TaxTMI Updates e-Newsletter
Apr 25,2022

Summary order. Notice issued on the Special Leave Petition and on the prayer for interim relief, petition listed for hearing on 8 October 2021; Dasti permitted.

Quashing of show cause notice - summons issued under Section 70 of the Central Goods and Services Tax Act - inquiry and seizure in exercise of powers under Section 67 of the CGST Act - scope of writ jurisdiction under Article 226 of the Constitution - requirement to avail statutory remedy and file response to show-cause notice - judicial restraint in pre-adjudication interference with statutory inquiry - decision on application for supply of documents to be made by the competent authority

Quashing of show cause notice - judicial restraint in pre-adjudication interference - requirement to avail statutory remedy and file response to show-cause notice - Validity of the show cause notice dated 28th/29th December, 2020 and the summonses including the summons dated 15th February, 2022 and whether they should be quashed in writ jurisdiction. - HELD THAT: - The Court found that the question whether the Petitioner's activities attract service tax under the Finance Act, 1994 or are exigible to GST under the CGST Act is a disputed question of fact that must be adjudicated by the statutory authorities vested with the relevant powers. The Court relied on precedent establishing that notices to show cause issued within authority of law are not to be quashed in writ jurisdiction except where issued palpably without legal authority, and therefore the petitioner is required to file its response and raise objections before the authority. Given the existence of an ongoing statutory inquiry, seizure and summons issued in aid of that inquiry, the Court declined to exercise its equitable jurisdiction to pre-empt investigation or adjudication by the competent authority and refused to interfere at this stage. [Paras 11, 12, 14]

The writ petition seeking quashing of the show cause notice and summons is dismissed; the Court will not interfere with the statutory inquiry at this stage and the Petitioner must participate and file its response before the authority.

Decision on application for supply of documents to be made by the competent authority - scope of writ jurisdiction under Article 226 of the Constitution - Fate of the Petitioner's application dated 12.12.2021 for supply of documents said to be pending before the authority. - HELD THAT: - The Court observed that the application for supply of documents lies for disposal by the appropriate authority and that the authority is competent to decide the same in accordance with law. Rather than directing production or adjudicating the entitlement to documents itself, the Court left the application to be considered and decided by the statutory authority in the course of the ongoing inquiry. [Paras 13, 14]

The application for supply of documents is not granted by the Court; it remains to be decided by the competent authority in accordance with law and the Petitioner may pursue the matter before that authority.

Final Conclusion: Writ petition dismissed without interference in the ongoing statutory inquiry; Petitioner permitted to participate in the proceedings and required to file response to the show-cause notice, while the application for supply of documents is left to be decided by the competent authority in accordance with law.

Negative blocking of input tax credit - Rule 86A of CGST/UPGST Rules, 2017 - lien on electronic credit ledger - not allow debit - Rule 86A is not a recovery provision - remedy under Rule 86A(2) - filing of objections - obligatory decision by authorized officer on objections

Negative blocking of input tax credit - lien on electronic credit ledger - not allow debit - Validity of blocking (resulting in a negative/debit entry) of the electronic credit ledger under Rule 86A when no positive credit exists on the date of the order. - HELD THAT: - The Court followed the coordinate bench decision in R.M. Dairy Products LLP which interprets Rule 86A as creating a lien and not requiring that positive credit must exist on the date the order is passed. The words 'input tax available' and the phrase 'has been' are to be read as referring back to credits that were availed (allegedly fraudulently or without eligibility) and not necessarily to the balance on the date of invocation. Consequently, where no positive balance exists at the time of the order, Rule 86A may nevertheless create a lien up to the specified limit and that lien will attach to future credit entries as and when they arise; the debit entries in the electronic credit ledger are to be read accordingly. The petitioner's contention that 'negative blocking' is impermissible was rejected in view of this reasoning. [Paras 7]

The challenge to the blocking leading to a negative/debit entry is rejected; Rule 86A may create a lien attaching to future credits and such blocking is not impermissible per se.

Rule 86A is not a recovery provision - Whether the power under Rule 86A amounts to a recovery or appropriation of input tax credit. - HELD THAT: - Relying on the coordinate bench reasoning, the Court held that Rule 86A does not operate as a recovery provision and does not transfer title of any amount to the revenue. The Rule enables an authorized officer to 'not allow debit' of an amount equivalent to the credit sought to be secured; that creates a lien to secure revenue's interest but is distinct from appropriation or reversal/adjustment of credit against demands. The operation and consequences of 'not allow debit' were elucidated as different from appropriation. [Paras 7]

Rule 86A is a protective lien-creating provision and not a provision for recovery or appropriation of input tax credit.

Remedy under Rule 86A(2) - filing of objections - obligatory decision by authorized officer on objections - Availability and exercise of the remedy under Rule 86A(2) for an assessee aggrieved by blocking of input tax credit. - HELD THAT: - The Court noted and applied the guidance in a later coordinate-bench order (M.M. Traders) that an assessee aggrieved by an action under Rule 86A(1) must first file objections before the authorized officer under Rule 86A(2). The authority is under obligation to decide such objections in a time-bound, speaking and reasoned order after affording reasonable opportunity of hearing. The present petitioner had filed objections which remained pending; the Court therefore dismissed the writ while directing that any pending objection be disposed of expeditiously and in accordance with law. [Paras 8, 9, 11]

The statutory remedy under Rule 86A(2) is available and must be availed; the authorized officer is required to decide objections expeditiously by a reasoned order after hearing.

Final Conclusion: Writ petition dismissed. The petitioner's challenge to the blocking of credit under Rule 86A is rejected in view of coordinate-bench precedents; the petitioner must pursue objections under Rule 86A(2), and if any objection is pending the respondent no.2 is directed to decide it expeditiously and in accordance with law by a speaking and reasoned order.

Detention under Section 129 of the CGST/UPGST Act - breach of principles of natural justice - failure to afford reasonable opportunity of hearing before passing confiscation/detention order - invoice and e-Way Bill compliance in inter-state/ intra-state movement of goods - remand for fresh consideration after considering the assessee's reply

Detention under Section 129 of the CGST/UPGST Act - breach of principles of natural justice - failure to afford reasonable opportunity of hearing before passing confiscation/detention order - Validity of the order of detention/penalty under Section 129 passed without affording the petitioner an opportunity of hearing and without considering the petitioner's reply. - HELD THAT: - The Court found that the detention order and the subsequent order under Section 129 were issued in the name of the driver and that notices were created against a temporary ID for the driver, with the petitioner unable to access the portal credentials. The petitioner filed a written reply on 16.03.2022 explaining the absence of a legible GSTIN on the invoice and produced a clear copy at the time of interception. The respondent proceeded to pass the impugned order reiterating the grounds of detention and recording that no reply had been submitted, without affording a personal hearing or considering the submitted reply. The Court held that, insofar as the respondents admitted that the invoice was issued by the petitioner, the failure to afford any opportunity of hearing and to consider the petitioner's response amounted to a breach of the principles of natural justice and rendered the impugned order unsustainable.

Impugned order dated 14.03.2022 under Section 129 of the CGST/UPGST Act quashed for breach of natural justice.

Remand for fresh consideration after considering the assessee's reply - invoice and e-Way Bill compliance in inter-state/ intra-state movement of goods - Post-quash procedure to be followed: whether the matter should be remitted for fresh adjudication after affording opportunity to the petitioner. - HELD THAT: - The Court did not decide the merits of the dispute regarding valuation, authenticity of the invoice, or e-Way Bill requirements. Instead, having quashed the impugned order for procedural infirmity, the Court remitted the matter to the adjudicating authority (respondent no.3) to decide afresh in accordance with law. The authority is directed to consider the petitioner's reply dated 16.03.2022 and any material placed before it, afford a reasonable opportunity of hearing, and pass a fresh order. The Court expressly disclaimed any opinion on the substantive merits while prescribing a two-week timeline from receipt of certified copies to enable re-adjudication after hearing.

Matter remitted to respondent no.3 for fresh decision after considering the petitioner's reply and after affording reasonable opportunity of hearing; fresh order to be passed within two weeks of production of certified copy and reply.

Final Conclusion: Impugned order of detention/penalty dated 14.03.2022 under Section 129 set aside for breach of natural justice; matter remitted to the adjudicating authority to decide afresh after considering the petitioner's reply and affording a reasonable hearing, with no expression of opinion on the merits.

Anticipatory bail - custodial arrest - economic offence - conditions of bail - verification of computerized copy of order - expeditious completion of investigation - liberty to seek cancellation of bail on default

Anticipatory bail - custodial arrest - conditions of bail - Applicant Rahul Agarwal granted ad interim anticipatory bail in connection with prosecution under the Central Goods and Services Tax Act, 2017. - HELD THAT: - The High Court, after hearing parties and perusing the record, recorded that the sole allegation relates to production of an allegedly fraudulent sale invoice (ITC) and that final adjudication on that question has yet to be made. Noting that no coercive process had been issued and that the applicant had cooperated with proceedings, the Court concluded that custodial arrest was not necessary at the interim stage. Consequently, ad interim anticipatory bail was directed to be made effective on furnishing a personal bond with two sureties, subject to conditions protecting investigation and witnesses, restraint on foreign travel (with passport deposit if any), and requirements for producing a computer generated copy of this order before the police. The Court preserved the power of the Investigating Officer or Government Advocate to move for cancellation of bail in the event of default of these conditions.

Ad interim anticipatory bail granted to the applicant on furnishing bond and compliance with stated conditions; liberty reserved to move for cancellation on default.

Verification of computerized copy of order - expeditious completion of investigation - liberty to seek cancellation of bail on default - Procedural directions concerning verification of the order, investigation and future proceedings were issued. - HELD THAT: - The Court directed that the applicant must file a computer generated copy of the order downloaded from the High Court website and that the concerned police/Court/Authority shall verify the authenticity of that copy from the official website and declare such verification in writing. The Investigating Officer was directed to conclude any pending investigation expeditiously and independently, uninfluenced by observations in the bail order. The Court also directed compliance steps for production of the order before the Senior Superintendent of Police/Station House Officer to ensure observance of the bail conditions. A short counter affidavit had been filed and the opposite party was ordered to file a complete counter affidavit within four weeks, with liberty to the applicant to file rejoinder thereafter.

Directions issued for verification of the computerized order, expeditious and independent conclusion of investigation, and filing of complete counter affidavit within a stipulated period.

Final Conclusion: The High Court granted ad interim anticipatory bail to the applicant subject to specified conditions, directed procedural steps for verification of the order and expeditious completion of investigation, and permitted the prosecution to seek cancellation of bail in case of default.

Vague show cause notice - Cancellation of GST registration - Requirement of material particulars in a show cause notice - Right to effective opportunity of hearing - Fresh show cause notice containing necessary particulars where fraud is alleged

Vague show cause notice - Requirement of material particulars in a show cause notice - Right to effective opportunity of hearing - Impugned show cause notice dated 02.11.2021 calling for cancellation of GST registration was without necessary material particulars and liable to be quashed. - HELD THAT: - The show cause notice merely recited that "on the basis of information" the registration appeared liable to be cancelled and referred to a "negative spot visit report" without furnishing any particulars or details enabling a meaningful response. In the absence of specific information or factual particulars, the notice was vague and did not afford the registered person an effective opportunity to reply or to prepare for a hearing. The Court therefore concluded that the impugned notice was untenable and required quashing. [Paras 4]

Impugned show cause notice quashed and set aside.

Cancellation of GST registration - Fresh show cause notice containing necessary particulars where fraud is alleged - Authority permitted to initiate fresh proceedings if satisfied that registration was obtained by fraud, but any fresh show cause notice must be in physical form and contain all necessary information and details. - HELD THAT: - The Court left open the respondent's right to proceed if there is a bona fide belief that the registration was obtained by fraud or by misstatement or suppression of facts. However, any such fresh show cause notice must be issued in physical form and expressly state the particulars and materials on which the allegation is based so that the registered person can effectively respond. This directs the Authority to furnish adequate particulars rather than rely on vague references. [Paras 5]

Authority may issue a fresh, particularised show cause notice in physical form if fraud or suppression is alleged; otherwise the previous notice remains quashed.

Final Conclusion: Writ petition allowed; the impugned show cause notice of 02.11.2021 cancelling GST registration is quashed and set aside. The respondents may, if satisfied of fraud or suppression, issue a fresh physical show cause notice containing necessary particulars to enable effective response.

IGST refund - duty drawback - export entitlements - mandamus under Article 226 - deficiency memo and system error rectification

IGST refund - duty drawback - export entitlements - deficiency memo and system error rectification - mandamus under Article 226 - Direction to sanction the petitioner's IGST refund claim along with duty drawback and other export entitlements after respondent's delay in adjudication. - HELD THAT: - The writ-applicant had its refund application for IGST, duty drawback and other export entitlements delayed. A deficiency memo from the Customs office recorded system errors SB005 and SB006 and advised rectification. The petitioner responded to and rectified the stated system errors and averred that no further deficiency was communicated and the portal showed no outstanding error. Having regard to the narrow scope of the grievance - that no further action was required from the petitioner and yet the refund remained unsanctioned - the High Court exercised its powers under Article 226 to compel the administrative respondent to complete adjudication. In the circumstances, and as there was nothing more to be done by the petitioner, the Court directed respondent no.5 to sanction the refund claim along with duty drawback and other export entitlements within two weeks.

Writ disposed directing respondent no.5 to sanction the IGST refund claim along with duty drawback and other export entitlements within two weeks.

Final Conclusion: The petition is disposed by issuing a mandamus directing respondent no.5 to sanction the petitioner's IGST refund and allied export entitlements within two weeks; no further action was required from the petitioner after rectification of the system errors.

Appealable order - availability of statutory appeal to Tribunal - judicial review discretionary refusal where alternative remedy exists - penalty under Section 11AC(1)(c) of the Central Excise Act, 1944

Appealable order - availability of statutory appeal to Tribunal - judicial review discretionary refusal where alternative remedy exists - Whether the writ petition should be entertained despite the existence of a statutory appellate remedy before the Tribunal. - HELD THAT: - The Court held that the order passed by the Principal Commissioner, CGST & Central Excise is an appealable order and that a statutory remedy of appeal to the Tribunal is available to the writ applicants. In view of the existence of this alternative and adequate remedy, the High Court declined to exercise its discretionary jurisdiction to entertain the writ petition and rejected the petition. The Court expressly left open the right of the applicants to raise all contentions available in law, including those presented before the High Court, by availing the statutory appeal remedy. [Paras 4, 5, 6]

Writ petition refused and rejected on the ground that an appeal to the Tribunal is the appropriate remedy; applicants may pursue all available contentions in that statutory appeal.

Final Conclusion: The High Court declined to entertain the writ petition because the impugned order was appealable and a statutory remedy before the Tribunal was available; the petition is rejected, with liberty to pursue the statutory appeal and raise all legal grounds therein.

