TaxTMI Updates e-Newsletter
May 03,2021

Speaking order - compliance with judicial directions - early hearing - consideration of precedent - listing for further hearing

Speaking order - compliance with judicial directions - consideration of precedent - Direction to the revenue officer to pass a speaking order on the petitioners' representation and the timeframe for compliance. - HELD THAT: - The Court recorded that earlier orders dated 17.03.2021 and 15.04.2021 required the respondent to consider the petitioners' representation and pass a speaking order. Noting non-compliance and that the concerned Principal Commissioner and the joining officer were unwell, the Court received an assurance from the Deputy Commissioner that a speaking order would be passed before the next date of hearing. The Court expressly directed that while passing the speaking order the concerned Principal Commissioner shall have regard to the directions in the earlier orders and to the Supreme Court judgment dated 20.04.2021 in Civil Appeal No.1155/2021 (M/S Shri Radha Krishan Industries v. State of Himachal Pradesh & Ors.), relied upon by petitioners' counsel. The Court took the statement on record and listed the matter for further hearing. [Paras 3, 4, 5, 6]

Respondent to pass a speaking order on the petitioners' representation, taking into account the earlier directions and the cited Supreme Court judgment, and to comply before the next listed date; matter listed on 06.05.2021.

Early hearing - listing for further hearing - Prayer for early hearing of listed interlocutory applications. - HELD THAT: - Having regard to the assertions in the applications seeking early hearing of the pending interlocutory matters (CM Nos. 10652/2020, 10579/2021, 10577/2021), the Court allowed the prayer and took those applications up for hearing. The Court then proceeded to address compliance and directed the timeline for the speaking order and fixed the next hearing date. [Paras 1, 2, 3, 4]

Prayer for early hearing allowed; interlocutory applications taken up and matter listed on 06.05.2021.

Final Conclusion: The Court allowed the applications for early hearing, directed the concerned revenue officer to pass a speaking order on the petitioners' representation before the next date of hearing while having regard to earlier orders and the cited Supreme Court judgment, took the assurance on record, and listed the matter on 06.05.2021.

Wrongful assumption of jurisdiction - jurisdictional bar where State GST proceedings have been initiated - authority to initiate proceedings under the CGST Act subject to notification conditions - format and contents of summons under the CGST regime - interim stay of departmental proceedings

Wrongful assumption of jurisdiction - jurisdictional bar where State GST proceedings have been initiated - authority to initiate proceedings under the CGST Act subject to notification conditions - Validity of the impugned summons in light of prior State GST proceedings for the same subject matter - HELD THAT: - The petitioner produced material demonstrating that the subject matter for the financial year 2017-2018 had been the subject of show-cause notices issued by State tax authorities and that the petitioner had responded and the matter had been closed, supported by a communication dated 19.02.2021. Section 6(2)(b) of the CGST Act, 2017 was invoked to contend that where a proper officer under the State GST Act has initiated proceedings on a subject matter, no proceedings under the CGST Act on the same subject matter ought to be initiated, subject to conditions of the notification. On the materials placed before the Court the petitioner made out a prima facie case that the impugned summons dated 30.03.2021 may have been issued in wrongful assumption of jurisdiction, warranting further adjudication of the question of competence before any further steps are taken.

Prima facie case of wrongful assumption of jurisdiction made out; notice issued and further departmental action pursuant to the impugned summons restrained pending adjudication.

Format and contents of summons under the CGST regime - interim stay of departmental proceedings - Challenge to the form and terms of the impugned summons, including the provision preventing the authorised representative from leaving the officer's office without permission - HELD THAT: - The petitioner challenged the summons on the ground that it was not in the prescribed format and contained an onerous directional clause requiring the authorised representative not to leave the officer's office without permission. The Court noted these contentions while considering the scope of the challenge to the summons. In view of the prima facie conclusions on jurisdiction and the procedural objections to the summons, the Court considered interim relief appropriate to preserve the parties' positions until fuller adjudication.

Interim stay granted on further proceedings contemplated pursuant to the impugned summons dated 30.03.2021; respondents directed to file counter-affidavits within four weeks with liberty to the petitioner to file rejoinder before the next date.

Final Conclusion: Notice issued on the petition; respondents to file counter-affidavits within four weeks and rejoinder permitted; matter listed on 20.07.2021; meanwhile further proceedings under the impugned summons are stayed pending adjudication on the challenged jurisdiction and procedural issues.

Supply including licence, rental or lease - License to occupy land and renting of immovable property treated as supply of services under Schedule II - Scope of supply under Section 7 - Prohibition on unauthorised collection of tax - Liability to register and pay GST by supplier and recipient as per statutory scheme

Scope of supply under Section 7 - License to occupy land and renting of immovable property treated as supply of services under Schedule II - License granted to contractors to run vehicle parking and renting/ licence to occupy railway land constitute supply of services under the CGST Act. - HELD THAT: - The Court examined Section 7 (scope of supply) read with Schedule II and concluded that activities such as licence to occupy land and renting of immovable property fall within the definition of 'supply' and are to be treated as supply of services. The statutory text in Schedule II treating lease, tenancy and licence to occupy land as services, and clause treating renting of immovable property as supply of services, led to the conclusion that the grant of licence for parking and the renting/ licence aspects are within the ambit of taxable services under the CGST scheme. The Court also relied on Board/departmental circulars and implementation instructions which consistently treated renting of space (including parking) as taxable at the applicable rate, reinforcing the statutory classification. [Paras 7, 11, 13, 36, 45]

The licence/renting involved in the parking contracts is a supply of services under Section 7 read with Schedule II and therefore falls within the GST regime.

Prohibition on unauthorised collection of tax - Liability to register and pay GST by supplier and recipient as per statutory scheme - Section 32's prohibition on unauthorised collection of tax does not assist the petitioners; collection of GST in these contracts is not unauthorised where it conforms to the CGST Act and contractual terms. - HELD THAT: - Petitioners contended that Section 32 forbids collection of tax except as provided by the Act and therefore agreements purporting to collect GST are void. The Court rejected this contention, holding that Section 32 addresses unauthorised collection, but where collection is in conformity with the CGST Act (i.e., the transactions are taxable supplies), Section 32 cannot be invoked to nullify contractual provisions. The Court pointed out that the licence agreements expressly contemplated payment of taxes and that the CGST provisions unambiguously impose liability in the facts of these cases; hence collection demanded by Southern Railways is not 'unauthorised' within the meaning of Section 32. [Paras 20, 41, 42, 46]

Section 32 does not render the contractual tax-collection clauses void where the underlying transactions are taxable under the CGST Act; the challenge under Section 32 is rejected.

