TaxTMI Updates e-Newsletter
May 01,2023

Time-bar - condonation of delay - preclusive effect of pending proceedings - reply to statutory intimation and its effect on limitation - restoration of appeal for adjudication on merits - re-credit from electronic credit ledger

Time-bar - reply to statutory intimation and its effect on limitation - preclusive effect of pending proceedings - Whether the appeal against the order issued pursuant to Form GST DRC-01 dated 16.09.2021 was hopelessly time barred or liable to be entertained in view of earlier intimation in Form GST DRC-01A dated 05.03.2021 to which the appellants had submitted a reply on 08.03.2021 and which proceedings remained pending. - HELD THAT: - The Court found that the first intimation in Form GST DRC-01A dated 05.03.2021, issued by the first respondent, initiated proceedings in respect of the same amount and allegation and elicited a reply from the appellants on 08.03.2021 which was not considered or disposed of. The second respondent initiated summary proceedings thereafter by issuing Form GST DRC-01 dated 16.09.2021 while the earlier proceedings remained pending. The Court held that, in these peculiar facts, the appellants' response to the first intimation and the pendency of those proceedings precluded treating the subsequent appeal as time barred; the question whether the appellants had noticed the uploading of Form GST DRC-01 became academic given the prior pending proceedings. The Court therefore concluded that the appeal should be decided on merits and in accordance with law rather than rejected as barred by limitation. [Paras 1, 2, 3]

The order rejecting the appeal as time barred was set aside and the appeal was held not to be time barred in the facts of the case.

Restoration of appeal for adjudication on merits - re-credit from electronic credit ledger - condonation of delay - What relief and directions should follow from the finding that the appeal is not time barred. - HELD THAT: - Having found that the appeal ought to be decided on merits, the Court restored the appeal to the file and number of the appellate authority and directed that the appeal be heard and disposed of on merits and in accordance with law. The Court expressly left open the appellants' claim that amounts swiped from their electronic credit ledger should be re-credited, directing that such a prayer may be made before the appellate authority and shall be considered. The appellants or their authorised representative are to be afforded an opportunity of personal hearing. The Court emphasised that the order was passed considering the peculiar facts and circumstances of the case. [Paras 4, 5]

Appeal restored to the appellate authority for adjudication on merits; appellate authority to consider claim for re-credit and afford personal hearing.

Final Conclusion: The order of the appellate authority rejecting the appeal as time barred is set aside; the appeal is restored for fresh adjudication on merits by the appellate authority which shall also consider the appellants' claim for re-credit from the electronic credit ledger after affording personal hearing, the directions being issued in light of the case's peculiar facts and circumstances.

Presumption of innocence reinforced on acquittal - Willful attempt to evade tax - False statement in return or verification - Filing of revised return - Dropping of penalty proceedings as evidence affecting criminal liability - Interference with long standing acquittal requires miscarriage of justice

Willful attempt to evade tax - Dropping of penalty proceedings as evidence affecting criminal liability - Presumption of innocence reinforced on acquittal - Guilt of the respondent under the offence of willful attempt to evade tax (charged under the Income Tax provisions) was not proved and the trial court's acquittal is not vitiated. - HELD THAT: - The Court examined evidence that the assessing officer had reopened assessment on suspicion of concealment and that penalty proceedings under the relevant penalty provision had been initiated but were subsequently dropped by the Income Tax Authority (order exhibited). The prosecution relied on the reopened assessment and related proceedings, but the dropping of penalty proceedings and the absence of evidence establishing willful evasion indicated no sustainable criminal culpability. Given the settled principle that an acquittal reinforces the presumption of innocence and, absent a demonstrated miscarriage of justice after a long period, interference is unwarranted, the trial court's conclusion on this charge was affirmed. [Paras 5, 7]

Acquittal on the charge of willful attempt to evade tax is upheld; no interference with the trial court's finding.

False statement in return or verification - Filing of revised return - Presumption of innocence reinforced on acquittal - The charge that the respondent furnished a false statement in her return/verification was not established and the acquittal on this count stands. - HELD THAT: - The evidence showed the respondent filed an initial return and thereafter a subsequent/revised return in which a loan was declared. The Income Tax Authority disbelieved the loan for assessment purposes, but there was no evidence that the respondent deliberately or knowingly furnished a false statement. The statutory provision permitting filing of revised returns was accepted by prosecution witness evidence, and the subsequent return explaining the source (loan) cannot be equated with a criminally false verification absent proof of knowledge or belief of falsity. In these circumstances and in light of the trial court's appreciation of evidence, the Court found no error warranting reversal. [Paras 6, 7]

Acquittal on the charge of furnishing false statement in return/verification is affirmed; no interference with the trial court's finding.

Final Conclusion: The appeal against the trial court's judgment of acquittal is dismissed; the acquittal of the respondent on the charges relating to evasion and false statements is upheld and the appeal is dismissed on contest with no order as to costs.

Ex-post facto approval of FDI - consideration on merits uninfluenced by previous administrative orders - submission through National Single Window System (NSWS) under consolidated FDI policy - obligation of competent authority to decide expeditiously within judicially directed timeframe

Consideration on merits uninfluenced by previous administrative orders - The respondent authority must decide the petitioner's application for ex-post facto approval of FDI on merits without being influenced by earlier orders of FIPB or DPIIT. - HELD THAT: - The Court recorded that earlier FIPB orders (dated 27.03.2012, 24.02.2016 and 21.06.2016) should not influence fresh consideration of the petitioner's proposal and specifically directed that the application be examined afresh on merits. The Court noted prior undertakings and prior disposals which led to the obligation that the competent authority consider the application on its own merits and not rely on earlier rejections that did not address the merits. The Court accordingly ordered consideration of the proposal uninfluenced by previous orders and found that the petitioner's rights were prejudiced by non-consideration on merits over an extended period. [Paras 6, 7, 18]

The competent authority is obliged to decide the petitioner's application on merits without being influenced by earlier FIPB/DPIIT rejection orders.

Submission through National Single Window System (NSWS) under consolidated FDI policy - The petitioner is required to file the application afresh through the online NSWS portal in terms of the consolidated FDI policy and SOP. - HELD THAT: - Having regard to the changed mechanism for processing FDI proposals (abolition of FIPB and adoption of SOP/NSWS), the Court directed the petitioner to submit an application in accordance with the consolidated FDI policy dated 15.10.2022 (as amended) via the NSWS online portal and comply with the guidelines and requirements under the FDI policy and SOP. The Court recognised that the present regime requires online filing and transfer to the concerned Administrative Ministry/Department for disposal and thus mandated compliance with that procedure before the competent authority considers the case on merits. [Paras 8, 15, 17]

Petitioner must file the application through NSWS in terms of the consolidated FDI policy and SOP for the competent authority to consider it.

Obligation of competent authority to decide expeditiously within judicially directed timeframe - The respondent authority must decide the freshly filed application within three months from filing, and the petitioner must file within two weeks from the order. - HELD THAT: - The Court imposed a clear timeline to cure the prolonged inaction: the petitioner was given two weeks to file the application via NSWS and the competent authority was directed to decide the application on merits within three months of filing. The Court emphasised the peculiar delay of over a decade in considering the petitioner's earlier filings and made the three-month period mandatory, warning that non-compliance may invite the Court to call for personal presence of the responsible officer. This direction is intended to secure expeditious administrative disposal and to prevent further prejudice to the petitioner. [Paras 18, 19]

If the petitioner files the application within two weeks, the competent authority shall decide it on merits within three months; failure to comply may attract further judicial measures.

Final Conclusion: The petition is disposed of with directions that the petitioner shall file an application through NSWS in terms of the consolidated FDI policy within two weeks, the competent authority shall consider and decide the proposal on merits uninfluenced by earlier rejection orders and do so within three months of filing; the petitioner may seek revival of the petition if these directions are not complied with.

Prosecution under Section 276B read with Section 278B of the Income Tax Act - principal officer / person in charge and responsible for the business of the company - requirement of notice to directors under the definition of principal officer - sanction to prosecute and Board's Standard Operating Procedure under Section 119 - factual inquiry at trial as to responsibility and delay in sanction

Prosecution under Section 276B read with Section 278B of the Income Tax Act - principal officer / person in charge and responsible for the business of the company - requirement of notice to directors under the definition of principal officer - Whether the complaints against the company and its directors were liable to be quashed for want of a prior notice under the definition of 'principal officer' to the directors - HELD THAT: - The Court held that the complaints cannot be quashed on the ground that no separate prior notice was issued to the directors under the definition of 'principal officer'. Reliance was placed on the decision of the Supreme Court in Madhumilan Syntex Ltd., which states that where the complaint and show-cause notice expressly aver that the directors are to be treated as principal officers or are in charge of and responsible for the business of the company, initiation of criminal proceedings cannot be treated as illegal on that ground. The question whether the directors were actually in charge of and responsible for the company's business is one of fact to be determined by the trial court and not for determination in a quash petition. [Paras 5]

Complaints not liable to be quashed merely because no separate notice was issued to the directors; factual responsibility must be determined at trial.

Sanction to prosecute and Board's Standard Operating Procedure under Section 119 - factual inquiry at trial as to delay and exclusion of assessee's reply time - Whether the belated grant of sanction to prosecute, contrary to the Board's time guidelines, entitled the petitioners to quash the complaints - HELD THAT: - The Court observed that the Board's instructions prescribe a time-limit for granting prosecution sanction and also provide that time taken by the assessee in replying is to be excluded. The court noted the contention that sanction was granted much later but found that whether the delay is attributable to the assessing authority or is explained by time taken by the assessee to reply is a factual matter. Accordingly, the propriety and effect of any delay in granting sanction cannot be resolved in the present petitions and must be examined by the trial court. [Paras 6, 7]

Delay in granting sanction, and exclusion of assessee's reply time, are factual matters for the trial court; not a ground for quashing at this stage.

Final Conclusion: The Criminal Original Petitions challenging the complaints under Section 276B read with Section 278B are dismissed; the factual questions as to whether the directors were principal officers and whether there was impermissible delay in sanction are left open for determination by the trial court; petitioners' personal attendance dispensed with subject to the trial court's discretion.

Stay of demand - attachment of bank accounts - recovery of disputed demand - statutory appeal under Section 246(A) - direction for disposal of appeal within fixed time - quashing of demand order

Statutory appeal under Section 246(A) - direction for disposal of appeal within fixed time - Appellate authority to adjudicate the statutory appeal filed by the petitioner within a stipulated period - HELD THAT: - The Court observed that the statutory appeal filed by the petitioner under Section 246(A) is pending disposal and that earlier writ proceedings had resulted in quashing of a demand and a direction to the respondent to pass speaking orders. In the interest of justice and having noted that 20% of the disputed demand had already been recovered from the petitioner's bank accounts, the Court directed the appellate authority to dispose of the appeal within 12 weeks from receipt of a copy of this order. The direction is one of expedition and remediation to ensure the substantive challenge to the assessment is finally adjudicated within a fixed timeframe. [Paras 12, 13]

The appellate authority is directed to dispose of the statutory appeal within 12 weeks from receipt of this order.