Concessional rate under Notification No 41/2017 IT (Rate) - movement directly to the Port, ICD, Airport or Land Customs Station or to a registered warehouse - registered warehouse and aggregation of supplies - conditional notifications - strict compliance

Concessional rate under Notification No 41/2017 IT (Rate) - movement directly to the Port, ICD, Airport or Land Customs Station or to a registered warehouse - entitlement of the supplier to 0.1% concessional IGST under Notification No 41/2017 IT (Rate) where goods were shipped to a third party (sugar factory) instead of moving directly from supplier's premises to port or to a registered warehouse - HELD THAT: - The Appellate Authority examined condition (vi) of Notification No 41/2017 which mandates that the merchant exporter shall move the goods from the place of the registered supplier either (a) directly to the port/ICD/airport/LCS from where the goods are to be exported or (b) directly to a registered warehouse from where the goods shall move to the port. The factual position is that the HDPE drums were invoiced to the merchant exporter but shipped on the merchant exporter's directions to the sugar factory premises for filling and onward export. Clause (a) is therefore not satisfied. Clause (b) requires movement to a registered warehouse; the authority found that the movement in this case was not to such a warehouse and consequently clause (b) is also not satisfied. On this basis the supplier cannot be accorded the concessional rate since the statutory condition as worded is not complied with. [Paras 11]

Condition (vi) of Notification No 41/2017 is not fulfilled and the supplier is not entitled to the concessional rate.

Registered warehouse and aggregation of supplies - aggregation under condition (vii) - whether the sugar factory premises could be treated as a 'registered warehouse' and whether the activity constituted 'aggregation' under condition (vii) of the Notification - HELD THAT: - The authority analysed the ordinary meaning and statutory context of 'warehouse' and observed that a factory (place of manufacture) and a warehouse (place of storage) have distinct commercial purposes. The drums were supplied for immediate use in packing ethyl alcohol and belonged to the sugar factory once brought there; the sugar factory was not performing warehousing services for the merchant exporter nor issuing warehouse acknowledgements as contemplated by the Notification and allied statutory provisions. Further, condition (vii) contemplates aggregation of supplies from multiple suppliers into a registered warehouse with specified acknowledgements (condition (viii)). The supplier's role in sending drums for use in packing does not amount to the merchant exporter aggregating separate suppliers' goods in a registered warehouse. Accordingly the sugar factory premises could not be treated as a registered warehouse and condition (vii) was not engaged. [Paras 12, 13]

The sugar factory is not a 'registered warehouse' for purposes of the Notification and the facts do not amount to aggregation under condition (vii).

Conditional notifications - strict compliance - whether a liberal or purposive interpretation should be adopted to extend the concessional benefit despite non-fulfilment of the explicit conditions of the Notification - HELD THAT: - While recognising that earlier Supreme Court decisions permit liberal construction of beneficial provisions in appropriate cases, the authority distinguished those precedents and emphasised that Notification No 41/2017 is a conditional concessional-rate notification. It held that where conditions are clear and unambiguous, benefit under a conditional notification cannot be allowed in the absence of strict compliance. There was no ambiguity in the wording of the impugned Notification and therefore the court refused to expand the definitions or read in words to treat the sugar factory as a registered warehouse or to treat the movement as complying with condition (vi). The authority also noted availability of alternative commercial options for merchant exporters (export under LUT and refund mechanisms) and CBIC guidance that the concessional rate is optional. [Paras 14, 15]

No liberal construction can be used to confer the concessional rate where the Notification's conditions are not satisfied; strict compliance is required.

Final Conclusion: The appeal is dismissed. The Advance Ruling No. KAR ADRG 54/2021 dated 29-10-2021 is upheld; the supplier is not eligible for the 0.1% concessional rate under Notification No 41/2017 IT (Rate) as the statutory conditions, in particular movement to port or to a registered warehouse, were not satisfied.

Determination of liability to pay tax - determination of place of supply - import of service - advance ruling - applicant as recipient versus supplier - binding effect of advance ruling on applicant and jurisdictional officer

Determination of liability to pay tax - determination of place of supply - import of service - Scope of clause (e) of Section 97(2): whether determination of tax liability includes determination of place of supply where the place of supply is material to taxability. - HELD THAT: - The Authority held that although 'place of supply' is not expressly enumerated in Section 97(2), clause (e) (determination of liability to pay tax) covers a determination of place of supply where the tax liability depends on that determination. Import of service requires the supplier to be located outside India, the recipient to be located in India and the place of supply to be in India; hence, in cases where taxability hinges on place of supply, the advance ruling forum has jurisdiction to decide the place of supply as part of determining tax liability. This legal principle was articulated while examining the statutory scheme governing import of services and place of supply rules under the IGST Act (Section 13) and applied to the general scope of advance rulings. (See para 9-10.) [Paras 9, 10]

Where determination of tax liability necessarily involves ascertaining the place of supply, clause (e) of Section 97(2) covers such determination and the Authority has jurisdiction to rule on place of supply in that context.

Advance ruling - applicant as recipient versus supplier - binding effect of advance ruling on applicant and jurisdictional officer - Whether an applicant who is only the recipient of a supply can seek an advance ruling on the classification, place of supply or taxability of a supply performed by a third party supplier. - HELD THAT: - The Authority concluded that the advance ruling mechanism applies to matters 'in relation to the supply ... being undertaken or proposed to be undertaken by the applicant.' Persons eligible to apply are those registered or desirous of registration and who are suppliers in relation to the transaction in question. An advance ruling is binding only on the applicant and the concerned jurisdictional officer (Section 103). Consequently, the Authority is not competent to determine the classification or place of supply of a service provided by a third party supplier on an application made by the recipient; where the applicant is not the supplier, the Authority lacks jurisdiction to decide the supplier's transaction. Applying this principle to the present case, because the appellant is the recipient (not the supplier) seeking a ruling on the supplier's service, the Advance Ruling Authority correctly refrained from deciding the classification/place of supply and the impugned order of non-maintainability is upheld for want of jurisdiction. (See paras 11-14, 15.) [Paras 11, 12, 13, 14, 15]

An applicant who is merely the recipient of a supply is not entitled to obtain an advance ruling on the classification, place of supply or tax liability of a supply made by a third party supplier; the Authority therefore lacked jurisdiction to decide the appellant's claimed questions and correctly dismissed the application.

Final Conclusion: The impugned Advance Ruling order denying a ruling for lack of jurisdiction is upheld; the appeal is dismissed. The Appellate Authority clarifies that clause (e) of Section 97(2) can encompass place of supply where tax liability depends on it, but an advance ruling cannot be sought by a recipient to determine classification/place of supply of a third party supplier.

Advance ruling - Maintenability under section 95(a) - Supplier versus recipient - Binding effect of advance ruling - Applicability of concessional rate for composite supply of works contract for low-cost houses in an affordable housing project

Advance ruling - Maintenability under section 95(a) - Supplier versus recipient - Binding effect of advance ruling - Application for advance ruling filed by the recipient of services (developer) in respect of works contract services received from contractors is not maintainable under section 95(a) of the CGST Act. - HELD THAT: - The Authority examined section 95(a) and observed that the statutory language contemplates that the applicant seeking an advance ruling must be the supplier in relation to the supply of goods or services or both; the words 'in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant' indicate that the applicant is to be the supplier (see discussion at paras 5.2-5.5). Further, reliance was placed on section 103(1) which provides that an advance ruling is binding only on the applicant who sought it and on the concerned/jurisdictional officer in respect of that applicant; consequently a ruling by a recipient would not bind the supplier and would defeat the practical utility of the provision. The Authority noted the applicant conceded that the questions raised were not capable of being covered under section 95(a) and therefore declined to answer the substantive questions on applicability of the concessional rate (paras 5.4-5.6). The Authority accordingly refrained from adjudicating the rate questions on merits because the application itself was not maintainable. [Paras 5]

Application not maintainable; questions on applicability of the concessional rate to works contract services received and to construction of common amenities are not answered.

Final Conclusion: The Authority held that an advance ruling application must be filed by the supplier (not the recipient); since the applicant was the recipient of works contract services the application was not maintainable under section 95(a) and the substantive questions were not answered.

Supply - supply of goods - supply of services - transfer of business as a going concern - permanent transfer or disposal of business assets treated as supply even if without consideration - supply between related or distinct persons treated as supply even if without consideration - transfer of input tax credit on change in constitution of a registered person - distinct persons (multiple registrations treated as distinct persons)

Supply - permanent transfer or disposal of business assets treated as supply even if without consideration - supply between related or distinct persons treated as supply even if without consideration - Transaction of transfer of business by way of merger of two GST registrations/distinct persons constitutes a supply under the GST law. - HELD THAT: - The Authority examined the statutory meaning of 'supply' and the activities specified in Schedule I. Having regard to Section 7(1) read with Schedule I (Sr. No.1 and Sr. No.2), transactions contemplated between related or distinct persons and permanent transfer/disposal of business assets where ITC has been availed are rendered 'supply' even if made without consideration. Applying these provisions to the facts, the merger/transfer between the Nagpur and Akola registrations constitutes a 'supply'. The Authority therefore answered this question in the affirmative. [Paras 5]

Answered in the affirmative; the impugned merger/transfer constitutes a supply.

Supply of goods - transfer of business as a going concern - distinct persons (multiple registrations treated as distinct persons) - Whether the transaction is a supply of goods or supply of services - held to be supply of goods. - HELD THAT: - The Authority considered Schedule II (Part 4(c)) which exempts goods forming part of business assets from being deemed supplied where the business is transferred as a going concern to another person. Relying on Section 18(3) as guidance and on the concept of 'distinct persons' under Section 25(4), the Authority held that a change in the constitution of the business is essential to qualify as a transfer to 'another person'. Here the two registrations operate under the same PAN and are only 'distinct persons' for GST purposes; there is no change in constitution to an independent third person. Consequently Para 4(c) of Schedule II does not apply and the transaction must be treated as a supply of goods (assets) between distinct persons rather than as a transfer as a going concern or as a supply of services. The Authority also followed the reasoning of the Appellate Authority for Advance Ruling, Andhra Pradesh in the Shilpa Medicare matter to support this conclusion. [Paras 5]

Answered in the affirmative as supply of goods; not a supply of services.

Transfer of input tax credit on change in constitution of a registered person - Rule 41 - procedure for transfer of ITC via Form ITC-02 - distinct persons (multiple registrations treated as distinct persons) - Whether Nagpur registration can file Form GST ITC-02 and transfer unutilized credit balance to Akola registration - held not permissible. - HELD THAT: - Section 18(3) permits transfer of unutilized ITC upon a change in constitution of a registered person on account of sale, merger, demerger, amalgamation or transfer of business to another person in the manner prescribed. The Authority concluded that because the two units are distinct persons sharing the same PAN and there is no transfer to a different constitutional person, the factual matrix does not satisfy the requirement of change in constitution contemplated by Section 18(3). Following its conclusion that the transaction is a supply of goods between distinct persons (and not a transfer as a going concern), the Authority held that the conditions for transfer of ITC under Section 18(3) and Rule 41 are not met and therefore Nagpur registration cannot transfer the unutilized credit to Akola registration via Form ITC-02 in the circumstances of this case. [Paras 5]

Answered in the negative; ITC-02 transfer from Nagpur to Akola is not allowed on these facts.

Transfer of business as a going concern - Whether merger between distinct persons would qualify as transfer of business as a going concern - not answered under Section 97 and therefore not decided. - HELD THAT: - The question was held to fall outside the scope of Section 97 and was not taken up for adjudication under the application. Accordingly the Authority did not decide this question and recorded that it was not answered. [Paras 5]

Not answered under Section 97; question not taken up for discussion.

Form ITC-02A / admission of application - Whether Akola registration's credit can be claimed in Nagpur registration via Form ITC-02A (question 7) - not admitted and therefore not answered. - HELD THAT: - At admission the Authority recorded that question No.7 was not filed by the unit that would be the supplier in that scenario and accordingly the question was not admitted for consideration. The Authority therefore did not answer question No.7. [Paras 4, 5]

Not admitted at the time of admission and therefore not answered.

Final Conclusion: The Authority ruled that the proposed intra company merger/transfer between the two GST registrations constitutes a 'supply' and, on the facts before it (units under the same PAN treated as distinct persons), is a supply of goods rather than a supply of services; consequently transfer of unutilized ITC from Nagpur to Akola via Form ITC-02 is not permitted. Two questions (transfer as a going concern and the Form ITC-02A query) were not answered - one as outside the scope of Section 97 and the other as not admitted.

Immunity from penalty under Section 270AA - Prohibition on immunity where penalty proceedings are for misreporting - Conditions for grant of immunity: payment of tax demand, non-institution of appeal, initiation of penalty for under-reporting - Revenue's delay in passing statutory order cannot prejudice assessee - Distinction between under-reporting and misreporting for applicability of Section 270AA

Immunity from penalty under Section 270AA - Conditions for grant of immunity: payment of tax demand, non-institution of appeal, initiation of penalty for under-reporting - Petitioner entitled to immunity under Section 270AA for AY 2017-18 where statutory conditions are satisfied. - HELD THAT: - The Court held that the statutory scheme for grant of immunity under Section 270AA is triggered by satisfaction of three conditions: payment of the tax demand, non-institution of appeal and initiation of penalty on account of under-reporting of income. Applying these principles to the facts, the Court found that the petitioner had paid the tax on the additions, had not filed any appeal and that the penalty proceedings were initiated on account of under-reporting. On this basis the petitioner acquired a right to be granted immunity and the impugned penalty order under Section 270A was set aside with a direction to grant immunity under Section 270AA. [Paras 6, 8, 9, 10]

Grant of immunity under Section 270AA directed and impugned order under Section 270A set aside.

Revenue's delay in passing statutory order cannot prejudice assessee - Delay/default by the Assessing Officer in passing an order under Section 270AA within the statutory time-limit does not prejudice the assessee and cannot defeat statutory immunity. - HELD THAT: - The Court observed that settled law precludes causing prejudice to an assessee on account of delay or default by the Revenue. Consequently, the fact that no order was passed by the Assessing Officer within the prescribed timeline could not be treated as equivalent to a denial of immunity where the statutory conditions were otherwise satisfied. The petitioner therefore could not be denied the benefit of Section 270AA for that reason. [Paras 7]

Revenue's inaction or delay in passing the Section 270AA order does not bar grant of immunity to the petitioner.

Prohibition on immunity where penalty proceedings are for misreporting - Distinction between under-reporting and misreporting for applicability of Section 270AA - Immunity under Section 270AA is not available where penalty/prosecution proceedings have been initiated on account of misreporting of income; immunity is available where penalty has been initiated for under-reporting. - HELD THAT: - The Court clarified that the statutory bar on applying for immunity applies only in cases where proceedings for levy of penalty have been initiated on account of alleged misreporting of income. By contrast, where penalty proceedings are on account of under-reporting of income, an assessee remains eligible to apply for and obtain immunity under Section 270AA if other conditions are met. In the present case the penalty notice showed initiation on account of under-reporting, and therefore did not disqualify the petitioner from obtaining immunity. [Paras 5, 6, 8]

Since proceedings were for under-reporting (not misreporting), petitioner was eligible for immunity under Section 270AA.

Final Conclusion: Writ petition allowed; impugned order under Section 270A set aside and respondents directed to grant immunity under Section 270AA to the petitioner for Assessment Year 2017-18.

Validity of reassessment notice and limitation - Benefit of precedent - Principle of natural justice - Remand for fresh consideration

Validity of reassessment notice and limitation - Benefit of precedent - The reassessment notice dated 31st March, 2021 (dispatched 31st March, 2021 at 11:36 PM) was issued within limitation and the petitioner is not entitled to the benefit of Mon Mohan Kohli (supra). - HELD THAT: - The Court examined the timing of dispatch of the impugned notice and recorded that the notice was dispatched on 31st March, 2021 at 11:36 PM. On that basis the Court held that the notice was within limitation and consequently the petitioner cannot claim the benefit of this Court's decision in Mon Mohan Kohli. The Court therefore refused to set aside the notice on limitation grounds and proceeded to consider other contentions. [Paras 7]

The reassessment notice was validly issued within limitation and the petitioner is not entitled to the benefit of the cited precedent.