Liability to register and pay GST by supplier and recipient as per statutory scheme - Supply including licence, rental or lease - Both the Southern Railways and the private contractors have distinct GST liabilities: Railways for the licence fee received from contractors; contractors for parking services provided to end users, subject to registration and applicable exemptions. - HELD THAT: - The Court identified two separate services in the transaction chain: (i) the Railways supplying the licence to contractors (taxable to Railways on licence fee), and (ii) contractors supplying parking services to end users (taxable to contractors if within registration thresholds). The agreements wherein contractors agreed to pay applicable taxes were held binding, and the statutory scheme requires registration and tax compliance by parties who fall within the taxable thresholds. The Court emphasised that contractors who are registered must generate tax-compliant invoices and pay GST for supplies to end users; Railways must account for GST on licence fees collected from contractors. [Paras 31, 38, 47, 48, 49]

Railways are liable to GST on licence fees collected from contractors; contractors are liable to GST on parking services to end users and must register/pay as required by law.

Exemption verification by competent authority - Whether particular parking services supplied by contractors to end users are exempt from GST is not decided on merits and is left for verification by the competent GST authorities. - HELD THAT: - The Court observed that while the statutory scheme generally makes the transactions taxable, specific claims of exemption in respect of services rendered by contractors to end users require factual and legal verification by the GST authorities. The Court declined to determine exemption qua individual contractors' supplies and directed that the Competent Authorities of the GST Department should examine and pass appropriate orders regarding any exemption claims. [Paras 50, 51]

Claims of exemption for services provided by contractors to end users are to be verified and decided afresh by the competent GST authorities; the questions are remitted for administrative determination.

Final Conclusion: Writ petitions dismissed on merits. The Court held that licence/renting of railway land for parking constitutes taxable supply of services under Section 7 read with Schedule II of the CGST Act; contractual tax-collection clauses are not rendered void by Section 32 where collection conforms to the Act; Southern Railways is liable to GST on licence fees and contractors are liable to GST on parking services (subject to registration thresholds). Claims of exemption by contractors vis-a -vis supplies to end users are left to the competent GST authorities for verification and appropriate orders.

Summary order. Appeal under Section 260A against ITAT order setting aside penalty under Section 271(1)(c) directed to be listed; Court recorded ITAT's ground that the penalty notice/order did not specify which limb of Section 271(1)(c) was invoked, made a prima facie observation on whether Section 271(1)(c) applies to the revised return filed pursuant to Section 153A, and directed the appellant to file a compilation of authorities and produce the Section 271(1)(c) notice and other relied documents before the next hearing listed on 25th May, 2021.

Search case - assessment on the basis of search - Direct Tax Vivad Se Vishwas Act, 2020 - amount payable under Vivad se Vishwas - classification of assessment under Section 153A/153C - CBDT clarification (FAQ No.70 and Circular No.4/2021) - designated authority's determination under Form No.3

Search case - assessment on the basis of search - classification of assessment under Section 153A/153C - CBDT clarification (FAQ No.70 and Circular No.4/2021) - amount payable under Vivad se Vishwas - designated authority's determination under Form No.3 - Whether the petitioner's assessment for Assessment Year 2015-16 is a 'search case' for the purpose of determining amount payable under the Direct Tax Vivad Se Vishwas Act, 2020 and whether the Form No.3 determination treating it as a search case is sustainable. - HELD THAT: - The Court applied the three-fold clarification in Circular No.4/2021 which modified FAQ No.70: to be a 'search case' the assessment/re-assessment must (i) be under sections 143(3)/144/147/153A/153C/158BC, (ii) be in respect of a person referred to in Section 153A or Section 153C (or analogous provisions), and (iii) be on the basis of a search initiated under Section 132 or requisition under Section 132A. The material showed that petitioner's assessment was framed under Section 143(3) following CASS selection and scrutiny notices, not under Chapter XIV-B procedures; the petitioner was not a person falling within Sections 153A/153C (no action under those provisions had been initiated), no warrant or requisition under Section 132/132A had been executed in the petitioner's case, and the petitioner's name did not appear in the statements or seized material relied upon. On these findings the Court concluded that criteria (ii) and (iii) for treating the case as a search case were not satisfied. In that factual and legal matrix, the designated authority's application of the 125% search-case rate was unsustainable. The Court noted it was unnecessary to decide questions on the vires or broader interpretation of the earlier Circular No.21/2020 since Circular No.4/2021, as applied, showed the petitioner's case was not a search case. [Paras 36, 37, 38, 42, 43]

The assessment is not a 'search case' for the purposes of the DTVSV Act; the Form No.3 order dated 26th January 2021 is set aside and the designated authority is directed to pass a fresh Form No.3 determining the tax payable as a non-search case in accordance with the DTVSV Act, the Rules and Circular No.4/2021 within two weeks.

Final Conclusion: Petition allowed: the Form No.3 order treating the petitioner as a search case is quashed; the designated authority shall pass a fresh Form No.3 treating the petitioner as a non-search case and determine the amount payable under the DTVSV Act accordingly within two weeks; no order as to costs.

Time limit for issuance of notice under Section 149 - Issuance of notice versus service of notice - Meaning of 'issue of notice' - notice signed by competent authority - Non-applicability of Section 27 of the General Clauses Act to reckoning limitation under Section 149 - Practical and pragmatic approach to postal or delivery delays - Obligation to afford opportunity and reasons in reassessment proceedings per GKN Driveshafts

Time limit for issuance of notice under Section 149 - Issuance of notice versus service of notice - Meaning of 'issue of notice' - notice signed by competent authority - Practical and pragmatic approach to postal or delivery delays - Whether the impugned notices under Section 148 were barred by limitation where dispatch or postal delivery occurred after the statutory cut-off but the notices were signed and shown as dispatched by the Income Tax Department on the last date - HELD THAT: - The court examined Section 149, which prescribes the time limit for issuing a notice under Section 148, and held that the statutory requirement relates to the issuance of the notice by the competent authority. 'Issuance of notice' is satisfied when the order/notice is signed by the competent authority; subsequent delivery or delay in postal transmission does not affect compliance with Section 149. The court observed that various contingencies (postal delay, holidays, process-server omissions) cannot be permitted to defeat initiation of reassessment where the competent authority has signed and dispatched the notice within the prescribed period. Applying this principle to the record before it, the court accepted the respondents' dispatch entries showing that the notices were signed and dispatched on 31.03.2018 and held that the requirement of Section 149 was satisfied, leaving the petitioners free to contest merits and procedural aspects in reassessment proceedings. [Paras 23, 24, 25, 26, 31]

The notices were not barred by limitation because they were signed/issued by the competent authority on 31.03.2018; postal or delivery delays after issuance do not vitiate compliance with Section 149.

