TaxTMI Updates e-Newsletter
Apr 26,2021

Composite supply - Works contract - Principal supply - Leasing or rental services with or without operator (SAC 9973) - Concessional rate under Notification No. 11/2017-Sl. No. 3(v)(a) and Sl. No. 3(vi)(a) - Service of order by registered post deemed served

Service of order by registered post deemed served - Appeal filed within statutory period - HELD THAT: - The Appellate Authority examined the mode and dates of communication of the lower authority's ruling and the appellant's submissions regarding receipt. The originally dispatched order was returned as 'left' and was thereafter re-sent to the appellant's declared address on request; the order was also made available on public websites. Applying the deemed service principle for registered post and having regard to the subsequent re-dispatch and the circumstances shown on record, the Appellate Authority held that the appeal was filed within the statutory time and proceeded to decide the merits. [Paras 6]

Appeal is maintainable and was filed within the statutory period.

Composite supply - Principal supply - Whether the entire LOA/tender constitutes a single composite supply - HELD THAT: - The Authority analysed the contractual structure and the nature and timing of the various supplies under the tender. The tender comprises distinct categories: (i) construction, provisioning and commissioning (Schedules I-III) to be completed within the contract period; (ii) disposal of obsolete M&Ps where ICF is supplier; (iii) wet leasing of M&Ps for ten years with distinct terms and payment on productivity basis; and (iv) CAMC to commence after warranty. Not all supplies are made by the appellant to ICF, and the supplies are not supplied in conjunction with each other in the ordinary course of business because of differing durations, separate agreements, separate delivery and contractual modalities. Consequently, the tender as a whole is not a single composite supply as defined in the statute; only certain elements are naturally bundled. [Paras 8]

The entire LOA/tender is not a single composite supply; only Supplies under Schedule I, II and III are naturally bundled as a composite supply.

Works contract - Concessional rate under Notification No. 11/2017-Sl. No. 3(v)(a) - Whether supplies under Schedule I, II and III are composite works contract eligible for concessional rate under Sl. No. 3(v)(a) - HELD THAT: - On examination of the contract and tender documents, the Authority found that Schedule I-III comprise construction of shed, provisioning of M&Ps, installation, commissioning and related activities that involve transfer of property in goods in execution of immovable property work. Those elements are naturally bundled and supplied together on a turn key basis and therefore fall within the statutory definition of 'works contract'. The lower authority had held these schedules to be composite supply of works contract eligible for Sl. No. 3(v)(a) and the Appellate Authority found no reason to interfere with that conclusion. [Paras 8]

Supplies under Schedule I, II and III are a composite supply of works contract and eligible for the concessional rate under Sl. No. 3(v)(a).

Leasing or rental services with or without operator (SAC 9973) - Works contract - Classification of wet leasing under Schedule V and its eligibility for Sl. No. 3(v)(a) - HELD THAT: - The wet leasing agreements provide for lease of machinery in working condition, supply of manpower, consumables, maintenance during the lease, quarterly lease charges linked to productivity, and retention of the assets in the lessor's books during the lease with transfer of title to ICF only at lease expiry. These contractual features distinguish the activity from a works contract (which requires transfer of property in goods in execution of immovable property work). The Appellate Authority agreed with the lower authority that wet leasing is properly classifiable as leasing/rental services (SAC 9973) and not as a works contract. [Paras 8]

Wet leasing under Schedule V is leasing/rental service and not a works contract; Sl. No. 3(v)(a) is not applicable.

Works contract - Concessional rate under Notification No. 11/2017-Sl. No. 3(vi)(a) - Whether the Comprehensive AMC under Schedule VI is eligible for Sl. No. 3(v) or alternatively for Sl. No. 3(vi)(a) - HELD THAT: - The Authority held that maintenance services (CAMC) do not fall under entry Sl. No. 3(v), which is confined to works contract by way of construction, erection, commissioning or installation of original works. The appellant alternatively relied on Sl. No. 3(vi)(a) which grants concessional rate for composite works contracts provided to specified government entities for original works 'meant predominantly for use other than for commerce, industry or any other business or profession.' The Authority examined the nature of ICF and the purpose of the plant: ICF is a production unit of the Railways and the plant is intended for manufacturing stainless steel coaches. The Explanation to the entry indicates that where the activity is not that of a 'public authority' the activity is treated as 'business.' On this basis the Authority agreed with the lower authority that the CAMC is not covered by Sl. No. 3(vi)(a). [Paras 8]

CAMC under Schedule VI is not covered by Sl. No. 3(v) and the alternative claim under Sl. No. 3(vi)(a) is rejected; concessional rate is not available for CAMC.

Final Conclusion: The Appellate Authority dismissed the appeal on merits: the appeal was held to be timely; only Schedules I-III constitute a composite works contract eligible for concessional rate under Sl. No. 3(v)(a); Schedule V (wet leasing) is a leasing service not eligible for Sl. No. 3(v)(a); and Schedule VI (CAMC) is not eligible for concessional benefit under Sl. No. 3(v) or Sl. No. 3(vi)(a). The original advance ruling is upheld and the appeal is disposed of.

Ad interim bail - conditions of bail - deposit as bail condition - undertaking restraining creation of encumbrance - production before trial court - notice returnable

Ad interim bail - production before trial court - notice returnable - Petitioner released on ad interim bail pending further consideration and case listed on notice. - HELD THAT: - Having considered the facts placed before the Court, including the period of custody and the filing of the charge-sheet, the Court issued notice returnable on 10.05.2021 and ordered that, pending further consideration, the petitioner be released on ad interim bail subject to satisfaction of the concerned Trial Court. To effectuate the order, the petitioner was directed to be produced before the Trial Court within three days from the date of the order so that the Trial Court may implement the bail release subject to such conditions as it deems appropriate.

Notice issued returnable 10.05.2021; petitioner to be produced before the Trial Court within three days and released on ad interim bail subject to the Trial Court's satisfaction and such conditions as it may impose.

Conditions of bail - deposit as bail condition - undertaking restraining creation of encumbrance - Specific conditions imposed for grant of ad interim bail, including deposit and undertaking. - HELD THAT: - As part of the order granting ad interim bail, the Court conditioned the release on (i) deposit of a specified sum with the concerned authorities on or before 10.05.2021 and filing proof of such deposit in the Registry of this Court, and (ii) filing within five days of an undertaking by the petitioner that she shall not create any encumbrance over business or personal properties and that she will deposit the amount representing the admitted duty element. These conditions were imposed to secure the interests asserted by the State while permitting temporary release pending further adjudication.

Petitioner to deposit the specified sum by 10.05.2021 and file proof, and to file the undertaking within five days; compliance with these conditions required for the interim bail to operate.

Final Conclusion: Interim relief granted: notice issued and ad interim bail allowed subject to the petitioner being produced before the Trial Court and compliance with the deposit and undertaking conditions; Trial Court to release petitioner on bail subject to such conditions as it considers appropriate.

Anticipatory bail under Section 438 Cr.P.C. - power to arrest under the Central Goods and Services Tax Act - pre-arrest authorisation by the Commissioner - cognizable and non-bailable offences under the CGST Act subject to monetary thresholds - reason to believe - safeguards against arbitrary arrest and requirement to produce before Magistrate - custodial interrogation not necessary where material is lacking

Anticipatory bail under Section 438 Cr.P.C. - custodial interrogation not necessary where material is lacking - Whether the applicant was entitled to grant of anticipatory bail in respect of apprehended arrest in GST-related proceedings. - HELD THAT: - The court found that on the materials before it the applicant had not been arraigned as an accused and no concrete evidence sufficient to implicate him had been collected. Although an associate (Abdul Saleem) had implicated the applicant by alleging sharing of login credentials and filing of returns, the respondents had not produced incriminating material against the applicant in the writ objections; the recovery reported from the applicant's residence was not detailed beyond reference to blank cheques. The court accepted that an apprehension of arrest need not await formal arraignment and that a petitioner may seek anticipatory bail upon establishing a reasonable apprehension of arrest. Having regard to the lack of material to justify custodial interrogation and the applicant's willingness to cooperate and produce bank accounts and documents for scrutiny, custodial interrogation was held unnecessary and relief of anticipatory bail was appropriate. [Paras 8, 9]

Anticipatory bail granted; applicant directed to appear before investigating officer within three weeks, cooperate and produce documents, and if arrested to be released on bail upon execution of bond and furnishing of sureties with conditions to attend for investigation and not tamper with evidence or witnesses.

Power to arrest under the Central Goods and Services Tax Act - pre-arrest authorisation by the Commissioner - cognizable and non-bailable offences under the CGST Act subject to monetary thresholds - reason to believe - safeguards against arbitrary arrest and requirement to produce before Magistrate - Whether the arrest framework under the CGST Act incorporates adequate safeguards and the correct legal standard for exercise of arrest powers. - HELD THAT: - The court examined Sections of the CGST Act and observed that the statute confines arrest powers to specific offences and, for most first-time offenders, imposes a monetary threshold before arrest powers can be exercised. Certain offences (for example repeat offences or acts like falsification of records, obstruction, tampering with evidence) permit arrest irrespective of monetary amount. The CGST Act further requires pre-arrest authorisation by the Commissioner for exercise of arrest powers by central tax officers, thereby introducing an additional layer of restriction. The phrase 'reason to believe' governing the Commissioner's satisfaction was held to require a rational connection with relevant material and not a purely subjective satisfaction. Post-arrest safeguards - informing the arrested person of grounds and producing him before a Magistrate within twenty four hours - align with constitutional and Cr.PC protections. [Paras 5, 6, 7]

Arrest powers under the CGST Act are subject to statutory safeguards including offence-specific limits, monetary thresholds for many first-time offences, pre-arrest authorisation by the Commissioner based on 'reason to believe', and procedural safeguards after arrest; these features must be respected to prevent arbitrary arrests.

Final Conclusion: The petition for anticipatory bail is allowed. The applicant must appear before the investigating officer within three weeks and cooperate by producing documents; if arrested after interrogation he shall be released on bail on execution of a bond and furnishing of solvent sureties, subject to attendance for investigation and non-tampering conditions.

Dropping of demand - competency of adjudicating officer - correction of typographical error in order - liberty to revive writ petition on recall or review

Dropping of demand - liberty to revive writ petition on recall or review - The contesting respondents' statement that the demand in the show cause notice stands dropped is accepted and the petition is not pursued further at this stage, with liberty granted to revive the petition if the respondents recall or review the order. - HELD THAT: - The contesting respondents informed the Court that the statement made on 05.04.2021, that the demand raised in the subject show cause notice stands dropped, continues to hold. The Court recorded this position and, given that the demand no longer subsists, chose not to detain the matter on the competency objection raised by the petitioner. However, the Court expressly recognised that if the respondents thereafter seek to recall or review the order which has the effect of reviving the demand, the petitioner would be entitled to challenge such action and to seek revival of the writ petition. Liberty to do so is accordingly granted. [Paras 3, 8, 11]

Respondents' statement that the demand stands dropped is accepted; petition not pursued now and liberty granted to revive the petition if respondents recall or review the order.