Principle of natural justice - Remand for fresh consideration - The assessment order and demand notice were set aside for violation of natural justice, and the matter was remanded for fresh consideration to decide the objections dated 14th March, 2022. - HELD THAT: - The Court found that the detailed objections filed by the petitioner on 14th March, 2022 were not considered prior to issuance of the show cause notice-cum-draft assessment order dated 30th March, 2022. Further, the show cause notice-cum-draft order was made available on the portal at 12:42 PM on 30th March, 2022 and required a response by 23:59 PM the same day, which did not afford the petitioner adequate opportunity to reply. In view of these procedural deficiencies, the Court held there was a breach of the principles of natural justice. The impugned assessment order and demand notice dated 31st March, 2022 were therefore set aside and the file remitted to respondent no.2/NFAC to decide the objections in accordance with law; if objections are rejected, respondent no.2/NFAC may proceed further and pass appropriate orders. [Paras 8, 9]

Assessment order and demand notice set aside for breach of natural justice; matter remanded to respondent no.2/NFAC to decide the objections dated 14th March, 2022 and thereafter proceed in accordance with law.

Final Conclusion: Writ petition disposed of by setting aside the impugned assessment order and demand notice for breach of natural justice and remanding the matter to respondent no.2/NFAC for fresh consideration of the objections dated 14th March, 2022; the reassessment notice was held to have been validly issued within limitation and no comment was made on merits.

Faceless assessment - mandatory issuance of show cause notice and draft assessment order under Section 144B(1)(xvi)(b) - violation of principles of natural justice - remand to Assessing Officer for fresh consideration and reasoned order

Faceless assessment - mandatory issuance of show cause notice and draft assessment order under Section 144B(1)(xvi)(b) - violation of principles of natural justice - Omission to issue the draft assessment order and a show cause notice prior to passing the final assessment order under the Faceless Assessment Scheme and Section 144B(1)(xvi)(b) amounted to a violation of the mandatory procedure and principles of natural justice, warranting setting aside of the impugned orders and remand. - HELD THAT: - The Court held that assessments conducted by the National Faceless Assessment Centre must follow the statutory procedure prescribed under the Faceless Assessment Scheme and cannot follow a prior regime (paragraph 5). Section 144B(1)(xvi)(b) mandates that where a proposed variation would be prejudicial to the assessee, the authority must serve a notice calling upon the assessee to show cause and examine a draft assessment order before issuing a final order (paragraph 6). In the present case no draft assessment order or show cause notice was issued before the final assessment dated 19th March, 2022, resulting in denial of a reasonable opportunity of hearing and thus a breach of natural justice and the mandatory procedure (paragraph 7). The Court further observed that the existence of an appellate remedy does not bar writ jurisdiction where there is a breach of natural justice (paragraph 8). Consequently the assessment, demand and penalty orders dated 19th March, 2022 were set aside and remitted for compliance with the prescribed procedure (paragraph 9). The Court expressly refrained from commenting on the merits of the controversy and left the parties' rights and contentions open (paragraph 10). [Paras 6, 7, 8, 9, 10]

Impugned assessment, demand and penalty orders dated 19th March, 2022 set aside; matter remitted to the Assessing Officer to issue a show cause notice and draft assessment order and thereafter pass a reasoned order in accordance with law.

Final Conclusion: Writ petition allowed in part: impugned orders dated 19th March, 2022 under Sections 147, 156 and 271(1)(c) set aside for failure to comply with mandatory show cause and draft-order requirement under the Faceless Assessment Scheme; matter remitted to the Assessing Officer to issue the requisite notices and pass a reasoned order, with no adjudication on merits by the Court.

Reopening of assessment - reason to believe - change of opinion - full and true disclosure - prima facie material - judicial review under Article 226 - approval under Section 151

Reopening of assessment - reason to believe - prima facie material - full and true disclosure - judicial review under Article 226 - Validity of the notice issued under Section 148 for assessment year 2013-14 on the ground that the Assessing Officer had 'reason to believe' income had escaped assessment. - HELD THAT: - The Court reviewed the scope of judicial review at the notice stage and applied the settled principle that it must be satisfied only whether there was prima facie material on which the Department could reopen the assessment, without examining the sufficiency or correctness of that material. The reasons recorded showed a discrepancy between amounts in Form 26AS and receipts in the assessee's Profit & Loss account, and that the assessee had not produced details, ledgers, bills or vouchers to explain receipts alleged to arise under multiple TDS provisions. The Assessing Officer recorded a belief that the assessee had not made a full and true disclosure of material facts and that income had escaped assessment. Having regard to precedents cited by the Court, and on the material placed on record, the Court found there was prima facie material with a live link to the formation of the requisite belief and hence the notice under Section 148 was not invalid on its face. [Paras 16, 17, 25, 26, 35]

The notice under Section 148 and consequent reassessment proceedings were valid; there was prima facie material warranting reopening.

Change of opinion - approval under Section 151 - reopening of assessment - Whether the reassessment was vitiated by being a mere 'change of opinion' or by improper acceptance of an audit objection without application of mind by the approving authority. - HELD THAT: - The Court examined the record and held that the Assessing Officer had not previously formed an opinion on the specific matters relied upon for reopening (non disclosure of certain receipts, non production of vouchers, non disclosure of reimbursements). Consequently the reopening did not amount to a mere change of opinion. The Court also considered the role of the Commissioner under the CBDT instructions and Section 151, observed that the approving authority had recorded satisfaction after perusal of the reasons and annexed material, and found no indication of non application of mind in the approval order. Earlier communications from the Assessing Officer to the CIT did not amount to final rejection of the audit objection such that the Commissioner could not re evaluate; the power to accept or reject rests with the Commissioner as per the instructions. [Paras 21, 22, 31, 34]

Reopening was not based on mere change of opinion and the approval under Section 151 was not shown to be vitiated; objection on these grounds was rejected.

Final Conclusion: The writ petition challenging the notice dated 26-03-2021 under Section 148 and consequential proceedings for assessment year 2013-14 is dismissed as the Court found prima facie material to support reopening and no illegality in the approval for issuance of the notice.

Re-opening of assessment under Section 148 - Change of opinion - Third-party verification under Section 133(6) - Deemed consideration of replies despite silent assessment order

Re-opening of assessment under Section 148 - Change of opinion - Third-party verification under Section 133(6) - Deemed consideration of replies despite silent assessment order - Validity of notice under Section 148 for reopening assessment for A.Y. 2014-2015 where loans to the assessee were enquired into during original assessment and third-party confirmations were obtained under Section 133(6). - HELD THAT: - The Court found that the questions regarding unsecured loans were specifically raised during the original assessment proceedings, the assessee furnished explanations and documents, and notices under Section 133(6) were issued to third-party lenders who replied and provided confirmations and supporting material. The assessing officer, having obtained and accepted those responses during assessment, was to be taken as satisfied with the genuineness and credit worthiness of the creditors even though the assessment order itself was silent on the matter. The reasons recorded for reopening proceeded merely from a change of opinion by the assessing officer that the source of the loans remained unexplained. Re-opening under Section 148 is impermissible where the very issue was earlier raised, responded to, and effectively decided in the assessment proceedings by reason of the replies and third-party confirmations obtained under Section 133(6). The impugned notice dated 31st March, 2021 was therefore founded on an impermissible change of opinion and could not be sustained. The Court also noted an inconsistent and incorrect statement in the Revenue's affidavit regarding non-explanation of credit worthiness, which was not disputed by the Revenue's pleadings and was contradicted by admission of issuance of Section 133(6) notices and receipt of confirmations during assessment. (See paras. 1-6, 7-9.) [Paras 4, 5, 7, 8, 9]

Impugned notice under Section 148 dated 31st March, 2021 and the order disposing objections dated 22nd December, 2021 are set aside.

Final Conclusion: The High Court quashed the reopening notice for A.Y. 2014-2015 and the order dismissing objections, holding that the reopening was based on a mere change of opinion since the loan transactions were examined during assessment and third-party confirmations under Section 133(6) had been obtained and accepted.

Power of revision under Section 263 of the Income-tax Act - show cause notice not mandatory for revision but opportunity of hearing is required - principles of natural justice - requirement to afford opportunity of hearing prior to final decision - limits on CIT travelling beyond matters put to the assessee where no opportunity was afforded

Power of revision under Section 263 of the Income-tax Act - show cause notice not mandatory for revision but opportunity of hearing is required - limits on CIT travelling beyond matters put to the assessee where no opportunity was afforded - principles of natural justice - Validity of the ITAT's finding that the CIT could not base the revision under Section 263 on payments under Section 40A(2)(b) which were not raised in the show-cause notice and in respect of which the assessee was not afforded an opportunity to be heard. - HELD THAT: - The Court examined the settled principle that Section 263 does not mandate issuance of a formal show-cause notice before initiating revision, but does require that the assessee be afforded an opportunity of being heard prior to the finalisation of the revisional order. In the present case the Tribunal found as a fact that the CIT had neither raised the issue of payments to persons specified under Section 40A(2)(b) in the notice nor confronted the assessee with that ground, and that no file notings or evidence of an opportunity being given were produced before the Tribunal. While Amitabh Bachchan (supra) recognises that a revisional inquiry may proceed without a formal show-cause notice, it equally emphasises that denial of a real opportunity to contest the facts renders the revisional order vulnerable on natural justice grounds. Applying that principle, the High Court held that the Tribunal's factual conclusion - that the impugned ground was not put to the assessee and therefore could not validly form the basis of revision - was not perverse and did not involve any incorrect application of law. As the revenue accepted the Tribunal's findings on the other two grounds, and no material was shown to demonstrate that the assessee had been given the requisite opportunity on the Section 40A(2)(b) point, the Court found no substantial question of law to entertain.

The ITAT's factual finding that the CIT could not base revision on the unraised Section 40A(2)(b) payment issue (for which the assessee had not been afforded an opportunity) is upheld and the appeal is dismissed.

Final Conclusion: The appeal is dismissed; the Tribunal's factual finding that the revisional order could not be sustained on the unraised Section 40A(2)(b) ground (in the absence of any opportunity afforded to the assessee) is affirmed and no substantial question of law is made out.

Reopening under Section 148/147 of the Income Tax Act, 1961 - reopening after scrutiny assessment under Section 143(3) - change of opinion - failure to fully and truly disclose - new tangible material - escapement of income

Reopening under Section 148/147 of the Income Tax Act, 1961 - change of opinion - failure to fully and truly disclose - new tangible material - Legality and validity of the notice dated 20.03.2021 issued to reopen assessment for A.Y.2014-15. - HELD THAT: - The Court examined whether the Assessing Officer had jurisdiction to reopen the assessment for A.Y.2014-15 by issuing a notice under Section 148 read with Section 147, having regard to whether any new tangible material came to the revenue's knowledge after completion of scrutiny assessment under Section 143(3) or whether there was any omission or failure by the assessee to fully and truly disclose material facts. The Court noted that the grounds relied upon for reopening (claimed business losses and unabsorbed depreciation adjustments, capital receipt shown as SHIS, TDS deduction issues and depreciation on goodwill arising from amalgamation) were all aspects that were before the Assessing Officer at the time of the original scrutiny assessment. The revenue's counsel fairly conceded that these aspects were available to the Assessing Officer when the assessment was framed. No fresh tangible material was shown to have emerged post-assessment and there was no finding of omission or nondisclosure by the assessee. In that factual matrix the Court held that the reopening amounted to a mere change of opinion by the Assessing Officer, which is not a permissible ground for reopening an assessment. Consequently, the impugned notice was unsustainable and required quashing.

Impugned notice under Section 148/147 for A.Y.2014-15 quashed as reopening was based on mere change of opinion and no new tangible material or failure to fully and truly disclose was shown.

Final Conclusion: Writ petition allowed; notice dated 20.03.2021 reopening assessment for A.Y.2014-15 quashed and set aside.

Unexplained cash credit under Section 68 of the Income tax Act - proof of identity, creditworthiness and genuineness of investors - survey based stock inventory and additions under Section 69 of the Income tax Act - reconciliation of survey inventory with books of account - acceptance of documentary evidence in limited scrutiny

Unexplained cash credit under Section 68 of the Income tax Act - proof of identity, creditworthiness and genuineness of investors - acceptance of documentary evidence in limited scrutiny - Deletion of addition made by the AO treating share application money with share premium as unexplained cash credit. - HELD THAT: - The assessee had repaid outstanding loans to parties (directors or their relatives) and subsequently received the same amounts as share application money with premium. The assessee produced documents - PANs, ITRs, bank statements and confirmations - and the parties replied to notices issued under section 133(6), records of which formed part of the assessment file. The Tribunal accepted the view of the CIT(A) that identity, creditworthiness and genuineness of the transactions were satisfactorily established and that the mere temporal sequence of repayment and fresh receipt, arising from the assessee following a particular mode of converting loans into equity, did not by itself render the transactions suspect. The Tribunal found the CIT(A)'s order to be reasoned and speaking and upheld the deletion of the addition under the principles governing unexplained cash credits when documentary evidence and corroboration from the investors are on record. [Paras 7]

Order of the CIT(A) deleting the addition under Section 68 is upheld; revenue ground no. 1 is dismissed.

Survey based stock inventory and additions under Section 69 of the Income tax Act - reconciliation of survey inventory with books of account - Correct quantum of addition on account of excess stock found during survey and alleged discrepancies between survey inventory and books of account. - HELD THAT: - The survey inventory recorded a higher stock value than the books, leading the AO to add the full difference. The assessee furnished a detailed reconciliation pointing to multiple errors in the survey inventory (omission of certain finished goods, double counting, wrong rates, and sales not recorded in books). The CIT(A) reduced the addition but maintained a substantially larger figure than the assessee's unreconciled amount. On review, the Tribunal examined the reconciliation and noted that authorities below did not demonstrate why the assessee's reconciliation was incorrect. Given the apparent infirmities in the survey exercise and the assessee's specific reconciliations, the Tribunal accepted that only a limited difference remained unreconciled. Consequently the Tribunal modified the CIT(A)'s order and directed that only the unreconciled amount be added to income. [Paras 13]

AO directed to restrict the addition to the amount remaining unreconciled (Rs. 3,81,063.09) and the revenue ground no. 2 is dismissed; assessee's appeal partly allowed.

Final Conclusion: The Tribunal upholds the CIT(A)'s deletion of the addition under Section 68 (share application money with premium) and, on the stock discrepancy arising from survey, reduces the addition to the specific unreconciled amount, dismissing the revenue's appeals and partly allowing the assessee's appeal.

