TaxTMI Updates e-Newsletter
Apr 28,2021

Doctrine of mutuality - supply (as defined in Section 7 of the CGST Act) - deemed separation of persons (members and organisation) - retrospective legislative override - notification requirement for commencement of statutory amendment

Doctrine of mutuality - supply (as defined in Section 7 of the CGST Act) - Liability to GST of membership subscription fees and infrastructure development fund collected from members - HELD THAT: - The Authority applied the principle of mutuality as affirmed by the Supreme Court in M/s. Calcutta Club Ltd. and earlier decisions, observing that where the activities and receipts of a members' club are in furtherance of its mandate for the benefit of its members and there is no transfer between two distinct persons, the transaction does not constitute a taxable supply under the CGST Act as it stood prior to the Finance Act, 2021 amendment. On the basis of those precedents and the facts presented about the applicant's structure and use of funds for members' benefit, the Authority concluded that subscription fees and the infrastructure development fund are not exigible to GST in the prevailing legal position prior to any operative amendment. [Paras 2, 3, 5, 6, 10]

Subscription fees and infrastructure development fund collected from members are not liable to GST under the law in force prior to the operative effect of the Finance Act, 2021 amendment.

Deemed separation of persons (members and organisation) - retrospective legislative override - notification requirement for commencement of statutory amendment - Effect of the Finance Act, 2021 amendment inserting a deeming clause in Section 7 and its applicability before notification - HELD THAT: - The Authority recorded that Section 108 of the Finance Act, 2021 inserted a clause deeming activities between a person (other than an individual) and its members or constituents to be supplies inter se and declaring them to be between deemed separate persons. The Authority further noted that Section 1 of the Finance Act, 2021 provides that the provisions containing that amendment will come into force on such date as the Central Government may notify. Because the amendment, though enacted, had not been notified for commencement at the time of the ruling, the Authority held that the legislative override of the doctrine of mutuality would not operate until the amendment is notified and brought into force with corresponding state enactments; accordingly the applicant's present liability is to be determined in the pre-notification legal regime. [Paras 7, 8, 9, 10]

The Finance Act, 2021 amendment, though enacted, is not operative until notified; therefore its deeming effect does not apply until notification, and the applicant's transactions are not liable to GST until such notification and corresponding state action.

Final Conclusion: The Authority ruled that M/s Bow-ring Institute is not liable to pay GST on membership subscription fees and the infrastructure development fund collected from its members under the law in force at the time of the order; this ruling is subject to the Finance Act, 2021 amendment becoming operative upon notification, after which the legal position may change.

Interim order - filing of reply, counter-affidavit and rejoinder - correction of record regarding appearance of counsel - restriction on coercive measures pending compliance - investigation to be conducted only by specified Commissionerate - direction to ensure no invasion of privacy during investigation

Filing of reply, counter-affidavit and rejoinder - Replies and counter-affidavits to be placed on record within a specified timeline and rejoinders permitted before next hearing. - HELD THAT: - The Court recorded that a reply by certain respondents has been filed but not placed on record and directed that the same be placed on record. Further, respondents who have not yet filed their reply and counter-affidavit will do so within four weeks, and any rejoinder may be filed before the next date of hearing. The direction fixes a timetable for completion of pleadings related to the captioned application and the main writ petition. [Paras 1, 2, 4]

Respondents shall place the filed reply on record and file outstanding replies and counter-affidavits within four weeks; rejoinders, if any, to be filed before the next hearing.

Correction of record regarding appearance of counsel - The record shall be corrected to reflect the accurate representation of respondents by their respective counsel. - HELD THAT: - The Court noted an earlier clerical recording that erroneously attributed appearances to counsel for respondents no.2 to 8. It recorded the correct allocation of appearances - that Ms. Sonu Bhatnagar appears for respondent no.2 and no.8 and Mr. Ravi Prakash appears for respondents no.1, 3, 4, 5, 6, 7 and 9 - and directed the record to be corrected accordingly. [Paras 3]

The court record shall be corrected to reflect the accurate appearances of counsel for the respective respondents.

Interim order - restriction on coercive measures pending compliance - investigation to be conducted only by specified Commissionerate - direction to ensure no invasion of privacy during investigation - The interim order dated 17.03.2021 shall continue; no coercive measures to be taken in the interim and any investigation shall be conducted only by the Gautam Budh Nagar Commissionerate in accordance with the cited circular, ensuring no invasion of privacy. - HELD THAT: - The Court directed continuation of the earlier interim order. It corrected paragraph 10 of the earlier order to clarify that while respondents are given a short time to file replies, no coercive measures shall be taken against the petitioner in the meantime. The Court further stated that if investigation is necessitated during the interregnum it must be carried out only by the Gautam Budh Nagar Commissionerate and that search officers must ensure there is no invasion of privacy, thereby restricting the locus and manner of any investigative action while the interim order operates. [Paras 5, 6]

Interim order of 17.03.2021 continues; no coercive action in the interim and any investigation to be limited to the Gautam Budh Nagar Commissionerate with safeguards against invasion of privacy.

Continuation of remaining directions - All other directions contained in the order dated 17.03.2021 remain unaltered. - HELD THAT: - Beyond the specific corrections and continuance directed by the Court, it expressly preserved the balance of directions issued in the earlier order, so that those directions continue to have effect as originally stated. [Paras 7]

Other directions in the order dated 17.03.2021 shall remain unchanged and continue to operate.

Final Conclusion: The Court directed placement of the filed reply on record, fixed a four week timeline for outstanding replies and counter affidavits with rejoinders allowed before the next hearing, corrected the record of appearances of counsel, continued the interim order of 17.03.2021 subject to clarified paragraph 10 restricting coercive measures and limiting any investigation to the Gautam Budh Nagar Commissionerate with privacy safeguards, and preserved the remaining directions of the earlier order.

Extension of time for statutory compliance - filing of annual GST returns - statutory authority's power to extend time - Form GSTR-9 and GSTR-9C

Extension of time for statutory compliance - statutory authority's power to extend time - filing of annual GST returns - Form GSTR-9 and GSTR-9C - Petition for judicial extension of time to file Forms GSTR-9 and GSTR-9C for FY 2019-20 was not maintainable before the High Court where the statutory authority alone is empowered to extend the filing period. - HELD THAT: - The Court declined to accept the submission that the nine-month filing period should be computed from the date of notification of the forms. It observed that the period for filing returns is fixed by statute and any extension of that period is within the exclusive competence of the statutory authority. Consequently, the writ petition seeking a direction to respondents to extend the time for submission of Form GSTR-9 and GSTR-9C was not entertained and the petitioner was directed to approach the appropriate statutory authority for any extension. The Court expressed expectation that any such representation would be considered expeditiously but declined to exercise its discretionary jurisdiction to grant the extension.

Writ petition dismissed; petitioner left to approach the statutory authority for extension of time.

Final Conclusion: The High Court dismissed the writ petition seeking judicial extension for filing Forms GSTR-9 and GSTR-9C, holding that only the statutory authority may extend the prescribed filing period and advising the petitioner to seek relief from that authority.

Violation of principles of natural justice - best judgment assessment - quashing of assessment orders - remand for fresh consideration - deposit as interim measure - decision on merits - right to be heard

Violation of principles of natural justice - quashing of assessment orders - best judgment assessment - Impugned assessment orders in Form ASMT-13 were quashed for having been passed without affording principles of natural justice. - HELD THAT: - The Court found that the assessment orders dated 29.10.2018, 31.07.2019, 07.08.2019, 24.07.2019 and 20.08.2019, passed under the power of best judgment assessment, imposed financial liability without affording the petitioner adequate opportunity of hearing or assigning reasons. Such omission amounted to a breach of the principles of natural justice which vitiated the orders. For that reason the orders were set aside. The Court expressly refrained from expressing any opinion on the merits of the assessment and limited its interference to the procedural infirmity identified.

Impugned ASMT-13 assessment orders quashed and set aside for violation of principles of natural justice; no opinion expressed on merits.

Remand for fresh consideration - deposit as interim measure - decision on merits - right to be heard - Matter was remanded to the assessing authority for fresh adjudication on merits with specified interim and procedural directions. - HELD THAT: - The Court remitted the matter to the authority for fresh consideration in compliance with natural justice, subject to a limited interim regime. The petitioner was directed to deposit a specified interim sum within a stipulated period and to appear before the authority on a fixed date to place any additional material; parties were to be afforded further opportunity to place material. The authority was directed to decide the matter on merits in compliance with principles of natural justice within a specified timeframe. The Court clarified that the deposit would be without prejudice to rights of the parties and that any excess deposit, if found, shall be refunded expeditiously as per statute. Liberty to pursue other remedies was reserved. The Court emphasised cooperation by the petitioner and permitted digital proceedings if necessary.

Proceedings remanded for fresh adjudication on merits with directions including interim deposit, opportunity of hearing, timeline for decision, and refund of any excess deposit.

Final Conclusion: The assessment orders in Form ASMT-13 for the period March, 2018 and March, 2019 to June, 2019 were quashed for breach of natural justice and the matter remitted to the authority for fresh decision on merits subject to interim deposit and procedural directions; no adjudication on merits was undertaken by the Court.

Legitimate expectation - transition to GST regime - administrative mistake and relief - protection of substantive rights despite procedural error - remedial direction in public interest during transitional difficulties

Legitimate expectation - administrative mistake and relief - protection of substantive rights despite procedural error - Whether the respondents were justified in denying the assessee the opportunity to migrate input tax credit by refusing to accept or enable electronic filing of form GST TRAN-I after the assessee attempted to upload on 29.12.2017 relying on a press release showing the last date as 30.12.2017, and whether relief in the form of opening the portal or accepting the form manually was permissible. - HELD THAT: - The existence of a press release dated 20.11.2017 indicating availability of upload till 30.12.2017 was admitted and there was no subsequent clarification or notification correcting that date. In the transitional phase of the new tax regime, dealers were entitled to rely on public statements and to wait until the last day prescribed; acting on 29.12.2017 was therefore reasonable. The denial was founded on a technical compliance point (no prior login before 27.12.2017) despite the assessee having attempted to act within the period he reasonably believed to be available. The court noted systemic difficulties faced by assessees and the department during transition and disapproved the Grievance Redressal Committee's hyper-technical approach. In these circumstances, depriving the assessee of the substantive benefit under the GST migration provisions on account of the administrative/technical error would be unjust. The Single Judge's direction to enable filing (either by reopening the online portal or by accepting manual filing) was a proportionate remedial measure tailored to the singular facts of the case. The court, however, limited the relief to the case's specific circumstances and clarified that the judgment should not be treated as a precedent.

The Single Judge's order directing that the assessee be enabled to file form GST TRAN-I electronically or be permitted to file it manually was upheld; the appeal is dismissed, subject to the judgment being non precedential and confined to the case's facts.

Final Conclusion: Appeal dismissed; direction to enable filing of form GST TRAN-I (by reopening the portal or accepting manual filing) upheld on the facts and admitted press release, but the decision is confined to the singular circumstances and is not to be treated as a precedent.

Detention, seizure and assessment procedure under Section 129 of the CGST Act - Confiscation and mens rea requirement under Section 130 of the CGST Act - Intention to evade tax (mens rea) as sine qua non for action under Section 130 - Notice, hearing and opportunity to pay under Section 129(3) and Section 129(6)

Detention, seizure and assessment procedure under Section 129 of the CGST Act - Notice, hearing and opportunity to pay under Section 129(3) and Section 129(6) - Whether the departmental action should have proceeded under Section 129 procedures (detention/seizure and assessment with notice and opportunity to pay) instead of under Section 130. - HELD THAT: - The Court examined the scope of Section 129, which applies where goods are detained or seized for contravention of the Act or Rules while in transit and contemplates notice specifying tax and penalty and, if adverse, a 14 day opportunity to pay. The petitioner's counsel relied on Ext.P2 and contended the departmental action had to follow Section 129 safeguards. The Court contrasted Section 129 with Section 130 and observed that Section 129 is directed to irregularity in transit and associated procedural safeguards, but that Section 130 addresses cases involving an act or omission with intention to evade tax. The Court found on the material in the notice that facts pointed to a different statutory field (intentional evasion) rather than a mere transit contravention, and therefore the departmental initiation under Section 130 rather than Section 129 was appropriate on the record before it. [Paras 3, 7, 8, 10]

Proceedings under Section 130 were appropriate in the circumstances; the petition cannot succeed on the ground that only Section 129 procedures should have been followed.

Confiscation and mens rea requirement under Section 130 of the CGST Act - Intention to evade tax (mens rea) as sine qua non for action under Section 130 - Whether the impugned confiscation and the adjudication under Section 130 were sustainable on the finding of mens rea and material in the show cause notice and adjudication order. - HELD THAT: - The Court analysed the elements of Section 130, which requires an act or omission done with intent to evade tax. Ext.P2 recorded that officers observed persons entering and leaving the jewellery shop with bags containing substantial quantities of gold ornaments not accompanied by tax documents, and only authority letters without statutory basis. The petitioner filed a reply and was heard (Ext.P5), but did not produce evidence of tax payment or lawful authority for possession of the seized jewellery exceeding two kilograms. On these facts the Court accepted the administrative conclusion that the material reflected mens rea and justified confiscation under Section 130. The Court noted the absence of documents evidencing payment of tax or lawful authority by the petitioner before the authority or before the Court. [Paras 8, 9, 10, 11]

The confiscation adjudicated under Section 130 was upheld as the material disclosed requisite mens rea and no evidence was produced to rebut the departmental finding.

Final Conclusion: The writ petition is dismissed. The High Court found that the departmental initiation and adjudication under Section 130 of the CGST Act were appropriate on the material before the authority, that the requisite intention to evade tax was reflected in the show cause notice and adjudication, and that the petitioner failed to produce evidence of payment of tax or lawful authority to possess the seized goods.

Attachment of bank account under section 83 of the Central Goods and Services Tax Act, 2017 - alleged fraudulent refund of unutilized input tax credit - interim restraint on appropriation of disputed funds - opportunity to file rejoinder affidavit - production of contemporaneous original records for verification

Interim restraint on appropriation of disputed funds - attachment of bank account under section 83 of the Central Goods and Services Tax Act, 2017 - Whether respondents should be restrained from appropriating the amount credited in the petitioner's bank account pending adjudication. - HELD THAT: - The Court, without expressing any final view on the merits of the respondents' assertion that the petitioner obtained a refund fraudulently, granted an interim order restraining the respondents from appropriating the amount standing credited in the petitioner's bank account maintained with respondent No.3. The restraint is interlocutory and preserves the subject-matter of dispute to enable adjudication on merits after further pleadings and production of records.

Respondents are restrained, in the meanwhile, from appropriating the amount credited in the petitioner's bank account.

Opportunity to file rejoinder affidavit - alleged fraudulent refund of unutilized input tax credit - Whether the petitioner should be permitted to file a rejoinder to the respondents' averments regarding alleged fraudulent refund and related proceedings. - HELD THAT: - The Court observed that respondents had relied on averments in their reply, including that proceedings under provisions for recovery and investigation had been or were being initiated and that admissions had been recorded against two directors. To enable a fair determination on the contested factual and legal assertions, the Court directed that the petitioner be allowed to file a rejoinder affidavit within a specified short period so the matter can be decided on fuller pleadings.

Petitioner permitted to file a rejoinder affidavit within two weeks.

Production of contemporaneous original records for verification - Whether respondents should produce contemporaneous original records relied upon in their reply for inspection on the next date of hearing. - HELD THAT: - The Court required the respondents to produce the contemporaneous record in original on the next date of hearing to enable verification of the factual assertions made in their pleadings. This direction is procedural and intended to facilitate effective adjudication of the dispute between the parties.

Respondents directed to produce the contemporaneous original records on the next date of hearing.

Final Conclusion: Interim relief granted restraining respondents from appropriating the disputed bank-account amount; petitioner given two weeks to file a rejoinder; respondents directed to produce original contemporaneous records; matter listed for further hearing.

Rectification of error or omission in GST returns - limitation period for rectification under GST - prohibition on judicial condonation of statutory limitation - absence of statutory appeal or condonation mechanism

Rectification of error or omission in GST returns - limitation period for rectification under GST - prohibition on judicial condonation of statutory limitation - Application for rectification of GSTR-1 for the period January 2018 to March 2018 filed after the statutory period is barred and cannot be condoned by the writ court. - HELD THAT: - The Court noted that the statutory scheme expressly prescribes a deadline for rectification of details furnished under the return and that the proviso disallows rectification after the month of September following the end of the financial year or after furnishing the annual return, whichever is earlier. The petitioner sought rectification approximately one and a half years after the period in question. In the absence of any provision for appeal or for condonation of delay within the Act, the Court held that it could not itself extend or waive the legislatively prescribed limitation. Allowing judicial condonation would render the statutory limitation meaningless and risk opening the floodgates to similar belated applications.