Correction of typographical error in order - The typographical error in the order dated 05.04.2021 identifying Mr. Hriday Singh's rank is to be corrected from the erroneous designation to 'Assistant Commissioner, CGST'. - HELD THAT: - The petitioner pointed out that the order dated 05.04.2021 incorrectly described Mr. Hriday Singh as an officer of the Income Tax Department and that the error appears both in the body of the order and alongside the cause title where appearances are recorded. The Court found this to be a typographical error and directed that the order be corrected to show Mr. Hriday Singh's rank as Assistant Commissioner, CGST. The correction is to be made both in the body of the order and alongside the cause title. [Paras 6, 9, 10, 11]

Order dated 05.04.2021 shall be corrected to show Mr. Hriday Singh's rank as Assistant Commissioner, CGST, in the body and alongside the cause title.

Final Conclusion: Notice issued; respondents' concession that the demand has been dropped accepted and petition disposed of on that basis; typographical correction directed; liberty granted to the petitioner to revive proceedings if the respondents recall or review the order.

Order of prohibition - power under Section 67(2) of the Central Goods and Services Tax Act, 2017 - liberty to apply for release of detained goods - personal hearing - speaking order - release of detained goods on such terms as deemed fit - video-conferencing proceedings

Order of prohibition - liberty to apply for release of detained goods - personal hearing - speaking order - video-conferencing proceedings - Interim procedural relief in respect of goods subject to the prohibition order and direction for consideration of an application for release of the goods. - HELD THAT: - The Court did not decide the correctness or vires of the prohibition order on merits. Instead, petitioner's immediate grievance was addressed by granting liberty to file an application within five days for release of the goods qua which the prohibition order was passed. Upon such application, the concerned officer is directed to consider the request, grant a personal hearing to the authorised representative of the petitioner, and, if the request is found viable, release the goods on such terms as the officer deems fit. The officer must dispose of the application within three days of the hearing and pass a speaking order, furnish a copy to the petitioner and place a copy on the record of the Court. In view of COVID-19 restrictions, the officer may conduct proceedings via video-conferencing. The Court recorded that counter-affidavits and rejoinders would be filed in the normal course and listed the matter for further hearing. [Paras 4]

Liberty granted to petitioner to apply for release within five days; the concerned officer to grant personal hearing, decide the application within three days of hearing, pass and supply a speaking order, and may conduct proceedings by video-conference.

Final Conclusion: Petition entertained for interim consideration only; directions issued for prompt administrative consideration of the petitioner's application for release of goods subject to the prohibition order, without adjudicating the merits of the prohibition.

Provisional attachment - Release of attachment renders challenge academic - Balancing protection of revenue with continuation of business

Provisional attachment - Release of attachment renders challenge academic - Challenge to provisional attachment of the petitioner's bank accounts pending investigation - HELD THAT: - The Court recorded that all bank accounts of the petitioner had been provisionally attached, crippling the petitioner's business, and earlier directed that the petitioner could seek selective release of accounts sufficient to enable conduct of business while protecting the revenue. The petitioner subsequently made certain ad hoc payments during the investigation and the attachment of the petitioner's bank account was lifted. Since the relief sought in the writ petition challenged the provisional attachment and that attachment has been lifted, the challenge became academic. The Court therefore closed the writ petition and connected miscellaneous petitions without considering the matter on merits.

Writ petition closed as the provisional attachment has been lifted, rendering the challenge academic; connected petitions closed; no costs.

Final Conclusion: The writ petition challenging provisional attachment was closed because the bank account attachment had been released after ad hoc payments; the challenge was rendered academic and connected petitions were closed without costs.

Principles of natural justice - audi alteram partem - advance ruling - reliance on undisclosed opinion - remand for fresh consideration - alternative remedy not a bar

Principles of natural justice - reliance on undisclosed opinion - advance ruling - remand for fresh consideration - Whether the order of the Authority for Advance Ruling was vitiated for non-disclosure of the Principal Commissioner of Central Tax's report and consequent breach of principles of natural justice, and whether the matter should be remanded. - HELD THAT: - The Court found that the Authority for Advance Ruling materially relied upon a report/opinion of the Principal Commissioner of Central Tax when passing its order but did not furnish that report to the petitioner. Non-disclosure of the report deprived the petitioner of an opportunity to meet or controvert the material relied upon, thereby infringing the principles of natural justice and fair play. In these circumstances the Court concluded that the order could not stand. The Court noted that the petitioner has since obtained the report under the Right to Information Act and therefore remitted the matter to the Authority for Advance Ruling for fresh consideration. The remand is for rehearing and reconsideration of the matter afresh, allowing the petitioner to argue taking the previously undisclosed report into account; no opinion was expressed on the merits of the underlying tax question.

Order dated 11.09.2020 set aside; matter remitted to the Authority for Advance Ruling to rehear and pass a fresh order in accordance with law within 45 days, petitioner to be permitted to rely on the previously undisclosed report.

Final Conclusion: Writ petition allowed; the advance ruling is quashed for breach of natural justice and the matter is remitted to the Authority for Advance Ruling for fresh consideration, with liberty to the petitioner to be heard on the basis of the report now in its possession.

Refund of unutilised input tax credit under Section 54(3) - alternative relief of duty drawback versus refund of ITC - validity of administrative Circular vis-a -vis statutory provision

Refund of unutilised input tax credit under Section 54(3) - alternative relief of duty drawback versus refund of ITC - Claim for refund of unutilised input tax credit for the months of August and September, 2017 was maintainable despite the petitioner having claimed and received duty drawback. - HELD THAT: - The Court examined Section 54(3) and concluded that an exporter engaged in zero rated supplies is entitled to one of two mutually exclusive benefits - duty drawback or refund of unutilised input tax credit - thereby recognising an option in favour of the assessee. The petitioner had received drawback and had remitted/credited tax which formed the basis of a refund claim under Section 54. Applying the plain language of Section 54(3), the Court found the refund claim to be in order and held that the appellate authority's rejection was unsustainable. The Court directed refund of the sanctioned amounts for the specified months within six weeks, setting aside the appellate orders which had denied the refund on the ground of alleged excess drawback. [Paras 11, 12]

Refund claim under Section 54(3) upheld for August and September, 2017; appellate orders set aside and sanctioned amounts to be refunded within six weeks.

Validity of administrative Circular vis-a -vis statutory provision - Paragraph 2.5 of Board's Circular No.37/18-Customs dated 09.10.2018 cannot override or defeat the benefit conferred by Section 54(3) and is invalid insofar as it is contrary to the statute. - HELD THAT: - The appellate authorities relied on paragraph 2.5 of the Board's Circular to conclude that by claiming drawback (and in the respondent's view by making certain declarations) the exporter had renounced any claim to ITC refund. The Court held that a circular cannot curtail or negate a statutory entitlement and specifically declared paragraph 2.5, to the extent it conflicts with Section 54(3), bad in law. The Court therefore rejected the reliance on the circular to refuse the statutory refund remedy. [Paras 12]

Paragraph 2.5 of Circular No.37/18-Customs is inoperative to the extent it is contrary to Section 54(3) and cannot be used to deny the statutory refund.

Final Conclusion: Writ Petitions for the months of August and September 2017 allowed; appellate orders rejecting the refund set aside and the sanctioned amounts directed to be refunded within six weeks. The petition for July 2017 was withdrawn and dismissed accordingly.

Adjustment of tax liability under Section 34(2) of the CGST Act, 2017 - Refund of excess tax under Section 54 of the CGST Act, 2017 - Duplicate/double payment of GST - Declaration of credit note in return within prescribed time - Relevance of Rule 86(4A) - recredit to electronic credit ledger - Circular No.137/07/2020-GST - adjustment versus refund

Duplicate/double payment of GST - Adjustment of tax liability under Section 34(2) of the CGST Act, 2017 - Declaration of credit note in return within prescribed time - Whether the appellant had in fact paid GST twice and whether adjustment under Section 34(2) precludes classification of the amounts as excess payment refundable under Section 54. - HELD THAT: - The Commissioner (Appeals) found that multiple invoices, debit note and credit notes were issued for the same supply and that the situation falls within Section 34(1). The appellant had reported credit notes in GSTR-1 filed after 30.09.2018 but failed to adjust the tax liability in the returns for the months in which the credit notes were issued, as mandated by Section 34(2). In view of Section 34(2) and the Board's clarification (Circular No.137/07/2020-GST) on adjustment versus refund, the proper course where credit notes can be adjusted is to adjust tax liability in the specified return and time-frame; failing that, the case cannot be treated as simple excess payment eligible for refund under Section 54. The adjudicator accordingly concluded that the appellant did not demonstrate an entitlement to refund because the statutory adjustment mechanism under Section 34(2) had not been availed within the prescribed period and manner. [Paras 7, 9, 10]

The payments are governed by Section 34(2) adjustment mechanism and, since the appellant failed to adjust the credit notes in the returns as required, the amounts cannot be allowed as refund claimed as excess payment.

Refund of excess tax under Section 54 of the CGST Act, 2017 - Relevance of Rule 86(4A) - recredit to electronic credit ledger - Circular No.137/07/2020-GST - adjustment versus refund - Whether the appellant is entitled to refund of the claimed amounts under Section 54 of the CGST Act, 2017. - HELD THAT: - The Commissioner (Appeals) held that the present facts involved issuance of multiple credit notes and a debit note for the same supply, bringing the matter within Section 34 rather than a pure case of erroneous/excess payment for which refund under Section 54 would apply. The submission invoking Rule 86(4A) (recredit to electronic credit ledger) was found not to be relevant because the dispute concerned adjustment by credit notes under Section 34. The appellate authority therefore concluded that the refund claims under Section 54 are not maintainable on the facts because the statutory adjustment under Section 34(2) was the operative remedy and was not complied with by the appellant. [Paras 11, 12]

Claim for refund under Section 54 is not sustainable as the facts require adjustment under Section 34 and the appellant did not follow the statutory adjustment procedure.

Final Conclusion: The appeals are dismissed. The Commissioner (Appeals) upheld the Orders in Original rejecting the refund claims for June 2018, August 2018 and September 2018 on the ground that the facts fall within the adjustment regime of Section 34(2) of the CGST Act, 2017 and the appellant failed to effect the requisite adjustment in the prescribed returns; the refund under Section 54 is therefore not allowable.

Refund of tax deducted at source - condonation of delay under Rule 41 of the Income Tax Rules, 1962 - application for refund under Chapter XIX - obligation to file return under Section 139 - effect of amendment to Section 239 of the Income Tax Act, 1961

Condonation of delay under Rule 41 of the Income Tax Rules, 1962 - refund of tax deducted at source - Liberty granted to the petitioner to file an application under Rule 41 seeking condonation of delay for claiming refund of withholding tax for the AYs mentioned in the impugned communication. - HELD THAT: - The High Court, while noting that the petitioner had not filed returns for the AYs in question and that assessment proceedings under Sections 147/143(3) had been completed with income assessed as nil for AY 2013-2014, observed that the petitioner could seek condonation of delay under Rule 41 of the Income Tax Rules, 1962. The court did not finally adjudicate the substantive entitlement to refund but held that the petitioner should be permitted to move the statutory remedy of condonation; the petitioner undertook to file such application within ten days. The court thereby preserved the petitioner's procedural right to have the delayed refund claim considered on its merits by the administrative authority in accordance with law. [Paras 7]

Petitioner granted liberty to file a Rule 41 application for condonation of delay in claiming the refund.