Non-applicability of Section 27 of the General Clauses Act to reckoning limitation under Section 149 - Issuance of notice versus service of notice - Whether Section 27 of the General Clauses Act (meaning of 'service by post') governs the reckoning of limitation under Section 149 of the Income Tax Act - HELD THAT: - The court analysed Section 27 of the General Clauses Act which defines 'service by post' and contrasted it with the language of Section 149 which refers to the 'issue of notice'. The court held that Section 149 contemplates issuance by the competent authority and does not predicate the time-limit on service to the assessee; consequently, the definition of 'service by post' in Section 27 is not apposite for determining whether a notice was issued within the statutory period under Section 149. Therefore, reliance on postal franking or proof of delivery under Section 27 cannot, for limitation purposes under Section 149, override proof of issuance by the authority. [Paras 4, 21, 27, 28, 29]

Section 27 of the General Clauses Act is not applicable to determine the time-limit under Section 149; limitation is satisfied by issuance (signing) of the notice by the competent authority.

Meaning of 'issue of notice' - notice signed by competent authority - Obligation to afford opportunity and reasons in reassessment proceedings per GKN Driveshafts - Whether non-receipt of the physical notice by a petitioner warrants quashing the reassessment where the record shows the notice was signed and issued within time - HELD THAT: - Applying the principle that issuance is complete upon signing by the competent authority, the court held that mere non-receipt of the notice does not nullify the initiation of reassessment if issuance within the statutory period is established. The court noted that although issuance suffices for limitation, the assessee remains entitled to contest the reassessment and the authorities are required to follow the procedural mandates and provide reasons as required by settled law (citing GKN Driveshafts ) to enable a fair hearing. [Paras 30, 33, 34]

Delay in receiving the notice or non-receipt does not by itself invalidate the proceedings if the notice was signed/issued within the statutory period; the assessee retains the right to defend the reassessment and the authorities must afford required opportunities and reasons.

Final Conclusion: Writ petitions challenging notices under Section 148 for being time-barred fail; the court held issuance (signing) of notices within the period prescribed by Section 149 satisfies limitation notwithstanding subsequent postal or delivery delays, and all petitions are dismissed with no order as to costs.

Reopening of assessment under Section 147 - reason to believe test - change of opinion - validity of unregistered sale agreement and power of attorney - operation of part performance under Section 53-A and requirement of registered conveyance under Section 54 of the Transfer of Property Act - assessing officer's independent application of mind vis-a -vis audit objection - scope of judicial interference in initiation of reassessment proceedings

Reopening of assessment under Section 147 - reason to believe test - change of opinion - Validity of the notice under Section 148/147 reopening the assessment for A.Y. 2010-11 - HELD THAT: - The Court held that the Department had articulated a reason to believe that income chargeable to tax had been under-assessed for A.Y.2010-11 because the factual matrix showed that the registered sale deed was executed only in the year relevant to A.Y.2010-11 and earlier documentation (unregistered sale agreement and power of attorney) did not, as a matter of law, complete the transfer. The Court rejected the petitioner's contention that the reopening was merely a change of opinion, observing that where new material or a legal objection (including applicability of Sections 53-A and 54 of the Transfer of Property Act) supports the belief of escapement, the AO is entitled to reopen the assessment and courts should be slow to interfere with the initiation of reassessment so long as the statutory pre-conditions for forming a reason to believe are met; factual disputes arising from such reopening are for adjudication in reassessment proceedings. [Paras 34, 35, 36, 39, 41]

Notice under Section 148/147 for reopening assessment for A.Y.2010-11 was validly issued and the writ petition challenging reopening is dismissed.

Validity of unregistered sale agreement and power of attorney - operation of part performance under Section 53-A and requirement of registered conveyance under Section 54 of the Transfer of Property Act - Whether the unregistered sale agreement and general power of attorney effected transfer for tax purposes so as to fix capital gains in earlier year - HELD THAT: - The Court accepted the legal proposition that a transfer of immovable property by way of sale is completed only by a duly stamped and registered deed of conveyance, and that unregistered sale agreements or mere powers of attorney do not transfer title. Applying this principle to the admitted facts, the Court recorded that the sale deed was executed only in the year relevant to A.Y.2010-11; consequently, the capital gain arising on that registered conveyance is to be assessed in A.Y.2010-11. The Department's position that Sections 53-A and 54 of the Transfer of Property Act were not complied with in the earlier year furnished a lawful basis for treating the later registered deed as the relevant transfer for assessment purposes. [Paras 16, 34, 35, 36, 38]

The unregistered sale agreement and power of attorney did not constitute completion of transfer; capital gains are to be considered in A.Y.2010-11 when the registered sale deed was executed.

Assessing officer's independent application of mind vis-a -vis audit objection - scope of judicial interference in initiation of reassessment proceedings - Whether the reopening was vitiated by the Assessing Officer merely acting on audit objections without independent application of mind - HELD THAT: - The Court examined whether the reasons for reopening were a verbatim adoption of audit objections or whether an independent opinion was formed by the AO. Having regard to the materials and the legal objection regarding non-compliance with statutory requirements for transfer, the Court found that the Department had furnished reasons and dealt with the petitioner's objections in a speaking order; thus the assumption of jurisdiction was not shown to be arbitrary. The Court observed that it is not the function of the High Court at the initiation stage to adjudicate disputed facts, and judicial interference is limited to examining whether the statutory pre-conditions for reopening were fulfilled. [Paras 29, 37, 39]

The reopening was not vitiated for want of independent application of mind by the AO; the objections were considered and the reasons recorded sustain initiation of reassessment.

Final Conclusion: The writ petition challenging the reopening of the assessment for A.Y.2010-11 is dismissed; the reassessment proceedings may proceed so that the parties can contest and adjudicate the disputed factual and legal contentions before the income-tax authorities.

Waiver/reduction of interest under Section 234B - CBDT instruction on reduction/waiver of interest (clause 2(d) of circular dated 23.05.1996) - bona fide belief and wilful default in payment of advance tax - genuine hardship as ground for waiver of interest - judicial decision reversing earlier High Court orders as triggering event for relief

Waiver/reduction of interest under Section 234B - CBDT instruction on reduction/waiver of interest (clause 2(d) of circular dated 23.05.1996) - judicial decision reversing earlier High Court orders as triggering event for relief - Whether the petitioner was entitled to reduction/partial waiver of interest under Section 234B in view of the CBDT circular and the sequence of judicial orders. - HELD THAT: - The Court held that clause 2(d) of the CBDT circular dated 23.05.1996 contemplates relief where income previously treated as not chargeable by a High Court order later becomes taxable by reason of a subsequent Supreme Court decision. The petitioner had obtained interim orders and favourable High Court decisions which endured until the Supreme Court reversed them on 31.01.2001. Given the stay/orders and the intervening judicial developments, the facts constituted a fit case for exercise of the delegated discretion to reduce/waive interest under the circular. Consequently, the Court concluded that the petitioner was entitled to a partial waiver of interest up to 31.01.2001, the date on which the Supreme Court reversed the Division Bench's earlier decisions. [Paras 40, 41, 42, 43]

Partial waiver of interest under Section 234B granted to the petitioner up to 31.01.2001.