Stay of demand - attachment of bank accounts - recovery of disputed demand - Interim relief in the form of stay of the remaining demand and vacation of attachment pending disposal of the appeal - HELD THAT: - Having noted that 20% of the disputed tax, interest and penalty had already been withdrawn by the respondent from the petitioner's bank accounts, the Court granted interim protection by staying recovery in respect of the remaining 80% of the demand. Correspondingly, the attachment in respect of that remaining portion was ordered to be raised until the appellate authority disposes of the appeal in the stipulated period. The stay is conditional and limited to the balance of the demand not already recovered. [Paras 12, 13]

Till disposal of the appeal within 12 weeks, there shall be a stay in respect of 80% of the demand and the attachment in respect thereof is lifted.

Final Conclusion: Writ petition disposed of by directing the appellate authority to decide the pending statutory appeal within 12 weeks; 20% of the disputed amount already recovered was noted, and recovery/attachment in respect of the remaining 80% is stayed until disposal of the appeal; no order as to costs.

Application under Section 220(6) of the Income-tax Act - stay of recovery pending disposal of appeal - non-speaking order - 'Trinity' principles - remand for fresh consideration

Application under Section 220(6) of the Income-tax Act - non-speaking order - 'Trinity' principles - remand for fresh consideration - stay of recovery pending disposal of appeal - Impugned assessment orders passed under Section 220(6) during pendency of appeals were vitiated for being non-speaking and required fresh consideration of stay applications. - HELD THAT: - The High Court found that the orders dated 12.12.2022 in respect of the specified assessment years were not acceptable in their existing form and directed that the stay applications filed under Section 220(6) be reconsidered afresh. The Court required the first respondent to apply the 'Trinity' principles articulated by this Court in Kannammal and in Queen Agencies while adjudicating the stay applications. Consequently, the impugned orders were set aside and the matter remanded to the Assessing Officer for fresh disposal of the stay petitions. The Court imposed a timetable for disposal, directing that the stay applications be decided within six weeks from receipt of the order, and restrained further recovery proceedings until such disposal.

Impugned orders set aside; stay applications remanded to the Assessing Officer for fresh decision applying the 'Trinity' principles, to be disposed of within six weeks, and no recovery to be undertaken until disposal.

Final Conclusion: The writ petitions were allowed to the extent that the assessment orders dated 12.12.2022 for Assessment Years 2014-2015, 2016-2017 and 2020-2021 were set aside; the stay applications under Section 220(6) are remanded for fresh consideration applying the 'Trinity' principles and must be disposed of within six weeks, with recovery stayed until such disposal.

Condonation of delay under Section 119(2)(b) of the Income tax Act - non speaking order and absence of application of mind - TDS refund consequent to processing of income tax return

Condonation of delay under Section 119(2)(b) of the Income tax Act - non speaking order and absence of application of mind - Validity of the order rejecting the petitioner's application for condonation of delay in filing returns where returns had already been processed - HELD THAT: - The Court found on the material on record that the petitioner's returns had been processed and the petitioner had been intimated of such processing prior to the impugned order. Despite that, respondent No.1 rejected the application for condonation of delay by an order which the Court characterised as unreasoned, non speaking, laconic and cryptic, showing no application of mind or assignment of cogent reasons for rejection. For these reasons the impugned order could not stand; the Court set it aside and accepted the petitioner's request for condonation of delay.

Impugned order rejecting condonation of delay set aside; delay treated as condoned.

TDS refund consequent to processing of income tax return - condonation of delay under Section 119(2)(b) of the Income tax Act - Entitlement and further adjudication of the petitioner's claim for refund of TDS following setting aside of the rejection order - HELD THAT: - Having held that the delay has effectively been condoned by virtue of prior processing of the returns and having set aside the non speaking rejection order, the Court directed the respondents to consider the petitioner's claim for refund of TDS in accordance with law. The consideration is to be carried out afresh and expeditiously, within the time period ordered by the Court.

Respondents directed to consider the TDS refund claim in accordance with law within three months from receipt of the order.

Final Conclusion: Petition allowed; the impugned order dated 28.07.2020 is set aside, the delay in filing the returns is treated as condoned, and respondents are directed to consider the petitioner's claim for refund of TDS in accordance with law within three months.

Assessment in search and seizure/post-search proceedings - addition under section 69A read with section 115BBE - explanation of source of cash - burden on the assessee to explain unexplained cash - opportunity to be heard - restriction of additions on consideration of evidence

Explanation of source of cash - burden on the assessee to explain unexplained cash - addition under section 69A read with section 115BBE - assessment in search and seizure/post-search proceedings - Sustainability of the addition of Rs. 3,32,313/- (out of total cash investment) upheld by the CIT(A) on the ground that the assessee failed to explain the source of cash. - HELD THAT: - The Tribunal recorded that the CIT(A) examined the assessee's explanation and documentary material and found that the chart submitted in post-search proceedings showed the expenditure as incurred in FY 2016-17, while the assessee later claimed it was incurred in FY 2017-18 without corroborative evidence. The CIT(A) regarded the changed plea as an afterthought, noted absence of evidence of the claimed cash expenditure and inability to explain the source of cash, and therefore treated the amount as paid out of undisclosed sources. On that factual basis the CIT(A) restricted the AO's addition to the sum of Rs. 3,32,313/-. The Tribunal found that the CIT(A) had in fact considered the material on record, afforded opportunity to the assessee, and given reasoned findings; consequently there was no ground for interference with the factual conclusion that the assessee failed to satisfactorily explain the cash expenditure, and the addition was sustainable to the extent confirmed by the CIT(A). [Paras 6, 7]

Assessee's challenge to the addition is rejected and the addition of Rs. 3,32,313/- as sustained by the CIT(A) is upheld; grounds of appeal dismissed.

Final Conclusion: The Tribunal dismissed the assessee's appeal against the CIT(A)'s order for assessment year 2017-18, upholding the restricted addition of Rs. 3,32,313/- after concluding that the assessee failed to satisfactorily explain the source of the cash expenditure and that the CIT(A) had considered the material and afforded opportunity to be heard.

Registration under section 12AA - charitable purpose - genuineness of activities - proof of payments for charitable activities - application for registration - rejection of registration

Registration under section 12AA - genuineness of activities - proof of payments for charitable activities - charitable purpose - Whether the denial of registration under section 12AA of the Income Tax Act was justified on the ground that certain payments were unexplained and not connected with the trust's charitable activities. - HELD THAT: - The assessee, a charitable trust, applied for registration under section 12AA and the CIT (E) rejected the application on the basis that payments to certain parties were unexplained and their connection with the trust's activities was not established. The assessee submitted documentary evidence including bills, salary accounts, invoices for medicines, declarations from the recipient society regarding payment for education of two children, and balance sheets and income & expenditure accounts for the years ending 31-03-2020, 31-03-2021 and 31-03-2022. The Tribunal observed that the payments were shown to relate to running a dispensary (purchase of furniture, salary to an MBBS doctor, medical expenses) and donations made for education through a registered society. The Revenue did not produce a strong rebuttal to the documentary evidence placed before the Tribunal. The CIT (E)'s doubt as to why certain payments were routed through a society rather than paid directly to parents was not supported by material and was held to be an insufficient basis to deny registration. Applying the statutory requirement that the registering authority must satisfy itself about the objects and genuineness of activities, the Tribunal found the assessee's explanations and documents adequate to demonstrate charitable activity and allowed registration. [Paras 5, 6]

Order of the CIT (Exemptions) rejecting registration set aside and registration under section 12AA directed to be allowed.

Final Conclusion: The appeal is allowed; the order denying registration under section 12AA is set aside and the trust's registration is to be granted.

Unexplained cash deposits under section 69A - credits/loans/gifts in books - onus to prove creditworthiness under section 68 - reappraisal of material on record by appellate authority without remand - relevance of declarations under Income Disclosure Scheme (IDS) - verification by Assessing Officer versus appellate re-examination

Unexplained cash deposits under section 69A - reappraisal of material on record by appellate authority without remand - Deletion of addition made under section 69A in respect of unexplained cash deposits for AY 2014-15 - HELD THAT: - The Assessing Officer treated aggregate cash deposits as unexplained but failed to deal with the detailed account-wise reconciliation and the letter (dated 20/12/2017) filed by the assessee during assessment which furnished breakup of deposits and bank statements. The CIT(A) reappraised the same material on record (including the Standard Chartered Bank statement) and reduced the unexplained amount; the Tribunal found that the CIT(A) did no more than verify and apply the material already placed before the AO, and that the AO's omission to verify did not mandate a remand. Accordingly the appellate re-examination was sustained and the addition was deleted to the extent held by the CIT(A). [Paras 11, 14, 15, 16]

Addition under section 69A for AY 2014-15 deleted as held by the CIT(A); Revenue's ground accordingly dismissed.

Credits/loans/gifts in books - onus to prove creditworthiness under section 68 - relevance of bank statements and third party confirmation - Deletion of addition of Rs. 2.35 crores under section 68 for AY 2014-15 treated as refundable fidelity guarantee received from M/s. Royal Home Constructions - HELD THAT: - The assessee produced the development agreement, a confirmation letter and affidavit of the Managing Partner of M/s. Royal Home Constructions, Axis Bank account statement of that firm and abstracts of cash withdrawals showing sufficiency of funds and withdrawals to make the payments. The Managing Partner had appeared and confirmed payment; the AO's inability to serve notice on the firm or the firm's non furnishing of returns did not negate the direct evidence produced. The CIT(A) found that the assessee discharged the onus of establishing creditworthiness and genuineness of the transaction; the Tribunal agreed and declined to interfere. [Paras 22, 23, 24, 25, 26]

Addition under section 68 for AY 2014-15 deleted; assessee discharged burden of proof.

Credits/loans/gifts in books - onus to prove creditworthiness under section 68 - precedential application of findings across assessment years - Deletion of refundable fidelity guarantee addition under section 68 for AY 2015-16 on same facts as AY 2014-15 - HELD THAT: - Facts pertaining to the refundable fidelity guarantee and supporting materials for AY 2015-16 were identical to those of AY 2014-15. The Tribunal applied the view taken for AY 2014-15, held that the assessee had discharged the onus by producing confirmation, affidavit and bank records, and therefore deleted the addition for AY 2015-16 as well. [Paras 27, 28]

Addition under section 68 for AY 2015-16 deleted following the decision on AY 2014-15.

Relevance of declarations under Income Disclosure Scheme (IDS) - treatment of agricultural income declared under IDS - Deletion of addition relating to agricultural income for AY 2015-16 on account of IDS declaration - HELD THAT: - The assessee declared the agricultural income in the return and made a declaration under IDS for the relevant amount. The CIT(A) accepted that the IDS declaration (and the return) encompassed the agricultural income and that the case fell within the permissible category under section 183(1)(c) of the Finance Act, 2016. No contrary material was produced by Revenue and the Tribunal declined to interfere with the acceptance of IDS declaration as inclusive of the agricultural income. [Paras 29, 30, 31]

Addition on account of agricultural income for AY 2015-16 deleted; CIT(A)'s acceptance of IDS declaration sustained.