Application for refund under Chapter XIX - obligation to file return under Section 139 - effect of amendment to Section 239 of the Income Tax Act, 1961 - Direction to the concerned income tax officer to consider and decide the Rule 41 application by affording opportunity of personal hearing and to pass a speaking order within a specified timeframe in respect of refund claims for the AYs mentioned. - HELD THAT: - The court directed that upon filing of the Rule 41 application by the petitioner, the concerned officer shall deliberate on it and dispose of the same in accordance with law after giving an opportunity of personal hearing to the petitioner's authorised representative; the hearing may be conducted via videoconferencing. The officer was directed to pass a speaking order and communicate the decision to the petitioner. The court set a time limit of three weeks from filing of the application for completion of the exercise. The court did not resolve whether the pre-amendment or post-amendment provisions of Section 239 govern the refund claim; instead it required the administrative process to be followed so that the legal position may be determined in the discharge of official duties. [Paras 7]

Concerned officer directed to hear the petitioner (including by videoconference), decide the Rule 41 application by a speaking order and communicate the decision within three weeks.

Final Conclusion: The petition is not finally adjudicated on entitlement to refund; the petitioner is granted liberty to file an application under Rule 41 for condonation of delay and the assessing/exemption authority is directed to decide that application after affording a hearing (including by videoconference) and to pass a speaking order within three weeks, following which the matter will be listed for further consideration.

Search and seizure under Section 132(1)(c) of the Income Tax Act - property representing undisclosed income - release of seized property - assessment officer's verification

Search and seizure under Section 132(1)(c) of the Income Tax Act - property representing undisclosed income - release of seized property - Seizure of original title deeds is permissible only if they represent, wholly or partly, income or property not disclosed or not to be disclosed; release of seized title deeds directed subject to verification. - HELD THAT: - The Court accepted petitioner's submission that seizure under the Act can be made only where the documents seized represent income or property that is not disclosed. While the revenue accepted that seizure must fall within the scope of Section 132(1)(c), the Court did not direct unconditional return. Instead, it required the Assessing Officer to satisfy herself whether the transactions covered by the seized title deeds had been disclosed in the income-tax returns for the relevant assessment years as represented in Annexure-R. On receipt of instructions, the revenue undertook to release the title deeds to the petitioner's authorised representative within two weeks, subject to the Assessing Officer's satisfaction and compliance with the procedure recorded by the Court. [Paras 4, 5, 6]

Title deeds to be released to authorised representative within two weeks, after the Assessing Officer verifies that the transactions reflected in those deeds were disclosed in the ITRs as indicated in Annexure-R; release to be intimated to petitioner's counsel.

Assessment officer's verification - liberty to approach the Court - If the Assessing Officer decides not to release all or some of the seized title deeds, she must pass a reasoned order and furnish a copy to the petitioner, who will have liberty to approach the Court. - HELD THAT: - The Court stipulated a procedural safeguard: where the Assessing Officer, after verification, refuses release of any or all of the ten title deeds, she shall record an order to that effect and supply a copy to the petitioner. This preserves the petitioner's right to challenge non-release before the Court. The Court also directed filing of a counter-affidavit by the revenue within two weeks and permitted rejoinder, thereby keeping the matter judicially supervised pending compliance. [Paras 8, 9]

Assessing Officer to pass an order if she declines release, provide copy to petitioner; petitioner given liberty to approach the Court against such order.

Final Conclusion: The petition is admitted; the Court directed conditional release of ten seized title deeds subject to the Assessing Officer's verification that the transactions were disclosed in the ITRs as per Annexure-R, required the revenue to file a counter-affidavit, and granted the petitioner liberty to challenge any refusal to release by way of a reasoned order furnished to the petitioner.

True and full disclosure - application under Section 245C - pre condition of clean hands - rejection of settlement application under Section 245D(4) - scope of judicial review under Article 226 in settlement proceedings - settlement Commission's factual finding - interference only for error apparent

True and full disclosure - application under Section 245C - pre condition of clean hands - rejection of settlement application under Section 245D(4) - Validity of the Settlement Commission's rejection of the petitioner's application for settlement on the ground that the petitioner had not made true and full disclosure as required by Section 245C and consequential rejection under Section 245D(4). - HELD THAT: - The High Court held that Section 245C requires an assessee to make a full and true disclosure and approach the Commission with clean hands; this pre condition must persist through the stages contemplated in Section 245D. The Settlement Commission had recorded specific, unambiguous findings that the petitioner retracted earlier statements made on three occasions and failed to furnish cogent reasons for the retraction, and that material facts (including tax paid by the other party in respect of the amount received) did not negate the Commission's view that true and full disclosure was lacking. Reliance on precedents (S.V.Shankar , Shriyans Prasad Jain , and Abdul Rahim ) was placed to emphasise the limited scope of judicial review: courts exercising jurisdiction under Article 226 may interfere only for errors apparent on the face of the record and should not substitute their appreciation of facts for that of the Settlement Commission. Given the Commission's factual adjudication that the requirement of true and full disclosure was not satisfied, and in absence of any apparent error on the face of the record, the High Court declined to disturb the Commission's rejection and refused to remand for fresh consideration on merits. [Paras 10, 11]

The Settlement Commission's rejection under Section 245D(4) for failure to make true and full disclosure was upheld and not interfered with by the High Court.

Scope of judicial review under Article 226 in settlement proceedings - statutory arbitration nature of settlement proceedings - Whether the writ petition under Article 226 was maintainable to challenge the Commission's factual conclusion and to direct reconsideration of the settlement application. - HELD THAT: - The Court reiterated that settlement proceedings under Chapter XIX A are in the nature of statutory arbitration and the High Court's jurisdiction is not appellate. The court may intervene only where there is a mistake apparent on the face of the record; it cannot reappraise evidence or substitute its view for that of the Commission. The petitioner's plea that the matter be remanded so he may explain facts was rejected because the Commission had concurrently exercised its fact finding function and arrived at specific conclusions adverse to the petitioner. There was no perversity or demonstrable apparent error shown that would justify interference under Article 226. Additionally, the Court noted the administrative fact that the Settlement Commission has been abolished with effect from 01.02.2021, which rendered the petition unsustainable. [Paras 5, 6, 7, 12]

Writ petition was dismissed; the High Court declined to entertain the petition challenging the Commission's factual findings and found no ground to direct reconsideration.

Final Conclusion: The High Court dismissed the petition, upholding the Settlement Commission's finding that the petitioner did not make true and full disclosure warranting rejection under Section 245D(4), and refused to interfere under Article 226; the petition was unsustainable also in view of abolition of the Settlement Commission with effect from 01.02.2021.

Stay of recovery - interim stay pending appeal - time bound disposal of stay applications - direction to adjudicating authority to consider pending application - CBDT circulars on stay applications

Stay of recovery - interim stay pending appeal - CBDT circulars on stay applications - Grant of interim stay of recovery of the disputed demand and its temporal scope. - HELD THAT: - The Court directed that, because a stay application had been filed by the petitioner pending appeal and circulars of the Central Board of Direct Taxes require Assessing/Appellate Authorities to hear and dispose stay applications in a time bound manner, there shall be an interim stay of recovery of the disputed demand arising from the assessment order dated 25.12.2019. The stay is limited in duration to four weeks from the date of the order or until the earlier disposal of the stay application. The order implements the administrative directive to ensure prompt consideration of stay applications where appeals are pending. [Paras 2]

Interim stay of recovery granted for four weeks from the date of the order or until disposal of the stay application, whichever is earlier.

Direction to adjudicating authority to consider pending application - time bound disposal of stay applications - Obligation of the assessing/appellate authority to consider and decide the stay application within a specified period. - HELD THAT: - Noting that a copy of the stay application is on record, the Court directed R2 to consider the stay application, hear the petitioner and pass orders within a period of four weeks from the date of the order. This direction enforces the obligation flowing from the CBDT circulars and ensures adjudicatory action within a prescribed short timeframe to determine continuance or cessation of the interim relief. [Paras 1]

R2 directed to consider, hear and decide the stay application within four weeks from the date of the order.

Final Conclusion: Writ petition disposed; interim stay of recovery granted for four weeks or until earlier disposal of the stay application, and the assessing/appellate authority directed to consider and decide the pending stay application within four weeks; connected petitions closed with no costs.

Summary order. Application for condonation of delay in re filing the appeal listed; notice issued to the respondent by all permissible modes; matter posted to 20.05.2021.

Disallowance under Section 14A read with Rule 8D - applicability of Section 14A where no exempt income is earned - only expenditure relatable to earning of exempt income is disallowable - relevance of CBDT Circular No.05/2014 - interpretation of MAXOPP INVESTMENT LTD. regarding Section 14A

Disallowance under Section 14A read with Rule 8D - applicability of Section 14A where no exempt income is earned - only expenditure relatable to earning of exempt income is disallowable - relevance of CBDT Circular No.05/2014 - interpretation of MAXOPP INVESTMENT LTD. regarding Section 14A - Whether disallowance under Section 14A read with Rule 8D could be sustained for Assessment Year 2013-14 when the assessee did not earn any exempt income. - HELD THAT: - The Court considered whether the Tribunal was justified in deleting the disallowance made under Section 14A read with Rule 8D(2) where the assessee had not earned any exempt income in the relevant year. Relying on the reasoning in the cited decisions, and particularly the interpretation of MAXOPP INVESTMENT LTD. that disallowance under Section 14A is relatable to the earning of actual exempt income and only expenses proportionate to such earning are disallowable, the Court held that Section 14A does not apply where no exempt income accrued to the assessee. The Court noted that the factual position for Assessment Year 2013-14 was that no exempt income was earned, a fact not disputed by the revenue, and that the ITAT was therefore justified in deleting the disallowance. The Court observed the limited role of CBDT Circular No.05/2014 and the need to apply the principle that disallowance must be connected to actual exempt income earned rather than hypothetical or anticipated income. [Paras 7, 8]

Disallowance under Section 14A read with Rule 8D deleted for Assessment Year 2013-14 as no exempt income was earned; ITAT's order upheld.

Final Conclusion: The substantial question is answered in favour of the assessee: as no exempt income accrued in Assessment Year 2013-14, disallowance under Section 14A read with Rule 8D was not sustainable; the appeal is dismissed.