Bona fide belief and wilful default in payment of advance tax - genuine hardship as ground for waiver of interest - Whether the petitioner had wilful default or lack of bona fide and whether genuine hardship was made out to deny waiver. - HELD THAT: - The Court recorded the competing contentions: Revenue relied on absence of a favourable High Court order at the time advance tax was due to argue wilful default, while the petitioner relied on a sustained litigation history and belief in exemption. The Court accepted that interim orders and subsequent favourable High Court decisions sustained the petitioner's bona fide position until the Supreme Court decision. The Court also observed that genuine hardship includes acute lack of liquid resources; while the first respondent doubted such hardship, the overall circumstances - notably transfers for charitable purposes historically accepted and the timing of judicial pronouncements - warranted mitigation of interest up to the date of the Supreme Court decision. The Court therefore rejected a finding of unmitigated wilful default that would preclude any relief and found that partial relief was appropriate on the facts. [Paras 35, 36, 37, 42]

Petitioner's bona fide position and the circumstances of litigation justified partial relief; wilful default did not preclude exercise of discretion to grant partial waiver up to 31.01.2001.

Re-quantification of proportionate interest - Quantification and implementation of the partial waiver awarded. - HELD THAT: - The Court directed that the interest payable by the petitioner be re-quantified so as to give effect to the partial waiver up to 31.01.2001. The second respondent (assessing authority) was directed to compute the proportionate interest payable from 31.01.2001 (date of the Supreme Court decision) until the actual date of payment, allowing for the partial waiver granted, and to complete that exercise within three months. The petitioner was ordered to pay the quantified interest within one month thereafter. [Paras 44]

Matter remitted for re-quantification of proportionate interest in accordance with the partial waiver; re-quantification to be completed within three months and payment within one month thereafter.

Final Conclusion: Writ petition allowed. The petitioner is granted a partial waiver of interest under Section 234B up to 31.01.2001 (the date of the Supreme Court decision reversing earlier High Court orders). The assessing authority is directed to re-quantify the proportionate interest from 31.01.2001 to the date of actual payment within three months, and the petitioner shall pay the quantified interest within one month thereafter. No costs.

Reasonable time for exercise of statutory power - remand for fresh assessment - block assessment and seizure-based taxation - right to cross-examination of witnesses in tax proceedings - application of seized assets towards tax liability

Reasonable time for exercise of statutory power - remand for fresh assessment - right to cross-examination of witnesses in tax proceedings - block assessment and seizure-based taxation - application of seized assets towards tax liability - Validity of recommencement of remand assessment proceedings after a lapse of six years and the scope of further proceedings required on remand - HELD THAT: - The Court examined whether the respondent's action in recommencing proceedings on 09.12.2013, six years after this Court's remand order dated 03.09.2007, was so delayed as to be unreasonable and therefore liable to be quashed. While recognising the settled principle that where no express limitation is prescribed a statutory power must be exercised within a reasonable time, the Court found that the Revenue had pursued appeals (including a belated SLP dismissed for delay) and that incriminating assets had been seized during the search of 19/20.01.1996. The Division Bench's earlier remand was founded on procedural infirmities in the original assessment, notably lack of opportunity to cross-examine those whose statements were relied upon and absence of corroborative evidence for large additions made by totaling seized entries. The present Court held, however, that at this distant point summoning and cross-examining numerous persons scattered across States would serve no useful purpose. The Court concluded that notwithstanding procedural lapses earlier, the tax liability insofar as undisclosed assets (cash, jewellery and valuables) actually seized from the petitioner can and should be assessed. Consequently the Court did not quash the recommencement of proceedings on the ground of inordinate delay, but limited the scope of further proceedings to quantification and assessment of tax on the assets recovered during the search and required the assessing authority to complete that exercise after giving the petitioner an opportunity to be heard. The petitioner was also permitted to file any additional representation before fresh orders are passed. [Paras 64, 65, 66, 67, 68]

Proceedings recommenced after six years are not quashed; the Assessing Officer is directed to complete assessment only in respect of the assets seized during the search of 19/20.01.1996 (cash, jewellery and valuables), after giving the petitioner an opportunity to be heard and allowing him to file additional representations, and to finalise such assessment within three months from receipt of a copy of this order.

Final Conclusion: Writ petition disposed by directing the assessing authority to complete, within three months, the assessment only in respect of the undisclosed assets seized on 19/20.01.1996 after giving the petitioner an opportunity to be heard; the recommencement of proceedings after six years is not set aside.

Tax Deducted at Source - TDS on rent under Section 194-I - assessee in default under Section 201 - recovery of TDS not remitted - credit/adjustment of TDS - issuance of fresh demand notices after verification

Tax Deducted at Source - assessee in default under Section 201 - recovery of TDS not remitted - credit/adjustment of TDS - Liability to pay alleged arrears where TDS was deducted by the tenant but not remitted to the Government. - HELD THAT: - The court found that where the second respondent (tenant) had deducted tax at source but failed to remit the same to the credit of the Central Government, recovery of such TDS can be directed only against the second respondent as the assessee in default. The petitioners (landlords) cannot be made to pay the same tax twice. Orders passed under section 201/201(1A) against the second respondent for the assessment years mentioned must be taken into account before demanding arrears from the petitioners. To the extent the second respondent deducted TDS but did not remit it, no demand shall be made upon the petitioners; the department remains free to pursue recovery from the second respondent in accordance with law. The court relied on the factual record (including the Memorandum of Understanding recording deductions and undertakings) and the subsequent statutory orders against the second respondent in concluding that demands against the petitioners were unsustainable to that extent. [Paras 32, 33]

Demands quashed insofar as they seek recovery of TDS that was deducted by the second respondent but not remitted; such recovery must be effected only from the second respondent.

Issuance of fresh demand notices after verification - credit/adjustment of TDS - Procedure to be followed by the department in issuing demands to the petitioners after taking into account subsequent developments and payments. - HELD THAT: - The court directed the third respondent to issue fresh demand notices to the petitioners after taking note of the subsequent developments, including payments and the orders passed under section 201/201(1A) against the second respondent dated 16.01.2018. The fresh demands must exclude any amount representing TDS deducted by the second respondent but not remitted to the Department. If any balance tax remains which escaped assessment, it may be recovered from the petitioners by issuing suitable notices under the Income Tax Act. This re-issuance/verification exercise is confined to quantification and proper adjustment having regard to recorded deductions, undertakings and remittances. [Paras 34]

Third respondent to issue fresh demand notices within four weeks, after verification and exclusion of amounts representing TDS deducted by the second respondent but not remitted.