Unexplained cash deposits under section 69A - explanation by matching withdrawals and re-deposits - Deletion of addition of Rs. 5 lakhs under section 69A for AY 2015-16 - HELD THAT: - Bank statements showed deposits and corresponding cash withdrawals and re-deposits on the same/succeeding days; this phenomenon was admitted and verified in the remand report. The CIT(A) held that such deposits were satisfactorily explained by the withdrawals and re-deposits and therefore deleted the addition; the Tribunal confirmed that finding. [Paras 32, 33]

Addition under section 69A for AY 2015-16 deleted as explained by bank transactions; CIT(A) upheld.

Final Conclusion: Both appeals by Revenue are dismissed and the assessee's cross objections are allowed: additions under section 69A and section 68 for the assessment years 2014 15 and 2015 16 were deleted by the CIT(A) and those deletions are sustained by the Tribunal on the grounds stated above.

Interpretation of "person responsible for paying" under section 204 - Applicability of section 194C to intermediaries/payment collection agents - Role of mere remitter versus payer in determining TDS liability - Retrospective operation of statutory amendment - Binding effect of CBDT circulars on TDS obligations - Principle lex non cogit ad impossibilia (impossibility of performance)

Interpretation of "person responsible for paying" under section 204 - Applicability of section 194C to intermediaries/payment collection agents - Role of mere remitter versus payer in determining TDS liability - Binding effect of CBDT circulars on TDS obligations - Principle lex non cogit ad impossibilia (impossibility of performance) - Whether the assessee (UISPL) was a "person responsible for paying" and therefore liable to deduct tax under section 194C read with section 204 for payments to driver-, restaurant- and courier partners. - HELD THAT: - Following earlier coordinate bench decisions in the assessee's own cases for preceding years, the Tribunal held that UISPL was a mere payment and collection service provider remitting collections on behalf of Uber B.V. and was not the payer or a party to the contract under which the drivers/restaurants/courier partners rendered services. The Tribunal accepted that (i) no contract existed between UISPL and the driver partners; (ii) the services (transport/food delivery) were performed for and contracted with Users/third parties and lead generation services were provided by Uber B.V.; and (iii) UISPL merely collected and disbursed funds at the direction of Uber B.V. In that factual matrix section 194C did not apply because the statutory conditions - person responsible for paying, payment in pursuance of work for that payer, and a contract with the payer - were not satisfied. The Tribunal relied on precedents and binding CBDT circulars that an intermediary or mere remitter is not required to deduct TDS, and invoked the maxim lex non cogit ad impossibilia to underline the impracticality of imposing TDS obligations on an entity that is not party to the contract and which does not control the underlying transaction. Having found no change in facts or law for the year under consideration, the coordinate bench reasoning was followed and the CIT(A)'s order setting aside the AO TDS order was upheld. [Paras 8, 10, 11]

UISPL was not a "person responsible for paying" for the purposes of section 194C read with section 204 and therefore was not an assessee in default under section 201(1)/201(1A); the CIT(A) order was upheld.

Retrospective operation of statutory amendment - Interpretation of "person responsible for paying" under section 204 - Whether the insertion of clause (v) in section 204 by Finance Act, 2020 has retrospective effect so as to bring UISPL within the definition of "person responsible for paying" for earlier assessment years. - HELD THAT: - The Tribunal recorded that clause (v) - covering persons authorized to make payments on behalf of a non resident - was inserted with effect from 1.4.2020 and therefore applies from assessment year 2020 21 onwards. The Tribunal observed that the amendment was not enacted with a "for removal of doubts" statement and that treating the amendment as clarificatory and retrospective would render the legislative change redundant. On this basis, and having regard to the fact matrix before it, the Tribunal rejected the Revenue's contention that the later amendment should be read back to earlier years and held that the 2020 amendment could not be given retrospective operation to impose TDS liability on UISPL for the years under appeal. [Paras 3, 10]

The amendment to section 204 by insertion of clause (v) is effective from 1.4.2020 and cannot be applied retrospectively to make UISPL liable for earlier assessment years.

Final Conclusion: The Tribunal, following coordinate bench precedents, dismissed the Revenue's appeal, upheld the CIT(A) order and held that UISPL was not liable as a "person responsible for paying" under section 194C/204 for AY 2019-20; the Finance Act 2020 amendment to section 204 is prospective (effective 1.4.2020) and does not apply to the years under consideration.

Interest under Section 234A for late filing of return - Return filed in response to notice under Section 148 - Assessment reopened under Section 147 treated as regular assessment for Section 234A - Computation period for interest to commence from date of Section 148 notice

Interest under Section 234A for late filing of return - Return filed in response to notice under Section 148 - Assessment reopened under Section 147 treated as regular assessment for Section 234A - Computation period for interest to commence from date of Section 148 notice - Whether interest under Section 234A is leviable where the return is filed in response to a notice under Section 148 after reopening under Section 147, and from which date such interest is to be computed. - HELD THAT: - The Tribunal noted that Section 234A is mandatory in its language when a return is furnished after the due date or not furnished under Section 139(1) or (4), and that Explanation 3 to Section 234A treats an assessment made for the first time under Section 147 as a regular assessment for the purposes of Section 234A. However, having considered precedent relied upon by the appellant, the Tribunal held that where a belated return could not lawfully have been filed before issuance of the Section 148 notice, the Appropriate period for charging interest should be confined and interest should be charged from the date of the notice under Section 148. Applying this principle to the facts, the Tribunal concluded that the CIT(A) was not justified in levying Section 234A interest from the original due date under Section 139; instead the interest liability must be computed from the date of issuance of the Section 148 notice. [Paras 7, 8]

Partly allow; Section 234A interest is leviable but shall be computed from the date of the notice issued under Section 148 rather than from the original due date under Section 139.

Final Conclusion: The appeal is partly allowed: interest under Section 234A is confirmed as leviable, but the period for which interest is chargeable is limited to the period commencing from the date of the notice under Section 148; consequential adjustment to interest shall follow.

Classification of excess stock as unexplained investment under 69B - taxation of unexplained investment at special rates under 115BBE - assessment of surrendered excess stock as business income - mixed stock doctrine - indistinguishable/unidentifiable surplus stock treated as part of business stock - onus on Assessing Officer to disprove assessee's explanation regarding source - binding effect of coordinate/jurisdictional High Court precedents

Classification of excess stock as unexplained investment under 69B - taxation of unexplained investment at special rates under 115BBE - assessment of surrendered excess stock as business income - mixed stock doctrine - indistinguishable/unidentifiable surplus stock treated as part of business stock - onus on Assessing Officer to disprove assessee's explanation regarding source - Whether the excess stock of Rs.5.08 crores detected on survey ought to be treated as unexplained investment assessable under section 69B and taxed under section 115BBE or as business income under the head profits and gains of business. - HELD THAT: - The Tribunal found as undisputed facts that a survey under section 133A revealed excess physical stock valued at Rs.5.08 crores, and the managing partner admitted the excess and offered the amount as business income for the year, furnishing no further documentary proof. Section 69B applies where the assessee either offers no explanation or the Assessing Officer finds the explanation unsatisfactory. Here the assessee explained that the surplus formed part of mixed business stock and arose from current-year business receipts which were ploughed back into stock; that explanation was not disproved by the AO. The Tribunal accepted that mixed stock lacking separate physical identity is capable of representing business income and relied on precedents holding that, where a clear nexus exists between the excess and the regular business stock, the primary attempt should be to treat the amount as undeclared business receipt rather than as an independent unexplained investment. The AO and the CIT(A) proceeded to treat the amount as unexplained investment and apply section 115BBE without establishing that the assessee's explanation was implausible or disproved; the Tribunal held that in such circumstances the AO ought to have accepted the plausible explanation and assessed the amount under business income. Distinguishing the Madras High Court authority relied upon by the Revenue, the Tribunal observed that the facts here show the surplus was mixed with regular stock and no alternative source or separate assets were found, warranting assessment as business income. [Paras 10, 11, 12, 13, 16]

The Tribunal set aside the CIT(A)'s order and directed assessment of the additional income offered towards excess stock under the head profits and gains of business and profession, not as unexplained investment under section 69B nor taxed under section 115BBE.

Final Conclusion: Appeal allowed: the additional income offered towards excess stock detected on survey is to be assessed as business income (profits and gains of business and profession) and not as unexplained investment under section 69B with tax under section 115BBE; the Assessing Officer is directed to assess accordingly.

Classification of income declared during survey - taxability under section 115BBE - income as business income or income from other sources - survey proceedings under section 133A - applicability of tax amendment effective from 01.04.2017 - remand for fresh adjudication

Classification of income declared during survey - income as business income or income from other sources - taxability under section 115BBE - remand for fresh adjudication - Whether the sum of Rs.4,06,00,000 declared during survey is business income or income from other sources and consequent applicability of section 115BBE - HELD THAT: - The Tribunal recorded that the assessee had declared Rs.4.06 crore during survey proceedings and the Assessing Officer treated the amount as chargeable under section 115BBE. The lower authorities did not make any definitive finding on whether the surrendered amount arose from the assessee's business or from other sources. The assessee maintained that the surrendered amounts (difference in stock, factory construction/renovation, purchase of silver catalyst and flat renovation) represented business income. In the absence of a categorical finding by the Assessing Officer on the nature of the income, and given the specific contention that there was no other business or activity, the Tribunal found it necessary that the question of classification be examined afresh by the Assessing Officer. Consequently the matter was restored to the file of the Assessing Officer with directions to give a categorical finding on whether the declared amount is business income or income from other sources, to afford adequate opportunity of hearing to the assessee and to call for and consider details from the assessee. The Tribunal did not decide on the applicability of section 115BBE or on the effect of the amendment made effective from 01.04.2017, leaving those consequences to be determined after the Assessing Officer's fresh adjudication. [Paras 10]

Issue remanded to the Assessing Officer for fresh adjudication on the nature of the surrendered income, after granting opportunity of hearing and receipt of relevant details from the assessee.

Final Conclusion: The appeal is partly allowed inasmuch as the question whether the declared sum of Rs.4.06 crore is business income or income from other sources is remitted to the Assessing Officer for fresh determination; other contentions stand undetermined and to be considered by the Assessing Officer on remand.

Dependent Agent Permanent Establishment (DAPE) - Attribution of profit to Permanent Establishment - Disallowance under section 40(a)(i) for non-deduction of TDS - Article 5(7) of DTAA - Precedential effect of ITAT and High Court findings

Dependent Agent Permanent Establishment (DAPE) - Attribution of profit to Permanent Establishment - Disallowance under section 40(a)(i) for non-deduction of TDS - Article 5(7) of DTAA - Precedential effect of ITAT and High Court findings - Validity of deletion of disallowance under section 40(a)(i) on account of non-deduction of TDS where AO treated Mitsui India as Dependent Agent PE of Mitsui Japan and attributed profit to the Indian PE. - HELD THAT: - The Tribunal noted that the Assessing Officer's disallowance rested on the AO's conclusion in Mitsui Japan's assessment that 50% of gross profit was attributable to an Indian PE and that Mitsui India was a Dependent Agent PE. The CIT(A) relied upon appellate findings in the Mitsui Japan proceedings (including the ITAT decision for AY 2005-06 and subsequent orders of the Delhi High Court) which held that Mitsui India does not constitute a Dependent Agent PE under Article 5(7) of the India-Japan DTAA and accordingly there is no basis to attribute profit of Mitsui Japan to Mitsui India. Having regard to those precedents, the CIT(A) concluded that there was no question of attribution of profit to the appellant and hence no obligation on the appellant to deduct TDS resulting in the erroneous disallowance under section 40(a)(i). The Tribunal, following the ITAT/High Court precedents relied upon by the assessee and noting that the Revenue did not press contrary substantial questions of law, found no infirmity in the CIT(A)'s reasoning and outcome. [Paras 9, 10]

The deletion of the disallowance under section 40(a)(i) is upheld and the Revenue's appeal is dismissed.