Mandamus - settlement under section 245D - pronouncement of decision and formal written order - procedural requirement versus substantive adjudication - exercise of discretion by the Settlement Commission

Mandamus - settlement under section 245D - pronouncement of decision and formal written order - procedural requirement versus substantive adjudication - exercise of discretion by the Settlement Commission - Direction to the Settlement Commission to consider the petitioners' avowed facts and, if found correct, to pass the formal order under section 245D(4) within a specified time-frame; otherwise to proceed according to law and discretion. - HELD THAT: - The petition sought a writ of mandamus compelling the Settlement Commission to issue the formal text of its order under section 245D(4) after the Commission had orally pronounced the case as settled and recorded the terms of settlement. The Court observed that the truth of the factual assertions about completion of hearing and pronouncement can only be ascertained by the Settlement Commission itself. Accordingly, instead of directing mechanical issuance of the formal order, the Court directed the Commission to verify the facts as recorded in the petition and, if they are found correct, to pass/issue the appropriate formal order by 31.03.2021. If the Commission finds the petitioners' stated facts not to be correct, it was left free to act in accordance with law and in the exercise of its discretion. The Court therefore granted a limited, conditional mandamus requiring the Commission to consider and act upon the petitioners' case within the prescribed time, while preserving the Commission's adjudicatory discretion if the facts are not established. [Paras 6]

The Settlement Commission is directed to verify the petitioners' stated facts and, if correct, to pass/issue the formal order under section 245D(4) on or before 31.03.2021; if not, the Commission may proceed in accordance with law and discretion.

Final Conclusion: Writ petition disposed by issuing a conditional direction to the Settlement Commission to consider the petitioners' averments and, if verified, to pass the formal settlement order under section 245D(4) by 31.03.2021; otherwise the Commission may act as legally permissible.

Remand for fresh assessment - quash of appellate and assessment orders - factual adjudication required - contentions of parties to remain open - substantial questions of law not answered

Remand for fresh assessment - factual adjudication required - Whether the matters remitted by the Tribunal and Commissioner require fresh factual adjudication and consequent re-assessment - HELD THAT: - The Court examined the record and concluded that the factual controversy between the parties - in particular the question whether the trees were planted or acquired prior to 01.04.1981 and related indexation issues raised in the assessment and appellate proceedings - required fresh adjudication in the light of the material on record. The impugned orders of the Income Tax Appellate Tribunal, the Commissioner (Appeals) and the Assessing Officer were found to be incapable of final disposal of those factual disputes. Consequently the Court quashed the impugned orders and directed that the matter be remitted to the Assessing Officer for de novo assessment, permitting the parties to agitate all contentions afresh. [Paras 9]

Impugned orders quashed and matter remitted to the Assessing Officer for fresh assessment; parties' contentions to remain open.

Final Conclusion: The appeal is disposed by quashing the orders of the Tribunal, the Commissioner (Appeals) and the Assessing Officer and remitting the matter to the Assessing Officer for fresh assessment in respect of the assessments for Assessment year 2007-08 and Assessment year 2008-2009; all contentions of the parties are left open and the substantial questions of law framed are not answered.

Provision for warranty - scientific basis for provisions - application of Rotork Controls India Pvt. Ltd. test - consistency of method across assessment years - precedential value of decisions in same assessee's case

Provision for warranty - scientific basis for provisions - application of Rotork Controls India Pvt. Ltd. test - consistency of method across assessment years - The provision for warranty made by the assessee was held to have been made on a scientific basis and in compliance with the tests laid down in Rotork Controls India Pvt. Ltd. - HELD THAT: - The Court considered whether the assessee's warranty provision met the Supreme Court's requirement that such provisions be scientifically established. The Tribunal and the CIT(A) had examined the methodology adopted by the assessee and noted that the same method had been consistently followed across several assessment years. The High Court of Karnataka, in the assessee's own case, had tested and upheld the scientific nature of the provision. On this basis the High Court (Madras) concluded that the provision was in tune with the directions in Rotork Controls and that there was no basis to disturb the factual and evaluative conclusion reached by the Tribunal and the CIT(A). [Paras 4, 6, 9, 10, 11]

Tribunal's acceptance of the warranty provision as scientific and in accordance with Rotork Controls is affirmed; no interference with the allowance of the provision.

Precedential value of decisions in same assessee's case - consistency of method across assessment years - The High Court regarded the earlier decision of the High Court of Karnataka in the assessee's own case as a persuasive and determinative consideration for the present assessment year, despite it not being binding on this Court. - HELD THAT: - Although the Revenue relied on contrary decisions of this Court, the Bench recognised that the Karnataka High Court decision dealt with identical transactions and tested the assessee's methodology in the same factual matrix. The Madras High Court therefore treated that decision as materially relevant and persuasive because the assessee had been consistently following the same method for several years, and the Tribunal had taken cognisance of that consistency in upholding the provision. The Court distinguished other precedents relied upon by the Revenue on the basis of factual dissimilarity rather than any difference in legal principle. [Paras 8, 9]

Decision of the High Court of Karnataka in the assessee's own case was treated as persuasive due to identical transactions and consistency, and the Revenue's contention based on other precedents was not accepted.

Final Conclusion: The Tribunal's order upholding the assessee's warranty provision as scientifically made and consistent with Rotork Controls is affirmed; the Revenue's appeal is dismissed and the tax case appeal stands dismissed for Assessment year 2010-11.

Reopening of assessment - reasons recorded / reasons for reopening - requirement of a speaking order while rejecting objections (G.K.N Drive Shafts India Ltd. v. Income Tax Officer ) - quashing of assessment order for non-speaking communication and remand for fresh speaking order

Reopening of assessment - reasons recorded / reasons for reopening - requirement of a speaking order while rejecting objections (G.K.N Drive Shafts India Ltd. v. Income Tax Officer ) - Validity of the impugned assessment order dated 30.03.2016 in view of the respondent's communication rejecting the petitioner's objections to reopening without adequate reasons. - HELD THAT: - The communication dated 29.01.2016, purportedly disposing of the petitioner's representation against reopening, merely recorded that the objections were "not acceptable" because the petitioner had not furnished evidence, and stated that the claim that reopening was based on the "same set of facts" was "not with any basis." The High Court found that this communication did not constitute a reasoned or "speaking" order as required when objections to reopening are rejected. Relying on the principle laid down in G.K.N Drive Shafts India Ltd. v. Income Tax Officer , a mere formal overruling of objections without stating the rationale and application of mind is contrary to law. For that reason the impugned assessment order, which proceeded after reliance on the non-speaking communication, could not be sustained. The Court therefore quashed the assessment and directed the respondent to pass a reasoned speaking order addressing the objections in accordance with the cited precedent within three months, after which the assessment proceedings may be completed in accordance with law. [Paras 6, 7]

Impugned assessment order dated 30.03.2016 quashed; respondent directed to pass a speaking order on the objections to reopening in accordance with G.K.N Drive Shafts India Ltd. v. Income Tax Officer within three months, and thereafter proceed to complete the assessment.

Final Conclusion: Writ petition allowed; assessment order set aside and matter remanded for the respondent to pass a reasoned speaking order on the objections to reopening within three months, after which the assessment may be completed in accordance with law.

Wilful attempt to evade the payment of tax - wilful attempt to evade any tax - Explanation to Section 276C - mens rea / culpable mental state - presumption under Section 278E - failure to pay self-assessed tax - difference of opinion / estimate basis not concealment

Failure to pay self-assessed tax - wilful attempt to evade the payment of tax - difference of opinion / estimate basis not concealment - Whether a mere failure to remit tax declared in a self-assessment return (later paid with interest and instalments) attracts criminal liability under Section 276C(2) of the Income Tax Act. - HELD THAT: - The court held that the ingredients of an offence under Sections 276C and 277 require concealment of income or furnishing of inaccurate particulars and a positive wilful act to evade tax; mere non-payment of tax declared on a self-assessment return, subsequently paid with interest by instalments, does not disclose the mischief of Section 276C. Relying on the Apex Court's decision in Prem Dass, the court concluded that a case founded on difference of opinion or estimate (without concealment or inaccurate particulars) cannot sustain prosecution under Section 276C. Although the Explanation to Section 276C appears after sub-sections (1) and (2), and on a plain reading might be read to apply to both, the settled law requires the basic ingredients of the offence (such as concealment or furnishing inaccurate particulars) to be established before criminal liability under Section 276C(2) can be fastened. [Paras 5, 6]

The complaints alleging offence under Section 276C(2) insofar as they rest on mere non-payment of self-assessed tax (later paid with interest) are quashed.

Explanation to Section 276C - wilful attempt to evade any tax - Whether the Explanation to Section 276C applies so as to convert mere non-payment of assessed tax into an offence under sub-section (2). - HELD THAT: - The court observed that the legislative placement of the Explanation (appearing after sub-sections (1) and (2)) prima facie suggests it applies to both sub-sections. However, the court reconciled this textual observation with judicial precedent holding that the Explanation concerns evasion involving concealment or false particulars (concepts central to sub-section (1)), and that sub-section (2) is directed at evasion of payment after quantification. Applying the Apex Court's ratio in Prem Dass, the court held that the Explanation cannot be used to criminalise mere failure to pay in the absence of the substantive ingredients of evasion such as concealment or inaccurate particulars. [Paras 4, 6]

The Explanation cannot be invoked to sustain a prosecution under Section 276C(2) where the basic ingredients of evasion (concealment or furnishing inaccurate particulars) are not disclosed.

Presumption under Section 278E - mens rea / culpable mental state - Whether the rebuttable presumption of culpable mental state under Section 278E can be applied to infer mens rea in a case where the basic ingredients of the offence under the Act are not made out. - HELD THAT: - Section 278E is a rule of evidence that permits the court to presume a culpable mental state in prosecutions where such mens rea is an ingredient of the offence, subject to rebuttal by the accused. The court held that this presumption cannot be applied unless the prosecution first establishes the foundational ingredients of the offence. In the absence of evidence disclosing the basic elements of an offence under the Act, the evidentiary presumption under Section 278E has no application. [Paras 8, 9]

Section 278E's presumptive rule on culpable mental state cannot be used to convert a factual situation of mere non-payment into a criminal offence where the essential ingredients of the offence are not made out.

Section 276CC - wilful failure to furnish return - distinctness of statutory offences - Whether decisions concerning wilful failure to furnish returns under Section 276CC (and attendant presumptions) are applicable to prosecutions under Section 276C for non-payment of tax. - HELD THAT: - The court noted that the liability under Section 276CC (wilful failure to furnish return) concerns a distinct statutory requirement (failure to file returns) and the expression 'failure' in Section 276CC cannot be equated with non-payment of tax under Section 276C. Thus authorities dealing with Section 276CC and the consequences of failure to file are not directly applicable to prosecutions under Section 276C based on non-payment. [Paras 10]

Prakash Nath Khanna and similar decisions on Section 276CC do not render mere non-payment of tax punishable under Section 276C.

Final Conclusion: The High Court allowed the criminal miscellaneous petitions, quashed the complaints and further proceedings based on alleged offence under Section 276C(2) insofar as they rest on mere non-payment of self-assessed tax (which was subsequently paid with interest by instalments), and held that the evidentiary presumption under Section 278E cannot supply the missing foundational ingredients of the offence.