Final Conclusion: Writ petitions disposed: impugned demand notices are quashed to the extent they seek recovery of TDS deducted by the tenant but not remitted; the Revenue may recover such unpaid TDS from the tenant (assessee in default). The department is directed to issue fresh demand notices to the petitioners within four weeks after taking into account the subsequent payments and orders, excluding amounts representing unremitted TDS.

Assessment in case of search or requisition - fourth proviso to section 153A - tangible evidence - undisclosed investment in asset - strict interpretation of proviso - writ jurisdiction under Article 226 - interim stay of notice

Fourth proviso to section 153A - tangible evidence - undisclosed investment in asset - strict interpretation of proviso - Validity of invoking jurisdiction under the fourth proviso to section 153A in the absence of tangible evidence of undisclosed investment in assets - HELD THAT: - The Court examined the fourth proviso as inserted by the Finance Act, 2017, which permits issuance of notice beyond the sixth assessment year only where the assessing officer possesses books, documents or evidence revealing that income escaping assessment is represented in the form of assets and amounts to or is likely to amount to at least fifty lakh rupees. The Finance Bill 2017 and CBDT Circular No.2/2018 were noted to emphasise that tangible evidence found during search/requisition must represent undisclosed investment in assets. On perusal of the speaking order, the Court found no indication of any tangible evidence demonstrating undisclosed investment in the petitioner's assets; the revenue's contention referred only to alleged bogus liabilities and inflation of expenses without pointing to specific assets or documentary evidence revealing undisclosed investments. Given that the notice seeks reopening beyond the sixth assessment year, the fourth proviso must be strictly construed and, on the material before the Court, the precondition in the proviso prima facie appears not to be satisfied. [Paras 8, 9, 11, 12]

Prima facie the conditions of the fourth proviso to section 153A are not shown to have been satisfied as there is no indication of tangible evidence revealing undisclosed investment in the petitioner's assets; the proviso requires strict interpretation.

Writ jurisdiction under Article 226 - interim stay of notice - Whether the High Court should exercise writ jurisdiction at interlocutory stage and grant relief against the notice issued under section 153A - HELD THAT: - Having found a substantial jurisdictional issue regarding the applicability of the fourth proviso, the Court held that it would not be appropriate merely to relegate the petitioner to the assessment process and subsequent appeals. Reliance was placed on the need for further deliberation in view of settled precedents concerning jurisdictional challenges. Considering the prima facie absence of requisite tangible evidence and the jurisdictional character of the challenge, the Court exercised its extraordinary writ jurisdiction to grant interim relief rather than leaving the petitioner to contest the notice only in assessment and appellate proceedings. [Paras 12, 15]

Writ jurisdiction under Article 226 is appropriately exercised at this stage to protect the petitioner against a prima facie invalid invocation of section 153A; interim stay of the impugned notice is granted.

Final Conclusion: Notice dated 13.01.2021 issued under section 153A and the speaking order rejecting the petitioner's objections were stayed as an interim measure on the ground that prima facie the statutory precondition in the fourth proviso (tangible evidence of undisclosed investment in assets) was not shown; matter posted for further hearing.

Reopening of assessment under section 147/148 - Cash credits under section 68: identity, creditworthiness and genuineness - Addition under section 69C - Admissibility of third party statements recorded during search and right to cross examination - Scope of reassessment and Explanation 3 to section 147

Reopening of assessment under section 147/148 - Scope of reassessment and Explanation 3 to section 147 - Validity of reopening of assessment under section 147/148 in respect of the reasons recorded. - HELD THAT: - The Tribunal considered whether the Assessing Officer had recorded a valid belief to reopen assessment. Although earlier coordinate decisions (discussed at length) had quashed reopenings on facts where the AO's satisfaction was treated as borrowed or where the AO expanded the scope of proceedings without fresh reasons, the present Bench examined the contemporaneous material and earlier Tribunal decisions and found that the decision in INS Finance & Investment P. Ltd. on identical facts supported sustaining the initiation of reassessment. Consequently the reopening was held to be valid in this case and the assessee's challenge to the initiation of proceedings was dismissed. The Court therefore did not quash the reassessment on the ground of invalid reasons in the present appeal. [Paras 6]

Reopening of assessment under section 147/148 is confirmed.

Cash credits under section 68: identity, creditworthiness and genuineness - Addition under section 69C - Admissibility of third party statements recorded during search and right to cross examination - Whether additions made under section 68 (share capital of Rs.45 lakhs) and section 69C (commission) were justified. - HELD THAT: - On merits the Tribunal found that the assessee had produced documentary evidence-share applications, board resolution, ITR acknowledgements, audited balance sheet and bank evidence-establishing the identity, creditworthiness and that the transactions were routed through banking channels. The Assessing Officer relied primarily on statements recorded in search proceedings of third parties which were not supplied to the assessee and were not subjected to cross examination; the Tribunal held that such statements, recorded behind the back of the assessee and not furnished for rebuttal or cross examination, could not be read against the assessee. The Bench also placed weight on consistent findings in earlier Tribunal and High Court decisions concerning the same investor (M/s. Prraneta/Aadhaar Ventures India Ltd.) which had examined retraction and corroborative evidence and had upheld genuineness. In the light of the documentary proof and the inadmissibility (for want of opportunity to test) of the investigation statements, the additions under section 68 and the consequential addition under section 69C were found unsustainable and deleted. [Paras 6]

Addition of Rs.45,00,000 under section 68 and Rs.90,000 under section 69C deleted.

Final Conclusion: Reopening of assessment under section 147/148 for A.Y. 2010-2011 is upheld, but on merits the additions under section 68 (share capital) and section 69C (commission) are deleted; appeal is partly allowed.

Condonation of delay - Non-communication of reasons for reopening - Validity of reassessment jurisdiction under section 147 versus section 153C - Quashing of reassessment orders

Condonation of delay - Admission of belated appeals after condonation of delay - HELD THAT: - The Tribunal found that the appellants established a bona fide explanation for the 492 day delay, arising from the accountant's illness and oversight and absence of any material showing mala fides or dilatory strategy by the assessees. Reliance was placed on precedents where courts showed indulgence where explanations did not smack of mala fide. In the interest of justice and following the principles laid down by the Supreme Court and High Court decisions cited, the Tribunal condoned the delay and admitted the appeals. [Paras 1, 3]

Delay of 492 days condoned and appeals admitted.