The petition challenging the rejection of the rectification application is dismissed for being time-barred; the Court will not condone the statutory limitation.

Final Conclusion: Writ petition dismissed for want of remedy where the claim for rectification was time-barred under the statutory proviso; no order as to costs.

Denial of bail in economic offences involving alleged large-scale tax fraud - admissibility of accused's statement under the Central Goods and Services Tax Act - use of fake invoices to claim input tax credit (fake ITC) - ongoing investigation and risk of hampering probe as ground for refusing bail - jurisdiction of investigating agency to probe offences outside accused's primary place of business

Denial of bail in economic offences involving alleged large-scale tax fraud - ongoing investigation and risk of hampering probe as ground for refusing bail - The bail application of the accused is rejected. - HELD THAT: - The Court found that the prosecution materials show alleged large-scale fraudulent availment of input tax credit through fake suppliers to the tune of approximately Rs. 26.46 crores and that the accused, in statements recorded during investigation, admitted non-receipt of goods and claiming of such ITC. The offence was held to be an economic one of serious magnitude affecting the economy. The investigation was held to be ongoing and the Court concluded that grant of bail would risk hampering the probe. Defences and procedural objections raised by the accused were regarded as matters for trial and not sufficient to outweigh the prosecution's case and the stated danger to the investigation. On these grounds the Court refused bail.

Bail application rejected because the nature and magnitude of the alleged economic offence, admissions by the accused, corroborative materials and the ongoing investigation justify denial of bail.

Admissibility of accused's statement under the Central Goods and Services Tax Act - The statement(s) of the accused recorded during investigation were treated as admissible and relied upon by the Court. - HELD THAT: - The Court accepted that the accused's statements recorded on 17-02-2021 and 18-02-2021 are admissible under the CGST Act and found that those statements, together with seized documents and verification of supplier firms, corroborate the prosecution case that the accused claimed input tax credit without receipt of goods from non-existent or fake firms.

Statements recorded during investigation are admissible and were relied upon to support denial of bail.

Jurisdiction of investigating agency to probe offences outside accused's primary place of business - The Court found that the investigating agency had jurisdiction to investigate the offences and the Meerut Court could remand the accused. - HELD THAT: - The Court noted that the department, on receiving information that the accused's firm was involved in supplies in Uttar Pradesh and by producing a departmental notification, demonstrated authority to investigate the matter. The contention that the Meerut Court lacked jurisdiction was rejected as the investigation and alleged transactions had nexus with the State of Uttar Pradesh.

Objection to jurisdiction rejected; Court proceeded to consider and refuse bail.

Final Conclusion: The bail application of Manoj Kumar Garg is rejected; the Court relied on the accused's recorded statements, corroborative investigative material indicating large-scale fake ITC claims, the serious economic nature of the alleged offence and the risk of hampering ongoing investigation, and also held that the investigating agency had jurisdiction to probe the matter.

Re-opening of assessment - notice under Section 148 - reason to believe - duty to disclose fully and truly - change of opinion - interim stay of tax proceedings

Notice under Section 148 - reason to believe - duty to disclose fully and truly - change of opinion - interim stay of tax proceedings - Grant of ad interim relief restraining operation of the notice dated 28th March, 2019 and consequential proceedings including the order dated 29th March, 2021. - HELD THAT: - The petition impugns a notice issued under Section 148 and a subsequent order disposing objections, the re-opening being beyond four years. The Revenue relies on information from the Director General (Investigation) and Sales Tax Authorities that the assessee took bogus purchase bills (naming Loha Ispaat Ltd. for AY 2012-13) and contends that the assessee did not fully and truly disclose material facts, giving rise to a reason to believe that income has escaped assessment. The petitioner contends that the facts relied upon were already examined during original assessment and that the re-opening amounts to a change of opinion. On a prima facie consideration of these contentions the High Court found some merit in the petitioner's challenge and granted interim protection. The Court did not finally decide the legality of the re-opening on merits; it recorded a prima facie view and stayed further action pending final disposal of the petition. [Paras 4, 5]

Ad interim relief granted: operation of the notice dated 28th March, 2019 and consequential proceedings including the order dated 29th March, 2021 stayed until further orders; matter posted for further hearing.

Final Conclusion: The High Court granted ad interim relief by staying the operation of the impugned Section 148 notice and the subsequent order disposing objections, recording a prima facie view in favour of the petitioner and listing the matter for further consideration.

Retrospective operation of statutory amendment - prospective effect of amendment - severability of provisos - interpretation of Section 80HHC(3) - equality of treatment between classes of exporters - benefit under Section 80HHC

Retrospective operation of statutory amendment - severability of provisos - interpretation of Section 80HHC(3) - equality of treatment between classes of exporters - Whether the retrospective amendment to the third proviso to Section 80HHC is constitutionally impermissible when the assessee had not fulfilled the proviso's conditions - HELD THAT: - The Court held that the substantial question of law was governed by the decision of the Supreme Court in Commissioner of Income Tax v. Avani Exports, wherein the Supreme Court addressed the severability of the conditions introduced by amendment and the retrospective effect of that amendment. The Supreme Court concluded that the severable conditions in the third and fourth provisos were not to operate so as to create unequal treatment between exporters above and below the specified turnover threshold and issued a substituted direction treating both classes similarly; the High Court's order quashing retrospective operation was clarified by substituting uniform treatment. Applying that ratio, this Court found the question of law against the Revenue and followed the Supreme Court's directive that the amended conditions should not result in detrimental retrospective operation and that exporters in both categories be treated alike for the purpose of the benefit under Section 80HHC.

The question of law is decided against the Revenue and the Tribunal orders are affirmed in accordance with the Supreme Court's decision in Avani Exports.

Final Conclusion: Tax case appeals dismissed; the appeals are disposed of by applying the Supreme Court's decision in Commissioner of Income Tax v. Avani Exports, resulting in the challenged retrospective operation and application of the proviso being treated in the manner directed by the Apex Court, to the detriment of the Revenue.

Proportionate deduction under Section 80IB(10) - housing project unit area limit 1500 sq.ft. - interpretation of Section 80IB(10) - entitlement when some units exceed prescribed area

Proportionate deduction under Section 80IB(10) - housing project unit area limit 1500 sq.ft. - interpretation of Section 80IB(10) - entitlement when some units exceed prescribed area - Deduction under Section 80IB(10) need not be denied for the entire housing project where some units exceed 1500 sq.ft.; deduction is allowable in respect of units having built-up area less than 1500 sq.ft. - HELD THAT: - The Court, following the Division Bench decision in Commissioner of Income-tax, Chennai v. Elegant Estates and the reasoning in CIT v. Arun Excello Foundations (P) Ltd., held that the statutory language does not mandate denial of the deduction for the whole project merely because certain residential units exceed the specified dimension. Consequently, the Tribunal was correct in allowing the deduction in respect of flats measuring less than 1500 sq.ft. even though the project contained some units exceeding that limit. The Revenue's contention that a single unit exceeding 1500 sq.ft. would forfeit the deduction for the entire project was rejected as contrary to the precedent relied upon by the Court. [Paras 6]

Question of law answered against the Revenue and in favour of the assessee; deduction under Section 80IB(10) allowed proportionately for units under 1500 sq.ft.

Final Conclusion: The Tax Case Appeal is dismissed; the Tribunal's allowance of deduction under Section 80IB(10) for units below 1500 sq.ft. in a project containing some larger units is affirmed.

Advance tax liability - payment instalments under Section 211 - computation of advance tax under Section 209 - effect of sanctioning scheme of amalgamation - tax liability during the interregnum period

Advance tax liability - payment instalments under Section 211 - effect of sanctioning scheme of amalgamation - tax liability during the interregnum period - Whether the petitioner was obliged to pay advance tax for the period 1-04-2016 to 20-03-2017 for the assessment year 2017-18. - HELD THAT: - The scheme of amalgamation was sanctioned by the National Company Law Tribunal on 20-03-2017 and, although expressed to operate with retrospective effect from 01-04-2016, the petitioner remained a distinct legal entity until the Tribunal's sanction. Liability to pay advance tax is determined by reference to the assessee's current income for the financial year and the instalment schedule under the statutory provisions governing advance tax, including the quarterly due dates specified for payment. The first three instalments (on or before 15th June, 15th September and 15th December) fall within the interregnum 1-04-2016 to 20-03-2017. Accordingly, the petitioner could not escape liability for advance tax for those instalments on the ground that the amalgamation was retrospectively effective, because the legal sanction that extinguished the petitioner's separate entity occurred only on 20-03-2017. Prior decisions relied upon by the petitioner were found inapplicable on the facts, as the determinative question is the date on which the entity ceased to exist for tax purposes, which here was the date of the Tribunal's sanction. [Paras 9, 11, 12, 13]

Petitioner liable to pay advance tax for the instalments falling between 1-04-2016 and 20-03-2017 for AY 2017-18; liability for the last instalment after the sanction date does not arise.

Final Conclusion: Writ petitions dismissed; impugned order under Section 210(3)/(4) upholding demand of advance tax for the interregnum period 1-04-2016 to 20-03-2017 for AY 2017-18 is sustained.

Principles of natural justice - service of show cause notice - opportunity of hearing - reception of notice by postal track versus electronic service - faceless assessment scheme - setting aside assessment and remand for fresh hearing

Principles of natural justice - service of show cause notice - opportunity of hearing - reception of notice by postal track versus electronic service - Whether the impugned assessment order suffers from violation of the principles of natural justice by reason of the show cause notice being served after the scheduled hearing time and no opportunity being given to the petitioner to meet the crystallised proposals. - HELD THAT: - The Court found that the show cause notice dated 11.12.2019 fixed a personal hearing on 16.12.2019 but, according to postal tracking, the petitioner received that notice only on 16.12.2019 at 3:46:57 p.m., after the scheduled hearing time. The revenue's contention that the representative had appeared on 12.12.2019 with a written reply and that the show cause notice was sent by e-mail could be accepted only if the assessment records explicitly showed that the proposals in the 11.12.2019 notice had been discussed at the earlier hearing. On perusal of the records the revenue accepted there was nothing to indicate that the proposals in the show cause notice were in fact taken up on 12.12.2019. In these circumstances the Court held that the benefit of doubt must be extended to the petitioner and that the impugned order was vitiated by lack of opportunity to be heard on the crystallised proposals. [Paras 6, 7, 8]

Impugned assessment order set aside on grounds of breach of the principles of natural justice for non-service in time and absence of opportunity to be heard on the crystallised proposals.

Faceless assessment scheme - setting aside assessment and remand for fresh hearing - Procedure to be followed after setting aside the impugned assessment order. - HELD THAT: - Having set aside the assessment on grounds of denial of opportunity of hearing, the Court directed that the assessment proceedings be re-conducted in accordance with the faceless assessment scheme. The Court refrained from fixing a fresh hearing date itself and instead directed that the petitioner be heard and that the assessment proceedings be completed within six weeks from the date of the order. [Paras 9]

Assessment proceedings remitted for de novo completion under the faceless assessment scheme after hearing the petitioner within six weeks.

Final Conclusion: Writ petition allowed; impugned assessment under A.Y. 2017-18 set aside for breach of natural justice and remitted for fresh completion under the faceless assessment scheme after affording hearing to the petitioner within six weeks; no costs.

Reassessment under Section 147 read with Section 143(3) of the Income Tax Act, 1961 - notice under Section 148 of the Income Tax Act - principles of natural justice - GKN Drive Shafts procedural requirements for reassessment - assessing officer's obligation to furnish reasons and pass a speaking order on objections

Reassessment under Section 147 read with Section 143(3) of the Income Tax Act, 1961 - GKN Drive Shafts procedural requirements for reassessment - principles of natural justice - Validity of the assessment order dated 30.12.2019 passed in purported exercise of reassessment jurisdiction - HELD THAT: - The Court found from the undisputed sequence of events that the procedure mandated by the Supreme Court in GKN Drive Shafts for issuance of notices under Section 148 and for disposal of objections was not followed. Although the petitioner filed a return and repeatedly sought reasons and responded to show-cause communications, the assessing officer passed the reassessment order on 30.12.2019 without first furnishing reasons within a reasonable time and without disposing of the petitioner's objections by a speaking order. This constituted a prima facie violation of the procedural safeguards and gave rise to patent disregard of the principles of natural justice. Having regard to those findings, the impugned order was set aside. [Paras 3, 4, 5]

Impugned assessment order dated 30.12.2019 set aside for failure to follow the procedural requirements under GKN Drive Shafts and for breach of natural justice.

Assessing officer's obligation to furnish reasons and pass a speaking order on objections - notice under Section 148 of the Income Tax Act - Procedure to be followed on remand for consideration of objections to assumption of jurisdiction - HELD THAT: - The Court directed that the petitioner be permitted to file objections to the assumption of jurisdiction within four weeks from the date of uploading of the order. The assessing officer is required to hear the petitioner and pass an order accepting or rejecting those objections within three weeks from receipt of the objections. Thereafter, any proceedings for assessment are to be initiated in accordance with law. The direction thus remands the matter to the assessing officer for fresh consideration limited to disposal of objections and compliance with the procedural obligations to furnish reasons and pass a speaking order. [Paras 4]

Petitioner permitted to file objections within four weeks; assessing officer to decide objections after hearing within three weeks; assessment proceedings, if any, to proceed thereafter in accordance with law.

Final Conclusion: Writ petition allowed: the reassessment order dated 30.12.2019 is set aside for failure to comply with GKN Drive Shafts procedural requirements and principles of natural justice; petitioner may file objections within four weeks and the assessing officer shall decide them after hearing within three weeks, following which assessment proceedings, if any, may be taken up in accordance with law.

Concealment of particulars of income - furnishing of inaccurate particulars of income - notice under section 274 - penalty under section 271(1)(c) - requirement to strike out inapplicable limb in penalty notice - defective penalty notice vitiates penalty

Notice under section 274 - concealment of particulars of income - furnishing of inaccurate particulars of income - defective penalty notice vitiates penalty - Whether the penalty imposed under section 271(1)(c) is vitiated because the notice under section 274 recorded both limbs without striking off the inapplicable limb while the penalty order proceeded on only one limb. - HELD THAT: - The Tribunal examined the notice issued under section 274 and found that the Assessing Officer did not strike out either of the two alternative charges - concealment of particulars of income and furnishing of inaccurate particulars of income - although the penalty order was framed only for concealment. Relying on the authority of the Hon'ble Bombay High Court in Mohd. Farhan A. Shaikh Vs. Dy.CIT and Pr.CIT Vs. Golden Peace Hotels and Resorts (P.) Ltd. , the Tribunal followed the principle that failure to strike out the inapplicable limb in the penalty notice renders the notice defective and vitiates the consequent penalty order, even if the AO had recorded satisfaction otherwise. Applying this legal principle to the facts, the Tribunal held that the defect in the notice was fatal to the penalty imposed by the AO. [Paras 3, 4]

Penalty deleted as the notice under section 274 was defective for not striking out the inapplicable limb, thereby vitiating the penalty order.

Final Conclusion: The Tribunal upheld the CIT(A)'s order deleting the penalty; the Revenue's appeal is dismissed.

Rectification of mistake apparent on record - admission of additional evidence - remand for fresh consideration - comparability test for transfer pricing comparables - application of filters adopted by the TPO

Rectification of mistake apparent on record - comparability test for transfer pricing comparables - admission of additional evidence - remand for fresh consideration - application of filters adopted by the TPO - Whether the Tribunal's order contained an inadvertent omission regarding the comparability of MPS Ltd, and if so, whether the additional evidence should be admitted and the issue remanded to the Assessing Officer/TPO for reconsideration. - HELD THAT: - The Tribunal found an inadvertent mistake in its earlier order in failing to discuss and adjudicate the assessee's objection to the comparability of MPS Ltd. Having considered the assessee's submissions and the additional evidence filed (annual report material placed before the Tribunal), the Tribunal held that the omission amounted to a mistake apparent from the record warranting rectification. The Tribunal accordingly corrected the typographical reference in its earlier order and expressly admitted the additional evidence. The matter of comparability was remanded to the file of the Assessing Officer/TPO for reconsideration in accordance with law, including examination of whether MPS Ltd satisfies the filters applied by the TPO in selecting comparables. The Tribunal treated the ground as partly allowed for statistical purposes and directed reconsideration of the issue in toto. [Paras 4, 5]

The Tribunal rectified its order to correct the omission, admitted the additional evidence, and remanded the question of MPS Ltd's comparability to the Assessing Officer/TPO for fresh verification and reconsideration.