Condonation of delay for sufficient cause - Imposition of costs for delay caused by assessee's inaction - Restoration/remand to assessing officer for fresh examination - Right to opportunity to rebut evidence and to cross-examine - Treatment of transactions in penny stocks as colourable device/sham for generating bogus long term capital gains - Assessment of declared long term capital gains as taxable income where prima facie found to be bogus

Condonation of delay for sufficient cause - Imposition of costs for delay caused by assessee's inaction - Whether delay in filing appeals should be condoned and on what terms - HELD THAT: - The Tribunal found that the assessees had placed reliance on their earlier Chartered Accountant to file the appeals and were under a bona fide belief that the appeals had been filed. The earlier Chartered Accountant had expired and therefore the assessees could not procure corroborative letters. Having regard to the miscommunication and the assessees' bona fide belief, the Tribunal concluded there was sufficient cause to condone the delay. At the same time the Tribunal observed that assessees have a duty to follow up and be reasonably active in compliance; because the averments could not be cross verified and in view of the assessees' lethargy, costs were imposed as a condition for condonation. Accordingly, the delay was condoned subject to payment of costs to the Department within a stipulated time, and the appeals were admitted. [Paras 4]

Delay condoned for both assessees on payment of costs of Rs.10,000 each to the credit of the Income Tax Department within 30 days; appeals admitted.

Restoration/remand to assessing officer for fresh examination - Right to opportunity to rebut evidence and to cross-examine - Treatment of transactions in penny stocks as colourable device/sham for generating bogus long term capital gains - Assessment of declared long term capital gains as taxable income where prima facie found to be bogus - Whether the claim of long term capital gain arising on sale of penny stock shares was correctly rejected and whether the matter requires fresh examination - HELD THAT: - The Assessing Officer had treated the declared long term capital gains as bogus and assessed them as taxable income after relying on materials including admissions and characterisation of the companies as penny stocks. The Tribunal observed that the record did not disclose whether the assessees were afforded an opportunity to rebut the materials or to cross examine persons whose statements were relied upon by the A.O. Given the absence of a clear notice of opportunity to the assessees and in order to safeguard the assessees' right to fair hearing, the Tribunal set aside the appellate orders and restored the matters to the file of the A.O. for fresh examination. The A.O. was directed to afford adequate opportunity of being heard to the assessees, including the opportunity to rebut evidence and to cross examine any person whose statement has been relied upon, and then to decide the issues in accordance with law. [Paras 11, 12]

Orders of the CIT(A) set aside; issues restored to the A.O. for fresh adjudication after affording the assessees adequate opportunity to rebut evidence and to cross examine, and appeals allowed for statistical purposes.

Final Conclusion: The Tribunal condoned the delayed filing of both appeals on payment of costs and admitted the appeals; the Tribunal set aside the CIT(A) orders and remanded the matters to the Assessing Officer for fresh examination of the genuineness of the declared long term capital gains (involving penny stock transactions), directing that the assessees be afforded adequate opportunity to rebut the evidence and to cross examine witnesses before the A.O. decides in accordance with law.

Income from house property versus income from business - penalty under Section 271(1)(c) for concealment or furnishing of inaccurate particulars of income - parallel proceedings of quantum and penalty - quantum disallowance does not automatically attract penalty

Penalty under Section 271(1)(c) for concealment or furnishing of inaccurate particulars of income - income from house property versus income from business - parallel proceedings of quantum and penalty - Reliance Petroproducts principle - Deletion of penalty levied under Section 271(1)(c) in respect of the addition arising from classification of receipts as income from house property rather than business income. - HELD THAT: - The Tribunal examined whether imposition of penalty under Section 271(1)(c) was justified where the controversy related to classification of consolidated receipts between 'income from house property' and 'income from business'. The coordinate bench had, on merits, treated the receipts as income from house property and directed allowance of related interest expenditure under the appropriate head. The departmental representative did not dispute that the impugned matter was essentially a quantum/classification issue rather than clear concealment or furnishing of inaccurate particulars warranting penalty. Applying the authority cited by the Tribunal, which holds that quantum and penalty proceedings are parallel and that every disallowance/addition in quantum proceedings does not ipso facto attract penal consequences, the Tribunal concluded that the penalty could not be sustained merely because of the addition arising from classification. On that basis the Tribunal directed deletion of the penalty levied under Section 271(1)(c). [Paras 3, 4]

Penalty under Section 271(1)(c) deleted and the appeal allowed.

Final Conclusion: The Tribunal allowed the appeal by deleting the penalty imposed under Section 271(1)(c) because the dispute concerned classification/quantum of income (house property versus business) and, following the principle that quantum additions do not automatically give rise to penalty, the penalty was not sustainable.

Double taxation relief under tax treaty - Tax Residency Certificate requirement - Impossibility of performance - relaxation of TRC requirement - Taxability of salary of a non-resident for services rendered abroad - Article 15(1) of DTAA - employment income taxable in resident State unless employment exercised in other State - Conflict between domestic law and treaty - supremacy of treaty

Double taxation relief under tax treaty - Tax Residency Certificate requirement - Impossibility of performance - relaxation of TRC requirement - Article 15(1) of DTAA - employment income taxable in resident State unless employment exercised in other State - Taxability of salary of a non-resident for services rendered abroad - Conflict between domestic law and treaty - supremacy of treaty - Exemption under the applicable DTAA was allowable for salary and foreign allowances earned for services rendered outside India for A.Y. 2014-15 despite non-production of a Tax Residency Certificate and absence of foreign bank credits. - HELD THAT: - The Tribunal found that the assessee qualified as a non-resident of India and as a tax resident of the foreign State for the relevant year, and that the salary and foreign allowances were earned in respect of employment exercised outside India on foreign assignment. Applying the principle in Article 15(1) of the DTAA relied upon by the Coordinate Bench, such remuneration is taxable in the State of residence and not in India unless the employment is exercised in India. The Tribunal accepted the reasoning in the cited Coordinate Bench decision that where obtaining a Tax Residency Certificate from an alien State is practically impossible despite best efforts, requirement of section 90(4) (or domestic insistence on TRC production) may be relaxed if sufficient circumstantial evidence establishes foreign residence and taxation. The Tribunal further held that non-production of evidence of foreign bank credits or employer revised TDS particulars does not preclude grant of treaty benefit where facts demonstrate that the services were rendered abroad and the Treaty allocates taxing rights to the foreign State; the treaty thus overrides a domestic insistence on TRC as a precondition in such circumstances. Relying on the Coordinate Bench reasoning and analogous authorities, the Tribunal directed the Assessing Officer to allow the exemption under the DTAA in respect of the salary and foreign allowances for the assessment year in question.

Appeal allowed and Assessing Officer directed to grant exemption under the DTAA for the salary and foreign allowances for A.Y. 2014-15.

Final Conclusion: The Tribunal allowed the assessee's appeal for A.Y. 2014-15, holding that salary and foreign allowances earned for services rendered outside India are exempt under the applicable DTAA despite non-production of a Tax Residency Certificate and absence of foreign bank credits, and directed the Assessing Officer to grant the treaty exemption.

Estimation of income on rejection of books of account - Computation of presumptive/gross profit percentage for contractor business - Verification of receipts across assessment years to establish nexus

Estimation of income on rejection of books of account - Computation of presumptive/gross profit percentage for contractor business - Whether the Assessing Officer/CIT(A) was justified in rejecting the books and estimating net profit at 8% on main contracts and 5% on sub-contracts. - HELD THAT: - The Tribunal found no reason to interfere with the CIT(A)'s confirmation of the Assessing Officer's estimated profit rates. The CIT(A) had applied and followed relevant Tribunal precedents in arriving at the percentages and the appellate forum did not misapply legal principles in confirming the additions. The assessee's contentions regarding factual verifications and production of vouchers were considered but did not persuade the Tribunal to disturb the estimation made by the authorities below. [Paras 3]

The confirmation of estimated net income at 8% on main contracts and 5% on sub-contracts is upheld; grounds challenging these estimations are rejected.

Verification of receipts across assessment years to establish nexus - Whether the CIT(A) acted appropriately in directing the Assessing Officer to verify if amounts disclosed in A.Y. 2011-12 related to contract receipts of A.Y. 2010-11 and to enhance income if nexus was not established. - HELD THAT: - The Tribunal observed that the CIT(A) did not itself make an unqualified enhancement but directed the Assessing Officer to verify the nexus between receipts disclosed in the subsequent assessment year and the subject year, and, only if the assessee failed to establish direct nexus, to make enhancement to the extent indicated. The appellate order therefore entrusted fact-finding and verification to the Assessing Officer rather than effecting an immediate enhancement for a different assessment year. The Tribunal saw no reason to interfere with that direction. [Paras 4]

The CIT(A)'s direction to the Assessing Officer for verification and conditional enhancement is sustained; no interference is made with the direction.

Final Conclusion: The appeal is dismissed; the Tribunal upholds the confirmed estimated profit rates and sustains the CIT(A)'s direction to the Assessing Officer to verify nexus of receipts across assessment years and enhance income only if nexus is not established.

Seizure on reasonable belief of smuggling under Section 110 and burden of proof under Section 123 of the Customs Act, 1962 - goods liable to confiscation under Section 111 of the Customs Act, 1962 - import of live animals restricted to designated ports and subject to DGFT licence and CITES compliance - prohibited goods and cognizability of offences relating to prohibited goods - domestic trade of exotic species and applicability of the Wildlife Protection Act, 1972

Seizure on reasonable belief of smuggling under Section 110 and burden of proof under Section 123 of the Customs Act, 1962 - goods liable to confiscation under Section 111 of the Customs Act, 1962 - Whether the petitioners were entitled to regular bail in view of the seizure of exotic animals and birds and the material on record - HELD THAT: - The Court examined the materials and observations of the Customs Department that the seized animals and birds were of foreign origin, were not supported by any import documentation and were being transported from an area near an international border via a route not authorised for import. The Court noted the power of a Customs Officer under Section 110 to seize articles believed to be smuggled and that Section 123 places the burden on the person from whose possession goods are seized to prove they are not smuggled. Having regard to absence of any licence, invoices or supporting documents, the assessed high market value of the animals and the stated facts pointing to possible illegal importation, the Court concluded there existed sufficient reason to believe smuggling may have taken place and that detailed investigation was required. On these grounds the Court found it inappropriate to grant bail at this stage.

Bail rejected in the interest of ongoing investigation.

Import of live animals restricted to designated ports and subject to DGFT licence and CITES compliance - domestic trade of exotic species and applicability of the Wildlife Protection Act, 1972 - prohibited goods and cognizability of offences relating to prohibited goods - Whether the Customs Act could be invoked notwithstanding contentions that the seized exotic species were not covered by the Wildlife Protection Act or by a specific Customs notification - HELD THAT: - The Court observed that while no specific notification under Section 11-B of the Customs Act was placed before it, the species in question were enlisted in the Customs Tariff and the Import Policy permits import of live animals only subject to licence, CITES requirements and through designated ports. The prosecution's material suggested the animals had been acquired near an international border and were being moved along an unauthorised route without supporting documentation. Given these factors and statutory scheme restricting import, the Court held that invocation of the Customs Act and seizure under its provisions could not be ruled out on the papers before it. The question of ultimate applicability and classification remained for investigation and trial rather than for decision at bail stage.

Customs Act invocation prima facie sustainable for purposes of investigation; applicability to be finally determined in course of trial.

Final Conclusion: Having regard to the absence of import documentation, the assessed high value of the seized exotic animals and birds, the proximity of purchase to an international border and the statutory scheme restricting import, the Court declined to grant regular bail and dismissed the bail application in the interest of investigation.