Non-communication of reasons for reopening - Quashing of reassessment orders - Validity of reassessments completed under section 147 r.w.s. 143(3) where reasons recorded for reopening were not communicated to the assessee on request - HELD THAT: - The Tribunal held that once the assessee specifically requested the reasons recorded for reopening, communication of those reasons by the AO is a mandatory requirement and not a mere formality. Citing the Supreme Court's decision in GKN Driveshafts and consistent High Court and Tribunal authorities, the Tribunal observed that non furnishing of reasons before conclusion of reassessment proceedings vitiates jurisdiction and renders the reassessment invalid. The AO had shown the reasons to the authorised representative during proceedings but had not supplied the reasons in writing despite specific requests; moreover the AO's contention that requests were made in only one case was rejected because all assessments were completed on the basis of the statement and assurance of a single family member. Consequently, the reassessments were quashed. [Paras 8]

Assessments under section 147 r.w.s. 143(3) quashed for non-communication of reasons.

Validity of reassessment jurisdiction under section 147 versus section 153C - Quashing of reassessment orders - Whether the AO could invoke section 147 (reopening) when incriminating material (joint receipt and statements) was found and seized in a search, or whether reassessment ought to have been made under section 153C - HELD THAT: - The Tribunal examined the assessment order, remand report and record and concluded that the joint receipt and statements forming the basis of the addition were documents found and seized during the search. Under the statutory scheme, where incriminating material seized in a search relates to a person other than the searched person, the assessing officer must proceed under section 153C (and section 153A/153C scheme), and cannot proceed under section 147. Relying on the Tribunal's earlier decision in G. Koteswara Rao and the statutory non obstante language, the Tribunal held that the AO lacked jurisdiction to reopen under section 147 on the basis of material seized in the search. No contrary evidence was produced by the Revenue to show the joint receipt was not seized. Accordingly the assumption of jurisdiction under section 147 was held bad in law and the assessments were set aside. [Paras 9, 10]

Assessments framed under section 147 quashed; reassessment ought to have been proceeded with under section 153C as appropriate.

Final Conclusion: The Tribunal condoned the delay and admitted the appeals; having found that the AO failed to communicate reasons for reopening on request and that the additions were founded on documents seized in a search, the Tribunal held the AO had no jurisdiction to reopen under section 147 and accordingly quashed the reassessments for A.Ys. 2009-10 to 2011-12 and allowed the appeals.

Reopening of assessment under Section 147/148 - reason to believe not mere suspicion - Borrowed satisfaction based on report of the investigative wing - Requirement of independent application of mind by the Assessing Officer - Need for tangible material and rational nexus between information and escapement of income - Quashing of reassessment where reasons are non specific and amount to suspicion

Reopening of assessment under Section 147/148 - reason to believe not mere suspicion - Borrowed satisfaction based on report of the investigative wing - Requirement of independent application of mind by the Assessing Officer - Need for tangible material and rational nexus between information and escapement of income - Quashing of reassessment where reasons are non specific and amount to suspicion - Reopening of assessment under Section 147/148 was invalid because the Assessing Officer acted on non specific information from the investigation wing without independent application of mind; the reassessment was quashed. - HELD THAT: - The Tribunal examined the reasons for reopening and concluded that they reproduced a report of the investigation wing alleging receipt of high share premium but did not contain specific, incriminating or tangible material linking the information to escapement of income. Relying on the coordinate ITAT decision in M/s Indo Global Techno Trade Ltd. (order dated 15/06/2020) and other authorities, the Tribunal held that mere information of high premium, without particulars such as names shown to be bogus, untraceable or a modus operandi, amounts to suspicion and a "borrowed satisfaction". The Assessing Officer must form a prima facie belief based on material having a rational nexus to escapement of income and apply his own mind; repetition of the investigation report without independent scrutiny does not satisfy the statutory requirement. On these grounds the Tribunal found the reopening to be without jurisdiction and quashed the reassessment. Because the jurisdictional issue was decided in favour of the assessee, the Tribunal did not adjudicate the merits of the additions sustained below. [Paras 10, 11, 13]

The reopening under Section 147/148 is quashed for lack of valid reasons to believe; reassessment set aside and appeals allowed.

Final Conclusion: The Tribunal allowed the appeals for A.Y. 2010-11 by quashing the reassessment framed under Section 147/148 on the ground that the Assessing Officer acted on non specific information from the investigation wing without independent application of mind; no finding was given on the merits of the additions.

Deduction under section 80IB(10) - partnership deed and entitlement to interest and remuneration - audi alteram partem / opportunity to explain before disallowance - consistency of assessment treatment across assessment years

Deduction under section 80IB(10) - partnership deed and entitlement to interest and remuneration - consistency of assessment treatment across assessment years - Validity of the CIT(A)'s acceptance of the supplementary partnership deed dated 01.04.2006 and consequent allowance of deduction under section 80IB(10) for AY 2012-13 by disallowing the AO's restriction based on interest and remuneration to partners. - HELD THAT: - The Tribunal found that the Assessing Officer restricted the assessee's claim under section 80IB(10) by disallowing interest and remuneration to partners without considering the supplementary partnership deed dated 01.04.2006. The CIT(A) examined the second partnership deed, concluded that the partners were not entitled to interest or remuneration thereunder, and allowed the full deduction. The Tribunal noted that in the subsequent assessment year (AY 2013-14) the same AO accepted the partnership deed dated 01.04.2006 and did not make disallowances on the same issues. The Tribunal also observed the legal position, as referred to in authority relied upon by the parties, that mere incorporation of interest/remuneration in a deed does not make such payments mandatory; application depends on the deed's terms and factual matrix. In the absence of any contrary fact or law, the Tribunal affirmed the CIT(A)'s conclusion that the supplementary deed supported the assessee's entitlement and that the allowance of deduction under section 80IB(10) was justified. [Paras 6]

The CIT(A)'s allowance of the deduction under section 80IB(10) for AY 2012-13 on the basis of the supplementary partnership deed dated 01.04.2006 is affirmed.

Audi alteram partem / opportunity to explain before disallowance - Whether the AO's restriction/disallowance was vitiated by failure to give the assessee a show-cause notice or reasonable opportunity to explain the position regarding the partnership deed. - HELD THAT: - The Tribunal recorded that the AO did not issue any show-cause notice to the assessee before making the disallowance/restriction of the claim under section 80IB(10). The CIT(A) considered the supplementary partnership deed and the assessee's explanations at the appellate stage. Given the procedural lapse at assessment and the subsequent acceptance of the same deed in the next assessment year by the same AO, the Tribunal treated the lack of opportunity to explain as a material factor in upholding the appellate decision. No countervailing facts or legal submissions were shown to justify a different outcome. [Paras 6]

The AO's action in restricting the claim without issuing a show-cause notice or giving the assessee an opportunity to explain is a material defect; the appellate allowance is sustained.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and affirmed the CIT(A)'s order allowing the full deduction under section 80IB(10) for AY 2012-13, having found that the supplementary partnership deed supported the assessee's position and that the AO had neither considered that deed nor afforded the assessee a prior opportunity to explain.