Revisionary jurisdiction under section 263 - prejudicial to the interests of the revenue - principles of natural justice - duty to make independent inquiry before exercising revisionary power - inadmissibility of change of opinion based solely on audit objection - requirement of tangible/material evidence before invoking revision

Revisionary jurisdiction under section 263 - principles of natural justice - duty to make independent inquiry before exercising revisionary power - inadmissibility of change of opinion based solely on audit objection - Validity of the PCIT's revisionary order under section 263 quashing the assessment on the ground that the AO failed to verify genuineness of unsecured loan and whether the revision was vitiated by failure to afford opportunity and by relying solely on an audit objection. - HELD THAT: - The Tribunal examined s.263 and held that its exercise requires satisfaction of two conditions: the assessing officer's order must be erroneous and prejudicial to revenue; additionally the Commissioner must "make or cause to be made such inquiry as he deems necessary" and "after giving the assessee an opportunity of being heard." An assumption of jurisdiction based solely on an audit objection, without independent tangible material or independent inquiry by the revisional authority, or influenced by another agency, is impermissible. The assessment proceedings had raised explicit queries on the unsecured loan; the assessee furnished documentary evidence and the AO conducted enquiries, considered the material and framed the assessment without invoking section 68 additions. The PCIT's revisional order was founded on the audit objection and concluded the assessment to be erroneous without independent findings or fresh tangible evidence and without adequate compliance by way of inquiry or fair hearing. Citing the principle that a revisional authority must not be swayed by undisclosed material or the dictation of another authority, the Tribunal found the revisionary exercise to be a mere change of opinion unsupported by independent, concrete material and therefore contrary to the mandates of natural justice and the statutory riders to s.263. Reliance on the cited precedents was applied to conclude that mere audit information cannot alone render an assessment order erroneous and prejudicial so as to sustain revision under s.263. [Paras 8, 9, 10, 11, 13]

Revisionary order passed by the PCIT under section 263 quashing the assessment is quashed for want of independent inquiry and for being influenced by the audit objection; the assessment order is left undisturbed.

Final Conclusion: The appeal is allowed: the revisionary order under section 263 is quashed for failure to comply with the requirement of independent inquiry and principles of natural justice, and the assessment remains undisturbed; remaining grounds were not adjudicated as they became academic.

Assessee-in-default under section 201(1) and 201(1A) - failure to deduct TDS under section 195 on payment to non-resident - second proviso to Section 40(a)(i) - curative and retrospective application - first proviso to Section 201(1) - relief where payee files return, declares income and pays tax - interest liability under proviso to Section 201(1A) till date of filing of return by payee

Second proviso to Section 40(a)(i) - curative and retrospective application - first proviso to Section 201(1) - relief where payee files return, declares income and pays tax - Entitlement of the assessee to invoke the second proviso to Section 40(a)(i) read with the first proviso to Section 201(1) despite those amendments being inserted w.e.f. 01.04.2020. - HELD THAT: - The Tribunal found as an undisputed fact that the assessee failed to deduct tax at source on purchase of immovable property from a non-resident and was treated as an assessee-in-default under section 201(1)/201(1A). The assessee relied upon the second proviso to Section 40(a)(i) (inserted by the Finance Act, 2019 w.e.f. 01.04.2020) read with the first proviso to Section 201(1), which provides relief to a deductor where the payee furnishes return, takes the sum into account and pays the tax along with an accountant's certificate. The Tribunal examined the legislative memorandum which explains that the amendment was intended to remove an anomaly by extending to payments to non-residents the relief earlier available only for residents, and by aligning interest levy under section 201(1A) to the date of filing of the return by the payee. Observing that the amendment to Section 40(a)(i) is pari materia with the earlier amendment to Section 40(a)(ia), and that similar amendments were held to have retrospective effect by High Courts in the context of Section 40(a)(ia) (Pr. CIT Vs. Perfect Circle India (P.) Ltd. and CIT Vs. Ansal Land Mark Township (P) Ltd.), the Tribunal concluded that the second proviso to Section 40(a)(i) is curative in nature and has retrospective application. In consequence, the assessee may seek the protection of the proviso upon furnishing requisite proof that the non-resident payee filed return, included the income and paid tax, and produced the accountant's certificate; the AO is directed to verify such documents and compute interest as per law. [Paras 6, 7, 8]

Amendment embodied in the second proviso to Section 40(a)(i) is curative and retrospective; assessee entitled to invoke the proviso subject to furnishing prescribed documents and verification by the AO, who shall compute interest as applicable.

Final Conclusion: Impugned order set aside and matter remitted for verification: assessee to furnish documents in support of claim under the second proviso to Section 40(a)(i) read with the proviso to Section 201(1); AO to compute interest in accordance with law. Appeal partly allowed.

Revision under Section 263: erroneous and prejudicial to the interests of revenue - verification of sources of cash deposits - acceptance of unsecured loans after enquiry - plausible view / debatable conclusion - classification of sale proceeds as business income or capital gains

Verification of sources of cash deposits - mistaken assumption of facts - revision under Section 263: erroneous and prejudicial to the interests of revenue - Whether revision under Section 263 was sustainable for alleged non-verification of sources of cash deposits. - HELD THAT: - The Tribunal found on the record that the Assessing Officer had examined cash flow statements and that the Principal Commissioner of Income Tax (PCIT) had misread withdrawals as deposits. The PCIT therefore initiated revision proceedings on an incorrect factual basis. Because the revision was founded on a mistaken assumption of fact (treating withdrawals as deposits) and the Assessing Officer had in fact made enquiries, the condition for exercise of power under Section 263 was not satisfied insofar as the source of cash deposits is concerned. [Paras 11, 12]

Revision under Section 263 quashed insofar as it related to alleged non-verification of sources of cash deposits.

Acceptance of unsecured loans after enquiry - plausible view / debatable conclusion - revision under Section 263: erroneous and prejudicial to the interests of revenue - Whether revision under Section 263 was maintainable in respect of genuineness of unsecured loan creditors. - HELD THAT: - The Assessing Officer had sought details of loan creditors during assessment, received ledger extracts and confirmations and, after considering the material, chose not to make additions. The Tribunal held that silence in the assessment order does not mean lack of enquiry where queries were raised and answered; once the Assessing Officer considered the material and accepted the explanations, he adopted a plausible view. Section 263 can be invoked only for a total lack of enquiry or where the order is not tenable as not being a plausible view. Given the enquiry and the Assessing Officer's considered acceptance, the PCIT could not validly revise the assessment on this ground. [Paras 11, 13, 15]

Revision under Section 263 quashed in respect of the genuineness of unsecured loans.

Classification of sale proceeds as business income or capital gains - plausible view / debatable conclusion - revision under Section 263: erroneous and prejudicial to the interests of revenue - Whether revision under Section 263 was sustainable for reclassification of gains arising from sale of shops as capital gains instead of business income. - HELD THAT: - The Tribunal noted that the same issue had been the subject of appeal in the assessee's own case for a different assessment year, where both the Commissioner (Appeals) and the Tribunal had held that gains on sale of shops were assessable as business income. That concurrent view demonstrates the question was debatable and that the Assessing Officer's conclusion amounted to a plausible view. Where, after enquiries, the Assessing Officer adopts a plausible view on classification, the Commissioner cannot exercise revisional powers under Section 263 to substitute that view. [Paras 11, 16]

Revision under Section 263 quashed in respect of the classification of gains on sale of shops.

Final Conclusion: The Tribunal quashed the PCIT's order passed under Section 263 dated 17.03.2017 in respect of A.Y. 2008-09, 2009-10 and 2010-11, allowing the assessee's appeals; the PCIT was not justified in exercising revisional powers on the three contested items.

Deductibility of employees' contribution to Provident Fund under Section 36(1)(va) read with Section 43B - prospective operation of tax amendments (Finance Act, 2021) and non-retrospective application of Explanation 2 - reliance on tax audit report/Form 3CD showing payment within due date of filing return - claim of TDS credit and opportunity to file tax credit certificates for reconciliation

Deductibility of employees' contribution to Provident Fund under Section 36(1)(va) read with Section 43B - prospective operation of tax amendments (Finance Act, 2021) and non-retrospective application of Explanation 2 - reliance on tax audit report/Form 3CD showing payment within due date of filing return - Deletion of disallowance of employees' PF contribution of the assessee for the assessment year 2019-20. - HELD THAT: - The Tribunal examined the admitted fact that employees' contribution to PF as shown in the tax audit report (Form 3CD) had been paid within the due date for filing return under section 139(1). Applying the principle that amendments to taxing statutes are not to be given retrospective effect unless a contrary intention is clear, the Tribunal followed the coordinate bench reasoning that Explanation 2 inserted by Finance Act, 2021 is prospective and operates from the date specified (with effect from assessment year 2021-22) and therefore does not affect earlier years. In view of the payments falling within the return-filing due date and the prospective character of the 2021 amendment, the disallowance under Section 36(1)(va) read with Section 43B was not sustainable and was deleted. [Paras 3]

Disallowance deleted and issue allowed in favour of the assessee.

Claim of TDS credit and opportunity to file tax credit certificates for reconciliation - Direction to permit the assessee to file supporting TDS documents and for the assessing officer to reconsider the short grant of TDS credit. - HELD THAT: - The parties agreed that the assessee may furnish details and tax credit certificates to the assessing officer. The Tribunal directed the AO to give the assessee an opportunity to file the TDS evidence and to consider the claim afresh in accordance with law. The matter was therefore remitted to the AO for verification and appropriate adjustment of TDS credit. [Paras 5, 6]

AO directed to allow the assessee to file TDS certificates and to reconsider the claim; issue allowed for statistical purposes.

Final Conclusion: The appeal is allowed for statistical purposes: the disallowance of employees' PF contribution for AY 2019-20 is deleted, and the AO is directed to reconsider the shortfall in TDS credit upon production of tax credit certificates.

Explanation 5A to section 271(1)(c) - deeming provision in search cases - Due date for filing return - effect of return filed under section 139(4) - Penalty for concealment of particulars of income under section 271(1)(c) - Effect of Settlement Commission order - prohibition of double addition/double taxation

Explanation 5A to section 271(1)(c) - deeming provision in search cases - Due date for filing return - effect of return filed under section 139(4) - Penalty for concealment of particulars of income under section 271(1)(c) - Whether penalty under section 271(1)(c) read with Explanation 5A is attracted where the assessee filed a return under section 139(4) after search but within the extended time provided by section 139 - HELD THAT: - The Tribunal held that Explanation 5A applies where the due date for filing the return for the relevant previous year has expired and the assessee has not filed the return. The term "due date" in Explanation 5A is not confined to the dates specified in section 139(1) but includes the extended time available under section 139(4). Since the assessee filed the return within the extended period allowed under section 139(4) and the declared income was accepted in assessment, the situation contemplated by clause (b) of Explanation 5A (where the due date has expired and the assessee has not filed the return) does not arise. Consequently, the assessee cannot be deemed to have concealed particulars of income for the purpose of imposing penalty under section 271(1)(c). The Tribunal relied on the reasoning in a Mumbai Tribunal decision to support the interpretation that a return filed under section 139(4) falls within the "due date" contemplated by Explanation 5A, and therefore set aside the CIT(A)'s confirmation of penalty and directed deletion. [Paras 10]

Penalty under section 271(1)(c) read with Explanation 5A deleted as the return filed under section 139(4) is within the 'due date' and does not attract the deeming fiction of concealment.

Effect of Settlement Commission order - prohibition of double addition/double taxation - Deletion of additions where amount already offered before Settlement Commission - Whether additions made by the AO in assessment on account of cash and jewellery found in search can be sustained when the same amounts were offered and capitalised before the Settlement Commission - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that the amounts in question (cash and jewellery found during search) had been offered to tax and capitalised in the Settlement Commission's order under section 245D(4). Allowing the AO to make the same additions in the assessment would result in double addition/double taxation, which is not permissible. The Revenue did not controvert the CIT(A)'s factual finding at hearing. In view of the Settlement Commission having dealt with and granted capitalization of the relevant amounts, the Tribunal declined to interfere with the deletion of the additions by the CIT(A). [Paras 13, 16]

Additions for cash and jewellery deleted as the amounts were already offered/allowed before the Settlement Commission; Revenue's appeal dismissed.

Final Conclusion: The assessee's appeal is allowed by deleting the penalty under section 271(1)(c) (Explanation 5A) as the return filed under section 139(4) is within the 'due date'; the Revenue's appeal is dismissed as the additions for cash and jewellery cannot be sustained having been addressed by the Settlement Commission.

Deductibility of expenditure under wholly and exclusively test - application of section 37(1) of the Act - expenditure incurred for benefit of third parties and incidental benefit - corporate veil / separate legal entity of group companies - covered matter / consistency with Tribunal's earlier decision

Deductibility of expenditure under wholly and exclusively test - application of section 37(1) of the Act - expenditure incurred for benefit of third parties and incidental benefit - Service charges paid to CCI Inc. for plant maintenance/quality audit of unrelated bottlers are deductible in the hands of the assessee under section 37(1) for the assessment years under consideration. - HELD THAT: - The Tribunal examined whether the payments to CCI Inc. were incurred 'wholly and exclusively' for the assessee's business. While the Revenue argued that the services were primarily for the bottlers and therefore not deductible, the Tribunal found that the question had already been decided in favour of the assessee for the immediately preceding assessment year and that the nature of services rendered to bottlers in the year under consideration remained similar. Although the 1997 agreement expanded services provided to the assessee, the scope of services to the bottlers did not materially change. The Tribunal declined to pierce the corporate veil and aggregate group companies' accounts; deductibility must be judged with reference to the assessee's business. In view of the Tribunal's prior order for the preceding year (which was sub judice before the High Court) and for consistency thereof, the disallowance sustained by the AO/CIT(A) was held unwarranted and deleted for AY 1998-99. [Paras 10, 11]

Disallowance of service charges (25% of total) for AY 1998-99 deleted; service charges allowed as deduction under section 37(1).

Covered matter / consistency with Tribunal's earlier decision - deductibility of expenditure under wholly and exclusively test - Extent of deductibility of service charges for AY 1999-2000. - HELD THAT: - The parties conceded that facts for AY 1999-2000 were mutatis mutandis similar to the preceding year; the only difference was that the assessee did not carry out bottling in that year. Applying the same reasoning and to maintain consistency with the Tribunal's view in the preceding year (notwithstanding the Department's arguable case), the Tribunal allowed deduction of the service charges in full for AY 1999-2000. [Paras 13, 14]

Deduction of service charges allowed in full for AY 1999-2000; Revenue's appeal dismissed.

Final Conclusion: The Tribunal allowed the assessee's appeals: for AY 1998-99 the disallowance of service charges (25%) was deleted and the service charges were held deductible under section 37(1); for AY 1999-2000 the service charges were allowed in full and the Revenue's appeal was dismissed, the Tribunal following consistency with its earlier decision for the immediately preceding year.

Penalty under section 271(1)(c) - bona fide explanation - furnishing inaccurate particulars - concealment of income - reasonable cause - professional advice/negligence of chartered accountant - voluntary disclosure and payment of tax - applicability of coordinate bench decision

Penalty under section 271(1)(c) - bona fide explanation - furnishing inaccurate particulars - concealment of income - reasonable cause - professional advice/negligence of chartered accountant - voluntary disclosure and payment of tax - Levy of penalty under section 271(1)(c) in respect of amounts disallowed as erroneously claimed expenses - HELD THAT: - The Tribunal found that the assessee had claimed an untenable deduction for work in progress on the basis of professional advice from its chartered accountant, and that subsequent to appointment of a new auditor the error was identified, admitted by the assessee and corrected by offering the amounts to tax and paying the requisite tax. The assessing officer and CIT(A) recorded no finding of intentional concealment; rather the facts disclose a mistaken claim based on professional negligence. The explanation proviso to section 271(1) requires the assessee to prove that its explanation is bona fide; on the material the Tribunal held the explanation to be bona fide. The Tribunal also applied the ratio of a coordinate bench which recognised that delay or defects attributable to a breakdown in the auditor-client relationship and wrong professional advice can constitute a reasonable cause. Having regard to voluntary disclosure, correction before finalisation of assessment and prosecution steps against the auditor, the facts did not disclose concealment or furnishing of inaccurate particulars with mala fides, and penalty was not warranted. [Paras 9, 10, 11]

Penalty imposed under section 271(1)(c) deleted and order of CIT(A) set aside.