Prematurity of challenge to summons at preliminary enquiry stage - summons under Section 108 of the Customs Act, 1962 - awaiting decision of the Authority for Advance Ruling while administrative enquiry proceeds - judicial restraint in interfering with preliminary enquiries - no coercive remittance absent evidence - virtual conduct of administrative proceedings

Prematurity of challenge to summons at preliminary enquiry stage - judicial restraint in interfering with preliminary enquiries - Challenge to summons issued under Section 108 was premature and interlocutory, and not amenable to judicial interference at the stage of issuance of summons. - HELD THAT: - The Court held that the impugned summons merely call upon officials to appear for a preliminary hearing and the purpose of the summons cannot be assumed. Interference by the writ court at the stage of preliminary enquiry would be inappropriate and contrary to the principle of judicial restraint; the Court relied on the caution expressed by the Supreme Court in Commissioner of Customs v. M.M. Exports against intervention at preliminary stages such as issuance of summons. Consequently, the petitioner's challenge to the summons cannot be entertained at this stage. [Paras 3, 4]

The challenge to the summons is premature and the court will not interfere at this stage.

Awaiting decision of the Authority for Advance Ruling while administrative enquiry proceeds - summons under Section 108 of the Customs Act, 1962 - Request that the authorities defer proceedings until the AAR decides the taxability issue is to be made to the authorities; the court declined to direct a stay. - HELD THAT: - The petitioner contended that the merits regarding taxability of the machines are pending before the Authority for Advance Ruling and therefore the revenue should await the AAR decision. The Court observed that such a request must be placed before the authorities for their consideration in accordance with law and procedure; the Court did not grant a direction to stay or await the AAR but indicated the proper forum in which the petitioner should seek such relief. [Paras 2, 6]

Petitioner's request to defer proceedings until AAR decision must be addressed to the authorities; no judicial direction to await AAR was granted.

No coercive remittance absent evidence - Allegation of pressure by revenue to remit differential duty was not substantiated and did not justify interference. - HELD THAT: - The petitioner expressed apprehension that it might be compelled to remit differential duty and relied on deposits already made. The Court noted that there is nothing on record to show any threat or coercion by authorities to demand advance remittance; the petitioner's representations only request deferral, and an incidental reference to 'pressure' was insufficient to establish coercive conduct warranting relief. [Paras 5, 6]

No relief was granted on the ground of alleged coercive remittance as there was no supporting evidence.

Virtual conduct of administrative proceedings - Request for virtual rather than physical proceedings was left to the authorities to consider in accordance with convenience and integrity of procedure. - HELD THAT: - Having regard to the pandemic, counsel sought that proceedings be conducted virtually. The Court did not direct a mode of hearing but indicated that such a request may be made before the authorities and decided by them taking into account mutual convenience and integrity of the enquiry process. [Paras 7]

The question of virtual hearings is to be considered and decided by the authorities; no judicial direction issued.

Final Conclusion: Writ petition dismissed: the Court declined to interfere with issuance of summons at the preliminary stage, directed the petitioner to pursue requests (including deferral pending AAR and mode of hearing) before the competent authorities, found no evidence of coercive demand for duty, and dismissed connected petitions with no costs.

Bail under Section 439 Cr.P.C. - smuggling of gold - carrier liability - seriousness of offence and economic jeopardy - conditions of bail

Bail under Section 439 Cr.P.C. - carrier liability - seriousness of offence and economic jeopardy - conditions of bail - Applicants Dhruv Maheshwari and Laxman Ram are entitled to be released on bail in Case Crime No.08 of 2020. - HELD THAT: - The applicants were apprehended while transporting four gold bars smuggled from Bangladesh and admitted in statements under Section 108 of the Customs Act that they were carriers who received the gold to deliver to a third person. The Court noted they are not shown to be the main conspirators, have no criminal history, are in custody since 12.10.2020, and the case is triable by the Magistrate with a maximum sentence of seven years. Though the prosecution urged that smuggling is a serious offence affecting the economy, the Court balanced that gravity against the applicants' limited role as carriers, period of custody, lack of antecedents, and the trial forum and concluded that bail is appropriate. The Court therefore exercised its discretion under Section 439 Cr.P.C. to enlarge the applicants on bail while imposing conditions to secure attendance and prevent abuse of liberty.

Applicants enlarged on bail on furnishing a personal bond of Rs. 2 lakhs each and two sureties of the like amount, subject to enumerated conditions including attendance, not committing further offences, undertaking against seeking adjournments when witnesses are present, and presence on specified trial dates.

Final Conclusion: Bail granted to the two accused (Dhruv Maheshwari and Laxman Ram) in the Customs matter on specified bonds and conditions; liberty may be cancelled or penal consequences follow if conditions or attendance obligations are breached.

Interim relief of maintenance of status quo - right of directors to access company premises and books - requirement of notice, agenda and circulation of papers for board and general meetings - beneficial ownership / control for purposes of statutory standing - direction to file affidavit in reply and procedural timelines

Interim relief of maintenance of status quo - right of directors to access company premises and books - requirement of notice, agenda and circulation of papers for board and general meetings - Grant of interim reliefs in the company petitions directing maintenance of status quo over assets and investments, allowing petitioner-directors access to premises and books, and requiring due notice, agenda and circulation of papers for meetings. - HELD THAT: - The Tribunal, having considered the allegations of oppression and mismanagement and the submissions of parties, granted identical interim measures in respect of the several company petitions. In each relevant petition the orders require the respondent company to maintain status quo of its assets and investments; permit petitioner Nos. 1 and 2, in their capacity as directors, to enter the company premises and inspect and access books and records to discharge their functions; and mandate that board and general meetings be convened only after giving due notice with agenda and circulation of relevant papers. These measures were granted as interim reliefs having regard to the totality of circumstances and the petitioners' asserted shareholding/control entitling them to maintain the petitions. [Paras 2, 15, 22, 23]

Interim reliefs as stated were granted and shall remain in effect until further orders.

Beneficial ownership / control for purposes of statutory standing - direction to file affidavit in reply and procedural timelines - Petitioners' claim of beneficial ownership/control was accepted for the limited purpose of entertaining waiver applications under the statutory standing provision, and respondents were directed to file affidavits in reply to the petitions and to the connected applications within fixed timelines. - HELD THAT: - In petitions where petitioners did not hold direct shares but alleged beneficial ownership through control of holding companies, the Tribunal recognised the petitioners' asserted beneficial interest (noting specific percentages pleaded) and allowed connected applications seeking waiver under the statutory requirement for direct shareholding to proceed to be contested. The respondents were directed to file reply affidavits to the main company petitions and to the connected applications within four weeks, copies to be served on the petitioners' authorised representative; petitioners were granted a further period to file rejoinders after receipt of replies. These directions are procedural and for the purpose of enabling adjudication on the merits. [Paras 4, 5, 7, 8, 24]

Respondents to file replies to the petitions and connected waiver applications within four weeks; petitioners thereafter may file rejoinders within a further four weeks.

Final Conclusion: The Tribunal granted interim reliefs across the several company petitions preserving status quo of assets and investments, ensuring petitioner-directors' access to premises and records, and directing proper notice and circulation for meetings; it also directed respondents to file reply affidavits to the petitions and connected waiver applications within prescribed timelines, with the interim orders to continue until further orders and the matters listed for further consideration.

Time bound liquidation - duty of liquidator to verify and admit or reject claims - limitation and delay in filing claims - binding effect of a sanctioned compromise scheme - requirement of communication and appeal against rejection of claim - liquidator's accountability under liquidation regulations

Binding effect of a sanctioned compromise scheme - time bound liquidation - Validity of the stakeholders' meeting of 29.10.2020 and challenge to the Scheme sanctioned in CP/546/CAA/2020 - HELD THAT: - The Tribunal recorded that the Scheme in relation to the corporate debtor had been sanctioned by this Tribunal on 18.03.2021 and, once sanctioned, the Scheme is binding on the stakeholders. The Court noted the authorities emphasising finality and observed that permitting an 'undecided' or belated claim to unsettle a sanctioned scheme would be impermissible. In light of the time bound nature of liquidation and the requirement that the liquidator complete proceedings within the statutory period (and seek extension if necessary), the challenge to the meeting and to the sanction of the Scheme could not be entertained so as to upset the concluded sanction process. The Tribunal also recorded that objections to the Scheme had been considered in the sanctioning proceedings (CP/546/CAA/2020) and declined to reopen those findings in the present petition. [Paras 12, 17]

The challenge to the stakeholders' meeting and the sanctioned scheme was rejected; the Scheme stands and the meeting is not set aside.

Duty of liquidator to verify and admit or reject claims - requirement of communication and appeal against rejection of claim - limitation and delay in filing claims - Whether the Liquidator was obliged to accept and admit the Applicant's belated claim filed after the public announcement deadline - HELD THAT: - The Tribunal observed that under the IBC and the IBBI (Liquidation Process) Regulations the liquidator must verify claims within prescribed timeframes, record reasons in writing for any rejection, and communicate admission or rejection to the creditor, with a statutory right to appeal within the stipulated period. The Applicant filed its claim belatedly and did not furnish any explanation for the delay before the Authority; no application for condonation of delay was made. The Tribunal accepted the liquidator's position that claims filed after the public announcement cut off cannot be entertained without justification, that the liquidator does not have unfettered power to condone unexplained delay, and that allowing endless or belated claims would frustrate the code's time bound mandate. The Tribunal also referenced authority reiterating the time bound nature of liquidation and the one year timeline under the regulations. [Paras 13, 14, 16]

The application seeking direction to the Liquidator to accept the belated claim was dismissed for want of timely filing and absence of explanation; the liquidator's rejection is sustained.

Limitation and delay in filing claims - no equity about limitation - Applicability of limitation and the Applicant's failure to produce evidence of acknowledgment to overcome limitation - HELD THAT: - The Tribunal noted the Liquidator's submission that the claim appeared prima facie barred by limitation and that no documents evidencing acknowledgment of liability under the Limitation Act, 1963 were produced with the claim form. The Court referred to the settled principle that 'there is no equity about limitation' and treated unexplained delay and lack of limitation saving material as further grounds for refusing relief. This reasoning was applied in the context of the liquidation's statutory time constraints. [Paras 10, 18]

The claim cannot be entertained on account of delay and absence of material to establish interruption or acknowledgment for limitation purposes; the plea based on limitation was rejected.

Final Conclusion: The petition is dismissed. The Tribunal declined to set aside the stakeholders' meeting or to direct the Liquidator to admit the belated claim; the time bound mandate of the liquidation process and the finality of the sanctioned scheme determine the outcome. The petition is dismissed without costs.