Final Conclusion: Miscellaneous Application allowed: the Tribunal corrected the inadvertent omission, admitted the assessee's additional evidence and remanded the issue of MPS Ltd's comparability to the Assessing Officer/TPO for reconsideration in accordance with law.

Comparability - functional comparability - Transactional Net Margin Method - selection and exclusion of comparables - mark-up on third-party cost recoveries - working capital adjustment for delayed receivables - remand for verification - extraordinary economic events / amalgamation affecting comparables

Selection and exclusion of comparables - turnover filter - comparability - Whether M/s Microgenetics Systems Ltd. should be considered in the final set of comparables. - HELD THAT: - The Tribunal found that the TPO excluded Microgenetics after applying a turnover threshold of Rs. 5 crores without recording concrete reasons for its earlier selection or consistent application of the filter across comparables. In view of the absence of clear application and reasoning, the matter is directed back to the TPO/AO to examine this comparable afresh by applying all applicable filters and assessing the functional profile; if it satisfies those parameters it may be included for statistical purposes. [Paras 9]

Partly allowed for statistical purpose; TPO/AO to reconsider Microgenetics after applying all filters and functional comparability.

Selection and exclusion of comparables - contemporaneous audited data - comparability - Whether R-Systems International Ltd. should be reintroduced as a comparable despite having a different financial year ending. - HELD THAT: - On review of publicly available annual reports the Tribunal observed that audited quarterly financial data for the relevant year (April 2009 to March 2010) was available despite a different year end. The Tribunal held that mere difference in year ending does not automatically exclude a comparable and directed the TPO/AO to reconsider R-Systems after applying all filters and assessing functional similarity; if parameters are satisfied it may be selected for statistical purposes. [Paras 9]

Partly allowed for statistical purpose; TPO/AO to reconsider R-Systems after applying filters and functional profile assessment.

Functional comparability - selection and exclusion of comparables - software development vs ITeS/BPO - Whether TCS E-Serve International Ltd. and TCS E-Serve Ltd. are appropriate comparables for the assessee. - HELD THAT: - The Tribunal found the functional profile of the two TCS entities to be materially different from the assessee: they were engaged in software testing, verification and validation (software development domain) and their financial statements did not provide separate ITeS/BPO segmental details. Given this functional dissimilarity, the Tribunal directed exclusion of both TCS entities from the final list of comparables. [Paras 9]

Allowed in favour of the assessee; both TCS E-Serve entities to be excluded from the final comparables list.

Mark-up on third-party cost recoveries - cost base for benchmarking - comparability - Whether the assessee was entitled to exclude mark-up on third-party out-of-pocket cost recoveries when applying the mark-up under TNMM. - HELD THAT: - The Tribunal rejected the assessee's contention that no mark-up should apply to third-party reimbursements (travel, boarding, lodging). Relying on the service agreement terms and the nature of such expenses as part of the assessee's business cost base, the Tribunal held these recoveries form part of total costs and should attract an appropriate profit margin; prior case relied upon by the assessee was distinguished on facts. [Paras 9]

Assessee's ground dismissed; recoveries treated as part of cost base and subject to mark-up.

Working capital adjustment - delayed realisation of receivables - remand for verification - Whether the working capital adjustment claimed by the assessee for delayed realisation of receivables from the AE is admissible and in what measure. - HELD THAT: - The Tribunal noted conflicting contentions as to invoice-wise delays and the assessee's claim of a weighted average realisation period of 20.52 days versus isolated delays on two invoices. Given the factual nature and need for verification of actual delays, the Tribunal remanded this issue to the TPO/AO for proper adjudication, requiring that the assessee be heard in accordance with principles of natural justice. [Paras 9]

Partly allowed for statistical purpose in that the issue is remanded to the TPO/AO for fresh verification and adjudication.

Selection and exclusion of comparables - extraordinary economic events / amalgamation - functional comparability - Whether the CIT(A) erred in excluding Accentia Technology Pvt. Ltd., Eclerx Services Ltd., I Gate Global Services and Infosys BPO Ltd. from the comparables (Revenue's challenge). - HELD THAT: - On examination of company profiles and CIT(A)'s findings the Tribunal agreed with the exclusions: Accentia was affected by an extraordinary merger event; Eclerx's functional profile differed from the captive ITeS provider; I Gate lacked separate segmental data to assess ITeS comparability; Infosys BPO was a large software development entity with different risk profile and had undergone an extraordinary economic event. The Tribunal dismissed the Revenue's appeal and upheld the CIT(A)'s exclusions. [Paras 10]

Revenue's appeal dismissed; exclusions of the four comparables by the CIT(A) upheld.

Final Conclusion: The assessee's appeal is partly allowed for statistical purposes in respect of reconsideration of certain comparables (Microgenetics and R-Systems) and remand of the working-capital/receivables issue to the TPO/AO; the Tribunal directed exclusion of the two TCS entities and dismissed the assessee's challenge to the treatment of third-party cost recoveries. The Revenue's appeal challenging the exclusion of four comparables is dismissed.

Revisional jurisdiction under section 263 of the Income-tax Act - Invocation of section 263 at the instance of the Assessing Officer - Requirement of independent examination of records by the Principal Commissioner - Erroneous order prejudicial to the interests of revenue - Need to confront assessee with adverse material and observance of principles of natural justice - Use of general/public domain material and SIT findings not substituted for specific adverse material - Application of twin conditions for exercise of section 263 - order must be erroneous and prejudicial

Invocation of section 263 at the instance of the Assessing Officer - Requirement of independent examination of records by the Principal Commissioner - Revisional jurisdiction under section 263 of the Income-tax Act - Whether the proceedings under section 263 were valid where they were initiated on a proposal received from the Assessing Officer rather than on independent examination by the Principal Commissioner - HELD THAT: - The Tribunal examined the wording of paragraphs 2 and 3 of the impugned order and found that the Principal Commissioner had acted after perusing a proposal received from the Assessing Officer and the record placed before him, rather than after conducting his own independent examination. The Tribunal applied its earlier coordinate-bench decisions and established principles that the power under section 263 is vested in the Principal Commissioner/Commissioner and cannot be invoked merely at the instance of the Assessing Officer; the revisional authority must himself consider and be satisfied that the order is erroneous and prejudicial to the revenue. Even if a proposal from the AO exists, the Principal Commissioner is required to independently examine the materials and record satisfaction before initiating revision. On the facts, the Tribunal held that initiation of revision based on the AO's proposal without independent examination vitiated the exercise of power under section 263. [Paras 10, 11, 13]

Proceedings under section 263 were invalid because they were initiated on the AO's proposal without independent examination by the Principal Commissioner; the section 263 order is vitiated on this ground.

Erroneous order prejudicial to the interests of revenue - Need to confront assessee with adverse material and observance of principles of natural justice - Use of general/public domain material and SIT findings not substituted for specific adverse material - Whether, on the merits, the Principal Commissioner had recorded adequate and specific reasons (and confronted the assessee with adverse material) to hold that the AO's assessment was erroneous and prejudicial so as to warrant exercise of revisional power - HELD THAT: - The Tribunal considered the substance of the Principal Commissioner's order and found that large portions were verbatim reproductions of reasoning used in other cases and that no specific adverse material relating to the assessee was placed on record. The AO had issued third-party enquiries under section 133(6) and recorded satisfaction on the basis of the replies and documents filed by the assessee. The Principal Commissioner did not himself conduct enquiries, nor did he identify deficiencies in the AO's inquiries or point to specific adverse evidence against the assessee; instead he relied on general observations, SIT/public-domain material and a template reasoning applied across multiple cases. The Tribunal reiterated the settled law that for invoking section 263 the revisional authority must be satisfied of the twin conditions (the order is erroneous and prejudicial to revenue), and must have prima facie material on the record to show such error; suspicion or general modus operandi published in reports cannot substitute for specific adverse material, and additions cannot be directed without confronting the assessee and following principles of natural justice. On these merits the Tribunal held that the Principal Commissioner's order was arbitrary and unsustainable. [Paras 15, 16, 17, 18, 20]

On merits the section 263 order is unsustainable for lack of specific adverse material, failure to conduct independent enquiries and failure to confront the assessee; the directions for additions are quashed.

Final Conclusion: Following coordinate-bench authority and applying the twin conditions for exercise of revisional jurisdiction under section 263, the Tribunal held that the Principal Commissioner initiated revision on the basis of the AO's proposal without independent examination and, additionally, the impugned order relied on general/cut and paste reasoning without specific adverse material or observance of natural justice; accordingly the section 263 order for AY 2014-15 is quashed and the appeal is allowed.

Capital gain computation for depreciable asset forming part of a block of assets - character of asset on cessation of depreciation and on letting out - treatment of written down value as cost of acquisition for depreciable assets - determination of long term versus short term capital gain where depreciation was earlier claimed but subsequently discontinued

Character of asset on cessation of depreciation and on letting out - determination of long term versus short term capital gain where depreciation was earlier claimed but subsequently discontinued - capital gain computation for depreciable asset forming part of a block of assets - Whether the profit on sale of the unit is to be treated as long term capital gain after indexation where depreciation was claimed in earlier years but discontinued and the unit was let out, notwithstanding the AO/CIT(A)'s invocation of provisions applicable to depreciable assets. - HELD THAT: - The Tribunal found that the assessee had claimed depreciation on the property in earlier years but from the relevant accounting period the units were let out and depreciation was not claimed; this factual position was not disputed by the Revenue. Relying on the precedent of a Coordinate Bench in M/s Prabodh Investment & Trading Company Pvt. Ltd. , the Tribunal held that when depreciation is discontinued and the asset is shown/treated as an investment (and income from letting is offered under the head 'Income from house property'), the asset ceases to be a business or depreciable asset from the year depreciation was discontinued. In that factual situation the character of the asset changes and the gain on sale is to be computed as long term capital gain after indexation, despite earlier claims of depreciation. The Tribunal rejected the AO/CIT(A)'s application of the depreciable-asset formula (taking WDV as cost and treating the gain as short-term) because the determinative fact was cessation of depreciation and change of character to an investment, which attracts the computation and character of long term capital gains. [Paras 6, 7, 8]

The sale profit is to be treated as long term capital gain after indexation; appeal allowed and Assessing Officer directed to compute accordingly.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2014-15, holding that once depreciation was discontinued and the unit was let out (treated as an investment), the asset ceased to be a depreciable business asset and the gain on its sale must be computed and taxed as long term capital gain after indexation; the Assessing Officer is directed to give effect accordingly.

Unexplained cash credits under section 68 - burden of proof and onus of assessee to establish identity, creditworthiness and genuineness of creditors - genuineness of loan transactions evidenced by banking channel movements and loan confirmations - consequential nature of additions of commission and interest where principal loan stands explained

Unexplained cash credits under section 68 - burden of proof and onus of assessee to establish identity, creditworthiness and genuineness of creditors - genuineness of loan transactions evidenced by banking channel movements and loan confirmations - Deletion of addition treating loan receipts of Rs. 2,22,50,000/- as unexplained cash credits was sustainable. - HELD THAT: - The assessee furnished loan confirmations, bank statements showing receipt and repayment through banking channels, and income-tax returns/PAN of the creditors. The CIT(A) applied the three-fold test - identity of creditors, creditworthiness and genuineness of transactions - and held the onus discharged. The Assessing Officer's order omitted any proper inquiry into these three ingredients and relied primarily on a search in unrelated group cases without controverting the factual material produced by the assessee. The Tribunal found no infirmity in the appellate conclusion that the nature and source of the loans stood explained and therefore confirmed deletion of the addition. [Paras 4]

Addition under section 68 treated as unexplained cash credit is deleted; order of CIT(A) confirmed.

Consequential nature of additions of commission and interest where principal loan stands explained - Whether additions of commission @3% and interest paid in respect of the above loans could be sustained once the loans were held genuine. - HELD THAT: - The CIT(A) deleted additions of commission and interest after holding the underlying loan transactions genuine. The Tribunal, having confirmed the finding that the loans stood explained, held these grounds to be consequential and dismissed Revenue's challenge to the deletions without further adjudication on merits. [Paras 6]

Additions of commission and interest are dismissed as consequential to the finding that the loans are genuine.

Procedural consequence of cross-objection not pressed - Disposition of the assessee's cross-objection which was not pressed before the Tribunal. - HELD THAT: - The cross-objection filed by the assessee was not pressed at the hearing. The Tribunal recorded that it was not pressed and dismissed it accordingly. [Paras 7]

Cross-objection dismissed as not pressed.

Final Conclusion: Both appeals of the Revenue are dismissed and the order of the CIT(A) deleting the additions is confirmed; the assessee's cross-objection is dismissed as not pressed.

Deduction under Section 10A/10B - allocation of common/indirect costs between business segments - foreign exchange gain/loss - revenue v. capital character and treatment for operating margin - transfer pricing - selection and exclusion of comparable companies - application of comparability filters (export earnings, onsite revenue, related party transactions, employee cost) - risk adjustment in transfer pricing - remand for verification and recomputation

Deduction under Section 10A/10B - Whether communication/telecommunication expenses excluded from export turnover for computing deduction under Section 10A/10B must also be excluded from total turnover when calculating the deduction. - HELD THAT: - The Tribunal followed the Karnataka High Court decision in CIT v. Tata Elxsi Ltd and earlier High Court confirmation in the assessee's own case, holding that where export turnover (numerator) is arrived at after excluding telecommunication expenses, the same exclusion must be applied to export turnover as a component of total turnover (denominator) for computing deduction under Section 10A. On the basis of these precedents and consistency with earlier decisions in the assessee's case, the assessee's ground on this point was allowed. [Paras 4]

Assessee's plea allowed; telecommunication expenses excluded from export turnover must also be excluded from export turnover as component of total turnover for computing Section 10A/10B deduction.

Allocation of common/indirect costs between business segments - remand for verification and recomputation - Whether the headcount basis adopted by the assessee for apportioning common/indirect costs among segments is an appropriate and consistent method. - HELD THAT: - The Tribunal upheld the headcount method as a plausible and consistent basis of allocation in line with prior orders of the Tribunal and the Karnataka High Court, noting that where alternative reasonable methods exist a consistently applied method should be accepted. However, factual discrepancies identified as to employee numbers and allocations warranted verification. Accordingly, while the method was accepted, the matter was remanded to the Assessing Officer for verification of employee numbers and the expenditure allocated to such employees so as to ensure the allocations are factually correct. [Paras 5]

Headcount method upheld as appropriate; remitted to AO for verification of employee counts and related allocations.

Foreign exchange gain/loss - revenue v. capital character and treatment for operating margin - remand for verification and recomputation - Whether the foreign exchange gains/losses should be treated as operating (revenue) or capital for (a) allowing deductions in computing taxable income and (b) inclusion in operating costs when determining operating margins for transfer pricing. - HELD THAT: - The Tribunal agreed with the lower authorities that the assessee had not furnished required segment wise breakups and supporting evidence before DRP/AT, and noted prior Tribunal directions in the assessee's own case treating foreign exchange fluctuation arising from software development services as operating. Given the factual gaps in the record and the need for segmental allocation, the Tribunal remitted the issue to the AO/TPO directing the assessee to furnish the detailed breakup of foreign exchange gain/loss and requiring the AO/TPO to decide the matter in light of the Tribunal's earlier order in IT(TP)A No.271/Bang/2014. The direction contemplates (i) verification of the nature of specific exchange gains claimed as capital and (ii) appropriate allocation/consideration while computing comparables' margins. [Paras 6]

Matter remitted to AO/TPO for the assessee to furnish details; AO/TPO to decide nature and allocation of foreign exchange gains/losses and recompute margins in accordance with the Tribunal's earlier direction.

Transfer pricing - selection and exclusion of comparable companies - application of comparability filters (export earnings, onsite revenue, related party transactions, employee cost) - Validity of DRP/TPO directions to exclude or include specific comparable companies from the final comparable set for determining arm's length price in different service segments. - HELD THAT: - The Tribunal, after reviewing the DRP findings and co ordinate Bench decisions, upheld exclusion or inclusion of specified comparables based on functional dissimilarity, presence of products/intangibles/brand, absence of segmental information, or failure to meet applied filters. Notable directions: exclude ICRA Techno Analytics Ltd, Infosys Ltd, KALS Information Systems Ltd, Persistent Systems Ltd, Tata Elxsi Ltd (software development comparables); in Technical Support Services exclude Accentia Technologies Ltd, Acropetal Technologies Ltd, Eclerx Services Ltd, ICRA Online Ltd, Infosys BPO Ltd and include Sundaram Business Services Ltd; in Marketing & Sales Support exclude HCCA Business Services Pvt Ltd and Killick Agencies & Marketing Ltd and exclude Asian Business Exhibition & Conferences Ltd; exclude APITCO Ltd. The Tribunal followed earlier Tribunal decisions and directed AO/TPO to modify the final comparable set accordingly and recompute ALP. [Paras 8, 10, 11, 12, 13]

DRP/TPO directions confirmed as to the exclusion/inclusion of the listed comparables; AO/TPO directed to adjust the comparable set and recompute ALP accordingly.