Eligibility for deduction under section 80IC - formation of a new industrial undertaking not by splitting up or reconstruction of existing business - transfer of plant and machinery previously used and the 20% threshold in Explanation 2 - requirement of fresh capital and separate identifiable unit for exemption - test of physical separateness and independent viability of a new undertaking

Formation of a new industrial undertaking not by splitting up or reconstruction of existing business - test of physical separateness and independent viability of a new undertaking - requirement of fresh capital and separate identifiable unit for exemption - Haridwar unit was not formed by splitting up or reconstruction of the existing Chennai business and thus qualified as a new industrial undertaking eligible for deduction under section 80IC. - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the Haridwar unit was conceived and set up in FY 2009-10 with independent approvals, registrations and capital outlay prior to denial of deduction to the sister concern, and that it manufactured different products (plastic components for water purifiers) and was capable of functioning as an integrated, independent unit. Applying authoritative tests from precedent, the Court noted that the statutory exemption targets new undertakings distinguished by substantial fresh capital, separate identity and independent viability; mere expansion or common ownership does not displace the new unit's character. On the facts - lease, allotment, registrations, power connection, separate investment and business plan predating the APMPL denial - the Tribunal concluded the Haridwar unit maintained a separate and distinct identity and was not a reconstruction or split of the Chennai business. The Tribunal therefore sustained deletion of the disallowance made by the Assessing Officer. [Paras 8, 9, 10, 17]

Deduction under section 80IC allowed: Haridwar unit held to be a new undertaking not formed by splitting up or reconstruction of the Chennai unit.

Transfer of plant and machinery previously used and the 20% threshold in Explanation 2 - computation of percentage of transferred machinery for eligibility - Transferred plant and machinery did not exceed the 20% limit in Explanation 2 and therefore did not disentitle the Haridwar unit from claiming deduction under section 80IC. - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that the Assessing Officer had erred in computing the base for percentage calculation. Using the total plant and machinery value as on the relevant year-end (either 31.03.2012 or, if taken at the first year of claim, 31.03.2011), the value of previously used machinery (as stated) amounted to 15.19% (on Rs.2,05,36,114) or 17.11% (on Rs.1,82,32,810), both within the 20% threshold prescribed by Explanation 2 to section 80(IA)(3) read with section 80IC. The Tribunal therefore found the Assessing Officer's conclusion of excess transfer to be factually incorrect and unsustainable. [Paras 8, 11, 12]

Transferred machinery fell within the 20% permissible limit; disallowance on this ground deleted and deduction under section 80IC sustained.

Final Conclusion: The Revenue's appeals for assessment years 2012-13 and 2013-14 are dismissed: the Haridwar unit is a new, separate industrial undertaking and the transferred plant and machinery do not exceed the 20% limit, thereby upholding entitlement to deduction under section 80IC.

Evidentiary value of statement recorded during survey u/s 133A - retraction of admission and its effect on evidentiary value - verification of survey inventory and admissibility of survey report - exercise of suo-moto powers by Commissioner (Appeals) under section 250(4) - rule of falsus in uno, falsus in omnibus not to be mechanically applied - estimation of undisclosed stock and computation of profit element - obligation on Assessing Officer to corroborate survey admissions with independent material

Evidentiary value of statement recorded during survey u/s 133A - retraction of admission and its effect on evidentiary value - obligation on Assessing Officer to corroborate survey admissions with independent material - Whether the addition could be sustained solely on the director's statement recorded during survey and whether the Director's subsequent retraction and the patent infirmities in the inventory (Page No.76) rendered the survey-based admission insufficient to justify the AO's addition. - HELD THAT: - The Tribunal followed the settled principle that statements recorded under section 133A are not conclusive evidence and an admission made during survey can be retracted if shown to be based on mistake of fact or given under duress. The AO relied solely on the director's conditional statement recorded late at night and on the existence of Page No.76 of the inventory. The assessee promptly filed a retraction and pointed out multiple material infirmities in Page No.76 (different handwriting, absence of item codes/location, stark quantity/value discrepancies vis-a -vis other inventory pages, and supporting schematic/photographic evidence and an architect's report). The AO failed to investigate or produce corroborative material identifying who prepared Page No.76 or otherwise rebut the specific allegations. In these circumstances the Tribunal held that the AO could not sustain the addition merely on the survey statement; the statement alone lacked probative value absent independent corroboration and therefore Page No.76 could not be treated as conclusively establishing undisclosed stock.

Statement recorded during survey could not, by itself, justify the addition; Page No.76 of the inventory was held to be unreliable and discarded.

Exercise of suo-moto powers by Commissioner (Appeals) under section 250(4) - verification of survey inventory and admissibility of survey report - obligation on Assessing Officer to corroborate survey admissions with independent material - Whether the CIT(A) was justified in suo-moto calling for and considering additional evidence (architectural drawings, photographs, stock/sales data) under section 250(4) and whether Rule 46A was violated by not seeking a remand report from the AO. - HELD THAT: - The Tribunal recognised that a presumption of regularity attaches to official acts but that such presumption may be rebutted in exceptional circumstances. Given the specific and material infirmities pointed out in the inventory and the assessee's contemporaneous retraction, the CIT(A) was entitled to exercise the co-terminus / suo-moto powers under section 250(4) to call for evidence necessary to test the veracity of the survey inventory. The Tribunal found no illegality in CIT(A)'s course of action and rejected the Revenue's contention that Rule 46A required the AO to be given an opportunity to file a remand report before the appellate authority entertained the additional material gathered suo-moto.

CIT(A) validly exercised suo-moto powers under section 250(4) to call for and consider additional evidence; no remand to AO was required in the circumstances.

Estimation of undisclosed stock and computation of profit element - rule of falsus in uno, falsus in omnibus not to be mechanically applied - Having discarded Page No.76, whether any addition was sustainable and, if so, quantification of the excess stock and the appropriate profit element to be added. - HELD THAT: - The Tribunal declined to follow the CIT(A)'s approach of discarding the entire survey inventory and then estimating a notional capacity of 2,500 sarees to fix addition, observing that other pages of the inventory (and the survey working sheet) remained unchallenged. The Tribunal applied the working sheet and inventory (excluding the discarded page) together with the book stock and allowed the dead stock concession to compute the discrepancy. Using the survey material (excluding Page No.76) and applying the preceding year's gross profit, the Tribunal estimated the excess physical stock at a value of Rs. 14,36,702 and sustained the corresponding gross profit at the rate of 6.74%. The assessee's cross-objection was partly allowed to this extent.

Addition restricted to the value of excess physical stock estimated at Rs. 14,36,702 and the gross-profit at 6.74% sustained; larger additions deleted.

Final Conclusion: Revenue's appeal dismissed; in view of infirmities in Page No.76 of the survey inventory and the AO's failure to corroborate the survey admission, the Tribunal discarded that page, sustained a reduced addition (value of excess stock estimated at Rs. 14,36,702 with corresponding gross profit at 6.74%), and partly allowed the assessee's cross-objection.