Sanction of composite scheme of arrangement - compliance with Sections 230 to 232 of the Companies Act, 2013 - Section 232(3)(i) obligation to pay fee on revised authorised share capital - protection of revenue's rights in ongoing and future tax assessments - certification of accounting treatment in conformity with applicable accounting standards under Section 133 - fair and reasonable standard and public policy scrutiny of corporate restructuring - dispensation of shareholders' meeting requirement

Sanction of composite scheme of arrangement - compliance with Sections 230 to 232 of the Companies Act, 2013 - fair and reasonable standard and public policy scrutiny of corporate restructuring - Sanctioning of the Composite Scheme of Arrangement between the Transferor Companies and the Transferee Company - HELD THAT: - The Tribunal examined statutory compliance under the provisions governing compromises, arrangements and amalgamations and noted that the boards of the respective companies had approved the Scheme and that statutory notices and directions previously issued by the Tribunal had been complied with. Certificates from the statutory auditors confirming that the accounting treatment under the Scheme conforms with applicable accounting standards were placed on record. The Tribunal found no material impediment: the Scheme appeared fair and reasonable, not contrary to public policy, and all requirements of the Act relating to sanction under Sections 230-232 have been satisfied. Accordingly, the Company Petition seeking sanction of the Scheme was allowed and the Scheme annexed to the Petition was sanctioned. [Paras 5, 7, 13, 14]

The Composite Scheme of Arrangement is sanctioned and the Company Petition is allowed.

Section 232(3)(i) obligation to pay fee on revised authorised share capital - certification of accounting treatment in conformity with applicable accounting standards under Section 133 - Requirement that the Transferee Company comply with fee/stamp duty obligations on increased authorised share capital as per statutory provision - HELD THAT: - The Regional Director's observation concerning compliance with the provision relating to fee payable on revised authorised share capital was noted. The Petitioner Companies filed a joint affidavit wherein the Transferee Company undertook to comply with Section 232(3)(i) and to pay any additional filing fee and stamp duty on its revised authorised share capital; the Scheme was amended to remove any clause seeking exemption from such payments. The Tribunal accepted this undertaking and clarified that its sanction does not amount to any exemption from payment of stamp duty, taxes or other charges, and that the Petitioner Companies remain bound to comply with statutory requirements. [Paras 9, 12, 15]

The Transferee Company shall comply with Section 232(3)(i) and pay additional fee/stamp duty on its revised authorised share capital; the sanction does not confer any exemption from taxes or duties.

Protection of revenue's rights in ongoing and future tax assessments - Preservation of the Revenue's rights with respect to tax assessments and proceedings after amalgamation - HELD THAT: - The Tribunal recorded the Income Tax Department's position that tax assessment proceedings and appeals pending or arising as on the Effective Date shall continue and/or be enforced by or against the Transferee Company to the same extent as against the Transferor Companies, and that the scheme should be accepted only after protecting the rights of the Revenue to examine tax implications. The Tribunal's sanction was given subject to the protection of the Revenue's rights and did not prejudice the Revenue's ability to pursue examination, assessment or reassessment in accordance with law. [Paras 11, 15]

The Revenue's rights in respect of tax assessments and appeals are preserved and remain enforceable against the Transferee Company post-amalgamation.

Final Conclusion: The Tribunal sanctioned the Composite Scheme of Arrangement as fair and compliant with statutory requirements; the sanction is subject to the Transferee Company's undertaking to pay additional fee/stamp duty on the revised authorised share capital and does not prejudice the Revenue's rights to pursue tax assessments or any other statutory dues. The Petitioner Companies may apply to the Tribunal for further directions if necessary.

Debt due and payable - premature Section 7 application - Form-1 materiality in Section 7 proceedings - novation and substitution of contract under Section 62 of the Indian Contract Act, 1872 - effect of restructuring under S4A and subsequent withdrawal of RBI circular - Section 238 IBC not overriding subsequent mutually agreed contracts - admissibility of documents filed after the initial Form-1

Debt due and payable - premature Section 7 application - novation and substitution of contract under Section 62 of the Indian Contract Act, 1872 - Form-1 materiality in Section 7 proceedings - effect of restructuring under S4A and subsequent withdrawal of RBI circular - Section 238 IBC not overriding subsequent mutually agreed contracts - Application under Section 7 dismissed as premature because the debt was not payable on the date alleged in Form-1 in light of subsequent novation/regularisation of obligations. - HELD THAT: - The Tribunal held that for adjudication under Section 7 the date of default as stated in Form-1 (filed under Rule 4) is the material datum. The subsequent written arrangements between the lenders and the corporate debtor operating from 25.10.2017 and payments made in August-September 2018 established that the original contract obligations were substituted and regularised. Relying on the factual sequence and applying Section 62 of the Indian Contract Act, the Tribunal found novation of the earlier arrangements such that defaults prior to the effective date of the substituted arrangement could not form the basis of a Section 7 petition. The Tribunal further observed that although the S4A-related restructuring was affected when RBI guidance was in force and the RBI circular was later held ultra vires, actions lawfully taken while the circular operated do not ipso facto become void; nonetheless the subsequent contractual substitution remained operative and decisive. Section 238 of the IBC did not nullify the effect of the subsequent mutually agreed contract where it was not contrary to the Code. On these grounds the requirement that the debt be due and payable as on the Form-1 date was not satisfied and the petition was liable to be dismissed as premature. [Paras 7, 8, 9, 10, 11]

The Section 7 petition is dismissed as premature because the debt claimed was not payable on the Form-1 date in view of a valid novation/regularisation of the contractual obligations.

Admissibility of documents filed after the initial Form-1 - Form-1 materiality in Section 7 proceedings - Interlocutory applications challenging post filing documents and procedural defects were disposed of as unnecessary in view of the dismissal of the main petition on merits. - HELD THAT: - Although the corporate debtor raised objections as to incompleteness of the petition and to documents and amendments filed after the original Form-1, the Tribunal recorded that it was not necessary to decide those technical/contentious interlocutory pleas once the main petition was dismissed on substantive grounds. Accordingly, IA No. 54 of 2021 and IA No. 180 of 2021 were dismissed and disposed of without adjudicating the contested procedural points. [Paras 11, 12]

The interlocutory applications are dismissed as unnecessary in light of the disposal of the main CP on merits.

Final Conclusion: The petition under Section 7 is dismissed as premature because subsequent contractual arrangements substituted and regularised the earlier obligations, rendering the debt not payable as alleged in Form-1; consequential interlocutory applications are dismissed as unnecessary.

Maintainability of a Section 7 petition by an individual allottee - requirement of joint application by not less than 100 allottees or 10% of allottees under the same real estate project (second proviso to Section 7(1) of the Insolvency and Bankruptcy Code, 2016, as amended) - retrospective effect of the Insolvency and Bankruptcy Code (Amendment) Act, 2020 from 28/12/2019

Maintainability of a Section 7 petition by an individual allottee - requirement of joint application by not less than 100 allottees or 10% of allottees under the same real estate project (second proviso to Section 7(1) of the Insolvency and Bankruptcy Code, 2016, as amended) - retrospective effect of the Insolvency and Bankruptcy Code (Amendment) Act, 2020 from 28/12/2019 - Whether the Company Petition filed under section 7 of the IBC by a single allottee is maintainable in view of the amendment to section 7(1) by the IBC (Amendment) Act, 2020. - HELD THAT: - The Tribunal applied the decision of the Hon'ble Supreme Court dated 19/01/2021 in Manish Kumar v. Union of India, which upheld the amendment effected by the Insolvency and Bankruptcy Code (Amendment) Act, 2020 as having retrospective effect from 28/12/2019. By virtue of the second proviso to Section 7(1) (as amended), an application under Section 7(1) for initiation of CIRP against a corporate debtor arising from allotment in a real estate project is maintainable only if filed jointly by not less than one hundred such allottees or not less than ten per cent of the total number of such allottees, whichever is less. The petitioner being an individual allottee did not meet this mandatory threshold as on the date of filing and therefore the petition could not be maintained. The Tribunal expressly refrained from adjudicating the merits of the claim and disposed of the petition on the ground of statutory ineligibility, while observing that the dismissal is without prejudice to any rights available to the petitioner under other laws. [Paras 14, 15]

The petition under Section 7 is not maintainable as the petitioner, an individual allottee, does not satisfy the joint-application requirement introduced by the amendment; the petition is dismissed without going into merits, subject to rights under other laws.

Final Conclusion: The Company Petition filed by the individual allottee under Section 7 of the IBC was dismissed as not maintainable in view of the retrospective application of the IBC (Amendment) Act, 2020 which requires a joint application by the prescribed threshold of allottees; the Tribunal did not decide the merits and preserved other legal rights of the petitioner.

Liquidation is a time bound process - Liquidator's duty to verify claims and communicate reasons for rejection - Claims filed during CIRP must be re-filed before the Liquidator after commencement of liquidation - Liquidator has no power to condone long delay in submission of claims beyond the public announcement period - Sanctioned scheme precludes admission of undecided claims - No equity about limitation

Liquidation is a time bound process - Liquidator has no power to condone long delay in submission of claims beyond the public announcement period - Liquidator's duty to verify claims and communicate reasons for rejection - Whether the delay of 725 days in submitting Form C could be condoned and the belated claim admitted by the Liquidator - HELD THAT: - The Tribunal observed that the liquidation process under the IBC is time bound and the IBBI (Liquidation Process) Regulations require claims to be submitted within the publicised period and mandate the Liquidator to verify claims within prescribed time limits and to record reasons in writing for any rejection. The Liquidator rejected the applicant's belated claim on the ground that he lacked power to condone such a long delay and that consideration of endless late claims would frustrate the statutory time frame. The Tribunal relied on regulatory provisions imposing one year timelines for liquidation and the necessity for the Liquidator to account for any extension, and noted precedent treating liquidation as a time limited process. The Tribunal also recorded that claims filed in the CIRP must nonetheless be presented afresh to the Liquidator after commencement of liquidation, and that the scheme sanctioned in the corporate-filed proceedings precludes permitting an undecided claim to revive after sanction. In that context the applicant's explanations (personal bereavement and pandemic) were found insufficient to justify the 725 day delay, and no timely acknowledgment under the Limitation Act was placed before the Liquidator to cure limitation concerns. Applying the principle that 'there is no equity about limitation' and giving primacy to the code's time limits, the Tribunal held that condonation and admission of the belated claim could not be permitted. [Paras 11, 12, 15, 16, 17]

Application to condone the 725 day delay and to admit the belated claim dismissed

Final Conclusion: The application for condonation of delay and admission of the belated claim is dismissed on the ground that liquidation proceedings are time bound, the Liquidator properly declined to condone the prolonged delay, and permitting the claim would conflict with the statutory scheme and the sanctioned resolution.

Admissibility of a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - commencement of corporate insolvency resolution process (CIRP) - declaration of moratorium under Section 14 of the IBC, 2016 - service of demand notice under Section 8 and compliance with Section 9(3)(b) - appointment of Interim Resolution Professional and persons disqualified from appointment - public announcement and submission of claims under Section 15 - duties of Interim Resolution Professional and cooperation of directors - provision for interim fund provisioning to the IRP

Admissibility of a petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - service of demand notice under Section 8 and compliance with Section 9(3)(b) - The Section 9 petition filed by the Operational Creditor was admitted and CIRP against the Corporate Debtor was ordered to commence. - HELD THAT: - The Tribunal examined the documentary record showing supply of goods, invoices, partial payments and credit notes, acceptance of invoices by the Corporate Debtor, service of the demand notice dated 09.08.2019 (delivered 13.08.2019) and the affidavit filed in compliance with Section 9(3)(b) stating no notice of dispute was received. The Tribunal found that the Corporate Debtor failed to make payments and that the legal requirements for admission under Section 9 were fulfilled. On that basis the application was admitted and the commencement of CIRP ordered to be ordinarily completed within 180 days from the date of the order. [Paras 4, 5, 6, 7, 8]

Section 9 petition admitted; CIRP against M/s. RS Seven Lifestyle Private Limited ordered to commence.