Final Conclusion: Following earlier appellate findings that Mitsui India is not a Dependent Agent PE of Mitsui Japan and that no profit is attributable to an Indian PE, the Tribunal upheld the CIT(A)'s deletion of the section 40(a)(i) disallowance for AY 2009-10 and dismissed the Revenue's appeal.

Restoration to Assessing Officer for fresh adjudication - opportunity of being heard - custodial incapacity of company's officers as ground for restoration - condonation of delay - common disposal of appeals by way of lead matters

Custodial incapacity of company's officers as ground for restoration - opportunity of being heard - restoration to Assessing Officer for fresh adjudication - Whether the impugned orders should be set aside and the matters restored to the file of the Assessing Officer for fresh adjudication after giving the assessee opportunity to produce relevant material - HELD THAT: - The Tribunal found on the basis of the record, including a jail certificate and correspondence, that the company's principal officers were in custody between 12/02/2016 and 23/10/2018 and, as a result, the assessee could not prosecute the proceedings with the relevant books and vouchers. The Tribunal noted that Coordinate Benches in identical group cases had set aside orders and restored matters to the Assessing Officer to afford the assessee an opportunity to place material before the revenue. Having regard to these peculiar facts and in the interest of justice, the Tribunal held that the impugned orders should be set aside and the matters restored to the Assessing Officer for fresh adjudication after giving the assessee an opportunity of being heard and to produce all relevant material in its custody. [Paras 7, 8, 9]

Impugned orders set aside and matters restored to the Assessing Officer for fresh adjudication with direction to give the assessee an opportunity to be heard and to produce relevant material

Condonation of delay - common disposal of appeals by way of lead matters - Whether delay in filing certain appeals ought to be condoned and lead matters may be taken for common disposal - HELD THAT: - The assessee explained that appeals for assessment years 2009-10, 2010-11 and 2015-16 were delayed because persons responsible for the company's affairs were in custody; the Revenue did not oppose condonation. Recording the concession, the Tribunal condoned the delay and proceeded to hear the appeals on merits, selecting the assessment year 2009-10 appeals as lead matters for common disposal of similar issues across years. [Paras 1]

Delay condoned in respect of the specified appeals and lead matters taken up for common disposal

Common disposal of appeals by way of lead matters - restoration to Assessing Officer for fresh adjudication - Disposition of appeals for the remaining assessment years in view of the decision in the lead matters - HELD THAT: - The Tribunal held that the facts and contentions in the remaining assessment years were identical to the lead matters. Consequently, its findings in the lead appeals apply, mutatis mutandis, to all other years. Where the Revenue alone had challenged specific directions of the CIT(A) for particular years, those issues were covered by the lead decision. Accordingly, all appeals for the remaining assessment years were treated as allowed for statistical purposes and the matters restored as directed in the lead appeals. [Paras 10]

Findings in the lead appeals applied to remaining years; those appeals treated as allowed for statistical purposes and disposed of in accordance with the lead order

Final Conclusion: The Tribunal set aside the impugned appellate orders and restored the matters to the Assessing Officer for fresh adjudication after affording the assessee an opportunity to be heard and to produce relevant material; delay in filing certain appeals was condoned and the decision in the lead matters (AY 2009-10) was applied, mutatis mutandis, to the other assessment years, which were disposed of for statistical purposes.

Refund under Notification No.102/2007 - scheme of exemption by way of refund - option to avail exemption under Notification No.29/2010 - reassessment under Section 27 of the Customs Act, 1962 - no requirement of reassessment where assessment is in order - inapplicability of Priya Blue principle to refund schemes requiring prior payment

Refund under Notification No.102/2007 - scheme of exemption by way of refund - option to avail exemption under Notification No.29/2010 - reassessment under Section 27 of the Customs Act, 1962 - no requirement of reassessment where assessment is in order - Whether reassessment was required before sanctioning refund under Notification No.102/2007 in respect of imports eligible for exemption under Notification No.29/2010 where the importer paid CVD and filed refund claim - HELD THAT: - The Tribunal held that Notification No.102/2007 implements a refund scheme that operates only after payment of duty; one condition for claiming refund under that notification is that the importer pays CVD at the time of import. Where assessment is in order and duty has been paid, the scheme contemplates sanction of refund on fulfillment of its conditions and does not mandate prior reassessment of the bills of entry. Although the importer may have been eligible to import duty-free under Notification No.29/2010, it was his option to avail that exemption at import; having chosen not to, and having paid CVD, he was entitled to pursue refund under the refund-notification. The decision in Priya Blue (and the Tribunal decision relied upon by the Revenue) was held distinguishable because those authorities addressed circumstances where reassessment was relevant to correct an incorrect assessment or where the exemption should have been applied at import, whereas here the statutory refund mechanism expressly contemplates post-payment refund without a prerequisite of reassessment. For these reasons the Commissioner (Appeals) was correct in directing sanction of the refund and the Department's plea for requiring reassessment was rejected. [Paras 9, 11, 12, 13]

Reassessment was not required and the refund claim under Notification No.102/2007 was rightly allowed by the Commissioner (Appeals).

Final Conclusion: The appeal filed by the department is dismissed and the order of the Commissioner (Appeals) directing sanction of the refund under Notification No.102/2007 is sustained.

Refund of Special Additional Duty - incomplete refund claim - time-barred refund claim - Deficiency Memo issued at scrutiny - ex parte Orders-in-Original - merger of orders on appeal - applicability of Sony India decision - opportunity to remove discrepancies - remand for fresh consideration

Time-barred refund claim - applicability of Sony India decision - Whether the refund claims were barred by time. - HELD THAT: - The Tribunal had earlier set aside the departmental finding of time-bar by relying on the decision in Sony India (as recorded in the earlier Final Order No.51906-51908/2021). The Department had maintained before this Bench that the Original Authorities had found the claims time-barred at initial scrutiny, but this Tribunal had already held that the claims were not barred by time. On the present remand, no new material was produced to re-establish the time-bar. The Tribunal accordingly did not disturb its earlier conclusion that the claims were not barred by time. [Paras 5, 8]

Findings of time-bar were already set aside by the Tribunal relying on Sony India and are not reinstated on remand.

Incomplete refund claim - Deficiency Memo issued at scrutiny - ex parte Orders-in-Original - opportunity to remove discrepancies - merger of orders on appeal - Whether the refund claims were incomplete for non-removal of discrepancies and liable to be rejected on that ground. - HELD THAT: - The Tribunal recorded that a Deficiency Memo was issued at the initial scrutiny on 09.04.2018 identifying discrepancies in the refund claim. The appellants failed to reply to the Deficiency Memo, to the subsequent memo dated 03.07.2018, to the Show Cause Notice dated 27.07.2018, and did not appear at personal hearings before the Original Adjudicating Authorities. Consequently, the Original Authorities passed ex parte Orders-in-Original rejecting the refund claims as incomplete; those orders were upheld by the Commissioner (Appeals), resulting in merger. On remand the appellants produced no documents to show that the deficiencies had been removed or that the Deficiency Memo was wrongly issued, and only reiterated earlier submissions and reliance on notifications. In view of the continuing non-removal of deficiencies and absence of new material on remand, the Tribunal maintained the finding that the refund claims were incomplete and liable to be rejected. [Paras 6, 7, 8, 9, 11]

Findings that the refund claims were incomplete for non-removal of discrepancies are confirmed and the refund claims are rejected on that ground.

Final Conclusion: On remand the Tribunal, while reiterating its earlier conclusion that the claims are not time-barred, finds that the claims remain incomplete because the Deficiency Memo issued at scrutiny was never complied with and the deficiencies were not cured; accordingly the three appeals by the importer are dismissed and the earlier Final Order is maintained.

Right of inspection by shareholder and director - Inspection as statutory right - Statutory entitlement to inspect registers, minutes and books of account - Tribunal's power to direct inspection and to maintain status quo

Right of inspection by shareholder and director - Statutory entitlement to inspect registers, minutes and books of account - Tribunal's power to direct inspection - Impugned order directing inspection of original statutory records by the respondent was not vitiated and required no interference. - HELD THAT: - The Appellate Tribunal examined the Tribunal's order permitting the respondent (a shareholder and director) to inspect original statutory records and to take assistance of professionals. Having considered the statutory scheme embodied in the relevant provisions (including the rights of inspection under the provisions reproduced in the order) the Tribunal concluded that a shareholder/director possesses a statutory right of inspection which cannot be denied by the company. It was noted that the main petition under Sections 241/242 was pending and that the Tribunal had already directed maintenance of status quo as to directorship and shareholding; therefore the appellate forum refrained from revisiting the factual allegations of oppression and mismanagement. The Appellate Tribunal found no error in the Tribunal's exercise of power to direct inspection and to fix modalities for inspection, and observed that the precedent relied upon by the appellants was not directly on point to displace the statutory right upheld by the Tribunal. [Paras 19, 20, 21]

The impugned order permitting inspection of statutory records is affirmed and the appeal is dismissed.

Final Conclusion: The appeal is dismissed and the Tribunal's order dated 20.02.2019, directing that the respondent be permitted to inspect the company's statutory records (with reasonable modalities and assistance), is affirmed; no costs.

Doctrine of merger of judgments - maintainability of contempt proceedings - scope of power to modify a judgment upheld on appeal - liberty to agitate subsequent events before competent forum - jurisdiction of a tribunal to initiate contempt proceedings

Maintainability of contempt proceedings - jurisdiction of a tribunal to initiate contempt proceedings - Whether the National Company Law Tribunal was correct in issuing notice in the contempt petition and in proceeding with CA No.1207/2019 alleging non compliance of the CLB order dated 01.07.2005. - HELD THAT: - The Tribunal examined the procedural posture from the CLB order dated 01.07.2005 through High Court and Supreme Court litigation. The Appellants contended that the CLB order stood merged in the final order of the Hon'ble Supreme Court dated 09.07.2019 and that contempt, if any, would pertain to the final order, not to the NCLT. The Appellate Tribunal observed that the CLB order had been upheld up to the Supreme Court and that the observation in the Supreme Court's order permitting the appellant to agitate subsequent events before the concerned forum did not operate as a direction empowering the Tribunal to set aside or cancel an order already upheld by the Supreme Court. On this basis the Appellate Tribunal held that the NCLT properly treated the CLB order as binding and that initiation of contempt proceedings and issuance of notice by the NCLT could not be faulted in the facts of the case. The Tribunal therefore found no infirmity in the NCLT's action in CA No.1207/2019 and affirmed the impugned order. [Paras 29, 30]

Affirmed the NCLT's issuance of notice in the contempt proceedings; the initiation of contempt before the NCLT was not set aside.