Risk adjustment in transfer pricing - remand for verification and recomputation - Whether suitable adjustments should be made to account for differences in risk profile between the assessee and the comparables. - HELD THAT: - The Tribunal referred to the assessee's submissions and precedents where methodologies for quantifying risk adjustment were proposed and recognized that while the TPO earlier rejected such adjustments for lack of quantification, the assessee had now provided a basis (including reference to judicial precedents and a quantification approach). Taking a consistent view with earlier Tribunal findings, the AO/TPO was directed to consider and give appropriate risk adjustment as per the methodology and authorities cited, subject to reasoned and reasonably accurate quantification. [Paras 14]

AO/TPO directed to consider and give proper risk adjustment in accordance with the submissions and precedents; matter remitted for quantification.

Remand for verification and recomputation - Whether the operating margin of Cyber Media Research Limited as a comparable was correctly computed and whether the TPO/AO should re compute it. - HELD THAT: - The Tribunal did not settle the numerical dispute on the record but remitted the issue to the AO/TPO to recompute the correct operating margin of Cyber Media Research Limited in accordance with law, directing re computation consistent with transfer pricing principles. [Paras 15]

Referred back to AO/TPO for recomputation of Cyber Media Research Limited's operating margin.

Final Conclusion: The cross appeals were partly allowed: the Tribunal (i) allowed the assessee's claim on the treatment of telecommunication expenses for Section 10A/10B computation; (ii) upheld the headcount method for allocation of common costs but remitted factual verification to the AO; (iii) remitted the foreign exchange gain/loss issue to the AO/TPO for detailed verification and decision (with directions to follow the Tribunal's earlier approach where applicable); (iv) confirmed multiple DRP/TPO directions to exclude or include specified comparables across segments and directed recomputation of ALP; (v) directed the AO/TPO to consider suitable risk adjustments; and (vi) remitted the computation of Cyber Media Research Limited's margin - overall both appeals were partly allowed for statistical purposes.

Long term capital gains - exemption under section 54 - principles of natural justice - ostensible ownership and assessment in hands of assessee - remand for production and verification of evidence

Exemption under section 54 - ostensible ownership and assessment in hands of assessee - long term capital gains - Whether the assessee is entitled to deduction under section 54 where the new residential property was purchased in the name of the assessee's mother and whether proof that the asset was assessed in the hands of the assessee was furnished - HELD THAT: - The Assessing Officer denied the section 54 exemption on the ground that the investment in the new residential house was made in the name of the assessee's mother and not in the assessee's name. The Tribunal noted the decision of the Hon'ble Madras High Court in CIT v. V. Natarajan, which recognises that acquisition in the name of another may still attract exemption if it is established that the asset was assessed in the hands of the assessee. The appellate authority required the assessee to produce evidence that the capital asset so acquired had been assessed in the assessee's hands; such proof was not produced before the CIT(A) despite opportunities. The CIT(A) has not disputed the legal eligibility for exemption but declined to allow the benefit for want of the requisite proof. In view of this, the Tribunal held that the matter should be remitted to the CIT(A) to afford the assessee one further opportunity to furnish the necessary proof; if the assessee fails to produce the evidence, the CIT(A)'s order confirming the addition would stand. [Paras 5, 6]

Remitted to the CIT(A) to give the assessee one more opportunity to produce proof that the acquired asset was assessed in the assessee's hands; failing which the appellate order confirming the addition will be sustained.

Principles of natural justice - remand for production and verification of evidence - Whether the assessee was denied adequate opportunity before the CIT(A) and whether relief on that ground should be granted - HELD THAT: - The assessee specifically contended that the CIT(A) did not provide sufficient opportunity to present the evidence required to establish entitlement to exemption, invoking natural justice. The Tribunal considered this contention and, noting the absence of the required proof on record and the appellate authority's reliance on the need for such proof, directed that the assessee be given one more opportunity before the CIT(A) to submit the evidence. This direction remedies any shortfall in opportunity and preserves the assessee's right to be heard before a final decision on the exemption is recorded. [Paras 4, 6]

Assessee to be given one further opportunity by the CIT(A) to produce the evidence; order ensures compliance with principles of natural justice.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes and remitted the matter to the CIT(A) with a direction to afford the assessee one final opportunity to furnish proof that the acquired residential asset was assessed in the assessee's hands for consideration under section 54; absent such proof, the CIT(A)'s order confirming the addition will remain effective.

Deductibility of interest expenditure as business expense - Matching principle - Mutuality doctrine - Deduction under section 37(1) of the Income-tax Act - Deduction under section 57(3) of the Income-tax Act - Commerciality taint

Mutuality doctrine - Commerciality taint - The Assessing Officer cannot, on his own, thrust the status of a mutual society on the assessee; the assessee is not entitled to mutuality exemption where commerciality is inherent in its activities. - HELD THAT: - The Tribunal held that the assessee never claimed exemption under mutuality and the AO was not competent to impose a method detrimental to the assessee. The society's bylaws and practice (including entitlement to dividend and continuation of membership after allotment) indicate a taint of commerciality. Reliance on precedent denying mutuality where commercial features exist supports the conclusion that the assessee is not entitled to mutuality exemption and the AO's action in treating it as a mutual society is set aside. [Paras 12]

AO's finding of mutuality set aside; assessee not entitled to mutuality exemption on these facts.

Deductibility of interest expenditure as business expense - Matching principle - Deduction under section 37(1) of the Income-tax Act - Interest paid/credited to members as compensation for delayed allotment is deductible under section 37(1) as expenditure incurred for the purpose of business. - HELD THAT: - The Tribunal accepted that the payments to members were compensatory and bore a direct nexus to the assessee's activity of holding members' advances in FDs. Applying the matching principle, and following authorities that profits are to be computed after allowing necessary expenses, the Tribunal held that such expenditure was incurred for the purpose of the society's business and hence allowable under section 37(1). The Tribunal rejected the AO's requirement of a strict cause-and-effect link between the specific item of income and expenditure, holding that purpose-of-business suffices for deductibility under section 37(1). [Paras 12]

Interest/compensation credited to members allowed as deduction under section 37(1).

Deduction under section 57(3) of the Income-tax Act - Inextricable link between interest income and interest expenditure - Even if the interest income is assessable as income from other sources, the interest/compensation paid to members is deductible under section 57(3) because of the inextricable link with the interest earned. - HELD THAT: - The Tribunal found that the interest income arose from deployment of members' advances in bank deposits; thus, the interest credited to members was laid out wholly and exclusively for earning that interest income. On this basis, and by reference to authorities recognizing deduction where loan proceeds were placed in FDs and interest on borrowed funds matched against interest income, the Tribunal allowed the deduction under section 57(3). The Tribunal also observed that an explicit contractual obligation at the time of advance is not a pre-condition for allowing the deduction where compensation for delay legitimately arose later. [Paras 12]

Interest paid to members allowable as deduction under section 57(3) if interest income is treated as income from other sources.

Validity of reopening of assessment - Grounds raised on validity of reopening of assessment were not adjudicated before the Tribunal because no argument was advanced by the assessee on that issue. - HELD THAT: - The Tribunal recorded that the assessee's representative did not press or argue the grounds relating to validity of reopening during the hearing; consequently, those grounds were not decided on merits by the Tribunal and remain unadjudicated. [Paras 12]

Validity of reopening of assessment not adjudicated (grounds not argued).

Final Conclusion: Appeals partly allowed: Tribunal disallowed the AO's imposition of mutuality, held that interest/compensation paid to members is deductible (under section 37(1) or, alternatively, section 57(3)), and did not adjudicate the validity of reopening since those grounds were not argued.

Binding precedent - doctrine of precedent - prospective application - stay of operation - persuasive precedent - interim protective directions

Binding precedent - doctrine of precedent - stay of operation - Whether the Division Bench judgment in M/s. Ganpati Dealcom Pvt. Ltd. remains binding on a Single Judge of this High Court notwithstanding an interim stay of its operation by the Supreme Court. - HELD THAT: - Relying on the Court's earlier decisions and the principles in Shree Chamundi Mopeds Ltd. and Pijush Kanti Chowdhury (and its reiteration in Niranjan Chatterjee), the Single Judge held that an interim order of stay passed by the Supreme Court in a pending SLP is binding only on the parties to that SLP and does not amount to a declaration of law under Article 141 which would obliterate the precedential force of the High Court's Division Bench judgment. Consequently, where a Division Bench of this High Court has laid down a ratio, a Single Judge of the same High Court is bound to follow that ratio even if the operation of the Division Bench order is stayed in proceedings before the Supreme Court, unless a larger Bench or the Supreme Court has laid down law to the contrary. [Paras 16, 26, 27]

The Division Bench judgment in M/s. Ganpati Dealcom Pvt. Ltd. is binding on this Court despite the Supreme Court's interim stay of its operation; the Single Judge must follow that ratio.

Persuasive precedent - prospective application - Whether judgments of other High Courts (notably Bombay and Rajasthan) holding that the 2016 amendment to the Benami Act is prospective are binding on this High Court. - HELD THAT: - Applying the rule in Valliama Champaka Pillai and Thana Electric Supply Ltd., the Court observed that decisions of one High Court are not binding on another High Court and can only have persuasive value. Consequently, the Bombay High Court's decision in Joseph Isharat and the Rajasthan High Court's decision in Niharika Jain, while relevant and persuasive on the question of prospective application of the 2016 amendment, do not bind this Court. The Court therefore treats those decisions as persuasive authorities but applies the binding Division Bench precedent of this High Court. [Paras 23, 24, 25]

Decisions of other High Courts are persuasive but not binding on this High Court; they do not displace the binding Division Bench precedent.

Interim protective directions - stay of operation - What interim reliefs and protective directions should be granted pending adjudication of the writ petitions challenging show cause notices under Section 24 of the Benami Act as amended in 2016. - HELD THAT: - Balancing the petitioners' entitlement to interim protection under the binding precedent with the Revenue's interest given ongoing proceedings before the Supreme Court, the Court directed that references under Section 24(5) be treated as provisional (not final) while the writ petitions are pending; further steps by respondent authorities in the matters were restrained until disposal of the writ petitions and petitioners were prohibited from selling, transferring, encumbering or parting with possession of the properties. The Court also granted the Revenue time to file affidavits-in-opposition and allowed petitioners a period to file replies. [Paras 27, 28]

References under Section 24(5) to be provisional during pendency of the writ petitions; respondent authorities shall not take further steps; petitioners shall not dispose of or deal with the subject properties; timelines for affidavits fixed.

Final Conclusion: The Single Judge held that the Division Bench's ratio in M/s. Ganpati Dealcom Pvt. Ltd. is binding on this High Court despite an interim stay by the Supreme Court, treated decisions of other High Courts as persuasive only, and granted interim protective directions - treating references under Section 24(5) as provisional, restraining further action by authorities, and prohibiting petitioners from dealing with the properties pending disposal of the writ petitions.

Mandatory time-limits in departmental disciplinary proceedings - Procedure for revoking licence or imposing penalty under Customs Brokers Licensing Regulations - Timelines for issuance of notice, inquiry report and final order under Regulation 17 - Effect of breach of statutory time-limits - mandatory v. directory - Overall time-limit for completion of suspension proceedings as prescribed by administrative circular - Requirement of opportunity to be heard before revocation or imposition of penalty

Timelines for issuance of notice, inquiry report and final order under Regulation 17 - Mandatory time-limits in departmental disciplinary proceedings - Effect of breach of statutory time-limits - mandatory v. directory - Overall time-limit for completion of suspension proceedings as prescribed by administrative circular - Timelines under Regulation 17 of the Customs Brokers Licensing Regulations, 2018 are mandatory and breach thereof vitiates consequent proceedings and orders. - HELD THAT: - The court examined the sequence of events against the timelines in Regulation 17(1), 17(5) and 17(7). The offence report dated 26.11.2018 required issuance of a notice within 90 days, but the notice was issued only on 30.08.2019, constituting a breach of Regulation 17(1). The inquiry report was prepared on 12.06.2020, beyond 90 days from the notice, constituting a breach of Regulation 17(5). The final order dated 19.11.2020 was passed after the 90-day period from submission of the inquiry report required by Regulation 17(7). The Court further noted the Central Board's Circular prescribing an overall time-limit to ensure prompt completion of suspension proceedings, treating such timelines as mandatory. Relying on earlier decisions of this Court (including the Division Bench's treatment of the corresponding provisions in CHALR, 2004), the Court held that where the statutory or prescribed timelines are mandatory, failure to comply renders the proceedings and resultant order unsustainable. Because the admitted facts showed repeated breaches (the judgment identifying four timeline violations including the Circular-prescribed limit), the impugned penalty order could not stand. [Paras 4, 5, 6, 10, 11]

The timelines in Regulation 17 are mandatory; repeated breaches of those timelines and of the Board's prescribed overall time-limit vitiate the impugned order.

Requirement of opportunity to be heard before revocation or imposition of penalty - Procedure for revoking licence or imposing penalty under Customs Brokers Licensing Regulations - The impugned order imposing penalty was quashed for non-compliance with the mandatory procedural timelines, notwithstanding that the order reversed the suspension but levied penalty. - HELD THAT: - Applying the determinative conclusion that Regulation 17's timelines are mandatory to the admitted chronology, the Court concluded that the impugned order dated 19.11.2020 (which reversed suspension but imposed penalty) was passed after multiple breaches of the prescribed timelines. There being no dispute about the dates or sequence of events, and in view of the settled legal position and the administrative circular aimed at preventing indefinite suspension, the impugned order was held to have 'no legs to stand' and was quashed. The writ petition was allowed and the connected miscellaneous petition closed; no costs were imposed. [Paras 6, 11, 12]

Impugned order quashed; writ petition allowed and connected petition closed.

Final Conclusion: The petition is allowed: the Court held Regulation 17's timelines to be mandatory, found multiple breaches of those timelines (including the Board-prescribed overall limit), and quashed the impugned order imposing penalty; connected miscellaneous petition closed with no costs.

Writ jurisdiction at show cause stage - Validity of show cause notice - Jurisdiction of adjudicating authority - Scope of interference during adjudication - Authorized officer - Prohibition on coercive action pending adjudication - Applicability of Foreign Trade Policy to EPCG licence - Fulfilment of export obligation by group companies

Validity of show cause notice - Authorized officer - Applicability of Foreign Trade Policy to EPCG licence - Fulfilment of export obligation by group companies - The notices dated 19th August, 2019 and 1st January, 2021 were not shown to be without jurisdiction on the face of the record and were issued by an authorised officer; the question of whether the EPCG licence was governed by the Foreign Trade Policy effective from 1st April, 2008 and whether exports by group companies breached that policy is a matter for adjudication. - HELD THAT: - The Court examined the two impugned communications and recorded that both had been issued by an authorised officer. The respondents' case that the EPCG licence dated 28th May, 2008 is governed by the Foreign Trade Policy effective from 1st April, 2008, and that export fulfilment by group companies in excess of the permitted extent gives rise to a claim for duty/interest, raises contested questions of policy application and fact which are the province of the adjudicating process. Interference under the writ jurisdiction at the show cause stage is permissible only on limited grounds and, in the absence of a plain lack of jurisdiction on the face of the notices, the Court declined to quash them at this stage. The Court therefore left the legal and factual contentions about policy applicability and alleged breach to the adjudication contemplated by the show cause notice.

Not inclined to interfere with the notices; adjudication on merits to be completed by the authority.

Writ jurisdiction at show cause stage - Scope of interference during adjudication - Prohibition on coercive action pending adjudication - Interim procedural directions were issued: petitioners to file reply within three weeks; adjudication to be completed within five weeks; respondents restrained from taking coercive action until one week after communication of the adjudication order. - HELD THAT: - Balancing the limited scope for pre adjudication relief with the petitioners' apprehension of coercive steps, the Court directed cooperation with the adjudicating authority and imposed a timetable to conclude the proceedings. The Court recorded that no coercive action had been taken since August 2019 and ordered that no coercive measures shall be taken against the petitioners until one week after the adjudication order is communicated, thereby preserving procedural fairness while allowing the statutory adjudicatory process to run its course. The petitioners were warned that failure to file their reply within the stipulated period would permit adjudication to proceed in their absence.

Reply to be filed within three weeks; adjudication to be completed within five weeks; no coercive action until one week after communication of the adjudication order.