Declaration of moratorium under Section 14 of the IBC, 2016 - scope of moratorium - A moratorium under Section 14 was declared and its prohibitions were specified. - HELD THAT: - Having admitted the petition and ordered commencement of CIRP, the Tribunal declared moratorium effective from the date of the order until completion of the CIRP. The order specifically prohibited institution or continuation of suits or proceedings against the corporate debtor, transfer or disposal of assets by the corporate debtor, actions to enforce security interests (including under the SARFAESI Act), and recovery of property by owners or lessors in possession. The order also clarified that supply of essential goods or services shall not be terminated, suspended, or interrupted during the moratorium period and that statutory exceptions as notified by the Central Government would apply. [Paras 8, 9, 10]

Moratorium declared with the specified prohibitions and exceptions for essential supplies.

Appointment of Interim Resolution Professional and persons disqualified from appointment - Mr. Piyush Moona was appointed as Interim Resolution Professional (IRP) on the record of consent and absence of any pending investigation. - HELD THAT: - The Operational Creditor proposed Mr. Piyush Moona as IRP; the Tribunal noted that his consent had been obtained and that no investigation was pending against him. Accordingly, the Tribunal appointed him as IRP and directed him to take immediate charge of the corporate debtor's management including bank accounts. The IRP was also directed to make the public announcement and call for claims in the manner prescribed under the Code. [Paras 11]

Mr. Piyush Moona appointed as Interim Resolution Professional and directed to take charge and make requisite public announcements and claims calls.

Public announcement and submission of claims under Section 15 - The IRP was directed to cause the public announcement and call for submission of claims within the statutory framework. - HELD THAT: - In line with admission and appointment, the Tribunal directed the IRP to cause the public announcement as prescribed under Section 15 of the IBC within three days from receipt of the order and to call for submission of claims by creditors in the prescribed manner, enabling the constitution of the claims process under the CIRP regime. [Paras 11]

IRP directed to make public announcement and call for claims in accordance with the Code.

Provision for interim fund provisioning to the IRP - The Operational Creditor was directed to pay an interim amount to enable the IRP to perform his functions. - HELD THAT: - The Tribunal directed the Operational Creditor to pay a sum of Rs. 2,00,000 to the IRP so that he could perform the functions assigned under the Regulations, thereby ensuring immediate availability of funds for the IRP to discharge statutory duties during the initial period of the CIRP. [Paras 12]

Operational Creditor directed to pay an interim fund to the IRP to enable discharge of his functions.

Duties of Interim Resolution Professional and cooperation of directors - The IRP was required to comply with statutory duties and the directors/promoters were directed to extend cooperation. - HELD THAT: - The Tribunal recorded that the IRP shall comply with the provisions of Sections 13(2), 15, 17 and 18 of the Code. It further directed that the directors, promoters or persons associated with the management of the corporate debtor shall extend all assistance and cooperation to the IRP as stipulated under Section 19 to enable the IRP to discharge his functions under Section 20. [Paras 13, 14]

IRP to comply with statutory duties; directors and promoters to extend cooperation and assistance.

Final Conclusion: The Tribunal admitted the Section 9 petition, ordered commencement of CIRP against M/s. RS Seven Lifestyle Private Limited, declared a moratorium, appointed Mr. Piyush Moona as Interim Resolution Professional with directions for public announcement and claims, mandated interim funding by the Operational Creditor, and directed statutory compliance by the IRP and cooperation from the corporate debtor's management.

Violation of principles of natural justice - non-consideration of material filed - remand for fresh consideration - service of show cause notice under Rule 64(1)(b) of the Telangana VAT Rules - personal hearing - reasoned order - recovery of costs from salary and disciplinary action

Violation of principles of natural justice - non-consideration of material filed - Impugned assessment order set aside on grounds of violation of principles of natural justice and failure to consider declaration forms previously filed. - HELD THAT: - The Court found that the Assessing Officer proceeded to pass the Assessment Order without affording a personal hearing and without calling for or considering material (the 'C' and 'F' declaration forms) that the assessee had filed earlier before the original assessing officer. The conduct mirrored earlier instances after the Covid-19 lockdown where multiple assessment orders were passed without serving show-cause notices, issuing reminders, or considering explanations and documents furnished by assessees. In these circumstances the order was quashed for non-compliance with the requirements of natural justice and for failure to consider relevant material already on record. [Paras 15]

Assessment Order A.O.No.45549 dt.31-03-2021 set aside for violation of principles of natural justice and non-consideration of material filed by the petitioner.

Remand for fresh consideration - service of show cause notice under Rule 64(1)(b) of the Telangana VAT Rules - personal hearing - reasoned order - Matter remitted to the Assessing Officer with directions to serve a show-cause notice, grant time to file objections with supporting material, afford a personal hearing and thereafter pass a reasoned order. - HELD THAT: - The Court directed that the matter be remitted to the 1st respondent for fresh consideration. The 1st respondent must serve a show-cause notice under Rule 64(1)(b) indicating the turnover and proposed tax, grant the assessee six weeks from receipt of that notice to file objections and supporting material, afford a personal hearing, and then pass a reasoned order in accordance with law and communicate it to the assessee. These steps are intended to cure the earlier procedural infirmities and ensure compliance with principles of natural justice. [Paras 15]

Remitted for fresh proceedings with directions to serve show-cause notice under Rule 64(1)(b), allow six weeks for objections with supporting material, afford a personal hearing and pass a reasoned order.

Recovery of costs from salary and disciplinary action - Award of costs against the departmental officer and direction to initiate disciplinary proceedings. - HELD THAT: - The Court directed the 4th respondent to pay costs to the petitioner and ordered that such costs be recovered from the salary of the 1st respondent. Further, disciplinary action was to be initiated against the 1st respondent for failing to consider material filed by the petitioner before passing the impugned assessment order. These directions were issued to mark the Court's dissatisfaction with the manner in which the official discharged duties and to deter recurrence. [Paras 16]

Costs awarded to the petitioner recoverable from the salary of the 1st respondent and disciplinary proceedings directed against the 1st respondent.

Final Conclusion: Writ petition allowed: impugned Assessment Order quashed for breach of natural justice and non-consideration of material; matter remitted for fresh adjudication with specific procedural directions (service of show-cause under Rule 64(1)(b), six weeks for objections, personal hearing and reasoned order); costs awarded and disciplinary action directed against the assessing officer.

Deduction for payments to sub-contractors under Rule 3(2)(i-1) of the KVAT Rules - suo moto revision - exercise of revisional jurisdiction under Section 64 of the KVAT Act - erroneous order prejudicial to the interests of the Revenue - requirement of prima facie material before invoking revisional power - remand without categorical finding

Deduction for payments to sub-contractors under Rule 3(2)(i-1) of the KVAT Rules - remand without categorical finding - Whether the question of entitlement to claim deductions for payments made to sub-contractors during the assessment years 2008-09 to 2011-12 was finally determined or required fresh consideration by the revisional authority. - HELD THAT: - The court found that the revisional authority, while referring to purchases and payments to sub-contractors, did not give a categorical finding on whether the appellant was entitled to the claimed deductions. Instead the revisional authority merely remanded the matters to the Prescribed Authority for verification and fresh re-assessment without adjudicating the entitlement. The absence of any clear determination on the core controversy as to entitlement to deduction rendered the remand impermissible in its present form. Consequently the court set aside the impugned revisional orders and remanded the matters to the revisional authority with a direction to reconsider the revisions afresh and, in particular, to give a categorical finding on entitlement to the claimed deductions for payments to sub-contractors, permitting the appellant to place further material and contentions before that authority. [Paras 21, 22, 23]

Remanded to the revisional authority for fresh consideration with direction to give a categorical finding on entitlement to deductions for payments to sub-contractors; liberty to the appellant to place further material.

Suo moto revision - exercise of revisional jurisdiction under Section 64 of the KVAT Act - erroneous order prejudicial to the interests of the Revenue - requirement of prima facie material before invoking revisional power - Whether the revisional authority lawfully exercised suo moto revisional jurisdiction under Section 64 of the KVAT Act in the facts of these cases. - HELD THAT: - The court reiterated the legal test for exercising suo moto revision: (i) there must be an order that is erroneous and (ii) the erroneous order must be prejudicial to the interests of the Revenue. Both circumstances must coexist and the revisional authority must be able to point to material on record to prima facie satisfy itself that these requirements are met. The court held that the power is not a licence for fishing and roving inquiries and cannot be exercised in the absence of material enabling a reasonable conclusion that tax exigible has escaped assessment. On the facts, the revisional orders did not record a categorical conclusion that an erroneous order prejudicial to revenue existed and proceeded merely to remand for verification; that mode of exercise was held to be improper. Accordingly the impugned revisional orders were set aside for want of proper exercise of revisional jurisdiction. [Paras 18, 19, 20, 22]

Revisional orders set aside as the suo moto jurisdiction under Section 64 was exercised without requisite prima facie material and without satisfying the twin conditions of an erroneous order prejudicial to Revenue.

Final Conclusion: Impugned revisional orders set aside; appeals allowed. Matters remanded to the revisional authority to reconsider the revisions in accordance with law, to give a categorical finding on entitlement to deductions for payments to sub-contractors for assessment years 2008-09 to 2011-12, with liberty to the appellant to place further material; parties to bear their respective costs.

Legislative competence to save repealed law - Section 174 saving of liabilities under KGST Act - Transitional provision / Section 19 (one year sunset clause) - Article 246A power to legislate on Goods and Services Tax - Presumption of constitutionality of statutory provisions - Appeal as alternative remedy against assessment orders

Section 174 saving of liabilities under KGST Act - Legislative competence to save repealed law - Article 246A power to legislate on Goods and Services Tax - Presumption of constitutionality of statutory provisions - Validity and intra vires challenge to clauses (d) and (e) of Section 174(1) of the Karnataka Goods and Service Tax Act, 2017 - HELD THAT: - The High Court held that clauses (d) and (e) of Section 174(1), which preserve tax, penalty, interest and related proceedings under the repealed KVAT Act, are within the legislative competence of the State. The court applied the settled principle that entries in the Seventh Schedule and statutes conferring legislative power must be given a broad construction and that there is a presumption in favour of constitutionality. It observed that the power to enact Section 174 can be traced to Article 246A read with Article 366(12-A), which confers power on the States to make laws with respect to taxes on supply of goods (a concept wider than sale of goods), and that Section 19 of the 101st Amendment is a transitional provision and does not negate the competence to enact savings for liabilities accrued before repeal. Applying these principles, the court rejected the submission that clauses (d) and (e) are ultravires or

Final Conclusion: The writ appeal is dismissed. The High Court upheld the validity of clauses (d) and (e) of Section 174(1) KGST Act and confirmed that the reassessment order for 2012-13 is appealable under the KVAT Act; the assessee is granted liberty to prefer an appeal within four weeks, with no order as to costs.