Final Conclusion: The Tribunal allowed the appeal, holding that the disallowance arose from a bona fide mistaken claim based on professional advice; since the assessee voluntarily corrected the error and paid tax, and the mistake was attributable to the chartered accountant, the penalty under section 271(1)(c) was not sustainable and is deleted.

Dismissal of Special Leave Petition - Dismissal on account of identical earlier order

Dismissal of Special Leave Petition - Dismissal on account of identical earlier order - Special Leave Petition dismissed on the ground that the same issue had already been dismissed earlier. - HELD THAT: - The Court recorded that a Special Leave Petition raising the same issue had been dismissed on 2 August 2021. In view of that earlier dismissal, the Court dismissed the present Special Leave Petition. No further reasons or separate adjudication on the merits were recorded.

Special Leave Petition dismissed; pending application, if any, disposed of.

Final Conclusion: The Special Leave Petition was dismissed as the identical issue had previously been dismissed on 2 August 2021; any pending applications are disposed of.

Forfeiture of security deposit - Custom House Agent Licence Regulations, 2004 - failure of CHA to supervise employees under Regulation 19(8) of the Custom House Agent Licence Regulations, 2004 - show cause notice requirement under disciplinary/regulatory proceedings - appellate interference - perversity and substantial question of law

Forfeiture of security deposit - failure of CHA to supervise employees under Regulation 19(8) of the Custom House Agent Licence Regulations, 2004 - show cause notice requirement under disciplinary/regulatory proceedings - appellate interference - perversity and substantial question of law - Validity of CESTAT's setting aside of forfeiture of the entire security deposit imposed by the Commissioner of Customs for alleged lack of supervision by the CHA under Regulation 19(8) of CHALR. - HELD THAT: - The Court examined the Commissioner of Customs' order and found internal inconsistency in the findings - the Inquiry Officer had concluded there was no contravention of certain Regulations, whereas the Commissioner subsequently held that the CHA had failed to adhere to Regulation 19(8) because a temporary employee had signed documents. The Commissioner did not produce or rely upon any show cause notice issued to the CHA under the CHALR alleging breach of Regulation 19(8), nor did he explain how termination of the temporary employee cured or implicated the CHA's statutory responsibility. On the facts and record before it the Tribunal (CESTAT) set aside the forfeiture; the High Court concluded that the Tribunal's decision was not perverse and did not reflect application of incorrect legal principles. Given the contradictions in the Commissioner's reasoning and the absence of procedural steps (a show cause notice) required to hold the CHA responsible under the regulatory framework, the question pressed did not raise a substantial question of law warranting interference. [Paras 5, 6]

CESTAT's order setting aside the forfeiture is sustained; no substantial question of law is made out and the appeal is dismissed.

Final Conclusion: The appeal is dismissed; the Tribunal's order setting aside forfeiture is not interfered with and no order as to costs is made.

Order in personam - acceptance of delayed questionnaire responses - discretion to extend time on sufficient cause under Rule 6(4) of the Anti Dumping Rules - time limit for determination under Rule 17 and first proviso

Order in personam - Whether the High Court's order dated 4th June, 2021 in Solar Power Developers Association (W.P.(C) 5882/2021) operated in rem or in personam. - HELD THAT: - The Court held that the earlier order extending the time-limit in paragraph 25 of the Initiation Notification was an order in personam. The relief granted by that order was addressed to and intended to enable the petitioners in that writ petition (importers) to place information before the Designated Authority and was not a general extension available to all interested parties. Consequently, the order did not, by itself, automatically confer an extended filing deadline on other parties who were not parties to that writ petition. [Paras 13]

The order dated 4th June, 2021 was an order in personam and did not operate as a general extension for all interested parties.

Acceptance of delayed questionnaire responses - discretion to extend time on sufficient cause under Rule 6(4) of the Anti Dumping Rules - time limit for determination under Rule 17 and first proviso - Whether the delayed questionnaire responses filed by the petitioners between 25th June, 2021 and 31st July, 2021 should be taken on record. - HELD THAT: - Although the Court found the earlier High Court order to be in personam, it recognised that anti dumping proceedings result in a single consolidated order after hearing both exporters and importers. Given that the Court had extended the time for filing by importers beyond the next date of hearing (19th July, 2021), the Court observed that foreclosing exporters from filing responses up to 21st July, 2021 would serve no useful purpose. The Court balanced the statutory scheme-which contemplates extensions on sufficient cause (Rule 6(4)) and imposes an overall one year determination period subject to limited extension under Rule 17-against the practical requirement of hearing all interested parties to a consolidated proceeding, and therefore permitted the delayed responses to be taken on record subject to payment of costs. [Paras 14, 15, 16]

Responses filed between 25th June, 2021 and 31st July, 2021 are directed to be taken on record, each petitioner to pay costs of Rs. 1,00,000 to the Armed Forces Battle Casualties Welfare Fund within four weeks; order confined to the peculiar facts of the case.

Final Conclusion: The Court held that the earlier order of 4th June, 2021 was in personam, but in view of the consolidated nature of the anti dumping proceedings and the extension granted to importers, permitted the delayed responses filed by the petitioners between 25th June and 31st July, 2021 to be taken on record subject to specified costs, while limiting the relief to the peculiar facts of the matters before it.

Amendment of bills of entry - refund of excess Basic Customs Duty - exemption notification - Section 149 of the Customs Act, 1962 - representation - personal hearing - speaking order

Amendment of bills of entry - refund of excess Basic Customs Duty - exemption notification - personal hearing - speaking order - Respondents directed to treat the writ petition as a representation and decide the petitioner's claim for amendment of the bills of entry and refund of excess Basic Customs Duty after granting a personal hearing. - HELD THAT: - The petitioner pleaded that excess Basic Customs Duty was paid for imports in June and July 2018 because an exemption notification dated 02.02.2018 entitled it to BCD at 10% instead of 20%, and that amendments to the bills of entry and consequent refund have not been carried out. The Court did not adjudicate the merits of the claimed entitlement but directed that the writ petition be treated as a representation. The respondents are required to grant a personal hearing to the petitioner's authorised representative and, thereafter, pass a speaking order addressing the two facets raised by the petitioner-viz., whether amendments to the bills of entry should be carried out and whether excess BCD ought to be refunded with interest. The exercise is to be completed at the earliest and in any event within eight weeks from receipt of a copy of the order. The Court's direction preserves the respondents' obligation to consider the exemption notification and the petitioner's claim but leaves substantive determination to the respondents in a reasoned order after hearing. [Paras 9, 10]

Writ petition treated as representation; respondents to grant personal hearing and pass a speaking order on amendment of bills of entry and refund claim within eight weeks; petition disposed of accordingly.

Final Conclusion: The writ petition is disposed of by directing the respondents to treat it as a representation, grant a personal hearing to the authorised representative of the petitioner and, within eight weeks of receipt of this order, pass a speaking order dealing with the request for amendment of the bills of entry and refund of excess Basic Customs Duty; no adjudication on the merits has been made by the Court.

Classification of imported goods - classification of CCTV cameras as television cameras - Customs Tariff Heading 8525 8010 (television cameras) - Customs Tariff Heading 8525 8090 (others) - remand for fresh consideration

Classification of imported goods - classification of CCTV cameras as television cameras - Customs Tariff Heading 8525 8010 (television cameras) - Customs Tariff Heading 8525 8090 (others) - remand for fresh consideration - Whether the classification of the imported CCTV cameras should be finally adjudicated as falling under CTH 8525 8010 or under CTH 8525 8090 and whether the impugned orders require interference. - HELD THAT: - The High Court noted the appellants consistently described the imported goods as falling under CTH 8525 8010 (television cameras) in documents placed before the authorities, and found the CESTAT's observation that the appellant had classified the goods under CTH 8525 8090 to be incorrect. Rather than finally determining the proper classification on merits, the Court set aside the orders passed by the authorities below (including the CESTAT) and remitted the matter to the Assessing Officer for reconsideration. The Assessing Officer is directed to consider all materials placed before the authorities below, verify relevant entries and certificates, and pass fresh orders on merits and in accordance with law after affording the appellant a hearing within four weeks of receipt of the judgment. [Paras 12]

Impugned orders set aside and the matter remitted to the Assessing Officer for fresh consideration and decision on merits within four weeks; appeals disposed of accordingly.

Final Conclusion: The appeals are allowed to the extent that the CESTAT orders are set aside and the classification dispute is remitted to the Assessing Officer for fresh adjudication on merits after verification and hearing; no costs.

Ultra vires - retrospective clarification versus prospective amendment - distinction between transmission and distribution of electricity - trade meaning and technical statutory definitions - vested rights and prospective operation of policy - manifest arbitrariness and Article 14 - restriction on trade under Article 19(1)(g) - EPCG Scheme - scope of prohibited activities

Retrospective clarification versus prospective amendment - EPCG Scheme - scope of prohibited activities - ultra vires - The impugned policy circular dated 4th January 2019 is not a mere clarification but introduces a new substantive restriction by treating distribution of electricity as prohibited under the EPCG scheme and is therefore ultra vires Para 5.01(g) of the Foreign Trade Policy. - HELD THAT: - The Court examined whether the 4.1.2019 circular merely clarified existing policy or added a new condition. The Foreign Trade Policy prior to the circular expressly referred to "transmission" (w.e.f. 18.4.2013) and later added "generation" (by amendment dated 29.1.2016), but at no stage prior to the impugned circular was "distribution" included in the prohibited list (paras 19-20). The 4.1.2019 circular for the first time characterized "distribution" as debarred under the EPCG scheme and thus imposed an additional restriction not earlier incorporated in the scheme (para 20). Having regard to distinct statutory definitions and separate regulatory treatment of transmission and distribution in the Electricity Act, and separate licensing and chapters for the two activities, the Court held that transmission and distribution are separate activities as understood in the trade and under the Electricity Act; consequently the circular could not be sustained as a mere clarification but amounted to introducing a new substantive condition which is ultra vires the policy (paras 21-23, 27). [Paras 20, 21, 22, 23, 27]

The 4th January 2019 circular is declared ultra vires Para 5.01(g) of the Foreign Trade Policy.

Trade meaning and technical statutory definitions - vested rights and prospective operation of policy - manifest arbitrariness and Article 14 - restriction on trade under Article 19(1)(g) - Retrospective operation of the impugned circular is manifestly arbitrary, infringes vested expectations and is violative of Articles 14 and 19(1)(g) of the Constitution. - HELD THAT: - The Court applied the established principle that technical or commercial terms in fiscal or policy contexts are to be construed according to trade meaning and statutory regime applicable to the industry; here the Electricity Act demonstrates separate meanings and regulatory regimes for transmission and distribution (paras 24-26). The EPCG licences were granted with disclosure that the capital goods were for distribution and the authorities had issued licences and invalidation letters on that basis; hence no misdeclaration was shown at the time of grant (para 28). A retrospective imposition of a new burden by labeling distribution as prohibited, rather than prospectively amending the policy, imposes an unexpected liability and is arbitrary; precedents were cited to show that retrospective introduction of new burdens that affect vested rights can be unconstitutional (paras 29-33). Applying those principles, the circular's retrospective operation was held to violate Articles 14 and 19(1)(g) (para 34). [Paras 30, 31, 32, 33, 34]

The retrospective operation of the circular is quashed as manifestly arbitrary and violative of Articles 14 and 19(1)(g).

Vested rights and prospective operation of policy - remedial direction - return of bank guarantees - Consequential relief: bank guarantees furnished against surrendered EPCG licences are to be returned to the writ applicants forthwith. - HELD THAT: - The Court noted the writ applicants were not pressing for return of surrendered EPCG licences but did seek recovery of bank guarantees furnished against those licences. In view of the declaration invalidating the circular and the applicants' surrender of licences and bank guarantees in reliance on the impugned circular, the Court directed immediate return of the bank guarantees (para 35). [Paras 34, 35]

Respondents directed to forthwith return the bank guarantees furnished for the surrendered EPCG licences.

Final Conclusion: Writ petition allowed. The policy circular dated 4th January 2019 is declared ultra vires Para 5.01(g) of the Foreign Trade Policy and its retrospective operation is set aside as arbitrary and violative of Articles 14 and 19(1)(g); bank guarantees furnished against surrendered EPCG licences are to be returned forthwith.

Disposal of unclaimed/un-cleared cargo under Section 48 of the Customs Act, 1962 - confiscation proceedings under Section 111 of the Customs Act, 1962 - misdeclaration of imported goods - hazardous cargo handling and de-stuffing - liability for storage/demurrage and release of empty containers - judicial direction for expedited administrative action and conditional relief

Confiscation proceedings under Section 111 of the Customs Act, 1962 - misdeclaration of imported goods - hazardous cargo handling and de-stuffing - judicial direction for expedited administrative action and conditional relief - Customs authorities directed to complete proceedings in respect of alleged misdeclaration and, if warranted, pass confiscation order within 30 days. - HELD THAT: - The Court accepted the position that the imported goods were alleged to be misdeclared following laboratory examination and that the goods are hazardous such that de-stuffing cannot be undertaken casually. Having sought and received an assurance from the customs authorities, the Court directed that the customs authority shall issue show-cause notice under Section 111 and dispose of the misdeclaration/confiscation proceedings within 30 days from receipt of this order. The direction was given as an expeditive judicial instruction to the administrative process in light of the hazardous nature of the cargo and the prolonged blockage of the claimant's containers, while expressly leaving the merits to the customs proceedings. [Paras 7, 8]

Proceedings under Section 111 to be completed and confiscation, if any, to be ordered within 30 days.

Disposal of unclaimed/un-cleared cargo under Section 48 of the Customs Act, 1962 - hazardous cargo handling and de-stuffing - liability for storage/demurrage and release of empty containers - judicial direction for expedited administrative action and conditional relief - If customs fail to pass the aforesaid order within 30 days, authorities may de-stuff into suitable containers or proceed to auction under Section 48 and must release the empty containers to the writ applicant within 15 days thereafter. - HELD THAT: - Recognising the writ applicant's ownership of the containers and the hardship caused by their prolonged detention, the Court conditioned its relief on administrative action: in the event customs do not complete the misdeclaration/confiscation process within the stipulated 30-day period, respondent authorities (including the CFS) are authorised to de-stuff the hazardous cargo into appropriate receptacles or to auction the goods as contemplated by the Section 48 process, following which the empty containers shall be handed over to the applicant within 15 days. The Court framed this as a contingent administrative pathway to ensure release of the containers while preserving the customs authority's statutory powers. [Paras 8, 9]

Failure by customs to act within 30 days permits de-stuffing or auction and mandates release of empty containers within 15 days thereafter.

Final Conclusion: Writ petition disposed by directing the customs authority to decide misdeclaration/confiscation proceedings within 30 days; if no decision is rendered, respondents may de-stuff or auction the hazardous cargo under the statutory process and must release the empty containers to the writ applicant within 15 days. The Court did not adjudicate the merits of the underlying dispute.