Final Conclusion: The writ petition is disposed of: the impugned notices are not quashed at the show cause stage, adjudication is directed to proceed within the specified timetable with interim protection against coercive action for the limited period ordered; no costs.

Confiscation under Section 111(d) of the Customs Act - requirement of a statutory prohibition for confiscation - redemption fine under Section 125 of the Customs Act - penalty under Section 112(a) of the Customs Act - liability where contamination may occur during transit or subsequently

Confiscation under Section 111(d) of the Customs Act - requirement of a statutory prohibition for confiscation - Confiscation of the imported seafood under Section 111(d) was not legally justified. - HELD THAT: - The Tribunal held that confiscation under Section 111(d) is permissible only when goods are imported contrary to a prohibition imposed by or under the Act or any other law for the time being in force. On the facts, the appellant had placed orders requiring compliance with Indian food-safety standards and relied upon vendor-issued test certificates showing conformity. Subsequent laboratory analysis in India found non-compliance on two biological parameters, but the sample was taken about two weeks after arrival, creating a real possibility that contamination occurred during transit or subsequently. There was no evidence that the appellant had imported the goods in contravention of any prohibition; the importable nature of the goods subject to compliance was not disputed. Applying these principles and following the approach in the comparable decision cited by the appellant, the Tribunal concluded there was no basis to treat the import as prohibited and therefore confiscation under Section 111(d) was unwarranted.

Confiscation under Section 111(d) set aside; confiscation held not legally justified.

Redemption fine under Section 125 of the Customs Act - Imposition of a redemption fine under Section 125 was not sustainable. - HELD THAT: - Section 125 permits redemption fine in lieu of confiscation where confiscation is authorised. Because the Tribunal found confiscation under Section 111(d) was not legally justified (the goods were not imported contrary to a statutory prohibition), the legal foundation for imposing a redemption fine did not exist. Consequently, the redemption fine imposed by the original order had to be set aside.

Redemption fine under Section 125 set aside as unsustainable in law.

Penalty under Section 112(a) of the Customs Act - Penalty under Section 112(a) was not imposable in the absence of liability to confiscation under Section 111. - HELD THAT: - Section 112(a) penalty is consequential upon goods being liable for confiscation under Section 111. Having held that confiscation under Section 111(d) was not justified on the facts, the Tribunal concluded there was no legal basis for imposing the penalty under Section 112(a). The penalty therefore stood discharged.

Penalty under Section 112(a) set aside as not warranted in law.

Final Conclusion: The appeal is allowed: the Tribunal set aside the confiscation, redemption fine and penalty imposed on the appellant, holding that the goods were not imported contrary to any statutory prohibition and that the legal foundations for confiscation, redemption fine and penalty under the cited provisions of the Customs Act were absent; consequential relief, if any, to follow in accordance with law.

Refund of excess duty - self-assessment as assessment order - claim for refund conditional on modification of assessment - reassessment under Section 17(4) - amendment of Bill of Entry under Section 149 - correction under Section 154 - treatment of reassessment request as Section 149 application

Refund of excess duty - self-assessment as assessment order - claim for refund conditional on modification of assessment - Sustainability of rejection of refund claim on ground that the assessment/self-assessment was not challenged or modified. - HELD THAT: - The Tribunal found as fact that the appellant had paid duty under protest and paid excess ADD and had requested reassessment by the Deputy Commissioner but reassessment was not undertaken. The original Order-in-Original rejected the refund claim on the ground that the Bill of Entry assessment had not been challenged or reassessed. While the Supreme Court in ITC Ltd. holds that a refund claim cannot be entertained unless the assessment or self-assessment is modified, the Tribunal observed that the Supreme Court itself recognised that modification of an assessment order may be effected under other relevant provisions of the Customs Act (including Section 149 and Section 154) and is not confined to appeal under Section 128. The Tribunal noted that the original authority had recorded that the importer had an option to seek amendment of the Bill of Entry under Section 149, but the Commissioner (Appeals) suo motu set aside that finding and denied the right to seek amendment. That denial was held to be unsustainable in law, particularly in view of precedents of High Courts and Division Benches of this Tribunal which have treated requests for reassessment as applications under Section 149 where appropriate. The determinative reasoning is that a refund claim may be preceded by modification of the assessment by available statutory corrective mechanisms and that an authority's contrary denial of the option to seek amendment when the authority below had allowed such option cannot be sustained. [Paras 6]

The impugned rejection of the refund claim insofar as it denied the appellant the option to seek amendment of the Bill of Entry was held unsustainable and set aside.

Amendment of Bill of Entry under Section 149 - reassessment under Section 17(4) - treatment of reassessment request as Section 149 application - opportunity of hearing - Appropriate remedy and direction where reassessment was not undertaken and the importer sought relief. - HELD THAT: - Applying the ratio of Division Bench decisions of this Tribunal (including Calisons Fibres Pvt. Ltd.) and considering the position clarified by higher courts that modification of an assessment may be effected under provisions other than Section 128, the Tribunal held that the appellant's request for reassessment should be treated as an application under Section 149 for amendment of the Bill of Entry. The Tribunal directed that the original authority should consider the application afresh and pass an appropriate order in accordance with law after granting the appellant an opportunity of hearing. This direction remedies the procedural failure to pass a reassessment order and preserves the statutory route for modification prior to any claim for refund. [Paras 6, 7]

The appeal was allowed; the impugned order set aside and the matter remitted with a direction to treat the reassessment request as an application under Section 149 and to decide it after hearing the appellant.

Final Conclusion: Appeal allowed. Impugned order set aside and matter remitted: the request for reassessment is to be treated as an application under Section 149 of the Customs Act, 1962 and the original authority directed to decide the application in accordance with law after affording opportunity of hearing to the appellant.

Restoration of company struck off from register - Restoration under the powers conferred by Section 252 of the Companies Act, 2013 - Conditional restoration subject to compliance of statutory filings - Power to direct the Registrar of Companies to take consequential actions on restoration - Costs for revival of company - Preservation of Registrar's power to initiate proceedings for other violations

Restoration of company struck off from register - Restoration under the powers conferred by Section 252 of the Companies Act, 2013 - Application for restoration of the company's name in the Register of Companies was allowed. - HELD THAT: - The Tribunal examined the applicant's explanation for non-filing of statutory returns, the documentary material placed on record including audited balance sheets and bank statement with demonetisation affidavit, and the report of the Registrar of Companies which recorded the statutory notices and striking off. The Tribunal was satisfied that the failure to file returns was inadvertent and that the requisite documents were ready for filing. Exercising its jurisdiction under Section 252 of the Companies Act, 2013 and the relevant NCLT rules, the Tribunal found it fit in the interests of the company, its shareholders and creditors to restore the company's name. [Paras 8, 9, 10]

Application allowed and the company ordered to be restored to the register.

Power to direct the Registrar of Companies to take consequential actions on restoration - Conditional restoration subject to compliance of statutory filings - Registrar of Companies directed to restore the company's status and take consequential actions; restoration made subject to the company filing pending statutory documents and compliance with ROC observations. - HELD THAT: - The Tribunal directed the Registrar of Companies to restore the company's status as if it had not been struck off and to undertake consequential actions (including change of status to active for e-filing, activation of DINs if applicable, and intimating bankers to defreeze accounts). Restoration was made conditional on the company filing all statutory documents along with INC-28 and payment of prescribed fees/additional fee/fine within thirty days of restoration, and on the company complying with ROC's observations/clarifications. The company was also permitted to deliver a certified copy of the order to the ROC for publication in the Official Gazette after due compliance.

ROC ordered to restore status and take consequential steps; company directed to complete statutory filings and comply with ROC observations within stipulated time.

Costs for revival of company - Restoration permitted subject to payment of cost directed by the Tribunal. - HELD THAT: - The Tribunal conditioned restoration on payment of costs for revival by online payment under the MCA portal in the sum directed in the order, to be made pursuant to the Tribunal's directions for CA No. 319/252/HDB/2020. This payment is an express pre-condition for restoration ordered by the Tribunal.

Restoration subject to payment of the directed cost.

Preservation of Registrar's power to initiate proceedings for other violations - Order confined to violations that led to striking off and does not preclude the Registrar from taking action for any other violations/offences. - HELD THAT: - The Tribunal expressly limited its order to the contraventions which resulted in the striking off of the company and clarified that the Registrar of Companies remains free to take appropriate action in accordance with law for any other violations or offences committed by the company prior to or during the striking off.

Restoration does not fetter ROC's statutory powers to initiate or continue proceedings for other violations.

Final Conclusion: The Tribunal allowed the company's application for restoration under Section 252, directed the ROC to restore the company and take consequential steps, imposed conditions including filing of pending statutory documents (with INC-28) and compliance with ROC observations within thirty days, required payment of the directed cost for revival, and clarified that the ROC remains free to take action for any other violations.

Dispensation of meetings under Sections 230 to 232 of the Companies Act, 2013 - Power of Tribunal under Section 230(9) to dispense with meetings where ninety per cent creditors consent - Case of doing business as a ground for dispensing meetings - Filing of second stage/company petition for sanction of scheme subject to statutory compliances

Dispensation of meetings under Sections 230 to 232 of the Companies Act, 2013 - Power of Tribunal under Section 230(9) to dispense with meetings where ninety per cent creditors consent - Case of doing business as a ground for dispensing meetings - Tribunal dispensed with convening meetings of Equity Shareholders and Unsecured Creditors and Secured Creditors of the applicant companies for consideration of the proposed scheme. - HELD THAT: - The Tribunal examined the certificates of the statutory auditors/chartered accountants and the affidavits of consent filed by the shareholders and creditors. The record showed that the equity shareholders constituted 100% in value and the relevant class(es) of creditors furnished affidavits of consent exceeding the statutory threshold. Applying the statutory power under Section 230(9) of the Companies Act, 2013 and the principle of doing business, the Tribunal held that no useful purpose would be served by convening meetings and that it was appropriate to dispense with the meetings to enable progress to the next stage of the scheme process. The Tribunal was satisfied that material information regarding the scheme had been disclosed and that the statutory conditions for dispensation were met. [Paras 5, 6]

Meetings of Equity Shareholders, Secured Creditors and Unsecured Creditors are dispensed with.

Filing of second stage/company petition for sanction of scheme subject to statutory compliances - Directions were issued enabling the applicant companies to proceed to file the company petition for sanction of the scheme, subject to statutory compliances and publication requirements. - HELD THAT: - The Tribunal directed the applicant companies to publish paper notifications in specified newspapers within ten days about the dispensation of meetings and granted a time period to file the appropriate company petition for sanction of the scheme. The Tribunal emphasised that the filing of the petition to seek final sanction remains subject to fulfillment of all statutory conditions and notice to statutory authorities. It also left open the remedy for any aggrieved party to file a miscellaneous application in the company application seeking appropriate directions. [Paras 7]

Applicants permitted to publish notifications and file the company petition for sanction of the scheme within the time directed, subject to statutory compliances; aggrieved parties may apply for directions.

Final Conclusion: The Tribunal, on the basis of auditor certificates and consent affidavits, dispensed with convening the meetings of shareholders and creditors under Sections 230-232 (applying Section 230(9)), directed publication of notifications and permitted the applicants to file the company petition for sanction of the scheme subject to statutory compliances and notice to authorities.

Power of Registrar to strike off name of company for non commencement or non operation - obligation to satisfy realization of liabilities before striking off - exercise of power under section 252(3) to restore struck off company - restoration subject to filing of overdue statutory documents and payment of fees - lenient exercise in the interest of justice and ease of doing business

Power of Registrar to strike off name of company for non commencement or non operation - obligation to satisfy realization of liabilities before striking off - Validity of the Registrar's action in striking off the company's name from the Register - HELD THAT: - The Tribunal recorded that the Registrar is empowered to strike off a company where it has failed to commence business within one year or has not carried on business for two immediately preceding financial years and has not applied for dormant status. The Registrar issued Form STK 1 and published STK 7 in the Official Gazette after no cause was shown and no filings were made. The Tribunal observed that the impugned striking off was carried out in accordance with the statutory procedure and requirements, including compliance with the prescribed steps under the Act, and there was no pending inquiry, investigation or complaint against the company.

The Tribunal held that the Registrar's action of striking off the company was in accordance with law.

Exercise of power under section 252(3) to restore struck off company - restoration subject to filing of overdue statutory documents and payment of fees - lenient exercise in the interest of justice and ease of doing business - Whether the Tribunal should restore the company's name and on what terms - HELD THAT: - Although the Registrar's action was lawful, the Tribunal considered the petitioner's bona fide explanations that non filing was a clerical lapse, that the company continued business and maintains bank accounts, and that there are no investigations. Balancing statutory scheme with the principle of ease of doing business and in the interest of justice, the Tribunal exercised its restorative power under section 252(3). Restoration was made conditional to ensure statutory compliance and protection of public interest: the company must file all outstanding statutory documents with prescribed/additional fees and fines within 30 days, the petitioner's representative must ensure compliance, payment of a specified cost to the Central Government within three weeks, delivery of a certified copy of the order to the Registrar, and publication by the Registrar in the Official Gazette after compliance. The Tribunal expressly confined its order to violations that led to the striking off and left open the Registrar's liberty to take appropriate action for any other violations or offences.

The Tribunal directed restoration of the company's name subject to specified conditions of filing, payment and compliance, and permitted the Registrar to take further action for unrelated violations.

Final Conclusion: The Tribunal found the Registrar's striking off to be procedurally lawful but, applying a lenient approach in the interest of justice and ease of doing business, allowed restoration of the company's name under section 252(3) subject to filing all overdue statutory documents, payment of prescribed fees/additional fee/fine and costs, personal compliance by the company's representative, and Registrar's subsequent publication in the Official Gazette; the Registrar remains free to act on any other violations.

Scheme of Arrangement - dispensation of meetings - convening of secured creditors' meeting - appointment of chairperson and scrutinizer - statutory certifications by auditors and chartered accountants - compliance with the Companies Act, 2013 and Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - filing of reports and petition for sanction

Scheme of Arrangement - dispensation of meetings - statutory certifications by auditors and chartered accountants - Dispensation of convening and holding meetings of the shareholders of the applicant companies and of the unsecured creditors of the transferor company. - HELD THAT: - The Tribunal examined the application under Sections 230 and 232 of the Companies Act, 2013 together with the documentary certifications. The Companies' boards had approved the Scheme and statutory auditors/chartered accountants certified the composition of shareholders and creditors and the proposed accounting treatment. The Applicant Companies disclosed material facts and produced affidavits from the shareholders/creditors granting no objection to dispensation. On this basis the Tribunal was satisfied that the requirements for dispensing with the meetings of the shareholders of the applicant companies and of the unsecured creditors of the transferor company were met and granted dispensation. [Paras 5, 6]

Meetings of the shareholders of the applicant companies and of the unsecured creditors of the transferor company are dispensed with.

Convening of secured creditors' meeting - appointment of chairperson and scrutinizer - compliance with the Companies Act, 2013 and Companies (Compromises, Arrangements and Amalgamations) Rules, 2016 - Convening of the meeting of the secured creditors of the transferor company and appointment of the chairperson and scrutinizer with directions as to conduct and subsequent filings. - HELD THAT: - The Tribunal directed that the secured creditors' meeting be convened because appropriate certification showed two secured creditors existed and no dispensation was sought for that class. The Tribunal appointed a chairperson and a scrutinizer, fixed the date, venue and quorum (both secured creditors to form quorum), specified publication of the notice in designated newspapers, and required adherence to statutory provisions in conducting the meeting. Further, the Tribunal directed the chairperson and scrutinizer to file their reports within two weeks of the meeting's conclusion and granted the applicant companies two weeks thereafter to file the petition for sanction, subject to statutory compliance. The Tribunal retained jurisdiction to entertain interim applications by aggrieved persons. [Paras 5, 6]

The meeting of the secured creditors of the transferor company shall be convened as directed; the named chairperson and scrutinizer are appointed; conduct of the meeting and subsequent filings must comply with the Companies Act, 2013 and relevant Rules.

Final Conclusion: C.A. (CAA) No. 12/BB/2021 disposed of: meetings of shareholders and unsecured creditors dispensed with; secured creditors' meeting directed to be convened with appointed chairperson and scrutinizer, statutory compliance mandated, and reports and petition to be filed within prescribed timelines.