Scope of power to modify a judgment upheld on appeal - liberty to agitate subsequent events before competent forum - Whether the NCLT was correct in dismissing CA No.785/2019 seeking modification of the CLB order dated 01.07.2005 in light of subsequent events and the Supreme Court's order dated 09.07.2019. - HELD THAT: - The Appellants relied on subsequent financial turnaround and on the Supreme Court's observation that it would be open to them to agitate subsequent events before the appropriate forum. The Tribunal analysed the Supreme Court's order and concluded that the observation permitting agitation of subsequent events did not amount to a direction empowering the NCLT to modify or cancel an order that had been upheld by the Supreme Court. Having regard to the finality of the orders up to the Supreme Court and the role of the NCLT, the Appellate Tribunal found that the NCLT was not empowered to modify or cancel the CLB order in the manner sought and therefore rightly dismissed the modification application. [Paras 29, 30]

Affirmed the NCLT's dismissal of the modification application; the Supreme Court's grant of liberty to agitate subsequent events did not authorize modification of the CLB order which was upheld on appeal.

Liberty to agitate subsequent events before competent forum - procedure on remand - Whether the matter requires further consideration by the NCLT in light of subsequent events placed on record by the Appellants. - HELD THAT: - While the Appellate Tribunal affirmed the impugned NCLT order, it recorded that the Supreme Court had permitted the Appellants to place subsequent developments before the appropriate forum. In consequence, the Tribunal directed that the Appellants in Company Appeal (AT) No.04 of 2022 may appear before the NCLT, Chandigarh and file their reply affidavit in the contempt proceedings bringing to the notice of the NCLT the subsequent developments and events. The NCLT was tasked to consider those submissions and pass appropriate orders in accordance with law. This effectively entrusted the NCLT to undertake fresh consideration of the subsequent events within the scope permitted by the higher courts and consistent with the finding that the CLB order remains binding unless lawfully modified. [Paras 31]

Appellants directed to file reply before the NCLT and the NCLT to consider subsequent events and pass appropriate orders; the matter is remitted for that purpose.

Final Conclusion: The impugned common order dated 06.10.2021 of the NCLT (in CA Nos. 785/2019 and 1207/2019 in CP No.4/2005) is affirmed and both appeals are dismissed. The Appellants are directed to appear before the NCLT, file their reply affidavit in the contempt application bringing on record subsequent developments as permitted by the Supreme Court, and the NCLT is to consider those submissions and pass appropriate orders in accordance with law.

Person aggrieved - locus standi of a non party secured financial creditor - leave to prefer an appeal under Section 61(1) IBC - effect of approval of resolution plan - resolution applicant takes over with a clean slate - maintainability of appeal by a creditor not arrayed as party - impleadment / joinder of a proposed party

Person aggrieved - locus standi of a non party secured financial creditor - leave to prefer an appeal under Section 61(1) IBC - IA No. 696 of 2022 (seeking leave to prefer Comp. App (AT)(CH)(Ins.) No. 325 of 2022) filed by Asset Reconstruction Company (India) Limited is not maintainable - HELD THAT: - The Tribunal held that although the applicant was a secured financial creditor of the corporate debtors, it was not arrayed as a party in the underlying IA before the Adjudicating Authority and did not acquire locus to challenge the resolution plan after approval. The resolution applicant had taken over the corporate debtor with a "clean slate" upon approval of the resolution plan, and the impugned order did not, in the Tribunal's view, take away any legal rights of the applicant. The Tribunal also observed that RISPL itself had preferred an appeal, and the controlling stakeholder could not advance a case different from that of RISPL; further, the leave application was filed with inordinate delay. On these bases the leave application was held ex facie not maintainable and dismissed. [Paras 22, 23, 24, 25]

IA No. 696 of 2022 dismissed; leave to prefer the appeal refused

Impleadment / joinder of a proposed party - maintainability of impleadment where principal leave application is dismissed - I.A. No. 1107 of 2022 (application by L & T Infra Investment Partners to be impleaded) is not entertained and is dismissed as not maintainable - HELD THAT: - The Tribunal declined to entertain the impleadment application because the primary IA seeking leave to file the appeal was dismissed. In consequence of the dismissal of IA No. 696, the proposed impleadment became otiose and the application was dismissed as not maintainable.

I.A. No. 1107 of 2022 dismissed (not entertained)

Maintainability of appeal by a creditor not arrayed as party - approval of resolution plan - effect on subsequent challenges - Comp. App (AT)(CH)(Ins.) No. 325 of 2022 (the main appeal) is not entertained and is rejected - HELD THAT: - In view of the dismissal of the leave application and the finding that the applicant lacked locus to assail the approved resolution process/plan, the Tribunal did not admit the main appeal. Connected interlocutory applications were closed.

Main Company Appeal not entertained and rejected; connected interlocutory applications closed

Final Conclusion: The application for leave to prefer the company appeal by the Asset Reconstruction Company was dismissed as not maintainable; consequentially the impleadment application was dismissed and the main company appeal was not entertained and rejected. No costs.

Proceeds of crime - dependency of the offence of money laundering on a scheduled offence - effect of compounding under Section 320 Cr.P.C. as acquittal - entitlement to release of property attached under PMLA upon final discharge/acquittal - Prevention of Money Laundering (Restoration of Property) Rules, 2016 - Rule 3 A

Effect of compounding under Section 320 Cr.P.C. as acquittal - dependency of the offence of money laundering on a scheduled offence - proceeds of crime - Whether closure of the predicate criminal case by compounding (Lok Adalat) which results in acquittal eliminates the scheduled offence and thereby precludes continuation of proceedings under PMLA including maintenance of attachment of properties - HELD THAT: - The Court held that compounding under Section 320 Cr.P.C. operates as an acquittal of the accused (sub s. (8)) and therefore, where the predicate offence has been finally closed by discharge/acquittal upon compounding, there is no scheduled offence against the person. The definition of "proceeds of crime" in Section 2(1)(u) of PMLA requires that property be derived or obtained "as a result of" criminal activity relating to a scheduled offence; consequently the offence under Section 3 of PMLA is dependent on illegal gain arising from criminal activity connected to a scheduled offence. Relying on the analysis in Vijay Madanlal Choudhary, the Court reiterated that authorities under PMLA cannot continue action on a notional basis once the scheduled offence is finally disposed of by acquittal or discharge, and in such circumstances there can be no continuing offence of money laundering in relation to the property linked to that scheduled offence. Applying these principles to the facts, the Court found that upon closure of C.C.No.319 of 2010 by compounding and discharge of appellant No.1, there was no predicate scheduled offence and hence no basis for treating the attached properties as proceeds of crime or for maintaining their attachment under PMLA. [Paras 18, 21, 25, 28, 31]

Compounding in the criminal case operated as an acquittal and, in the absence of any scheduled offence or proceeds of crime, continuation of attachment under PMLA was not justified.

Prevention of Money Laundering (Restoration of Property) Rules, 2016 - Rule 3 A - entitlement to release of property attached under PMLA upon final discharge/acquittal - Whether the appellants were properly relegated to seek relief under Rule 3 A of the Restoration Rules or were entitled to direct release of the attached properties - HELD THAT: - The Court examined Rule 3 A and observed that the rule is principally designed to facilitate restoration of property to claimants who lost property as a consequence of predicate offences and to regulate restoration during trial. However, where the predicate offence itself has been finally closed by compounding/acquittal, Rule 3 A would not be the appropriate basis to maintain attachment or to deny release. Given the legal conclusion that there was no scheduled offence or proceeds of crime after the acquittal, the learned Single Judge erred in declining relief and relegating the appellants to the designated court under Rule 3 A. The Court therefore directed release of the properties rather than requiring the appellants to pursue Rule 3 A proceedings. [Paras 22, 23, 31, 32]

Relegation to Rule 3 A was inappropriate in the circumstances; the appellants were entitled to release of the attached properties.

Final Conclusion: Writ appeal allowed; order of the Single Judge dated 17.10.2022 set aside and the respondents directed to release the appellants' properties from attachment, with miscellaneous applications closed and no order as to costs.

Business Auxiliary Service - declared service under clause (e) of Section 66E - service tax liability - demand must conform to allegations in the show cause notice

Business Auxiliary Service - service tax liability - Taxability of amounts retained/received by the appellant as Business Auxiliary Service for the period prior to 01.07.2012 - HELD THAT: - The Tribunal applied its precedent in Arpanna Automotives and the earlier decision in the appellant's own matter to conclude that amounts collected in relation to assistance with RTO registration for vehicle purchasers do not fall within the definition of Business Auxiliary Service for the period prior to 01.07.2012. The court accepted that the activity of assisting buyers to obtain statutory registration is not promotion or marketing of third party services and therefore the service tax demand confirmed by the Commissioner for that period was unsustainable. [Paras 10]

Demand under Business Auxiliary Service for the period prior to 01.07.2012 cannot be sustained; the Commissioner was not justified in confirming that demand.

Declared service under clause (e) of Section 66E - service tax liability - demand must conform to allegations in the show cause notice - Whether amounts received by the appellant post 01.07.2012 constituted a declared service or otherwise attracted service tax, and whether the Commissioner could confirm demand on a different allegation than contained in the show cause notices - HELD THAT: - The Tribunal recorded that the Commissioner (Appeals) had held that the amounts billed/received by the appellant post 01.07.2012 did not constitute consideration for a declared service under clause (e) of Section 66E since there was no agreement between the appellant and the payors for an act or forbearance for consideration. The decision of the Commissioner (Appeals) was said to have attained finality and was not controverted. Independently, the Tribunal held that the second and third show cause notices merely referred to the first notice and did not contain a fresh allegation under the statutory provision relied upon by the Commissioner; a demand cannot be confirmed on an allegation other than that contained in the show cause notice. For these reasons the Commissioner was not justified in confirming the demand for the period after 01.07.2012. [Paras 11, 13, 14]

Amount received post 01.07.2012 did not qualify as a declared service and the demand could not be confirmed; further the demand was not competent where it relied on allegations not made in the show cause notices.

Final Conclusion: The impugned order dated 11.01.2017 is set aside; the appeal is allowed and the service tax demands confirmed by the Commissioner for the periods in issue are quashed.

Unjust enrichment - refund of service tax - incidence of tax passed on - credit to Consumer Welfare Fund - retrospective exemption

Unjust enrichment - refund of service tax - incidence of tax passed on - credit to Consumer Welfare Fund - Whether refund of service tax paid by tour operators after retrospective exemption is hit by unjust enrichment and can be credited to the Consumer Welfare Fund - HELD THAT: - The Tribunal held that the question was no longer res-integra in view of its earlier decisions in identical factual situations and that those precedents negatived the assessee's claim. Applying those decisions to the present appeals, the Tribunal found that the appellants had paid service tax in the routine course and, when the levy was retrospectively withdrawn, the incidence of the tax had been passed on. Consequently, the refund sanctioned could not be returned to the appellants but was liable to be appropriated as unjust enrichment and credited to the Consumer Welfare Fund. The Tribunal therefore sustained the findings of the lower authorities that the refunds were liable to be credited to the Consumer Welfare Fund. [Paras 4, 5, 6]

Impugned orders upheld; refund held to be hit by unjust enrichment and crediting to the Consumer Welfare Fund affirmed; appeals dismissed.