Refund of Special Additional Duty (SAD) on re-sale - Requirement of payment of appropriate VAT/Sales Tax for SAD refund - Equitable levy in lieu of sales tax - Interpretation of 'appropriate' in exemption/notification - Precedential application of Gazal Overseas

Refund of Special Additional Duty (SAD) on re-sale - Requirement of payment of appropriate VAT/Sales Tax for SAD refund - Interpretation of 'appropriate' in exemption/notification - Precedential application of Gazal Overseas - Whether refund of SAD under notification No.102/2007-Cus is admissible where the goods were re-sold but the rate of VAT/Sales Tax on the re-sale was nil (or lower than the rate of SAD). - HELD THAT: - The Tribunal held that SAD is an equitable levy imposed at import in lieu of sales tax to protect domestic industry and that the Customs Tariff regime provides for refund of SAD on re-sale. Notification No.102/2007-Cus conditions refund on re-sale and on payment of "appropriate VAT/Sales Tax." Relying on the Tribunal's precedent in Gazal Overseas, which interpreted para 5.3 of CBE&C Circular No.6/2008 to mean there is no stipulation limiting refund where the rate of VAT/Sales Tax is lower than, or even nil vis-a -vis, the rate of SAD, the Tribunal concluded that the entire SAD, if otherwise eligible, shall be refunded. The Revenue's contention, invoking earlier decisions construing the word "appropriate" (including references to higher judicial pronouncements), was not accepted as displacing the Tribunal's interpretation in Gazal Overseas or the scheme permitting refund on re-sale even where VAT/Sales Tax is nil. On this basis the impugned order allowing refund was held to contain no error. [Paras 6, 7]

Refund of SAD under notification No.102/2007-Cus is admissible even if the rate of VAT/Sales Tax on re-sale is nil (or lower than the rate of SAD); Revenue's appeal dismissed.

Final Conclusion: The Tribunal dismissed the Revenue appeal and upheld the Commissioner (Appeals) order allowing refund of the balance SAD on the ground that refund is permissible under the notification even where the re-sale attracted nil (or lower) VAT/Sales Tax; the stay application is disposed of.

Power of remand under Section 167(2) Cr.P.C - Continuity of custody pending investigation and after filing of charge-sheet - Taking cognizance as application of mind - Scope of Section 309 Cr.P.C - postponement/adjournment and remand during inquiry or trial - Illegality of detention post filing of charge-sheet without cognizance

Power of remand under Section 167(2) Cr.P.C - Continuity of custody pending investigation and after filing of charge-sheet - Scope of Section 309 Cr.P.C - postponement/adjournment and remand during inquiry or trial - Taking cognizance as application of mind - Whether remand orders passed after filing of the charge-sheet but before formal taking of cognizance are illegal and render the detention of the accused unlawful. - HELD THAT: - The Court held that filing of a charge-sheet does not automatically extinguish the Magistrate's power to remand; custody must remain continuous with a court. Taking cognizance means application of mind and need not be a formal act; an 'inquiry' within Section 309(2) may commence upon submission of the charge-sheet so as to vest the court with power to remand. Reliance was placed on Suresh Kumar and the subsequent Apex Court decision in Rahul Modi which reiterate that filing of the charge-sheet within statutory time ends the accused's statutory right to default bail under Section 167(2), but does not prevent the Magistrate from remanding the accused pending the court's taking of cognizance; the court trying the offence assumes custody upon taking cognizance, preserving continuity. In view of these authorities and the statutory scheme, the applicant's contention that all remand orders post filing of the charge-sheet are ipso facto illegal for want of formal cognizance was rejected. [Paras 17, 18, 19, 21, 22]

The challenge to the remand orders on the ground that cognizance had not been taken was rejected and the contention that detention was illegal was held to be without merit.

Taking cognizance as application of mind - Illegality of detention post filing of charge-sheet without cognizance - Whether delay in taking cognizance by the Special Court required release of the applicant or other reliefs, and what directions (if any) should be issued to the trial Court. - HELD THAT: - The Court noted the unusual and prolonged delay in the trial Court taking cognizance of the complaint filed on 30th May 2019 and recorded factors contributing to the delay (multiple judicial transfers, COVID-19 related adjournments, and applications by accused seeking adjournments or hearings by video-conference). While the legal objections to remand were repelled on authority, the Court emphasised that cognizance must be taken expeditiously and that inevitable or inordinate delay is not acceptable. Accordingly, having found the legal submissions on illegality of detention unmeritorious, the Court nevertheless directed the trial Court to decide the question of cognizance as expeditiously as possible and took on record the reasons for the delay. [Paras 23, 24, 25, 26, 27]

The application was dismissed, but the trial Court was directed to decide cognizance expeditiously and the registry was directed to forward the order to the Presiding Officer seized of the complaint.

Final Conclusion: The application under Section 482 Cr.P.C. challenging remand orders as illegal for want of formal cognizance was dismissed: filing of the charge-sheet does not by itself bar remand pending the court's application of mind to take cognizance, but the trial Court was directed to decide cognizance without further delay.

Admission of winding up petition on creditor's claim - Bonafide dispute defence at stage of admission - Document stamping not a determinative obstacle to admission - Validity of third party service provider's licence and its effect on liability - Appointment of Provisional Liquidator on admission - Remand for modification of time limit by Company Court after hearing

Admission of winding up petition on creditor's claim - Bonafide dispute defence at stage of admission - Validity of admission of the winding up petition under Sections 433(e) and 433(f) of the Companies Act, 1956 in view of the dispute raised by the company. - HELD THAT: - The Court examined the petition, pleadings and primary documents (including the Engine Maintenance Agreement, amendment and supplementary agreement, bills of exchange, certificate of acceptance, and the ICC arbitration award). The petitioner (Credit Suisse) stepped into the position of an endorsee under the deferred payment arrangement and advances made by it on behalf of the company were established on the record. While admission is not automatic, the threshold is whether the defence is a bonafide and substantial one. The Company Court found the defences raised by the company not to be bonafide. The High Court, applying the same test and having regard to the materials (including the company's prior statements in arbitration), held that the pleas urged by the company do not constitute a bona fide dispute that would preclude admission. Consequently, there was no error in admitting the winding up petition on the creditor's claim. [Paras 5, 6, 7, 11, 14]

The admission of the winding up petition was upheld; the company's defences are not bonafide and do not preclude admission.

Document stamping not a determinative obstacle to admission - Whether absence of stamping on documents relied upon by the petitioner prevents the Company Court from admitting the winding up petition. - HELD THAT: - The Court noted and applied binding precedents relied upon by the Company Court: at the admission stage the focus is on whether the debt is bonafide disputed and the substantiality of the defence, not on technical stamping formalities. Applying that test to the materials on record, the Court held that the contention regarding unstamped documents does not amount to a bonafide defence warranting rejection of the petition at the admission stage. [Paras 9]

The objection based on alleged unstamped documents is rejected and does not vitiate admission.

Validity of third party service provider's licence and its effect on liability - Whether absence of a DGCA licence in favour of SR Technics precludes the appellant's liability and constitutes a bonafide dispute. - HELD THAT: - The company contended that SR Technics lacked DGCA licence and therefore no payment was due. The Court examined the company's inconsistent positions (including its own arbitration pleadings) and communications, and found that the company had on earlier occasions treated the services and related invoices as binding. The Court concluded that the licence contention is not a bonafide defence which defeats the creditor's claim at the admission stage and rejected the plea accordingly. [Paras 8, 10, 11]

The defence based on alleged lack of DGCA licence is rejected as not bonafide and does not bar admission.

Appointment of Provisional Liquidator on admission - Whether appointment of the Official Liquidator as Provisional Liquidator at the time of admitting the petition warranted interference. - HELD THAT: - The prayer for appointment of a Provisional Liquidator was made in the main petition and miscellaneous application and was considered by the Company Court while admitting the petition. Given the factual matrix, the pendency since 2015 and the Court's satisfaction on the nature of the debt and defences, the High Court found no ground to interfere with the appointment made by the Company Court. [Paras 12, 13]

The appointment of the Official Liquidator as Provisional Liquidator is sustained and does not require interference.

Remand for modification of time limit by Company Court after hearing - Whether any modification in the time limits prescribed in the impugned orders was required and what further direction should be given. - HELD THAT: - The High Court observed a time lag in implementation of the impugned orders and noted that limited modification of the time limit may be necessary. It directed that any modification be effected by the Company Court after hearing the parties for that limited purpose. Meanwhile, and to keep any challenge meaningful, the stay granted by the Company Court was extended for a limited period. [Paras 13, 15]

The matter of modifying time limits was left to the Company Court for hearing and determination; an interim extension of stay was ordered until 28.01.2022.

Final Conclusion: The appeals are dismissed; the High Court upheld admission of the winding up petition and the appointment of the Provisional Liquidator, rejected the company's defences as not bonafide, directed any limited modification of time limits to be decided by the Company Court after hearing the parties, and extended the existing stay until 28.01.2022.

Sanction of scheme of amalgamation - appointed date and its effect - transfer and vesting of assets - transfer of debts, liabilities and obligations - continuation of pending proceedings - responsibility of transferee for pre-existing liabilities - dispensing of meetings under section 230 - filing of certified copy with Registrar of Companies and dissolution on filing - requirement to file Schedule of Assets in prescribed form - undertakings regarding stamp duty and accounting compliance

Sanction of scheme of amalgamation - appointed date and its effect - The Scheme of Amalgamation among the Transferor Companies and the Transferee Company is sanctioned and shall be binding with effect from 1st April, 2019 (Appointed Date). - HELD THAT: - Having considered the petition, statutory filings, statutory auditor certificates, the report of the Official Liquidator and the observations and undertakings recorded in replies to the Regional Director's affidavit, the Tribunal allowed the petition and sanctioned the Scheme. The sanction is made effective from the Appointed Date specified in the Scheme, thereby fixing the temporal effect of the amalgamation as of 1st April, 2019. The sanction follows prior compliance steps including issuance of notices and publication of advertisements, and reference to the earlier order dispensing meetings where applicable. [Paras 1, 2, 7]

Scheme sanctioned and declared binding with effect from 1st April, 2019.

Transfer and vesting of assets - transfer of debts, liabilities and obligations - All property, rights and powers of the Transferor Companies are transferred and vested in the Transferee Company, and all debts, liabilities, duties and obligations of the Transferor Companies are to be transferred to and become those of the Transferee Company, from the Appointed Date. - HELD THAT: - Pursuant to sanction of the Scheme, the Tribunal directed, under the statutory framework governing amalgamations, that the assets specified in the Scheme shall stand transferred to and vested in the Transferee Company and that the liabilities and obligations shall stand transferred and become those of the Transferee Company without further act or deed. This vesting and transfer are subject to existing charges as provided in the Scheme, and the Tribunal granted leave to file the Schedule of Assets in the prescribed form to complete the record. [Paras 7]

Assets and liabilities of the Transferor Companies are transferred to and vest in the Transferee Company from the Appointed Date.

Continuation of pending proceedings - responsibility of transferee for pre-existing liabilities - Proceedings, suits and appeals pending by or against the Transferor Companies shall be continued by or against the Transferee Company, and the Transferee Company is responsible for liabilities and non-compliances of the Transferor Companies, permitting statutory authorities to initiate appropriate proceedings against it. - HELD THAT: - The Tribunal ordered that all pending legal proceedings of the Transferor Companies shall be continued by or against the Transferee Company as provided in the Scheme, thereby preserving procedural continuity. Separately, the Tribunal recorded that, in case of any default including under the Income Tax Act by the Transferor Companies, the Income Tax Department, ROC and other statutory authorities are at liberty to initiate appropriate proceedings against the Transferee Company, which after sanction will be responsible for liabilities/non-compliances of the Transferor Companies. This preserves enforcement rights of statutory authorities despite sanction of the Scheme. [Paras 6, 7]

Pending proceedings to continue in the name of the Transferee Company and statutory authorities may proceed against the Transferee Company for pre-existing defaults.

Dispensing of meetings under section 230 - filing of certified copy with Registrar of Companies and dissolution on filing - requirement to file Schedule of Assets in prescribed form - undertakings regarding stamp duty and accounting compliance - Compliance requirements were recorded: meetings of shareholders and unsecured creditors were dispensed with where consent affidavits existed; petitioners must file the Schedule of Assets in Form CAA7, deliver certified copies to the Registrar of Companies (triggering dissolution of Transferor Companies on filing), and undertake payment of stamp duty and adherence to applicable accounting standards. - HELD THAT: - The Tribunal noted the earlier order dispensing meetings where shareholders and unsecured creditors had given consent by affidavit and observed that statutory formalities including service of notices to statutory/sectoral authorities and publication of advertisements had been complied with. The Tribunal granted leave to file the Schedule of Assets in the form prescribed by Form No. CAA7 within three weeks and directed each company to deliver certified copies of the order to the Registrar of Companies within thirty days; upon filing of certified copies the Transferor Companies shall be dissolved and their records consolidated with the Transferee Company. The petitioners gave undertakings (and the Tribunal recorded obligations) regarding payment of applicable stamp duty after sanction and to make accounting entries in accordance with applicable accounting standards. [Paras 2, 3, 7, 8, 9]

Statutory compliances accepted as satisfied or directed; Schedule of Assets to be filed, certified copies to be delivered to ROC leading to dissolution on filing; petitioners to comply with stamp duty and accounting requirements.

Final Conclusion: The Tribunal allowed the petition and sanctioned the Scheme of Amalgamation with effect from 1st April, 2019, directing transfer and vesting of assets and transfer of liabilities to the Transferee Company, continuation of pending proceedings in the name of the Transferee Company, and specified post-sanction filing and compliance steps (including filing Schedule of Assets, delivery of certified copy to the Registrar of Companies, and adherence to stamp duty and accounting obligations).

Condonation of delay in submission of proof of claim - admission and verification of financial creditor's claim during CIRP - reconstitution of Committee of Creditors and voting share revision - exclusion of time from CIRP period for purposes of Section 12 IBC - challenge to follow up order vis-a -vis earlier unchallenged order

Condonation of delay in submission of proof of claim - admission and verification of financial creditor's claim during CIRP - reconstitution of Committee of Creditors and voting share revision - Delay in submission of proof of PNB's claim is condoned and the Resolution Professional is directed to consider and, if merited, admit and revise the claim so that the CoC may consider the revised voting share. - HELD THAT: - The Tribunal examined the chronology of events including initial filing, rejection on account of delay, an earlier Adjudicating Authority order condoning delay in filing the claim, the subsequent submission of proof after expiry of the 270 day CIRP period, and pendency of I.A. No. 1078 of 2021 seeking condonation of delay in submission of proof. Noting the Adjudicating Authority's order of exclusion of 245 days from the CIRP period and observing that the Appellant had pursued the matter diligently, the Tribunal found it appropriate to grant condonation. It held that the small delay in submission of proof (from 12.04.2021 to 20.04.2021) was outweighed by the fact that the Adjudicating Authority itself excluded substantial periods from the CIRP for purposes of achieving resolution. The Tribunal therefore directed the RP to consider the documents filed by PNB, revise the claim if the documents have merit, and complete verification within fifteen days; the CoC was directed to consider any revised claim for payment under the approved resolution plan and complete the exercise within forty five days from the judgment. [Paras 23, 27]

Delay condoned; RP directed to verify and, if justified, admit and revise PNB's claim and CoC directed to consider the revised claim and revise the resolution plan insofar as necessary.

Challenge to follow up order vis-a -vis earlier unchallenged order - exclusion of time from CIRP period for purposes of Section 12 IBC - The appeal against the Adjudicating Authority's order dated 14.12.2021 is maintainable despite an earlier order directing CoC to consider the resolution plan, because the later order affected PNB's right to a revised voting share by directing the CoC to proceed without deciding PNB's pending application. - HELD THAT: - The Tribunal distinguished the principle that a follow up order cannot be challenged where the original order has attained finality by observing that the earlier order dated 27.10.2021 merely directed the CoC to consider the resolution plan; the subsequent order dated 14.12.2021 specifically recorded that the CoC as existing on 14.12.2021 should consider the plan 'irrespective of the fate' of PNB's pending application, thereby affecting PNB's interest in the CoC composition and voting share. Given that PNB's I.A. No. 1078 of 2021 was pending and directly concerned admission and verification of its claim, the Tribunal held that PNB had a cause of grievance and was entitled to challenge the impugned order. [Paras 13, 24]

Appeal is maintainable; the earlier order did not preclude challenge to the 14.12.2021 order which affected PNB's right to be considered for revised voting share.