Rectification of register of members - Refusal of registration and appeal against refusal - Maintainability of petitions under Sections 397/398 by non-members - Limitation and laches in company rectification claims - Primary and secondary evidence regarding share transfer forms - Estoppel by conduct in share transfers - Board minutes and entries in the register of members as primafacie evidence of transfer

Maintainability of petitions under Sections 397/398 by non-members - Rectification of register of members - Maintainability of the composite petition under Sections 111, 397 & 398 read with Sections 402 and 406 when the petitioners had ceased to be members as on 21.02.2008. - HELD THAT: - The Tribunal found that the petitioners ceased to be members of the company as on 21.02.2008, as reflected in the company's register and supported by board minutes recording the transfers. Having ceased to be members well before filing, the petitioners could not maintain claims under Sections 397/398 challenging acts of oppression and mismanagement; those allegations therefore did not arise once the rectification/transfer issue stood decided in favour of the transferee. The Tribunal accordingly held that the aspects of the petition predicated on Sections 397/398 were not maintainable in the circumstances. [Paras 12, 14, 19]

Petition under Sections 397/398 is not maintainable because the petitioners had ceased to be members as on 21.02.2008.

Board minutes and entries in the register of members as primafacie evidence of transfer - Primary and secondary evidence regarding share transfer forms - Estoppel by conduct in share transfers - Whether the impugned transfers of shares were effected in accordance with law and are thereby binding on the petitioners. - HELD THAT: - On the material before it the Tribunal recorded that the Board of Directors' minutes of 21.02.2008 recorded receipt and examination of transfer deeds, original share certificates and a resolution to give effect to the transfers, and the register of members was updated accordingly. The Tribunal accepted that consideration was paid, transfer forms were executed and original certificates were surrendered to the transferee; the non-production of the original transfer forms at a later date (due to alleged destruction by fire) did not vitiate the transactions when the petitioners failed to produce primary evidence to impugn them. Given these findings, the Tribunal held the impugned transfers to be valid and the petitioners estopped from challenging them. [Paras 13, 14, 21]

Impugned transfers were validly effected in accordance with law and are binding on the petitioners.

Limitation and laches in company rectification claims - Refusal of registration and appeal against refusal - Whether the petition was barred by delay, laches and limitation given that transfers were effected in 2007-2008 and the petition was filed in 2012. - HELD THAT: - The Tribunal held that the petitioners filed the petition only on 03.08.2012 despite the register showing cessation of membership on 21.02.2008. The Tribunal rejected the petitioners' claim that they first became aware of the transfers in 2012 as baseless, observing that the petitioners were long engaged in litigation and aware of company affairs. In view of the above, and in the absence of any application for condonation of delay, the petition was held to be barred by laches and limitation. [Paras 13, 16, 21]

Petition is barred by laches and limitation; no condonation of delay was granted.

Primary and secondary evidence regarding share transfer forms - Estoppel by conduct in share transfers - Whether the petitioners approached the Tribunal with clean hands and whether their evidentiary contentions warranted relief. - HELD THAT: - The Tribunal observed that petitioners mixed various inconsistent factual pleas, failed to produce primary evidence (original share transfer forms or certificates) to substantiate their case and made untenable assertions of ignorance despite prolonged involvement in company affairs. The Tribunal further noted admissions by petitioners about signing documents and surrendering certificates and concluded that they could not now dispute the transfers. Consequently, the petitioners had not established a prima facie case warranting equitable relief. [Paras 13, 18, 21]

Petitioners did not come with clean hands; equitable reliefs were not warranted on the material produced.

Final Conclusion: For the reasons stated, the Tribunal dismissed C.P. No. 68 of 2012 (T.P. No. 39 of 2016); the impugned transfers were upheld as valid, the claims under Sections 397/398 were held not maintainable, the petition was barred by laches and limitation, and the connected application C.A. No. 01 of 2013 became infructuous. No order as to costs.

Investigation into the affairs of a company - power of Tribunal to direct investigation under Section 210(2) and Section 213 of the Companies Act, 2013 - requirement of prima facie satisfaction before directing investigation - interim protection against alleged oppression, mismanagement and siphoning of funds - judicial control over operation of company bank accounts and transparency measures

Power of Tribunal to direct investigation under Section 210(2) and Section 213 of the Companies Act, 2013 - requirement of prima facie satisfaction before directing investigation - Validity of NCLT direction to the Registrar of Companies to investigate the affairs of Respondent No.1 Company - HELD THAT: - The Appellate Tribunal held that the NCLT's direction appointing the Registrar of Companies to investigate violated the statutory scheme. Under Chapter XIV, the power to order an investigation is exercisable by the Central Government (or an inspector appointed by it) pursuant to Section 210(2) and Section 213; the Registrar's powers are limited to inspection and inquiry under Sections 206-207. Before directing an investigation, the Tribunal must form at least a prima facie opinion, on the basis of record and submissions, that investigation is necessary. Further, any direction for investigation must be issued to the Central Government and not to the Registrar. Applying these principles to the impugned order, the Tribunal found that the NCLT had not recorded the requisite satisfaction or shown good reasons and therefore erred in directing the Registrar to investigate. [Paras 31, 32, 33]

Direction appointing the Registrar of Companies to investigate is set aside; NCLT may, after hearing and upon forming a prima facie opinion, direct an investigation under Section 210(2) by referring the matter to the Central Government.

Interim protection against alleged oppression, mismanagement and siphoning of funds - judicial control over operation of company bank accounts and transparency measures - Whether the impugned NCLT directions concerning operation of the Company's bank accounts and interim protective measures were maintainable - HELD THAT: - The Tribunal observed that the Company is closely held with allegations and counter-allegations of siphoning and mismanagement between near-equal groups. At the interim stage, the correctness of competing factual charges could not be finally adjudicated. The NCLT had passed balancing interim orders to prevent alleged mismanagement and to protect the Company's assets. The Appellants failed to demonstrate that they were aggrieved by interim protective measures. In the circumstances the Appellate Tribunal upheld the operative interim directions relating to operation of bank accounts and added proportional transparency measures: all transactions above the specified threshold must be reported weekly to all directors by email so that any suspected siphoning can be promptly reported to the adjudicating authority for examination. [Paras 21, 22]

Interim directions as to operation of bank accounts are maintained; additionally, a weekly circulation of transactions above the prescribed threshold to all directors is directed to ensure transparency.

Final Conclusion: The appeal is partly allowed: the directions appointing the Registrar of Companies to investigate are set aside for being contrary to the statutory scheme, but the NCLT's interim protections regarding bank-account operation are sustained; the Appellate Tribunal permits the NCLT, after hearing and forming a prima facie opinion, to refer for investigation under Section 210(2) to the Central Government and directs additional weekly reporting for transparency. No order as to costs.

Financial debt under Section 5(8)(d) of the Insolvency and Bankruptcy Code, 2016 - finance lease - transfer of substantially all the risks and rewards incidental to ownership - classification of lease by substance over form under Indian Accounting Standards (paragraphs 61-67) - commercial effect of borrowing under Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016 - lessor's retained rights and control as indicia against classification as a finance lease

Finance lease - transfer of substantially all the risks and rewards incidental to ownership - classification of lease by substance over form under Indian Accounting Standards (paragraphs 61-67) - lessor's retained rights and control as indicia against classification as a finance lease - Whether the lease deed dated 30.07.2010 is a finance lease under Indian Accounting Standards and thereby constitutes a financial debt under Section 5(8)(d) of the IBC. - HELD THAT: - The Tribunal examined the definition and indicators of a finance lease in paragraphs 61-67 of the Indian Accounting Standards and applied the guiding test whether the lease transfers substantially all risks and rewards incidental to ownership. The lease deed was analysed in its terms: the lessor retained extensive rights and control (including reservation of mines/minerals rights, prescribed form of sub-lease, control over transfers, monitoring and cancellation rights, stipulated development norms, and priority charges). There was no clause transferring ownership at the end of the term, no bargain purchase option, no evidence that the lease term represented the major part of the asset's economic life, and no material showing that present value of lease payments equalled substantially all of the asset's fair value. The lessee's ability to sell constructed flats and limited operational liabilities did not convert the lease of land into a finance lease. On the substance of the transaction, the lease deed did not transfer substantially all risks and rewards of ownership and thus did not qualify as a finance lease under the Indian Accounting Standards. [Paras 22, 23, 24]

The lease deed is not a finance lease and therefore does not constitute a financial debt under Section 5(8)(d) of the IBC.

Commercial effect of borrowing under Section 5(8)(f) of the Insolvency and Bankruptcy Code, 2016 - classification of transaction by commercial substance - Whether permitting payment of the premium in instalments converted the lease transaction into one having the 'commercial effect of borrowing' under Section 5(8)(f) of the IBC. - HELD THAT: - The Tribunal considered the appellant's contention that allowing instalment payments and charging interest constituted a deemed disbursement or financing and thus had the commercial effect of borrowing. The court noted the Supreme Court's observations in relevant precedent that the 'commercial effect' test captures transactions where an advance is intended to be repaid by delivery of something equivalent, and where profit is the main aim. Applying that principle, the Tribunal found no sale or transfer of the land and no factual foundation to treat instalment payments under the lease as amounting to a borrowing with a commercial effect akin to real estate allottee advances. The terms of the lease, viewed in substance, reflected a lease with retained lessor control rather than a financing arrangement; the mere facility of paying premium in instalments did not convert the lease into a financial debt under Section 5(8)(f). [Paras 26, 27, 28, 29]

The transaction does not have the 'commercial effect of borrowing' and is not a financial debt under Section 5(8)(f).

Adequacy of reasons recorded by the Adjudicating Authority - appellate interference for non-speaking or short reasons - Whether the Adjudicating Authority's order should be set aside for failure to record sufficient reasons when it held the lease not to be a financial lease. - HELD THAT: - The Tribunal observed that the Adjudicating Authority recorded the parties' contentions and referred to the Indian Accounting Standards and the lease deed, ultimately concluding the lease was not a finance lease (noting para 18(b) of the impugned order). While acknowledging that more detailed reasons could have been recorded, the Tribunal held that the Adjudicating Authority's findings and the materials before it sufficiently demonstrated that the appellant had not made out a case for classification as a finance lease. The absence of extended reasoning, in the factual matrix of this case, did not warrant interference with the impugned order. [Paras 25]

The limited brevity of reasons is not a ground to interfere; the Adjudicating Authority's order stands.

Final Conclusion: The appeal is dismissed. The lease deed of 30.07.2010 does not qualify as a finance lease under the Indian Accounting Standards and therefore does not amount to a financial debt under Sections 5(8)(d) or 5(8)(f) of the IBC; the Adjudicating Authority's order, though not extensively reasoned, does not merit interference.

Authorization of representative to file insolvency application - standing of financial creditor as holder of debentures under the Code - existence of financial debt and occurrence of default - limitation for filing Section 7 petition - admission of petition under Section 7 and declaration of moratorium - appointment of interim resolution professional

Authorization of representative to file insolvency application - Whether the applicant was duly authorized to file the Section 7 insolvency petition on behalf of the financial creditor - HELD THAT: - The corporate debtor contested the competence of the applicant on the ground that the petition was not filed by the trustee and that the authorized signatory did not hold the requisite position in the trustee. The record shows a board resolution dated 18.10.2019 passed by Invesco Trustee Pvt. Ltd. authorising Ms. Nupur Tainwala, Assistant Vice President-Legal of Invesco Asset Management (India) Pvt. Ltd., to file cases, suits and petitions. The Adjudicating Authority held that since specific power was conferred on Ms. Nupur Tainwala by the trustee through the board resolution and the resolution was placed on record, the authorization could not be discarded on technical grounds. Consequently the objection that delegation was impermissible or that the Power of Attorney Act cannot apply was rejected on the facts before the Authority, and the application was treated as properly authorized. [Paras 14, 15, 16, 17, 19]

Authorization granted by the trustee to the applicant's authorised signatory is valid and the applicant was competent to file the Section 7 petition.

Existence of financial debt and occurrence of default - standing of financial creditor as holder of debentures under the Code - Whether there was a financial debt due and payable and a default by the corporate debtor, and whether the applicant qualifies as a financial creditor - HELD THAT: - The applicant produced the debenture documents (Information Memorandum, Debenture Trust Deed and its modification), notices including exercise of the put option by the fund's custodian, acknowledgements by the corporate debtor including letter admitting liability and inability to pay, and communications to stock exchanges about default. The Authority observed that these documents establish the existence of debt, its acknowledgment by the corporate debtor and occurrence of default. On the basis of the material, the Adjudicating Authority held that the applicant satisfies the definition of a financial creditor in view of its holding of debentures and the nature of the instrument as contemplated by the Code (including amounts raised by issue of debentures), and that default had occurred. [Paras 9, 21, 22, 23, 25]

There is a financial debt and a default; the applicant qualifies as a financial creditor entitled to invoke the Code.

Limitation for filing Section 7 petition - admission of petition under Section 7 and declaration of moratorium - appointment of interim resolution professional - Whether the Section 7 petition was filed within limitation and whether the petition should be admitted, with consequential orders of moratorium and appointment of an interim resolution professional - HELD THAT: - The Authority examined the filing timeline and records and found the petition to be within limitation and complete in all respects. Having found debt and default and the applicant's status as a financial creditor, the Authority held the case fit for initiation of Corporate Insolvency Resolution Process. The petition was therefore admitted, moratorium declared in terms of Section 14(1) prohibiting institution or continuation of suits, transfer or disposition of assets, enforcement of security and related actions, and essential supplies were directed not to be interrupted. The Authority also appointed the proposed interim resolution professional named by the financial creditor. [Paras 27, 28, 29, 30, 31]

The Section 7 petition is admitted as within limitation; moratorium is declared and the proposed interim resolution professional is appointed.

Final Conclusion: The Adjudicating Authority held that the applicant was duly authorized to file the Section 7 petition, that the applicant is a financial creditor holding debentures, that a financial debt existed and default had occurred, and accordingly admitted the petition within limitation, declared moratorium and appointed the interim resolution professional.

Finality of appellate and Supreme Court orders - res judicata arising from affirmance of earlier adjudications - reopening of valuation or sale once 'as is where is' sale confirmed - liquidator's duty in admission of claims during liquidation - timing of municipal demands and locus to claim post-sale

Finality of appellate and Supreme Court orders - res judicata arising from affirmance of earlier adjudications - Whether the characterization of the corporate debtor's land (agricultural or industrial) and related valuation could be reopened after NCLT, NCLAT and the Supreme Court had affirmed the earlier findings. - HELD THAT: - The Tribunal recorded that the question whether the land is agricultural or industrial had been considered and upheld by the NCLAT and the Supreme Court, and that the Supreme Court declined to interfere with the NCLAT order. The Bench held that once finality is achieved by higher fora, that determination is binding on interested parties and cannot be reopened by the Tribunal. The Tribunal therefore declined to revisit the characterization or to direct a fresh valuation on the basis that the matter had already attained finality in appellate proceedings. [Paras 5, 8, 9]

The request to reopen the issue of land characterisation and to order a fresh valuation was rejected on the ground of finality of earlier appellate orders.

Reopening of valuation or sale once 'as is where is' sale confirmed - liquidator's duty in admission of claims during liquidation - Whether the Liquidator should accept the Municipal Corporation's belated claim for External Development Charges and conduct a fresh valuation under Regulation 35(2) of the IBBI Liquidation Regulations 2016 after the sale process commenced and higher fora had given finality. - HELD THAT: - The Tribunal noted that the Municipal Corporation issued its memo demanding External Development Charges only after the Supreme Court had dismissed the appeal and that no demand for EDC had been raised during CIRP or earlier stages of liquidation. Given the prior findings regarding the nature of the land and the confirmation that the sale was to proceed on an 'as is where is' basis, the Bench found no merit in directing the liquidator to reopen valuation or to accept the belated claim. The application seeking conversion and revaluation of assets already sold to the successful bidder was held to be misconceived. [Paras 3, 6, 10]

Application seeking fresh valuation and direction to the liquidator to accept the belated EDC claim dismissed.

Timing of municipal demands and locus to claim post-sale - liquidator's duty in admission of claims during liquidation - Whether the Municipal Corporation's demand for property and fire tax, raised after the sale notice and after liquidation had advanced, should be enforced against the corporate debtor or the successful bidder. - HELD THAT: - The Tribunal observed that demands for property tax raised after the sale process were not pressed as claims prior to the sale; accordingly, if property tax is payable, the appropriate course is to proceed against the successful bidder after the liquidation process is closed rather than to disrupt the completed sale. The Bench drew a distinction between belated claims that were not filed during the sale/claim process and claims which could be pursued post-sale against the purchaser. [Paras 7]

The demand for property and fire tax raised post-sale was not acted upon against the corporate debtor in the liquidation; any tax liability should be pursued against the successful bidder after completion of the liquidation/sale process.

Final Conclusion: The application by Municipal Corporation Faridabad seeking directions for fresh valuation and acceptance of belated EDC and related claims is dismissed as misconceived; the Tribunal declined to reopen matters finally determined by NCLAT and the Supreme Court, and directed that any property-tax liability raised after the sale process be pursued against the successful bidder post-liquidation.