Final Conclusion: The Tribunal dismissed the appeals, holding that refunds of service tax paid in the routine course and subsequently retrospectively exempted were hit by unjust enrichment because the incidence had been passed on, and therefore the sanctioned refunds were correctly credited to the Consumer Welfare Fund.

Declared service under Section 66E(e) - service as defined in Section 65B(44) - consideration for toleration of an act - taxability of liquidated damages to service tax - application of precedents on contractual penalty and compensation

Declared service under Section 66E(e) - consideration for toleration of an act - taxability of liquidated damages to service tax - Liquidated damages recovered by the assessee for tolerating delay do not constitute a declared service liable to service tax under Section 66E(e) read with Section 65B(44) and Section 66B. - HELD THAT: - The Tribunal examined whether recovery of liquidated damages/penalty or forfeiture of earnest money could be treated as consideration for an activity of "agreeing to the obligation to refrain from an act, or to tolerate an act or a situation, or to do an act" under the statutory definition of declared services. Reliance was placed on the Tribunal's earlier considered decisions which analysed the scope of the statutory definitions and applied Supreme Court authorities holding that contractual liquidated damages are compensatory or penal provisions to secure performance and are not consideration for a service of toleration unless the agreement specifically contemplates such an activity and a flow of consideration for it. The Tribunal accepted the view that recovery of liquidated damages is not payment for any activity carried out by the recipient to tolerate a breach; rather it is a contractual remedy to safeguard commercial interest and does not evidentially represent a service provided for consideration as envisaged under the Finance Act. Applying those precedents and reasoning, the Tribunal held that the adjudicating authority's conclusion that liquidated damages were taxable as declared service could not be sustained.

Issue answered in favour of the assessee; liquidated damages are not taxable as a declared service.

Final Conclusion: The impugned order is set aside and the appeal is allowed; the demand of service tax on liquidated damages for the period July 2012 to June 2017 is rejected with consequential benefits as per law.

Exemption under Notification No. 14/2004-S.T. relating to Business Auxiliary Service - commission paid to overseas agents characterised as procurement of goods or services - provision of service on behalf of the client - reverse charge liability for business auxiliary services - export promotion activity as incidental or auxiliary to production

Exemption under Notification No. 14/2004-S.T. relating to Business Auxiliary Service - commission paid to overseas agents characterised as procurement of goods or services - provision of service on behalf of the client - Appellant is eligible for exemption under Notification No. 14/2004-S.T. in respect of commission paid to its foreign agents. - HELD THAT: - The Tribunal accepted the appellant's contention, following the ratio in M/s. Texyard International, that taxable services falling within Business Auxiliary Service are exempt when they relate to procurement of goods or services which are inputs for the client, or to provision of service on behalf of the client, or are incidental or auxiliary to those activities. The activities of the foreign agents - booking orders, liaising with customers, coordinating designs and approvals and facilitating sales for export of printed security documents - amount to procurement/provision of services within clauses (a) and (c) of the Notification and are incidental to the appellant's production/export activity. The Adjudicating Authority's conclusion that the agents did not render services covered by the Notification because they did not produce inputs was rejected as inconsistent with the scope of the exemption as interpreted by this Bench. Applying the settled view in Texyard and subsequent decisions following that ratio, the denial of exemption was found unsustainable. [Paras 8, 9, 10, 12, 13]

Denial of exemption under Notification No. 14/2004-S.T. in respect of commission paid to foreign agents set aside; appellant entitled to the exemption.

Final Conclusion: Appeal allowed; Order-in-Original denying exemption under Notification No. 14/2004-S.T. is set aside and the appellant is granted consequential relief in accordance with law.

Mandap keeper service - mandap - temporary occupation for consideration - taxable service - extended period of limitation - penalty and interest

Mandap keeper service - mandap - temporary occupation for consideration - taxable service - The services rendered by the appellant fall within the definition of 'mandap' and constitute 'mandap keeper' services taxable under the Finance Act. - HELD THAT: - The Tribunal applied the statutory definitions: 'mandap' as any immovable property (including furniture, fixtures, light fittings and floor covering) let out for consideration for organising official, social or business functions, and 'mandap keeper' as a person allowing temporary occupation of a mandap for consideration. A CBEC Circular (23.08.2007) treating halls or rooms let out by hotels/restaurants for functions as mandap was noted. The Commissioner relied upon statements of the manager and director, records seized under panchnama describing bills for mandap keeper services, and the appellant's daily receipt and expenditure sheets showing substantial 'other income'. The Tribunal found the appellant's defence that it only provided restaurant services on per-plate basis untenable in view of the categorical admissions and resumed records, and held that the activities constituted letting out of halls/rooms and related services within the definition of mandap keeper service and therefore taxable under section 65(105)(m). [Paras 15, 16, 20]

The demand for service tax on the amounts collected for letting out halls/rooms and related services is confirmed as mandap keeper service.

Reliance on resumed documents - panchnama - Documents seized/resumed under the panchnama and described in Annexure A could be relied upon by the Department in the show cause proceedings. - HELD THAT: - The Commissioner examined Annexure A to the panchnama which described the documents (including bills relating to mandap keeper services and bank statements/payment vouchers) and found that these were relied upon in the show cause notice. The Tribunal accepted that the panchnama and the records resumed thereunder formed a valid evidentiary basis and rejected the appellant's contention that those documents were not relied upon by the Department. [Paras 20]

The reliance on documents resumed under the panchnama is valid and the appellant's objection in this regard is rejected.

Extended period of limitation - suppression of facts - Invocation of the extended period of limitation and imposition of interest and penalty were legally sustainable. - HELD THAT: - The Commissioner concluded that the appellant had suppressed material facts to evade payment of service tax, relying on discrepancies between declared sales in Commercial Tax returns and receipts shown in daily sheets, the undisclosed 'other income', and the statements of the company's representatives. In that factual backdrop the proviso to section 73(1) permitting extended period was held to be correctly invoked; similarly, the imposition of interest and penalty was found not to be illegal. [Paras 21]

Extended limitation, interest and penalty were rightly invoked and imposed.

Final Conclusion: The appeal is dismissed; the demand of service tax characterized as mandap keeper service for 2008-2009 to 2011-2012, together with interest and penalty, is sustained.

Interpretation of 'permanently' in the 4th proviso to Rule 9 of the Pan Masala Packing Machines Rules - Pro-rata duty liability on change of retail sale price during a month - Effect of non-filing of declaration under Rule 13(5) on entitlement to pro-rata duty - Liability to pay duty on highest retail sale price where an operating machine produces pouches of different retail sale prices in a month - Imposition of penalty under Section 11AC where demand is unsustainable

Interpretation of 'permanently' in the 4th proviso to Rule 9 of the Pan Masala Packing Machines Rules - Pro-rata duty liability on change of retail sale price during a month - Whether the appellant complied with the condition of the 4th proviso to Rule 9 so as to be entitled to pro rata recalculation of duty for January 2012 and April 2012. - HELD THAT: - The Tribunal held that the word 'permanently' in the 4th proviso to Rule 9 is to be read in the context of a particular month and does not require the change to be irreversible for all future months. The proviso permits a manufacturer who permanently discontinues or commences a retail sale price during a month to have duty recalculated pro rata for that month. 'Permanently' therefore means that within the relevant month the discontinuation or commencement occurs once and is not altered again in that same month. Applying this construction, the appellant changed retail sale prices only once in January 2012 and once in April 2012; accordingly the condition in the proviso was satisfied for those months and the adjudicating authority's contrary interpretation (that 'permanently' meant an irrevocable forever change) was rejected as leading to absurd commercial consequences and inconsistent with the monthly duty framework. [Paras 5, 6, 7, 8]

The appellant complied with the 4th proviso to Rule 9 for January 2012 and April 2012 and is entitled to pro rata duty recalculation for those months.

Effect of non-filing of declaration under Rule 13(5) on entitlement to pro-rata duty - Whether failure to file the declaration under Rule 13(5) (showing closing stock) disentitles the appellant to pro rata duty benefit under the 4th proviso to Rule 9. - HELD THAT: - The Tribunal observed that mere non filing of the procedural declaration under Rule 13(5) cannot, by itself, defeat the substantive entitlement to pro rata duty where there is no allegation or finding of manipulation of stock. The department did not dispute the correctness of the appellant's recorded stock nor contend that stocks were manipulated. In absence of such adverse finding, procedural lapse alone cannot be a ground to deny the benefit of pro rata calculation expressly provided in the 4th proviso to Rule 9. [Paras 9]

Non-filing of the declaration under Rule 13(5) does not disentitle the appellant to the pro rata duty benefit where there is no finding of stock manipulation; the benefit cannot be denied for that procedural lapse alone.

Liability to pay duty on highest retail sale price where an operating machine produces pouches of different retail sale prices in a month - Interaction between proviso to Rule 8 and proviso to Rule 9 - Whether duty should, alternatively, have been calculated on the basis of the highest retail sale price for the whole month under the first proviso to Rule 8. - HELD THAT: - The Tribunal noted that the first proviso to Rule 8 (as amended) provides that where an operating machine produces pouches of different retail sale prices during a month, duty liability may be determined on the basis of the highest retail sale price for the whole month. While the appellant argued that, at most, duty could be demanded on that basis, the Tribunal expressly decided the case on the basis of the 4th proviso to Rule 9 and therefore declined to give a conclusive adjudication on the alternative contention regarding duty calculation under the first proviso to Rule 8. [Paras 10]

No conclusive finding on calculation of duty under the first proviso to Rule 8; the Tribunal reserved that issue because the matter was decided on the basis of the 4th proviso to Rule 9.

Imposition of penalty under Section 11AC where demand is unsustainable - Whether penalty under Section 11AC can be imposed where the confirmed duty demand is not sustainable. - HELD THAT: - The Tribunal held that since the differential duty demand itself was not sustainable and was set aside on merits, there was no basis for imposing penalty under Section 11AC. Penalty cannot survive where the underlying demand is vacated. [Paras 11]

Revenue's appeal for imposition of penalty under Section 11AC is without substance and is dismissed because the confirmed duty demand is not sustainable.

Final Conclusion: The differential duty confirmed by the adjudicating authority for January 2012 and April 2012 is set aside: the appellant was entitled to pro rata recalculation under the 4th proviso to Rule 9 for the months in question; failure to file Rule 13(5) declaration did not, absent any finding of stock manipulation, defeat that entitlement; no conclusive determination was made on alternative calculation under the first proviso to Rule 8; consequently the Revenue's cross appeal for penalty under Section 11AC fails and is dismissed.