Final Conclusion: The appeal is allowed: delay in submission of proof of PNB's claim is condoned; RP is directed to verify and, if justified, admit and revise the claim within fifteen days and the CoC to consider the revised claim and effect any necessary revision to the resolution plan within forty five days; appeal disposed of with no order as to costs.

Liquidation process - relief under Section 35 of the Insolvency and Bankruptcy Code, 2016 - Operations and Management Agreement - direction to discharge overdue amount - ex parte proceedings - interest on dues

Direction to discharge overdue amount - interest on dues - Liquidation process - Respondent directed to pay the overdue amounts claimed by the Liquidator together with interest at the rate specified by the Adjudicating Authority within a stipulated time. - HELD THAT: - The Liquidator, appointed after initiation of liquidation of the corporate debtor, claimed unpaid revenue share, operational costs and costs for replacement/maintenance under the Operations and Management Agreement entered into with the Respondent. The Respondent was served with notice but did not appear or contest the claim and the matter was proceeded with ex parte. The Tribunal found the relief sought by the Liquidator to be legitimate and, in the interests of progressing the liquidation process without further delay, directed payment of the claimed overdue amount together with interest at the rate fixed by the Adjudicating Authority until realization, and set a two week timeframe for compliance from receipt of the order. [Paras 7, 8]

Respondent to discharge the overdue amount claimed by the Liquidator together with interest @6% until realization within two weeks of receipt of the order.

Ex parte proceedings - Proceedings were ordered ex parte against the Respondent for failure to contest despite service of notice. - HELD THAT: - The Postal Tracking Report established service of notice on the Respondent. The Respondent neither took steps nor appeared to contest the application. In view of non appearance and absence of any defence on record, the Tribunal proceeded ex parte by order dated 02.03.2022 and adjudicated the claim on the merits presented by the Liquidator. [Paras 7]

Matter proceeded and was adjudicated ex parte against the Respondent for non appearance after service of notice.

Final Conclusion: The application filed by the Liquidator is disposed of by directing the Respondent to pay the claimed overdue amount to the corporate debtor together with interest at 6% until realization within two weeks of receipt of this order; the matter was decided ex parte after service of notice on the Respondent.

Exclusion of period from Corporate Insolvency Resolution Process timeline - approval of Committee of Creditors for extension under Section 12(2) - effect of judicial stay on CIRP timeline - bona fide application by Resolution Professional

Exclusion of period from Corporate Insolvency Resolution Process timeline - effect of judicial stay on CIRP timeline - Exclusion of specific days lost due to an interim judicial stay from the statutory 180 day CIRP period. - HELD THAT: - The Resolution Professional sought exclusion of the period during which the CIRP was stayed by the High Court, on the basis that those days were lost to the process and that the Committee of Creditors had approved seeking exclusion. The Adjudicating Authority examined the application, the chronology of the interim stay and its dismissal, and the CoC resolution approving exclusion of the contested period. Satisfied with the RP's submissions and the CoC's resolution, the Authority accepted that the period during which the CIRP could not proceed owing to the interim stay should be excluded from the CIRP timeline. [Paras 6]

A period of 33 days is excluded from the CIRP period.

Approval of Committee of Creditors for extension under Section 12(2) - bona fide application by Resolution Professional - Sufficiency of CoC approval and bona fides of the RP's application for exclusion/extension under the Code. - HELD THAT: - The Adjudicating Authority noted that Section 12(2) permits the RP to move the Authority for extension of the CIRP period where approved by the CoC. The CoC's third meeting record expressly accorded consent to exclude the period affected by the interim stay. The Authority, having considered the CoC resolution and the RP's characterization of the application as bona fide and not prejudicial to parties, found those aspects satisfactory for granting the relief sought. [Paras 5, 6]

The CoC's approval and the RP's bona fide application were held sufficient to justify excluding the period; the IA is disposed of accordingly.

Final Conclusion: The Interlocutory Application is allowed to the extent that 33 days are excluded from the CIRP period; IA No. 64/2022 in CP (IB) No. 682/7/HDB/2018 is disposed of.

Order for liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - appointment of Liquidator - cessation of moratorium on liquidation - vesting of powers of board and KMP in the Liquidator - restriction on suits by/against the corporate debtor subject to Section 52 - duty to issue public announcement by the Liquidator - sale as a going concern and 90 day timeline under Regulation 32A/32 of IBBI (Liquidation Process) Regulations, 2016 - payment of Liquidator's fees from the liquidation estate in accordance with Regulation 4(3) of IBBI (Liquidation Process) Regulations, 2016

Order for liquidation under Section 33 of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' resolution to liquidate - Liquidation of M/s. Bharani Commodities Pvt. Ltd. was ordered under Section 33 of the IBC on the basis of the CoC resolution and absence of any resolution plan. - HELD THAT: - The Fifth CoC unanimously resolved to liquidate the Corporate Debtor because no resolution plans were received and the CIRP period was nearing completion (having regard to COVID exclusion). The Adjudicating Authority, noting non receipt of any plan under Section 30(6) and the CoC resolution, exercised its powers under Clause (b) of sub section (1) of Section 33 and ordered liquidation to be carried out in accordance with Chapter III of Part II of the IBC, 2016. [Paras 6, 8]

Order for liquidation was passed.

Appointment of Liquidator - duty to issue public announcement by the Liquidator - Shri K.J. Vinod was appointed as Liquidator and directed to make the statutory public announcement. - HELD THAT: - The Adjudicating Authority appointed Shri K.J. Vinod as Liquidator after recording his consent in Form AA dated 20.10.2021. The Liquidator was directed to issue the required public announcement that the Corporate Debtor is in liquidation and to administer the liquidation process as mandated under the Code and Regulations. [Paras 8]

Appointment of Shri K.J. Vinod as Liquidator and requirement to publish the liquidation announcement ordered.

Cessation of moratorium on liquidation - vesting of powers of board and KMP in the Liquidator - restriction on suits by/against the corporate debtor subject to Section 52 - Legal consequences of liquidation were declared: the moratorium ceases, powers of directors and KMP vest in the Liquidator, and suits by/against the corporate debtor are restricted as provided by the Code. - HELD THAT: - The Tribunal directed that the moratorium under Section 14 shall cease from the date of the liquidation order; all powers of the board, directors and KMP shall cease and vest in the Company Liquidator; and, subject to Section 52, no suit or other legal proceeding shall be instituted by or against the Corporate Debtor except insofar as the Liquidator may institute proceedings with prior approval of the Authority. These directions implement the statutory consequences of commencement of liquidation under the IBC. [Paras 8]

Moratorium ceases; powers of management vest in Liquidator; restrictions on legal proceedings clarified.

Sale as a going concern and 90 day timeline under Regulation 32A/32 of IBBI (Liquidation Process) Regulations, 2016 - The Liquidator was directed to endeavour to sell the corporate debtor or its business as a going concern, and if unable to do so within 90 days of liquidation commencement date, to proceed to sell assets under Regulation 32 clauses (a)-(d). - HELD THAT: - The Tribunal instructed the Liquidator to keep Regulation 32A in view and prioritise sale as a going concern. A 90 day period from the liquidation commencement date was prescribed for this effort, failing which the Liquidator shall proceed to asset sales under the enumerated modes in Regulation 32 of the Liquidation Process Regulations. [Paras 8]

Liquidator must attempt going concern sale within 90 days, thereafter proceed to asset sales under Regulation 32.

Payment of Liquidator's fees from the liquidation estate in accordance with Regulation 4(3) of IBBI (Liquidation Process) Regulations, 2016 - Liquidator's fees shall be chargeable and payable from the liquidation estate in the proportion specified by the Board under Regulation 4(3). - HELD THAT: - The Tribunal authorised payment of the Liquidator's fee from the proceeds of the liquidation estate in accordance with the fee structure and proportion as specified by the Board under Regulation 4(3) of the IBBI (Liquidation Process) Regulations, 2016, thereby confirming the source and manner of remuneration. [Paras 8]

Liquidator's fees to be paid from liquidation proceeds as per Regulation 4(3).

Disposal of interlocutory applications as infructuous on liquidation - IA Nos. 57/2022 and 58/2022 filed by operational creditors were disposed of as infructuous consequent to the liquidation order. - HELD THAT: - Having ordered liquidation of the Corporate Debtor, the Tribunal held that the applications by operational creditors seeking admission of claims and CoC participation no longer survive and accordingly disposed of them as infructuous. [Paras 12]

IA Nos. 57/2022 and 58/2022 disposed of as infructuous.

Final Conclusion: The Tribunal, on the basis of the CoC resolution and absence of any resolution plan, ordered liquidation of M/s. Bharani Commodities Pvt. Ltd. under Section 33 of the IBC; appointed Shri K.J. Vinod as Liquidator (to issue the public announcement and administer liquidation), declared the moratorium to cease, vested management powers in the Liquidator, mandated endeavour to sell as a going concern within 90 days (failing which assets to be sold under Regulation 32), authorised payment of Liquidator's fees from the liquidation estate as per Regulation 4(3), and disposed of the pending operational creditors' applications as infructuous.

Limitation under Article 137 of the Limitation Act, 1963 as applicable to Section 7 IBC - date of default as date of account classification as NPA - authorization of filing by power of attorney/authorized officer - creditor-debtor relationship and existence of financial debt and default - admission of application under Section 7(4) of the Insolvency and Bankruptcy Code and initiation of CIRP - operation of moratorium under Section 14 of the IBC

Limitation under Article 137 of the Limitation Act, 1963 as applicable to Section 7 IBC - date of default as date of account classification as NPA - Application under Section 7 was not barred by limitation. - HELD THAT: - The Tribunal considered the IBC together with the Limitation Act and relied on precedent holding that Article 137 prescribes a three year limitation for Section 7 applications, commencing from the date of default. The loan account was stated in Part IV of the application to have become NPA on 05.06.2018 and the application was filed on 31.03.2021, within the three year period. The Tribunal therefore rejected the corporate debtor's contention that the application was time barred. [Paras 13, 14, 15, 16, 17]

Limitation objection overruled and Section 7 application held maintainable on limitation ground.

Authorization of filing by power of attorney/authorized officer - The person who filed the Section 7 application was competent and duly authorized to present it. - HELD THAT: - The Tribunal examined the Power of Attorney dated 21.06.2005 and the specific authorization dated 15.03.2021 in favour of the signatory. Relying on authority that general powers of attorney and bank authorisations can suffice for filing IBC applications, the Bench found that the Financial Creditor had proper authority to file the application through its authorised officer/POA holder. The technical objection to maintainability on this ground was rejected. [Paras 18, 19, 20]

Objection to competence/authority to file the application rejected; applicant held competent.

Creditor-debtor relationship and existence of financial debt and default - There exists a creditor-debtor relationship and the financial debt along with default was established. - HELD THAT: - On review of documents and parties' admissions, the Tribunal found that loans were disbursed by the Financial Creditor and that the corporate debtor did not controvert repayment, instead acknowledging receipt of funds. Attempts at restructuring were considered but the corporate debtor failed to honour restructuring terms and payments. The Tribunal concluded that the elements of "financial debt" and "default" required for a Section 7 application are satisfied. [Paras 21, 22, 23, 24]

Existence of financial debt and default established; creditor-debtor relationship upheld.

Admission of application under Section 7(4) of the Insolvency and Bankruptcy Code and initiation of CIRP - operation of moratorium under Section 14 of the IBC - The Section 7(4) application is admitted and the Corporate Insolvency Resolution Process is initiated with consequential directions including moratorium and appointment of an Interim Resolution Professional. - HELD THAT: - Having found the application complete and the statutory ingredients satisfied, the Tribunal admitted CP(IB)/08/KOB/2021 under Section 7(4). The order made the moratorium under Section 14 operative from the date of the order, appointed an interim resolution professional from the IBBI panel for the Bench, directed deposit for initial CIRP expenses, required public announcement and vesting of management in the IRP, and set out ancillary directions for compliance and communication to registry and Registrar of Companies. [Paras 24, 25, 26]

Application admitted; CIRP commenced, moratorium imposed, and IRP appointed with directions as recorded.

Final Conclusion: The Tribunal admitted the Section 7 application filed by the Financial Creditor, rejecting objections on limitation, authority to file and existence of debt/default, and directed initiation of the CIRP with moratorium and appointment of an Interim Resolution Professional together with consequential directions.

Business auxiliary service - air travel agent service - target-based incentives / CRS commission - consideration for levy of service tax - classification under Section 65A of the Finance Act - promotion or marketing of client's business

Target-based incentives / CRS commission - business auxiliary service - air travel agent service - consideration for levy of service tax - Incentives/commission received by the air travel agent from CRS developers for bookings through CRS portals are leviable to service tax under the category of business auxiliary service or not. - HELD THAT: - The Tribunal applied the Larger Bench decision in Kafila Hospitality and Travels Pvt. Ltd. and held that the incentives paid by CRS Companies (CRS commission) and target-based incentives are not leviable to service tax as business auxiliary service. The reasoning is that an air travel agent, by selling airline tickets, is promoting its own business and not the business or services of the airlines or CRS companies; any incidental promotion of the airlines/CRS companies is not tantamount to rendering a service of promotion or marketing of a client's business. Consequently, the proper classification of the service rendered by the appellant is under air travel agent service and not business auxiliary service. Further, the Larger Bench concluded that such target-based incentives do not constitute 'consideration' liable to service tax under the charging provisions. Applying these conclusions, the Tribunal found the departmental demand unsustainable and set it aside. [Paras 41, 58, 71, 80, 84]

Demand of service tax, interest and penalties in respect of incentives/commissions received from CRS developers is not sustainable; the impugned orders are set aside and the appeal is allowed.

Final Conclusion: Following the Larger Bench decision in Kafila Hospitality and Travels Pvt. Ltd., the Tribunal concluded that target-based incentives/CRS commission received by an air travel agent do not amount to consideration for levy as business auxiliary service, and accordingly set aside the demand for the period November 2003 to March 2008; the appeal is allowed with consequential relief.

Input Tax Credit on capital goods - Definition of "capital goods" under U.P. VAT Act - Definition of "vehicle" under U.P. VAT Act - Construction equipment vehicle as non-transport vehicle - Captive use within mining premises - Integral part of manufacturing/processing

Input Tax Credit on capital goods - Definition of "capital goods" under U.P. VAT Act - Captive use within mining premises - Integral part of manufacturing/processing - Whether loader and tipper used by the assessee are "capital goods" within the meaning of section 2(f) of the U.P. VAT Act and thus eligible for input tax credit under section 13(1)(b). - HELD THAT: - The court examined the statutory definition of "capital goods" which expressly includes "machinery, loader, equipment for lifting or moving goods within factory premises" while excluding "vehicle used for transporting goods or passengers". Having regard to the admitted facts that the tipper and loader are captively used within the leased mining area to shift boulders a short distance (100-200 meters) to the stone crushing plant and to load the hopper, the court held these operations to be interdependent and integral to the processing/manufacturing of gitti and bhassi. Reliance on authorities establishing that when mining and processing form an integrated operation, transport or handling equipment used to move ore for processing may be treated as part of the manufacturing/processing activity informed the conclusion. The court distinguished decisions concerned with registration or entry tax where classification as a "motor vehicle" for other purposes did not answer the VAT entitlement; consequently the mere fact that such machines may be registrable as motor vehicles under the Motor Vehicles Act does not preclude their characterisation as capital goods for input tax credit when used captively as part of the manufacturing process. [Paras 21, 22, 23, 24]

Loader and tipper, being captively used as integral parts of the processing/manufacturing operation within the mining area, fall within the definition of "capital goods" and are entitled to input tax credit under section 13(1)(b) subject to the factual condition of captive/integrated use.