Pre-existing dispute - operational creditor - Corporate Insolvency Resolution Process - Demand Notice under Section 8 of the Code - plausible contention standard - adjudicating authority's limited inquiry into disputes - rejection of Section 9 application where notice of dispute received

Pre-existing dispute - plausible contention standard - adjudicating authority's limited inquiry into disputes - rejection of Section 9 application where notice of dispute received - Existence of a pre-existing dispute between the parties sufficient to reject the Section 9 application for initiation of CIRP. - HELD THAT: - The Tribunal applied the standard in Mobilox Innovative Pvt. Ltd. that the adjudicating authority's enquiry at the admission stage is limited to whether a plausible contention exists which requires further investigation and is not a patently feeble or spurious defence. On the record the corporate debtor had, prior to the Demand Notice, communicated a dispute by an email dated 20.05.2019 alleging substandard goods, sought return of stocks and alleged consequential losses and technical problems. There was no admission of the debt by the corporate debtor and the pleadings and documents show the dispute was raised with sufficient particulars before issuance of the demand notice. The claim therefore fell within the ambit of a disputed claim and called for further enquiry rather than admission of the Section 9 petition. In view of the existence of a pre-existing dispute and the limited scope of the Tribunal's prima facie inquiry, the petition was liable to be rejected under the provision which requires rejection where notice of dispute has been received by the operational creditor or a record of dispute exists in the information utility. [Paras 6, 8, 9, 10]

The Section 9 application is rejected as a pre-existing dispute existed prior to the demand notice and the claim is disputed, necessitating rejection under the statutory provision.

Final Conclusion: The petition under Section 9 for initiation of CIRP is dismissed because a genuine pre-existing dispute was shown on the record prior to the demand notice, and the limited prima facie inquiry required at admission stage established that the claim was disputed.

Condonation of delay - sufficient cause for delay under the Limitation Act - restoration of petition dismissed for default - dismissal for default for non-appearance - liberal construction of 'sufficient cause' to advance substantial justice

Condonation of delay - sufficient cause for delay under the Limitation Act - restoration of petition dismissed for default - Whether the delay of 379 days in filing the application for restoration of CP/661/(IB)/CB/2018 should be condoned. - HELD THAT: - The Tribunal examined the application seeking restoration of the petition dismissed for default and the explanation offered for the delay. The applicant's former counsel failed to appear on two occasions, which led to dismissal for default; thereafter the applicant was misled by an uploaded order dated 02.11.2018 that created a genuine belief that the matter remained pending. Applying the established principle that the words 'sufficient cause' are to be construed liberally to advance substantial justice and that the decisive consideration is the sufficiency of the explanation rather than the length of delay, the Tribunal found the applicant was genuinely misled and that the delay was not the result of deliberate inaction or mala fide conduct. On these factual and legal considerations the Tribunal found merit in the submissions and concluded that the explanation amounted to sufficient cause for condonation of delay. [Paras 13, 14]

Delay of 379 days in filing the application for restoration is condoned and the restoration application may proceed.

Final Conclusion: The Tribunal accepted the applicant's explanation that non-appearance of the erstwhile counsel and a misleading uploaded order furnished sufficient cause; the delay of 379 days in seeking restoration of the petition dismissed for default is condoned.

Default under Insolvency and Bankruptcy Code - admission of section 9 application - initiation of Corporate Insolvency Resolution Process - appointment of Interim Resolution Professional - moratorium under section 14 - public announcement and submission of claims - duties of Interim Resolution Professional and cooperation of management - supply of essential goods or services during moratorium

Default under Insolvency and Bankruptcy Code - admission of section 9 application - The Tribunal admitted the section 9 application on the basis that the Operational Creditor proved default by the Corporate Debtor. - HELD THAT: - The Adjudicating Authority examined the pleadings and documentary evidence placed by the Operational Creditor, including issuance of the statutory notice in Form-3 and the Corporate Debtor's reply which did not raise a substantive dispute to the asserted debt but stated inability to pay. Having found that the requirements under the Code and the Rules for initiation of CIRP were satisfied and that default had occurred, the Authority was satisfied to admit the petition and order commencement of the CIRP. [Paras 5, 6]

Application under section 9 admitted and CIRP ordered to commence.

Appointment of Interim Resolution Professional - duties of Interim Resolution Professional and cooperation of management - An Interim Resolution Professional was appointed and directed to assume charge and perform obligations under the Code. - HELD THAT: - The Tribunal appointed the named IRP, directed him to file written consent and authorization in Form-2 within three days, take charge of management immediately, cause the public announcement and call for claims as prescribed, and comply with the statutory duties under the Code. Directors, promoters and persons associated with management were directed to extend assistance and cooperation to the IRP to enable discharge of his functions. [Paras 7, 11, 12]

Mr. Gonugunta Murali appointed as IRP with directions to assume charge, make public announcement and perform statutory functions; management to cooperate.

Moratorium under section 14 - supply of essential goods or services during moratorium - A moratorium under the Code was declared with specified prohibitions and incidental protections for supply of essential goods or services. - HELD THAT: - The Authority declared the moratorium effective from the date of the order until completion of CIRP, prohibiting institution or continuation of suits, transfer or disposal of assets, enforcement of security interests and recoveries by owners or lessors, subject to the Code's exceptions. It further clarified that supply of essential goods or services shall not be terminated during the moratorium and that suppliers critical to preservation of the corporate debtor's value shall not be interrupted unless dues arising during the moratorium are unpaid. [Paras 9, 10]

Moratorium imposed with specified prohibitions and protections for essential supplies.

Public announcement and submission of claims - initiation of Corporate Insolvency Resolution Process - The IRP was directed to make the statutory public announcement and invite submissions of claims in the prescribed manner. - HELD THAT: - Consistent with the initiation of CIRP, the Tribunal directed the IRP to cause public announcement as prescribed and to call for claims, thereby commencing the claims submission process under the Code and enabling constitution of the committee of creditors and other downstream processes. [Paras 7]

IRP to make public announcement and call for claims as prescribed.

Interim fees and registry communication - Directions were given for payment of an advance to the IRP and for communication of the order to relevant parties including ROC. - HELD THAT: - The Tribunal directed the Operational Creditor to pay an advance fee to the IRP to be ratified by the committee of creditors later, and directed the Registry to send copies of the order to the IRP, Operational Creditor, Corporate Debtor and to communicate the order to the Registrar of Companies for updation of the Corporate Debtor's status on the MCA website. [Paras 8, 12, 13, 14]

Operational Creditor to pay advance fee to IRP; Registry to communicate the order to IRP, parties and ROC.

Final Conclusion: The Company Application under section 9 was admitted; CIRP was ordered to commence, an IRP was appointed with directions to assume charge, make public announcement and invite claims, a moratorium under the Code was declared with protections for essential supplies, the Operational Creditor was directed to pay an advance to the IRP and the Registry was directed to communicate the order and update statutory records.

Service of demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - Operational debt and default for initiation of Corporate Insolvency Resolution Process - Unavailable set-off or counter-claim under the Insolvency and Bankruptcy Code, 2016 - Appointment of Interim Resolution Professional and moratorium under the Insolvency and Bankruptcy Code, 2016

Service of demand notice under Section 8 of the Insolvency and Bankruptcy Code, 2016 - Demand notice dated 05.04.2019 was served on the Corporate Debtor and the Corporate Debtor did not reply within the statutory period. - HELD THAT: - The Demand Notice dated 05.04.2019 is on record as Annexure A-4 and the Operational Creditor produced the postal track report (Annexure-1 to the rejoinder) showing delivery at the Corporate Debtor's registered address. In view of this evidence, the Adjudicating Authority held that the notice was served and that the Corporate Debtor failed to respond within ten days to either make payment or point out a pre-existing dispute, thereby satisfying the statutory pre-filing requirement under the Code. [Paras 12, 14, 15]

Demand notice held to be served; no reply received from Corporate Debtor within the prescribed period.

Operational debt and default for initiation of Corporate Insolvency Resolution Process - There existed an operational debt exceeding the statutory threshold and the Corporate Debtor committed default in payment. - HELD THAT: - The record establishes that the Operational Creditor provided maintenance services and supplied spare parts and raised various invoices. Having found service of the demand notice and no payment or reply from the Corporate Debtor, the Adjudicating Authority concluded that the Operational Creditor proved default and that the claimed operational debt exceeded the monetary threshold prescribed by the Code for filing a Section 9 application. [Paras 11, 17, 20]

Operational debt established and default held to have occurred; Section 9 application is maintainable on merits.

Unavailable set-off or counter-claim under the Insolvency and Bankruptcy Code, 2016 - The Corporate Debtor's contention of a receivable/claim against the Operational Creditor cannot be availed as set-off or counter-claim to defeat initiation of CIRP under the Code. - HELD THAT: - Although the Corporate Debtor asserted that an amount was receivable from the Operational Creditor, the Adjudicating Authority held that set-off or counter-claim is not available as a defence to bar initiation of insolvency proceedings under the Code. The Authority further noted that, had such a defence existed, the Corporate Debtor ought to have raised it in response to the demand notice within the prescribed period; the belated contention was treated as an afterthought and rejected. [Paras 9, 16]

Set-off/counter-claim defence rejected and held not to preclude admission of the Section 9 application.

Appointment of Interim Resolution Professional and moratorium under the Insolvency and Bankruptcy Code, 2016 - The Company Petition is admitted; an Interim Resolution Professional is appointed and moratorium under the Code is declared. - HELD THAT: - Having satisfied itself that the Operational Creditor proved default and complied with the Code's requirements, the Adjudicating Authority admitted the Company Application, appointed Mr. Santosh Bhatia as IRP (directing him to file consent and to take charge and make the public announcement), directed payment of an advance fee to the IRP to be ratified by the CoC, and declared the moratorium with the statutory prohibitions and exceptions as prescribed under the Code. [Paras 18, 21, 22, 23, 30]

Application admitted; IRP appointed; moratorium declared and operational directions issued for CIRP.

Final Conclusion: The Tribunal admitted the Section 9 Company Application, held that the demand notice was duly served and default in respect of an operational debt was established, rejected the Corporate Debtor's set-off defence, appointed an IRP and declared the moratorium to commence the CIRP.

Fixation of CIRP costs and fees - role and remuneration of Interim Resolution Professional - payment of CIRP costs by the corporate debtor - Committee of Creditors' approval of professional fees - compliance with appellate direction

Fixation of CIRP costs and fees - role and remuneration of Interim Resolution Professional - Committee of Creditors' approval of professional fees - compliance with appellate direction - Fixation of the Interim Resolution Professional's fees and CIRP expenses for the period of CIRP and direction for payment by the corporate debtor. - HELD THAT: - The Adjudicating Authority was required, in terms of the NCLAT order dated 08.11.2019 which set aside the admission order, to fix the CIRP costs and fees to be paid to the IRP/RP and direct initial payment by the corporate debtor. The record shows that the CoC did not pass any resolution in its second meeting either fixing the IRP's fee or replacing the IRP with an RP. Having considered the material including the scope of work undertaken by the IRP during the 61-day CIRP period and the absence of CoC fixation, the Tribunal exercised its power to determine a reasonable fee. The Tribunal fixed the IRP's professional fee at Rs. 4,00,000 for the 61-day period plus applicable GST at 18%. It additionally allowed reimbursement of other expenses incurred by the IRP (Rs. 1,86,890 for specified expenses) and security and other charges previously paid (Rs. 2,00,000), resulting in an aggregate amount directed to be paid to the IRP. The Tribunal expressly recorded that this decision gives effect to the NCLAT direction and ordered payment by Respondent No.2 within two weeks. [Paras 11]

IRP's fees fixed at Rs.4,00,000 plus @18% GST for 61 days together with Rs.1,86,890 towards other expenses and Rs.2,00,000 for security/other charges; total directed to be paid by Respondent No.2 within two weeks.

Final Conclusion: Application allowed. Tribunal fixed and directed payment of the IRP's fees and CIRP expenses as quantified in the order to be paid by the corporate debtor within two weeks, thereby implementing the appellate direction of the NCLAT.

Maintainability of a petition under Section 7 by a homebuyer/decree-holder - threshold requirement for homebuyers introduced by the 2019 Amendment (100 homebuyers or 10% of total) - decree-holder not falling within the class of financial creditor for purposes of initiating CIRP - subrogation under a tripartite agreement and non-joinder of the financier - effect of elapsed period/default date on limitation

Threshold requirement for homebuyers introduced by the 2019 Amendment (100 homebuyers or 10% of total) - effect of elapsed period/default date on limitation - Whether the petition filed by a single homebuyer under Section 7 is maintainable in view of the 2019 Amendment and the elapsed period since default. - HELD THAT: - The Tribunal found that the Insolvency and Bankruptcy Code (Amendment) Ordinance, 2019 requires homebuyers of a real estate project to join together (either 100 homebuyers or 10% of total, whichever is less) to file an application under Section 7. In the present case only one homebuyer had filed the petition and thus did not satisfy the statutory threshold. The Tribunal also noted that the construction agreement recorded delivery/possession default as of 01.07.2013 while the Company Petition was filed on 17.09.2019, indicating a significant lapse of time since the alleged default. Having regard to the statutory threshold and the chronology of default and filing, the petition failed at the threshold and was therefore not maintainable on that ground. [Paras 7]

Petition by a single homebuyer under Section 7 is not maintainable for want of the statutory threshold; the cited default predates the petition by several years and the petition fails at the threshold.

Decree-holder not falling within the class of financial creditor for purposes of initiating CIRP - Whether a decree-holder/homebuyer can invoke Section 7 to initiate CIRP for execution of a decree. - HELD THAT: - The Tribunal applied subsequent NCLAT decisions which held that although a decree-holder is within the definition of 'creditor', a decree-holder does not necessarily fall within the class of 'financial creditor' for purposes of Section 7. The Tribunal observed that an adjudicated/decretal amount is not the same as a financial debt attracting the time value of money test under the Code, and that allowing decree-holders to execute decrees by invoking Section 7 would undermine the legislative threshold introduced for homebuyers. Given that the petitioners' primary object was execution of a decree from the consumer forum, they could not maintain a Section 7 petition to execute that decree. [Paras 8]

A decree-holder/homebuyer seeking execution of a decree cannot invoke Section 7 to initiate CIRP where the decretal amount does not qualify as a 'financial debt' within the Code; the petition is therefore not maintainable on this basis.

Subrogation under a tripartite agreement and non-joinder of the financier - Whether the petition suffers from non-joinder and incapacity because the homebuyer had subrogated rights to the financier under a tripartite agreement. - HELD THAT: - The Tribunal examined the tripartite arrangement between the petitioner, the corporate debtor and the bank whereby the loan for the purchase was disbursed by the bank and certain rights (including cancellation and repayment) stood with the bank. The Tribunal agreed with the respondent that the petitioner had effectively subrogated its rights to the bank and that repayment, if due, would be payable to the bank which would be the financial creditor. Because the bank/financier was not impleaded as a party, the petition suffered from non-joinder of a necessary party and the petitioner could not be treated as the financial creditor in respect of the loan. [Paras 9]

Petition suffers from non-joinder due to subrogation of rights to the financier under the tripartite agreement; the petitioner cannot be treated as the financial creditor for the loan.

Final Conclusion: C.P.(IB) No. 377/BB/2019 dismissed: the petition was not maintainable as a single homebuyer proceeding under Section 7 in view of the 2019 Amendment and the elapsed default date; the decree-holder nature of the claim did not convert it into a financial debt for Section 7 purposes; and the tripartite subrogation rendered the petition defective for non-joinder of the financier. Petitioners remain free to pursue other remedies under law.

Liability to service tax for pre GST period - recovery under adjudication order - interim relief in writ jurisdiction - remand for affidavit based adjudication

Interim relief in writ jurisdiction - recovery under adjudication order - Prayer for interim relief to stay recovery and to quash the adjudication order dated 27th March, 2019 - HELD THAT: - The Court declined to grant the interim relief sought by the petitioner because doing so would amount to passing a final order in the writ petition. The petitioners had been subjected to recovery pursuant to the show cause cum demand and adjudication proceedings and a sum has already been realized. The respondent authorities also contended that the adjudication order is appellable and no appeal has been shown to have been preferred. In these circumstances the Court found no scope for the interim stay sought and refused to stay the impugned proceedings or recovery.