Validity of Rule 8(3A) of Rule 8 (Central Excise rules) - Permissibility of utilizing Cenvat Credit during period of default - Revenue bound by High Court declarations and parity of relief - Forfeiture of monthly payment facility as consequence of default

Validity of Rule 8(3A) of Rule 8 (Central Excise rules) - Permissibility of utilizing Cenvat Credit during period of default - Revenue bound by High Court declarations and parity of relief - Whether the demand and disallowance of utilization of Cenvat credit for the impugned period under Rule 8(3A) is sustainable when that provision has been declared ultra vires by High Courts. - HELD THAT: - The Tribunal held that the controversy is no longer res integra in view of authoritative High Court decisions which have declared the impugned expression in Rule 8(3A) invalid. The decision in Indsur Global Ltd. and the subsequent Calcutta High Court decision in Goyal MG Gases Pvt. Ltd. establish that the restriction on utilizing Cenvat credit during default is ultra vires; those declarations are not stayed by the Supreme Court. Revenue cannot take a contrary stand and deny parity to the assessee. Since the demand in the present appeal has been raised solely for contravention of the provision declared invalid, the demand cannot be sustained and must be set aside. The Tribunal therefore allowed the appeal on this ground and granted consequential relief. [Paras 10, 11, 12, 13, 14]

Demand raised for contravention of Rule 8(3A) is unsustainable as the provision has been declared ultra vires; impugned order set aside and appeal allowed with consequential relief.

Final Conclusion: The appeal is allowed: the demand and disallowance founded on Rule 8(3A) - a provision declared ultra vires by relevant High Court decisions - cannot be sustained; the impugned order is set aside and consequential relief is granted.

Entitlement to 'C' forms for inter-State purchases - concessional rate of tax against declaration in 'C' forms - registration under the Central Sales Tax Act for purchasing dealers - continued operability of CST provisions for specified six commodities post-GST - right to purchase at concessional rate is in rem - requirement to permit online downloading of 'C' forms - binding effect of High Court and Supreme Court decisions

Entitlement to 'C' forms for inter-State purchases - concessional rate of tax against declaration in 'C' forms - registration under the Central Sales Tax Act for purchasing dealers - continued operability of CST provisions for specified six commodities post-GST - Petitioner is entitled to obtain and use 'C' forms for inter-State purchase of specified goods (including High Speed Diesel) to claim concessional rate of tax in accordance with the law and binding precedents. - HELD THAT: - The Court applied and followed the decision in M/s Ramco Cements Ltd. and subsequent Division Bench and Supreme Court orders which held that the right of purchasing dealers to claim concessional rate by production of declaration in 'C' forms continues notwithstanding amendments and the advent of GST. A conjoint reading of the relevant provisions of the Central Sales Tax Act shows that registration and rights under the Act for purchasing dealers are independent and not conditioned solely on being a selling dealer; Section 7(2) was construed as granting an independent right to registration to dealers and Section 8(3)(b) preserving entitlement to concessional rate was noted as unamended. The Court held that the uniform view of multiple High Courts, its own precedents and the Supreme Court's dismissal of Special Leave Petitions establish that the petitioner and similarly placed dealers are entitled to the benefit of 'C' forms for inter-State purchases in accordance with law.

Entitlement to concessional rate by use of 'C' forms for inter-State purchases is upheld and shall be made available to the petitioner and other similarly placed dealers.

Right to purchase at concessional rate is in rem - requirement to permit online downloading of 'C' forms - binding effect of High Court and Supreme Court decisions - Assessing Authorities in Tamil Nadu cannot restrict application of the Court's decision to parties to the writ; the department must allow all eligible dealers to exercise the right and facilitate online downloading of 'C' forms. - HELD THAT: - The Court rejected the administrative practice of limiting the benefit to parties to the writ or blocking online access. It observed that the decisions are in rem and thus applicable to all dealers who legitimately claim the benefit under law. Given the Division Bench and Supreme Court confirmations, the State was directed to apply the rationale of those decisions to all pending assessments and to permit online downloading of declaration in 'C' forms. The Circular impeding use of 'C' forms was effectively set aside by earlier orders relied upon and the State was required to act in terms of those binding decisions.

The department must apply the Court's rulings uniformly to all eligible dealers and permit online downloading of 'C' forms; administrative restrictions limiting the benefit to parties are impermissible.

Final Conclusion: Writ petition allowed. In view of binding High Court and Supreme Court decisions, the petitioner (and similarly placed dealers) is entitled to use 'C' forms for inter State purchases to claim concessional tax; the State/authorities must apply that rationale to all eligible dealers and enable online downloading of 'C' forms.

Re-assessment of Basic Tax on land following an enabling order under the Kerala Land Utilisation Order, 1967 - duty of revenue authorities to make fresh assessment and update the Basic Tax Register - verification of veracity and genuineness of conversion/permission order before reassessment - administrative consideration of Form 5 application for removal from Land Data Bank prior to reassessment

Re-assessment of Basic Tax on land following an enabling order under the Kerala Land Utilisation Order, 1967 - duty of revenue authorities to make fresh assessment and update the Basic Tax Register - Reassessment of the rate of Basic Tax and updation of entries in the Basic Tax Register where a statutory order under the Kerala Land Utilisation Order, 1967 permits change of land use. - HELD THAT: - The Court applied its precedents holding that where an enabling order under Rule 6(2)/Clause 6 of the Kerala Land Utilisation Order, 1967 permits conversion of land, prior entries in the Basic Tax Register describing the land as paddy or Nilam become superfluous and the competent revenue officials are obliged to make a fresh assessment under the Kerala Land Tax Act, 1961. Having found that the petitioners produced such a permission, the competent authority is bound to reassess the property and make necessary entries in the Basic Tax Register, subject to verification of the permission's authenticity. The obligation to reassess flows from the change in the statutory characterization of the land and is not negated by the existence of earlier entries in the register.

The competent revenue authority (Tahsildar) is required to reassess the rate of Basic Tax and update the Basic Tax Register where conversion has been statutorily permitted, after verifying the permission's genuineness.

Verification of veracity and genuineness of conversion/permission order before reassessment - administrative consideration of Form 5 application for removal from Land Data Bank prior to reassessment - Procedure to be followed before reassessment where the land is included in the Land Data Bank and the conversion order dates from 2014: consideration of a Form 5 application to remove the land from the Data Bank and verification of the permission before the Tahsildar acts on the Form A application. - HELD THAT: - The Court observed that the permission under the Kerala Land Utilisation Order, 1967 which predates the present assessment must be verified for veracity and genuineness before re assessment under the Kerala Land Tax Act is undertaken. Because the land is recorded in the Land Data Bank, the petitioners were directed to have their Form 5 application for removal from the Data Bank considered by the Revenue Divisional Officer within a specified short time frame; contingent on that outcome, the Tahsildar was directed to consider the petitioners' Form A application for reassessment. The directions impose a sequential, ministerial process-first administrative determination on the Data Bank status and verification of the conversion permission, and thereafter reassessment and register updation by the Tahsildar.

The matter was remanded for administrative action: the RDO to decide the Form 5 Data Bank removal application within one month and, depending on that outcome and after verifying the permission, the Tahsildar to decide the Form A reassessment application within a further month.

Final Conclusion: The writ petition was allowed to the extent that the revenue authorities were directed to proceed sequentially: the Revenue Divisional Officer to decide the Form 5 application for removal from the Land Data Bank within one month, and thereafter the Tahsildar, after verification of the conversion permission, to consider and decide the Form A application for reassessment and make necessary entries in the Basic Tax Register within a further month.

Validity of auction where reserve price and valuation not disclosed - requirement of valuation report to fix reserve price - compliance with Asset Sale Committee (ASC) guidelines as condition precedent to confirmation of bid - effect of solitary bid and absence of competitive bidding on public auction - locus of persons residing on property to challenge auction proceedings - power to set aside confirmed sale for procedural infirmity and to order fresh sale to secure optimum realizable value

Requirement of valuation report to fix reserve price - validity of auction where reserve price and valuation not disclosed - Legality of the auction process in the absence of a valuation report from the approved valuer and without disclosure of a reserve price in the public notice. - HELD THAT: - The Operating Agency was under an obligation to obtain a valuation report from an approved valuer and to arrive at and disclose the reserve price before inviting bids. The record did not show any valuation report nor disclosure of a reserve price when the public notice was issued on 24th May, 2004. The Court concluded that the procedure adopted by the Operating Agency was defective at its inception and that this procedural defect vitiated the auction process. The AAIFR's confirmation of the sale without regard to the absence of valuation and reserve price was therefore not sustainable. [Paras 22, 23, 35]

The auction was procedurally defective for lack of valuation and non-disclosure of reserve price; confirmation of the sale on that basis was unsustainable.

Compliance with Asset Sale Committee (ASC) guidelines as condition precedent to confirmation of bid - effect of solitary bid and absence of competitive bidding on public auction - Whether the AAIFR was justified in confirming the solitary bid despite the bidder's failure to comply with ASC conditions (bank guarantee and staged payment) and despite absence of competitive bidding. - HELD THAT: - The ASC guidelines required the successful purchaser to furnish a bank guarantee within 15 days and to pay the balance in specified installments. The solitary bidder did not furnish the bank guarantee nor deposit any installment before the BIFR's order; competitive bidding was also absent. The BIFR declined to confirm the sale for these reasons. The AAIFR erred in setting aside the BIFR order without taking into account the twin factors of non-compliance with ASC conditions and the lack of competitive bidding which is essential to secure the optimum realizable value in a public auction. The High Court correctly restored the BIFR order for these reasons. [Paras 29, 30, 31, 32, 35]

AAIFR's confirmation of the solitary bid was set aside; the High Court rightly restored the BIFR order because the bidder failed to comply with ASC conditions and there was no competitive bidding.

Locus of persons residing on property to challenge auction proceedings - Whether residents of the staff colony who did not participate in the bidding process had locus to challenge the confirmation of the auction sale. - HELD THAT: - Although the residents had not submitted sealed bids, they were directly interested in the property as long standing occupants and were not strangers to the proceedings. The question of locus was not raised before the High Court and, on merits, the residents could invoke constitutional jurisdiction under Article 226 to challenge the confirmation of the sale. The Court therefore did not sustain any objection to their standing to seek redress. [Paras 33, 34]

The residents had locus to challenge the AAIFR's confirmation of the sale and were not precluded from invoking the High Court's jurisdiction.

Power to set aside confirmed sale for procedural infirmity and to order fresh sale to secure optimum realizable value - Relief to be granted upon finding procedural infirmity: refund of deposited amounts and direction to the Official Liquidator to initiate steps to fetch optimum value. - HELD THAT: - Having held the confirmation of sale unsustainable, the Court observed that the money deposited by the successful bidder in Civil Appeal No.10128 of 2011 must be refunded in terms of the High Court's order dated 5th February, 2010. The Court further directed that the Official Liquidator may take all reasonable steps to fetch the optimum realizable value of the property, consistent with the object of a public auction, to protect the interests of creditors and employees. [Paras 37]

Deposits paid by the successful bidder shall be refunded as ordered by the High Court; the Official Liquidator may take steps to obtain optimum value of the property by initiating sale in accordance with law.