Definition of "vehicle" under U.P. VAT Act - Construction equipment vehicle as non-transport vehicle - Captive use within mining premises - Whether the question of captive/integrated nature of mining and crushing (and consequent entitlement to input tax credit) has been finally determined by the Court or requires remand for factual determination. - HELD THAT: - Although the court reached the legal conclusion that tipper and loader used captively and integrally with the crushing plant qualify as capital goods, it noted that the entitlement depends on the factual finding whether mining and crushing are carried out as an integrated, captive operation (and that the machines were not used for transport beyond the captive operation or that boulders were not sold prior to crushing). The Revenue produced no material to displace the assessee's case of captive use, but the court directed that the Tribunal should decide the limited factual question whether the mining and crushing constitute captive/integrated operations and whether the machines were used only in that captive operation. [Paras 25, 26]

Matter remanded to the Tribunal for decision limited to the factual question of captive/integrated nature of mining and crushing and consequent entitlement to input tax credit; if mining/crushing are not captive (or boulders are sold prior to crushing), ITC cannot be allowed.

Final Conclusion: The court answered the question of law in favour of the revisionist that loader and tipper used captively and as integral parts of the processing operation fall within "capital goods" and are eligible for input tax credit; the case is remanded to the Tribunal to determine the limited factual question whether mining and crushing were carried out as a captive, integrated operation (failure to prove captive/integrated use will disentitle the assessee from ITC).

Writ of demand - recovery certificate - objection under Section 74 of the DVAT Act - pre-deposit - exclusion of time for limitation

Writ of demand - recovery certificate - objection under Section 74 of the DVAT Act - Whether the petitioner should be relegated to the alternate statutory remedy of filing an objection under Section 74 of the DVAT Act against the writ of demand and recovery certificate - HELD THAT: - The Court recorded that the petitioner is aggrieved by a writ of demand dated 19.09.2020 and an accompanying recovery certificate relating to the period 2007-08 to 2014-15. In view of the availability of the statutory remedy, the Court granted the petitioner liberty to file an objection under Section 74 of the DVAT Act and disposed of the writ petition accordingly. The Court accepted respondents' representation that the alternate remedy exists and that the authority will consider the objection once filed. [Paras 5, 7]

Petitioner relegated to file an objection under Section 74 of the DVAT Act; writ petition disposed of on that basis

Pre-deposit - objection under Section 74 of the DVAT Act - Procedure to be followed by the authority on receipt of the objection, including the question of any pre-deposit required before hearing the objection - HELD THAT: - The Court recorded the respondents' undertaking that upon filing of the objection the concerned authority will consider whether a pre-deposit of the claimed tax and interest is required before hearing the objections and, if so, determine the amount to be remitted. The Court directed that the authority shall hear the petitioner on this aspect in the given circumstances before deciding any requirement of pre-deposit. [Paras 4, 5]

Authority to decide, after hearing the petitioner, whether pre-deposit is required and the amount to be remitted prior to adjudicating the objection

Exclusion of time for limitation - objection under Section 74 of the DVAT Act - Whether the time spent in approaching this Court should be excluded for computing limitation for filing the objection - HELD THAT: - Having relegated the petitioner to the statutory remedy, the Court directed that the concerned authority shall take a benign view and exclude the period spent before this Court when ascertaining limitation for preferring the objection. The authority is also to have regard to orders passed by the Supreme Court in suo motu W.P.(C) No.3/2020 while determining the period to be excluded. [Paras 6]

Authority to exclude time spent in Court for computing limitation and to consider relevant Supreme Court orders in suo motu W.P.(C) No.3/2020

Final Conclusion: Writ petition disposed of by relegating the petitioner to file an objection under Section 74 of the DVAT Act; the authority is directed to decide after hearing whether any pre-deposit is required, to exclude the time spent in these proceedings for limitation, and to have regard to the Supreme Court's orders in suo motu W.P.(C) No.3/2020.

Section 11(6) of the Arbitration and Conciliation Act, 1996 - accrual of right to apply for appointment of arbitrator - limitation under the residuary provision (Article 137) of the Limitation Act, 1963 - stale claim / laches - invocation of arbitration clause and appointment of arbitrator - precedential scope of Bharat Sanchar Nigam Limited v. Nortel Networks India Pvt. Ltd.

Section 11(6) of the Arbitration and Conciliation Act, 1996 - accrual of right to apply for appointment of arbitrator - stale claim / laches - limitation under the residuary provision (Article 137) of the Limitation Act, 1963 - Whether the application under Section 11(6) filed in 2019 was barred by limitation because the right to claim arose on completion of work in 1985/1986 and the arbitration clause was invoked only after approximately thirty-two years. - HELD THAT: - The Court held that the right to claim for the alleged excess work accrued in 1985/1986 when the work was completed; subsequent correspondence beginning in 2012 and the legal notice dated 22.10.2018 invoking the arbitration clause came after an approximate lapse of thirty-two years. The application under Section 11(6) cannot be treated as timely by treating the date of the 2018 legal notice (and the 30-day wait thereafter) as the point of accrual when the underlying cause of action arose decades earlier. In these facts the claim is stale and barred by limitation; the residuary doctrine in Article 137 cannot be employed to resurrect a claim which has become hopelessly time-barred by such long delay. The Court further observed that the decision in Bharat Sanchar Nigam Limited v. Nortel Networks India Private Limited did not apply to a situation where invocation of the arbitration clause and the request for appointment were made after such an inordinate delay, and therefore did not assist the appellant. [Paras 4, 5, 6]

The High Court correctly dismissed the Section 11(6) petition as hopelessly barred by limitation; the claim is stale and the arbitration application is not maintainable.

Final Conclusion: The appeal is dismissed; the order of the Calcutta High Court refusing appointment of an arbitrator under Section 11(6) on the ground of limitation is affirmed. There shall be no order as to costs.

Review under Order XLVII Rule 1 CPC r/w Section 114 - Error apparent on the face of the record - Explanation to Order XLVII Rule 1-subsequent change of law by another Bench not a ground for review - Finality of judgment - Notional/pro-forma promotion and parity in administrative orders

Review under Order XLVII Rule 1 CPC r/w Section 114 - Error apparent on the face of the record - Explanation to Order XLVII Rule 1-subsequent change of law by another Bench not a ground for review - Whether the order dated 21st January, 2020 in Writ Petition No.25502/2018 is amenable to review - HELD THAT: - The Court held that review jurisdiction under Order XLVII Rule 1 r/w Section 114 is confined to limited grounds such as discovery of new evidence, mistake or error apparent on the face of the record, or any other sufficient reason analogous thereto. A mere change in law by a subsequent decision of a coordinate Bench, or subsequent setting aside of a decision relied upon, does not constitute an error apparent on the face of the record and is not a permissible ground for review in view of the Explanation to Order XLVII Rule 1. The Division Bench observed that the order of 21st January, 2020 was decided on merits and, as at that date, the earlier Tribunal order relied upon was extant and binding; the review petitioners, being parties to that writ, did not challenge the order then and subsequently sought review mainly on account of a later decision which set aside the Tribunal order in a separate petition. Re-agitation of the same points or reliance on subsequent change of law to reopen a final adjudication was held impermissible; no patent or self-evident error apparent on the face of the 21.1.2020 order was demonstrated that would justify review. Accordingly, the review petition did not disclose any of the statutory grounds warranting review and was therefore not maintainable. [Paras 19, 23, 34, 35]

Review petition dismissed for failure to establish any ground for review; no order as to costs.

Notional/pro-forma promotion and parity in administrative orders - Finality of judgment - Whether parity with the relief granted to D.B. Manival Raju could be the basis for review of the Court's own order - HELD THAT: - The Court noted that the earlier grant of notional promotion to D.B. Manival Raju by the Tribunal was a contextual fact relied upon when the Division Bench decided W.P. No.25502/2018 on merits. That decision had attained finality as the review petitioners did not challenge it at the time. The subsequent setting aside of the Tribunal order in unrelated proceedings, without showing any error apparent in the Division Bench's own order, does not afford a ground for reopening the final judgment. The Court emphasised that parity-based reliance on an earlier order, and a later change in law affecting that earlier order, cannot be used to obtain review absent a manifest error in the judgment sought to be reviewed. [Paras 17, 18, 29, 31]

No ground for review based on parity or subsequent change in law; the original judgment stands final.

Final Conclusion: The review petition is dismissed as devoid of merit; the order dated 21st January, 2020 in W.P. No.25502/2018 remains final and no costs are awarded.

Burden of proof for execution of a promissory note - presumption as to negotiable instruments when signature is admitted - appreciation of oral and documentary evidence - concurrent findings of fact and appellate interference

Burden of proof for execution of a promissory note - presumption as to negotiable instruments when signature is admitted - Pronote was not proved in the manner known to law; statutory presumption under Section 118 of the Negotiable Instruments Act could not be invoked. - HELD THAT: - The Courts below concurrently found that the plaintiff failed to prove execution of the pronote and failed to prove passing of consideration. Because the pronote was not established as executed in the manner required by law, the assumed foundation for invoking the statutory presumption relating to negotiable instruments was absent. The High Court accepted that where the document itself is not proved, the presumption envisaged by the statute cannot be applied in favour of the party who relies on it. [Paras 5, 6, 8]

Statutory presumption in respect of the pronote does not avail the plaintiff as the pronote was not proved.

Appreciation of oral and documentary evidence - concurrent findings of fact and appellate interference - Appellate interference with concurrent findings of the Trial and Lower Appellate Courts was not warranted as there was no perversity or illegality in their appreciation of evidence. - HELD THAT: - The High Court examined the contention that evidence of PW1 and PW2 and certain documents were misappreciated. It found no irregularity or perversity in the manner in which the Courts below evaluated the oral and documentary evidence. In the absence of any illegality or perversity in the concurrent findings, the High Court declined to reappraise the evidence or disturb the conclusions reached by the lower fora. [Paras 6, 8]

No interference with the concurrent findings of fact; appreciation of evidence by the Courts below upheld.

Final Conclusion: The Second Appeal is dismissed; the concurrent findings of the Trial and Lower Appellate Courts that the pronote was not proved and that the presumption under the Negotiable Instruments Act does not apply are affirmed.

Rebuttal of initial presumption under Section 118 of the Negotiable Instruments Act - requirement to prove consideration for promissory notes - appellate interference where trial court ignores improbabilities and goes beyond pleadings

Rebuttal of initial presumption under Section 118 of the Negotiable Instruments Act - Appellants/defendants successfully rebutted the initial presumption arising from execution of the promissory notes. - HELD THAT: - The court found that the weakness and improbabilities in the plaintiff's case amounted to sufficient rebuttal of the presumption under Section 118. Material improbabilities included the plaintiff's admission that interest on the first loan was unpaid and the implausibility of advancing a further large loan shortly thereafter, the scribe's interest which affected his neutrality, and independent evidence (attendance and admission registers) indicating the first appellant was at college during the alleged transaction. The judgment accepted that rebuttal need not always be by direct positive evidence and that circumstantial contradictions and improbabilities in the plaintiff's case can discharge the presumption. [Paras 21, 23]

Initial presumption under Section 118 was rebutted in favour of the appellants.

Requirement to prove consideration for promissory notes - Respondent/plaintiff failed to prove that the promissory notes were supported by consideration. - HELD THAT: - Even assuming the signatures were genuine, the court held the plaintiff bore the obligation to prove passing of consideration once the defendants denied it. The court noted absence of positive proof that the plaintiff had sufficient funds on the relevant dates and emphasised that probabilities must be established when the plaintiff's case contains material doubts. The improbabilities highlighted-non-payment of interest on the first loan, failure to make timely demand during the deceased's lifetime, and evidence placing the first appellant elsewhere at the relevant time-weighed against finding that consideration had been proved. [Paras 16, 18, 23]

Plaintiff did not prove that the promissory notes were supported by consideration.

Appellate interference where trial court ignores improbabilities and goes beyond pleadings - The trial court's judgment was set aside for misappreciation of evidence and for acting beyond the pleadings. - HELD THAT: - The appellate court found that the trial judge erred by disregarding material improbabilities in the plaintiff's case, by relying on evidence of doubtful neutrality, and by making observations outside the scope of pleadings (notably imputations about the deceased's alleged illicit conduct). Those misappreciations led to an unsafe conclusion; consequently the appellate court held interference was warranted and allowed the appeal. [Paras 20, 25, 26]

Judgment of the trial court set aside and appeal allowed.

Final Conclusion: The appeal is allowed: the defendants successfully rebutted the statutory presumption, the plaintiff failed to prove consideration for the promissory notes, and the trial court's decree is set aside. No costs.

Section 138 Negotiable Instruments Act - dishonour of cheque - payment within period specified in statutory notice - cheque issued as security - subsisting legal liability for criminal liability under Section 138 - quashing of criminal proceedings - disputed factual inquiries requiring trial

Payment within period specified in statutory notice - quashing of criminal proceedings - Section 138 Negotiable Instruments Act - Whether criminal proceedings in C.C. No. 6543 of 2015 should be quashed where the cheque amount was paid to the complainant within the period specified in the statutory notice. - HELD THAT: - The Court examined the account statement produced by the petitioners and found that the cheque amount in C.C. No. 6543 of 2015 was paid to the respondent on 04.04.2015. The statutory notice dated 24.03.2015 gave 15 days to make payment; the payment was therefore made within the notice period and was accepted by counsel for the respondent. On this basis the Court held there was no cause of action for prosecution under Section 138 of the Negotiable Instruments Act in respect of C.C. No. 6543 of 2015 and concluded that the criminal proceedings in that complaint must be quashed. [Paras 8]

Proceedings in C.C. No. 6543 of 2015 quashed.

Cheque issued as security - subsisting legal liability for criminal liability under Section 138 - disputed factual inquiries requiring trial - Section 138 Negotiable Instruments Act - Whether criminal proceedings in C.C. No. 6544 of 2015 should be quashed on the petitioners' plea that the post dated cheques were given as security and that amounts were paid subsequently. - HELD THAT: - The Court noted documentary material and correspondence suggesting the cheques in C.C. No. 6544 of 2015 may have been given as security and that payments were made subsequently, including email communications about returning cheques after RTGS transfers. However, the petitioners did not deny liability, and the payments relied upon by them were made after receipt of the statutory notice and do not conclusively demonstrate that those payments corresponded to the cheque amounts. The Court observed that the determination of whether the cheques were issued as security or in discharge of an existing liability involves disputed facts and documentary evidence that require oral testimony and trial-process evaluation. Accordingly, the Court refused to decide those contested factual issues in the present petition and directed that the matter proceed to trial. [Paras 10, 11, 12]

C.C. No. 6544 of 2015 not quashed; petition dismissed and the complaint to proceed to trial.

Final Conclusion: The petition succeeds in part: proceedings in C.C. No. 6543 of 2015 are quashed as the cheque amount was paid within the statutory notice period; proceedings in C.C. No. 6544 of 2015 are not quashed and must proceed to trial to decide disputed factual questions regarding the nature of the cheques and discharge of liability.