Interim relief refused; no stay of recovery or adjudication order

Liability to service tax for pre GST period - remand for affidavit based adjudication - Resolution of substantive question whether the petitioner was liable to pay service tax for the work carried out in 2013 14 and 2014 15 and the fate of the amount paid by the petitioner - HELD THAT: - The Court recorded that an issue remains whether the petitioner was liable to pay service tax for the specified financial years and what is the consequence of the sum paid by the petitioner after negotiation with the DGGI. Rather than deciding the substantive question on the materials then before it, the Court directed that the matter be adjudicated more effectively on affidavits. The respondents were directed to file affidavit in opposition within three weeks and the petitioner may file a reply within one week thereafter, with the matter listed for hearing. The Court thus left the substantive tax liability and the legality of recovery to be determined after exchange of affidavits and further hearing.

Substantive issue not decided on merits and remanded for adjudication on affidavits and hearing

Final Conclusion: The petition for interim relief was refused and the court directed the parties to file affidavits for adjudication of the substantive question whether service tax was payable for FY 2013 14 and 2014 15 and the fate of the amount already paid, with the matter listed for further hearing.

Valuation of taxable services - reimbursable expenses / pure agent - statutory supremacy of Section 67 over subordinate rules - prospectivity of statutory amendment

Reimbursable expenses / pure agent - valuation of taxable services - statutory supremacy of Section 67 over subordinate rules - Whether amounts reimbursed to the appellant for actual expenses paid to another service provider fall within the value of the taxable service for levy of service tax, or can be excluded as amounts paid in the capacity of a 'pure agent'. - HELD THAT: - The Court applied the ratio of the Supreme Court in Union of India v. Intercontinental Consultants and Technocrats Pvt. Ltd., holding that valuation for service tax must be the gross amount charged 'for such service' and does not include amounts not paid as consideration for the taxable service itself. Rules (subordinate legislation) that extend valuation to include reimbursable expenses go beyond the mandate of Section 67 and cannot override the statute. The Legislature subsequently amended Section 67 (effective May 14, 2015) to include reimbursable expenditure prospectively; that amendment confirms the earlier conclusion that prior to the amendment reimbursable expenses were not part of the taxable value. Applying that legal proposition, the Court answered the substantial question in favour of the assessee. [Paras 6, 7]

Answered in favour of the assessee; reimbursable expenses were not includible in valuation for service tax under the pre-amendment law and may be excluded as amounts paid as a 'pure agent'.

Valuation of taxable services - reimbursable expenses / pure agent - prospectivity of statutory amendment - Whether the questions regarding revenue neutrality and omission in returns constituted suppression with intent to evade tax for invoking extended limitation. - HELD THAT: - Having decided the determinative legal question that reimbursable expenses cannot be included in valuation under the pre-amendment law, the Court held that the related substantial questions about revenue neutrality and omission in returns no longer required adjudication in these appeals. Those questions were not decided on merits and were left open for future consideration where relevant facts and law may differ. [Paras 7, 8]

Held not necessary to decide in the instant case and left open.

Final Conclusion: The appeals are allowed: the substantial question concerning exclusion of reimbursable expenses from valuation (substantial question no.2) is answered in favour of the assessee; the other substantial questions (nos.1 and 3) are left open. No costs.

Application of Rule 8(3A) of the Central Excise Rules, 2002 - Demand for excise duty under Section 11A of the Central Excise Act, 1944 - Denial of Cenvat credit as consequence of Rule 8(3A) - Imposition of penalty under Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002 - Validity of Rule 8(3A) vis-a -vis Articles 14 and 19(1)(g) of the Constitution - Effect of an interim stay by the Supreme Court on the precedential value of a High Court decision

Application of Rule 8(3A) of the Central Excise Rules, 2002 - Demand for excise duty under Section 11A of the Central Excise Act, 1944 - Denial of Cenvat credit as consequence of Rule 8(3A) - Whether Rule 8(3A) applies to cases where the assessee had already paid declared duty prior to audit and the department thereafter finds additional duty payable. - HELD THAT: - The Tribunal and this Court held that Rule 8(3A) is directed to cases where the assessee has defaulted in payment of excise beyond thirty days from the due date and does not extend to every instance where, on scrutiny, audit or investigation, the department finds additional duty payable over and above amounts already declared and paid. Applying Rule 8(3A) in all such cases would permit denial of Cenvat credit on subsequent clearances irrespective of whether there was a prior default, leading to disproportionate and chaotic consequences. In the present case the assessee had paid duty declared in ER-1 returns before the audit; therefore the demand was properly to be pursued under Section 11A and not under Rule 8(3A). The Tribunal's reasoning that the matter is a demand under Section 11A and not covered by Rule 8(3A) is affirmed. [Paras 18, 19]

Demand under Rule 8(3A) set aside; matter treated as demand under Section 11A and Cenvat credit denial under Rule 8(3A) not applicable.

Imposition of penalty under Section 11AC of the Central Excise Act, 1944 and Rule 25 of the Central Excise Rules, 2002 - Consequences of erroneous application of Rule 8(3A) - Whether penalties imposed on the assessee under Section 11AC and Rule 25 consequent to demands framed under Rule 8(3A) are sustainable. - HELD THAT: - Because the Tribunal found that Rule 8(3A) did not apply to the assessee's case and that the demand should have been pursued under Section 11A, the attendant penalties founded on application of Rule 8(3A) were unsustainable. The High Court concurred with the Tribunal's finding and held that penalties imposed on the footing of Rule 8(3A) must be set aside. [Paras 9, 20]

Penalties imposed under Section 11AC and Rule 25 set aside as unsustainable in view of the incorrect application of Rule 8(3A).

Effect of an interim stay by the Supreme Court on the precedential value of a High Court decision - Validity of Rule 8(3A) vis-a -vis Articles 14 and 19(1)(g) of the Constitution - Whether the Supreme Court's interim stay of the Gujarat High Court's decision in Indsur Global Ltd. precludes this Court from following the ratio of that decision. - HELD THAT: - The Court reviewed authorities and held that a mere grant of interim stay by the Supreme Court does not, by itself, compel a High Court to decline to consider or follow the reasoning of another High Court decision. Interim orders are non-final and do not constitute binding precedent; the High Court must decide matters on merits uninfluenced by the fact of an interim stay. The Gujarat High Court's reasoning (that the relevant portion of Rule 8(3A) is unreasonable and violative of Articles 14 and 19(1)(g)) was considered persuasive and not displaced for the purposes of deciding the present appeal despite the pendency of a stay in the Supreme Court. [Paras 15, 16, 17]

The pendency of a Supreme Court stay on the Gujarat High Court decision does not preclude reliance on that decision's ratio for deciding the present case; the Court followed the Tribunal's reliance on the Gujarat decision.

Final Conclusion: The appeal is dismissed. The Tribunal's order setting aside the demand under Rule 8(3A) and the penalties under Section 11AC and Rule 25 is upheld; no substantial question of law arises and no costs are awarded.

Acceptance of declaration filed under SVLDRS despite filing before wrong Commissionerate - jurisdictional transfer of declarations between Commissionerates - permissibility of manual processing under SVLDRS Rules to effectuate relief - processing of SVLDRS-1 declarations where SVLDRS-2/2A were uploaded on another portal - effect of non availment of personal hearing on entitlement to relief under SVLDRS

Acceptance of declaration filed under SVLDRS despite filing before wrong Commissionerate - jurisdictional transfer of declarations between Commissionerates - Whether the petitioner's SVLDRS-1 declaration filed before the Rourkela Commissionerate could be processed and accepted despite the contention that it ought to have been filed before the Bhubaneswar Commissionerate. - HELD THAT: - The Court found that the petitioner's belief that it fell within the jurisdiction of the Rourkela Commissionerate after bifurcation was reasonable, and that the issuance of SVLDRS-2 by the Bhubaneswar Commissionerate and the petitioner's uploading of documents in SVLDRS-2A on the Bhubaneswar portal demonstrated that the declaration had in fact been transferred and was within the knowledge of both Commissionerates. The Court rejected a hyper technical approach by the opposite parties that refusal to process the declaration could be grounded solely on the initial filing before Rourkela, particularly when Bhubaneswar had issued SVLDRS-2 and received the petitioner's responses. [Paras 11, 12]

The petitioner's declaration must be processed despite its initial filing before Rourkela; the transfer and processing cannot be denied on the ground of technical misfiling.

Effect of non availment of personal hearing on entitlement to relief under SVLDRS - Whether the petitioner's failure to avail the opportunity of personal hearing precluded processing of its SVLDRS declaration. - HELD THAT: - The Court accepted the petitioner's explanation that the procedural interaction on the portal made it difficult to complete SVLDRS-2A unless the personal hearing question was answered; this could have been done involuntarily. The Court held that such inability to effectuate a hearing option on the portal was not a good ground to deny processing of the declaration under SVLDRS. [Paras 13]

The petitioner's partial or involuntary non selection regarding personal hearing does not bar processing of its declaration.

Permissibility of manual processing under SVLDRS Rules to effectuate relief - processing of SVLDRS-1 declarations where SVLDRS-2/2A were uploaded on another portal - Whether the Designated Committee (Bhubaneswar) must issue SVLDRS-3 and permit payment and issuance of SVLDRS-4, and whether manual processing in terms of departmental instructions can be used to comply with the Court's directions. - HELD THAT: - The Court directed the Designated Committee, Bhubaneswar (which had issued SVLDRS-2 and on whose portal the petitioner uploaded SVLDRS-2A) to issue SVLDRS-3 by a specified date and to permit payment of the tax dues within a further period, after which SVLDRS-4 would be issued. The Court noted departmental instructions permitting manual processing of declarations and directed that those instructions apply to give effect to the order, thereby validating manual processing where necessary to effectuate the petitioner's statutory remedy under SVLDRS. [Paras 14, 15]

Opposite Party No.3 (Designated Committee, Bhubaneswar) is directed to issue SVLDRS-3, allow payment, and thereafter issue SVLDRS-4; departmental instructions permitting manual processing shall apply.

Final Conclusion: Writ petition disposed. The Court directed the Designated Committee, Bhubaneswar to issue SVLDRS-3 by the date specified, allow the petitioner a short period to pay the dues and thereafter issue the discharge certificate in SVLDRS-4; manual processing instructions shall apply to implement the directions.

Refund of interest on penalty - refund of interest on duty under Section 11BB - power of Commissioner (Appeals) to remand

Refund of interest on penalty - refund of interest on duty under Section 11BB - Appellant is not entitled to interest on refunded penalty under Section 11BB. - HELD THAT: - The Tribunal applied the binding view of the Hon'ble Supreme Court in CORONATION SPINNING INDIA and held that Section 11BB authorises payment of interest only on refundable duty and does not extend to interest on penalty or fine. The earlier remand order of the Commissioner (Appeals) (paras 5.4-5.6) contained observations about interest but, having remanded the matter, expressly declined to finally adjudicate maintainability (para 5.7). The Tribunal therefore treated the Commissioner (Appeals)'s observations as non-final and concluded that, as a matter of law, interest on penalty is not admissible under Section 11BB. [Paras 4, 5, 6]

Appeal dismissed insofar as claim for interest on penalty under Section 11BB is concerned; no entitlement to such interest.

Power of Commissioner (Appeals) to remand - Whether the question of recoverability of the refunded amount in absence of a demand or show-cause notice could be decided in the present proceedings. - HELD THAT: - The Tribunal noted that the Commissioner (Appeals) had remanded the matter and that his remand (paras 5.6-5.7) left legal and factual issues open for fresh consideration. The present appeal did not admit adjudication of the separate question of recoverability or issuance of a demand/show-cause notice; the Tribunal observed that that is an independent issue which cannot be decided in the present proceedings and must be considered in appropriate proceedings. [Paras 5, 6]

Question of recoverability in absence of a demand/show-cause notice is not adjudicated and remains open for determination in the appropriate forum.

Final Conclusion: The appeal is dismissed on the ground that interest on refunded penalty is not payable under Section 11BB; the separate question of recoverability of the amount in absence of a demand/show-cause notice is not decided and remains open for appropriate proceedings.

Rate of interest on refund of excess duty - notification fixing rate of interest - supersession of earlier notifications - application of Notification No. 24/2014 - exercise of power under Section 35FF of the Central Excise Act

Rate of interest on refund of excess duty - application of Notification No. 24/2014 - supersession of earlier notifications - exercise of power under Section 35FF of the Central Excise Act - Whether the appellant is entitled to interest at 12% on refunds for manufacture of March, 2015 and April, 2015 or interest at 6% as fixed by Notification No. 24/2014. - HELD THAT: - The appellant's refund claims for manufacture of March, 2015 and April, 2015 were allowed but with interest at 6%; the appellant sought enhancement to 12% relying on earlier notifications and judicial decisions. The Tribunal examined the notification regime and noted that the Government, exercising powers under Section 35FF of the Central Excise Act, has fixed the rate of interest at 6% per annum by Notification No. 24/2014. Notification No. 24/2014 supersedes earlier notifications (including Notification No. 17/2002 and those subsequently superseded), and the decisions relied upon by the appellant pre-date Notification No. 24/2014. In consequence, the earlier authorities applying a higher rate are not applicable in view of the later notification which expressly fixes the rate at 6%. Applying this determinative legislative instrument, the Tribunal found no infirmity in the Adjudicating Authority's fixation of interest at 6% and declined to alter the rate.

Appellant is not entitled to interest at 12%; interest fixed at 6% by Notification No. 24/2014 applies and the order under challenge is upheld.

Final Conclusion: Appeal dismissed; the interest granted on the refunds for March, 2015 and April, 2015 at the rate of 6% (as fixed by Notification No. 24/2014) is confirmed.

Maintainability of joint complaint under Section 138 read with Section 142 of the Negotiable Instruments Act - applicability of the Code of Criminal Procedure to Chapter XVII of the Negotiable Instruments Act - summary trial under Section 143 of the Negotiable Instruments Act - quashing of complaint and partial continuance of proceedings

Maintainability of joint complaint under Section 138 read with Section 142 of the Negotiable Instruments Act - A joint complaint by two or more persons under Section 138 read with Section 142 of the Negotiable Instruments Act is not maintainable. - HELD THAT: - The expression 'complaint' and the reference to a 'person' in Sections 138 and 142, when read with the procedural mandate in Section 143, indicate a legislative scheme envisaging a single complainant. Authorities construing Section 200 Cr.P.C. have held that joint complaints are not contemplated; by conjoint reading of Sections 138, 141, 142 and 143 of the Act and having regard to the summary procedure incorporated by reference to the Code of Criminal Procedure, the same principle applies to complaints under Chapter XVII of the Act. Consequently, a joint complaint by two or more complainants is not maintainable under the special statutory scheme governing cheque-dishonour offences. [Paras 16, 17, 18, 19]

Joint complaint under Section 138 read with Section 142 is not maintainable.

Applicability of the Code of Criminal Procedure to Chapter XVII of the Negotiable Instruments Act - summary trial under Section 143 of the Negotiable Instruments Act - Chapter XVII of the Negotiable Instruments Act does not operate as a self-contained code excluding the Code of Criminal Procedure; the summary-trial provisions of the Code apply as incorporated by Section 143. - HELD THAT: - Section 143 expressly requires that offences under Chapter XVII be tried summarily and directs that provisions of Sections 262 to 265 Cr.P.C. apply 'as far as may be'. Thus Chapter XVII is to be read with relevant Cr.P.C. provisions; the argument that Chapter XVII is an independent and exclusive code displacing Cr.P.C. is rejected. This conclusion supports applying the Cr.P.C. approach to complainant joinder analogies and procedural consequences in complaints under Section 138. [Paras 16, 19]

The Code of Criminal Procedure applies to Chapter XVII matters to the extent provided by Section 143; Chapter XVII is not an exclusive code displacing Cr.P.C. procedure.

Quashing of complaint and partial continuance of proceedings - Though a joint complaint is not maintainable, the remedy is not automatic total quashment; the complaint may proceed on behalf of one complainant while proceedings as to the other complainant are quashed. - HELD THAT: - Having found joint complaints to be impermissible, the Court exercised remedial restraint: rather than quash the entire complaint and all proceedings, it allowed the complaint to continue in respect of one complainant and quashed the complaint insofar as the other complainant was concerned. The aggrieved complainant whose part was quashed remains free to pursue a fresh complaint following due process. The Court declined to give the complainants an option as to who should continue, noting the differing cheques and amounts involved and observing that any dispute between complainants may benefit the accused. [Paras 20, 21, 22]

Proceedings are quashed in respect of one complainant; the complaint continues in respect of the other complainant; the quashed complainant may file a fresh complaint.

Final Conclusion: The petition is allowed in part: joint complaints under Section 138/142 are not maintainable; however, rather than quashing the entire complaint, proceedings are permitted to continue on behalf of one complainant while the complaint is quashed insofar as the other complainant, who remains free to initiate fresh proceedings in accordance with law.