Final Conclusion: The appeals are dismissed. The Division Bench's setting aside of the AAIFR order and restoration of the BIFR order are upheld: the auction process was procedurally defective (no valuation/reserve price) and the solitary bidder's failure to comply with ASC conditions, together with absence of competitive bidding, justified setting aside the sale; deposits are to be refunded and the Official Liquidator may undertake steps to secure the optimum realizable value of the property.

Admissibility of confessional statements recorded under Section 67 of the NDPS Act - Bar under Section 25 of the Indian Evidence Act - Relevancy of statements recorded under Section 53A of the NDPS Act - Procedure for drawing representative samples under Section 52A of the NDPS Act - Proof of actual or constructive possession in NDPS prosecutions

Admissibility of confessional statements recorded under Section 67 of the NDPS Act - Bar under Section 25 of the Indian Evidence Act - Confessional statements recorded before officers empowered under Section 53 of the NDPS Act cannot be admitted in evidence against the accused. - HELD THAT: - The Court applied the majority view in Tofan Singh and held that officers invested with powers under Section 53 of the NDPS Act are 'police officers' for the purposes of Section 25 of the Evidence Act. Consequently, confessional statements made to such officers are barred by Section 25 and cannot be relied upon to convict the accused. The confessional statements in the present case were therefore excluded from consideration. [Paras 11, 12]

Confessional statements recorded under Section 67 before officers empowered under Section 53 are inadmissible and were excluded.

Relevancy of statements recorded under Section 53A of the NDPS Act - Statements by independent witnesses recorded under Section 53 could not be admitted under Section 53A because the prosecution failed to prove the conditions required for their admissibility. - HELD THAT: - Section 53A permits relevancy of statements recorded by officers under Section 53 in specified circumstances (e.g., when the declarant is dead, absent, incapacitated, kept out of the way, or where admission in the interest of justice is appropriate). The High Court found, on perusal of the record, that the prosecution did not prove that the two independent witnesses were dead, could not be found, were incapable of giving evidence, had been kept out of the way, or that their presence could not be obtained without unreasonable delay or expense. No satisfactory explanation was offered for failing to examine these material witnesses. Therefore their statements (Exhibits P19 and P71) were inadmissible under Section 53A. [Paras 13, 14]

Statements of the two independent witnesses were not admissible under Section 53A and could not be relied upon.

Procedure for drawing representative samples under Section 52A of the NDPS Act - Samples drawn by the seizing officer at the time of seizure without Magistrate's supervision are not in conformity with Section 52A and create doubt as to the integrity of the prosecution's case. - HELD THAT: - The Court referred to Mohanlal and observed that Section 52A contemplates forwarding seized contraband to the officer-in-charge or an officer empowered under Section 53 who must apply to the Magistrate to certify inventory, photographs and to draw representative samples in the Magistrate's presence. Samples drawn and certified by the Magistrate constitute primary evidence. In this case PW2 drew representative samples at the time of seizure and prior to forwarding to the Station House Officer, contrary to the procedure envisaged by Section 52A. That departure from the statutory procedure gave rise to serious doubt about the prosecution's claim that the recovered substance was contraband. [Paras 15, 16]

The drawing of samples by PW2 at the time of seizure without Magistrate's supervision was not in conformity with Section 52A and cast doubt on the prosecution's case.

Proof of actual or constructive possession in NDPS prosecutions - The prosecution failed to prove beyond reasonable doubt that the appellants had actual or constructive possession of the contraband recovered from a hotel room occupied by another accused. - HELD THAT: - The prosecution's own case placed the contraband in a bag found in room no.303 of Hotel Suriya, which was booked in the name of accused no.4. The appellants were staying in different hotels according to the prosecution's case and there was no evidence that any of them brought the contraband to that room or had custody or control of it. The bag was not proved to have been in the custody of the appellants; at best it was found in a room occupied by accused no.4. Coupled with the exclusion of confessional statements, the inadmissibility of independent witnesses' statements, and the irregularity in sample-drawing, the Court found the prosecution's case to be shrouded in suspicion and insufficient to establish possession beyond reasonable doubt. [Paras 17, 18]

Prosecution did not prove that the appellants were in actual or constructive possession of the recovered contraband; their convictions could not be sustained.

Final Conclusion: Leave being given, the Court found the confessional statements inadmissible, excluded the independent witnesses' statements for want of proof under Section 53A, noted procedural non-compliance in drawing samples under Section 52A which cast doubt on the recovery, and held that possession by the appellants was not proved beyond reasonable doubt. The convictions were set aside and the appellants were acquitted; the appeals are allowed.

Contempt of court - disobedience of court orders - willful contempt - misuse of process of law - impleading of wrong party - statutory notice - consideration of representation and OTS offer - costs/compensation for wrongful impleading

Contempt of court - disobedience of court orders - consideration of representation and OTS offer - Whether the respondent (IFCI through its officer) committed contempt by failing to comply with the Court's direction to consider the petitioner's representation dated 12.01.2021. - HELD THAT: - The writ order directed the third respondent (Deputy General Manager at Chennai) to consider the petitioner's OTS representation dated 12.01.2021 and pass appropriate orders after notice and hearing within four weeks. The respondent's counsel stated, and the Court accepted, that the petitioner submitted subsequent improved representations which were collectively considered and that the last OTS offer was considered and rejected as not feasible. There is no finding of deliberate or wilful refusal to comply with the Court's direction; rather, the representation(s) were considered on merits and finally rejected. Consequently, the conduct of the respondent does not amount to contempt.

No contempt was committed by the respondent; the contempt petition in respect of disobedience is closed.

Misuse of process of law - impleading of wrong party - statutory notice - costs/compensation for wrongful impleading - Whether the Managing Director & Chief Executive Officer was properly arrayed as contemnor and what consequence follows from wrongful impleading. - HELD THAT: - The Court found that the original direction was to the Deputy General Manager at Chennai, and that the MD & CEO (located in New Delhi) was not the officer to whom the direction was addressed. The MD & CEO was nonetheless impleaded and served in the contempt proceedings, causing him to travel and attend unnecessarily. The Court noted that senior officers should not be summoned without necessity and that impleading the head of the institution when he was not the appropriate officer constituted a gross misuse of process. In view of the wrongful impleading and the trouble caused to the officer, the Court imposed compensation to vindicate the officer's inconvenience and to discourage such practice.

The MD & CEO was wrongly impleaded; the petitioner is liable to pay costs/compensation to the officer, quantified by the Court.

Final Conclusion: The contempt petition is dismissed on merits as there was no willful non-compliance; however, the petitioner is penalised for wrongfully impleading the MD & CEO and ordered to pay compensation/costs to the officer as quantified by the Court.

Doctrine of Necessity - Saving clause against invalidity of acts or proceedings for vacancy or defect in constitution - Quorum for meetings versus adjudicatory constitution of the Commission - Interpretation and effect of Section 15 of the Competition Act, 2002 - Composition of the Commission and absence of statutory quorum prescription - Maintainability of applications under Section 42 of the Competition Act, 2002 - High Court superintendence under Article 227

Composition of the Commission and absence of statutory quorum prescription - Saving clause against invalidity of acts or proceedings for vacancy or defect in constitution - Validity of CCI adjudicatory functioning with only two members - HELD THAT: - The Court held that the Act prescribes the composition of the Commission (a Chairperson and not less than two and not more than six other Members) but does not prescribe a minimum number of Members to constitute a judicial quorum for adjudication. Section 15 is a saving clause which applies to both acts and proceedings and therefore contemplates that vacancies or defects in constitution shall not, merely by reason thereof, invalidate adjudicatory proceedings. The Court relied on plain reading of Sections 15, 8 and 22, the distinction between administrative meetings (where the proviso to Section 22(3) prescribes a three-member quorum for meetings) and adjudicatory proceedings, and the Coordinate Bench decision in Cadd Systems to conclude that a Bench of two Members can validly continue adjudicatory functions and that mere vacancy does not oust jurisdiction. [Paras 72, 73, 74, 75, 76]

CCI constituted with two Members is validly able to continue its adjudicatory role; vacancy or defect in constitution does not, by itself, invalidate adjudicatory proceedings.

Interpretation and effect of Section 15 of the Competition Act, 2002 - Saving clause against invalidity of acts or proceedings for vacancy or defect in constitution - Scope and effect of Section 15 of the Competition Act, 2002 - HELD THAT: - The Court interpreted Section 15 as an enabling and remedial provision intended to prevent the functioning of the Commission from being paralysed by vacancies or defects in constitution. The provision applies disjunctively to 'acts' and 'proceedings', and therefore extends to adjudicatory proceedings. The Court rejected arguments that Section 15 should be narrowly read so as to permit invalidation where statutory quorum (as argued from Section 22 proviso) is not met, observing that the proviso to Section 22 relates to meetings (administrative) and is not determinative of adjudicatory competence. An enabling construction is appropriate to effectuate legislative purpose. [Paras 68, 70, 71, 72, 76]

Section 15 operates as a saving clause ensuring that vacancies or defects in constitution do not, without more, invalidate the Commission's adjudicatory proceedings.

Doctrine of Necessity - High Court superintendence under Article 227 - Whether the Doctrine of Necessity must be applied to validate CCI proceedings or to compel CCI to decide pending applications - HELD THAT: - Having answered that the CCI may validly function and adjudicate with the present constitution (two Members) under Section 15, the Court found no occasion to invoke the Doctrine of Necessity. The doctrine, as explained in J. Mohapatra, applies where adjudicators are disqualified and no alternate competent tribunal can be constituted; none of the respondents alleged that the present Members were disqualified. The Court also noted that the Doctrine of Necessity addresses institutional incapacity rather than a particular case, and in the present facts the doctrine was unnecessary. The High Court retained supervisory power under Article 227 and, on that basis, could direct the CCI to take up the pending Section 42 applications for adjudication. [Paras 77, 79, 81, 87, 88]

Doctrine of Necessity is not invoked because there is no disqualification and Section 15 renders CCI capable of adjudication; accordingly application of the doctrine is unnecessary.

Maintainability of applications under Section 42 of the Competition Act, 2002 - High Court superintendence under Article 227 - Direction to CCI to consider and dispose of the petitioner's pending Section 42 applications - HELD THAT: - The Court observed that it need not decide merits or maintainability of the Section 42 applications, and left substantive questions to the CCI, but held there was no legal impediment to the Commission hearing those applications. Exercising supervisory jurisdiction and having concluded that CCI is functional and competent to adjudicate despite vacancies, the Court directed the CCI to take up and decide the petitioner's Section 42 applications expeditiously and in accordance with law, specifying a deadline. [Paras 82, 88, 89]

CCI directed to hear and decide the applications filed under Section 42 on or before 26.04.2023, without any expression on the merits.

Final Conclusion: The High Court held that vacancies in the Competition Commission do not, by themselves, invalidate its adjudicatory proceedings in view of Section 15; the proviso to Section 22(3) prescribing a three-member quorum pertains to meetings and does not negate adjudicatory competence. The Doctrine of Necessity was held unnecessary as no disqualification of present Members was shown. The Court directed the CCI to take up and decide the petitioner's pending Section 42 applications expeditiously (by 26.04.2023), leaving merits open.