint and found that the statutory timeline under the N.I. Act had been followed by the complainant. The court held that where the complaint discloses prima facie the ingredients of the offence and cognizance has been taken by the trial court, the High Court under Section 482 Cr.P.C. should not ordinarily quash the proceedings. The Court declined to re-appreciate disputed factual matters at this stage, noting precedents that quashing is an exception and that detailed fact-finding is the province of the trial court. [Paras 15, 16, 19, 21]

Impugned order taking cognizance and issuing summons is not liable to be quashed; petitions dismissed on this ground.

Vicarious liability under Section 141 of the Negotiable Instruments Act - Whether the directors (including Smt. Sangeeta Kejriwal) were prima facie amenable to vicarious liability under Section 141 as alleged in the complaint - HELD THAT: - Applying the principle that only persons who were in charge of and responsible for the conduct of the company's business at the relevant time can be made vicariously liable, the Court found that the complaint contains specific averments that the director participated in the business transactions, settlement of accounts and conspired with the other accused. The Court held that these averments satisfy the requirement for alleging charge under Section 141 at the stage of taking cognizance and that mere designation alone is not required to be presumed; where specific averments exist they render the accused prima facie liable to be tried. [Paras 12, 13, 14]

Complaint sufficiently avers that the directors were in charge of and responsible for the business at the relevant time; vicarious liability issue not a ground for quashing at this stage.

Effect of civil injunction on criminal prosecution - inadmissibility of adjudicating disputed factual issues at the quashing stage - Whether the injunction obtained in a civil suit restrained the respondent from instituting the criminal complaint or barred the criminal proceedings - HELD THAT: - The Court considered Section 41 of the Specific Relief Act and relevant precedents, and concluded that injunctions cannot be granted to restrain institution or prosecution of criminal proceedings in the circumstances relied upon by the petitioners. The chronology showed cheque presentation and follow-up steps preceding the civil injunction; the existence or service of the injunction was disputed by the respondent. Given the disputed facts and established law that High Courts should not probe into such disputes while considering quashing petitions, the injunction did not operate to preclude the criminal complaint or the trial court from taking cognizance. [Paras 16, 17, 18, 19]

The civil injunction did not bar the respondent from instituting the criminal complaint; the injunction is not a ground for quashing the NI proceedings.

Scope of High Court's power under Section 482 Cr.P.C. to quash criminal proceedings - inadmissibility of adjudicating disputed factual issues at the quashing stage - Whether the High Court should re-examine disputed factual allegations and evidence when considering petitions under Section 482 Cr.P.C. - HELD THAT: - Relying on authoritative decisions, the Court reiterated that the High Court exercising inherent jurisdiction under Section 482 Cr.P.C. must not embark upon detailed appreciation of disputed facts after cognizance has been taken by the trial court. Quashing is an exceptional remedy; where the complaint prima facie discloses offence and material averments exist, the trial court should be permitted to proceed and resolve factual controversies. The High Court therefore refrained from re-assessing contested factual claims between the parties. [Paras 16, 19, 20]

High Court will not adjudicate disputed factual issues at the quashing stage; Section 482 jurisdiction did not warrant interference here.

Final Conclusion: All petitions under Section 482 Cr.P.C. are dismissed; the impugned order taking cognizance under Section 138 N.I. Act is upheld and the criminal proceedings shall continue before the learned Chief Judicial Magistrate, Tinsukia. Parties to bear their own costs; any earlier stays are vacated.

Exemption of intelligence and security organisations under Section 24 of the RTI Act - Human rights exception to Section 24 - right to promotion as a facet of human rights - Withholding third party promotion proposals under confidentiality and third party exemption

Exemption of intelligence and security organisations under Section 24 of the RTI Act - Whether the Appellant (an organisation specified in the Second Schedule) is excluded from the RTI Act and, if so, the extent of that exclusion. - HELD THAT: - The Court held that the Appellant is an intelligence and security organisation listed in the Second Schedule and therefore falls within the exclusion contained in Section 24(1) of the RTI Act. The exclusion operates subject to the provisos which permit disclosure only in relation to allegations of corruption and violations of human rights. Accordingly, the Appellant cannot be compelled to disclose information under the RTI Act except insofar as the information sought falls within those specified exceptions. [Paras 12, 14]

The Appellant is exempt from the RTI Act under Section 24(1) except where the information relates to allegations of corruption or human rights violations.

Human rights exception to Section 24 - right to promotion as a facet of human rights - Whether the information sought by the respondent falls within the 'human rights' exception to Section 24 and whether denial of that information amounts to a human rights violation. - HELD THAT: - The Court reasoned that 'human rights' must not be given a narrow or pedantic meaning and encompasses rights relating to life, liberty, equality and dignity enforceable in courts. Employees' legitimate expectation of promotion and the ability to agitate service grievances are aspects of those rights. The RTI Act is a tool to secure access to information that enables enforcement of such rights. In the facts of this case, non supply of the seniority lists and related records would impede respondent No.2 from asserting her right to promotion; therefore, the information sought falls within the human rights exception to the exclusion in Section 24 and is not barred from disclosure. [Paras 17, 18, 19, 20, 24]

The requested seniority and related service information fall within the 'human rights' exception to Section 24 and must be furnished to enable enforcement of the right to promotion.

Withholding third party promotion proposals under confidentiality and third party exemption - Whether proposals for promotion of third parties and related DPC material can be disclosed to the applicant. - HELD THAT: - While upholding disclosure of the seniority lists and records necessary for the applicant to pursue her promotion rights, the Court held that information relating to promotion proposals of third parties is exempt from disclosure. The Court applied the relevant exemptions governing third party/confidential material and directed that such third party promotion proposals not be furnished to the respondent, while permitting disclosure of the applicant's own promotion proposals, DPC minutes insofar as they concern the applicant, and promotion/rejection orders affecting her. [Paras 25, 26]

Information pertaining to proposals for promotion of third parties shall not be disclosed; the Appellant must, however, provide the applicant's seniority lists and records related to her own promotion and DPC proceedings as directed.

Final Conclusion: Appeal disposed. The Appellant, being an organisation specified in the Second Schedule, is generally excluded from the RTI Act under Section 24(1) except for information relating to allegations of corruption or human rights violations; the Court found that the applicant's inability to obtain seniority and related records would amount to a human rights violation and directed disclosure of the seniority lists and records concerning the applicant's promotion/DPC, while excluding disclosure of promotion proposals of third parties.