Section 50C valuation - comparability of land for valuation - reliance on another appellate order without independent inquiry - requirement of physical verification and identification of land - validity of reopening of assessment under section 147/148

Section 50C valuation - comparability of land for valuation - reliance on another appellate order without independent inquiry - requirement of physical verification and identification of land - Whether the assessing officer was justified in making an addition under section 50C by adopting a rate determined in another case without independent inquiry or verification. - HELD THAT: - The Tribunal affirmed the Commissioner (Appeals) finding that the assessing officer had simply adopted the fair market value rate used in an earlier appellate order in respect of Survey No. 227, Bhestan, without conducting any independent enquiries or physical verification in the assessee's case. There was no finding by the AO on location, plot size, or any circumstances showing that the two pieces of land were comparable; no inspection or specific factual basis was recorded to equate the assessee's land with that in the other case. The appellate order relied upon had itself been set aside by the Tribunal, and in absence of cogent evidence or a reasoned basis for applying the other order's rate, no addition under section 50C could be sustained. The Tribunal held that the Commissioner (Appeals) had passed a reasoned and detailed order deleting the addition and affirmed that conclusion. [Paras 6, 10, 11]

The deletion of the addition under section 50C was affirmed and the addition made by the assessing officer is not sustained.

Validity of reopening of assessment under section 147/148 - Whether the reopening of assessment under section 147/notice under section 148 was valid and required adjudication in view of the assessee's objections. - HELD THAT: - Although the assessee had raised objections to the reopening, the Commissioner (Appeals) granted relief on merits and did not decide the validity of reopening. The Tribunal observed that, having affirmed the Commissioner (Appeals) order on the substantive issue of valuation/capital gain, adjudication of the alternate plea on reopening became academic. Consequently, the cross-objections raising validity of reopening were not separately adjudicated on merits and were treated as infractious. [Paras 11, 12]

The challenge to reopening was left without independent adjudication as academic; the cross-objections raising that plea are dismissed as infractious.

Final Conclusion: The order of the Commissioner (Appeals) deleting the addition under section 50C is affirmed and the revenue's appeal is dismissed; the assessee's cross-objections, insofar as they challenge reopening, are dismissed as infractious.

Coming into force of a notification by publication in the Official Gazette and electronic dissemination - effect of Information Technology Act, 2000 on statutory publication - status of amended section 25(4) of the Customs Act and its effect - whether customs duty is an "operational debt" under the IBC and characterization of crown debts - binding effect of an approved corporate resolution plan and extinguishment of pre-plan claims - remand to adjudicating authority for verification of inclusion of statutory dues in resolution plan

Coming into force of a notification by publication in the Official Gazette and electronic dissemination - effect of Information Technology Act, 2000 on statutory publication - status of amended section 25(4) of the Customs Act and its effect - Whether the amending notification increasing Basic Customs Duty came into force on 17.9.2015 despite printed Gazette copies being put up for sale on 21.9.2015. - HELD THAT: - The Court held that by 2015 the practice of dissemination of statutory information had materially changed and the amended notification was posted on the Central Board's website and published in the Official Gazette on 17.9.2015. In that factual and legal context the second limb of the pre-amendment formulation of section 25(4) requiring simultaneous offer for sale had become vestigial. Reliance on Union of India v. Param Industries Ltd. was considered inapplicable on the facts because electronic publication met the conditions contemplated by law and the Information Technology Act, 2000 treats information rendered in electronic form and accessible for subsequent reference as satisfying requirements of written or printed publication. The subsequent legislative amendment to section 25(4) by the Finance Act, 2016 to streamline the provision was noted as supporting the contemporary practice. For these reasons the Court rejected the contention that the notification came into force only when printed copies were offered for sale on 21.9.2015 and held that the amended notification came into force on the date of its publication on 17.9.2015. [Paras 36, 37, 40, 78, 79]

The amending notification came into force on 17.9.2015 (date of publication in the Official Gazette and posting on the Central Board's website); the petitioner's contention that it came into force only on 21.9.2015 is rejected.

Whether customs duty is an "operational debt" under the IBC and characterization of crown debts - binding effect of an approved corporate resolution plan and extinguishment of pre-plan claims - remand to adjudicating authority for verification of inclusion of statutory dues in resolution plan - Whether the respondent Customs Department's claim to differential customs duty was extinguished by the corporate resolution plan approved under the IBC and whether customs duty qualifies as an operational debt. - HELD THAT: - The Court recognised that earlier parts of its reasoning distinguished between 'operational debt' and sovereign tax/duty obligations, but observed itself bound by the Supreme Court's interpretation in Ghanashyam Mishra and Sons v. Edelweiss Asset Construction which holds that statutory dues payable to the Central or State Government can fall within the scheme of the IBC and that an approved resolution plan is binding on government authorities so that claims not part of the approved plan stand extinguished. In that light the Court accepted the need to determine, on the facts of the resolution plan, whether the customs duty in question was included or otherwise dealt with by the plan. The Court therefore did not adjudicate the extinguishment on the merits but remitted the matter for the petitioner to obtain a clarification from the National Company Law Tribunal / National Company Law Board regarding whether the corporate resolution plan treated the customs duty as part of the plan. [Paras 81, 82, 83, 84, 85]

The question of extinguishment is not finally decided on the merits by this Court; the matter is remitted for the petitioner to obtain clarification from the NCLT/NCLB whether the customs duty was included in or dealt with by the approved corporate resolution plan; meantime status quo directions and timelines are imposed.

Final Conclusion: The petition is dismissed insofar as the challenge to the coming into force of the amending notification (held to be 17.9.2015). On the question whether the customs duty claim was extinguished by the approved resolution plan, the Court remits the matter to the petitioner to seek clarification from the National Company Law Tribunal/Board; status quo is directed for 180 days and recovery/remittance is to proceed thereafter unless clarification favourable to the petitioner is produced within the prescribed period.

Constitutionality of statutory classification - distinction between regulator and State authorised actor - sanction by the Central Government as an administrative act - requirement of opportunity/natural justice in administrative sanction - presumption of constitutionality - malafide challenge to executive sanction - abuse of process where alternative forum is available

Constitutionality of statutory classification - distinction between regulator and State authorised actor - presumption of constitutionality - Validity of Section 272(1)(e) of the Companies Act and whether proviso to Section 272(3) must be read down to apply to persons authorised by the Central Government - HELD THAT: - The Court held that the classification drawn by the statute between the Registrar of Companies and a 'person authorised by the Central Government' is tenable because the Registrar occupies a regulatory role distinct from a State authorised actor. The Registrar's statutory functions and duties justify different treatment and procedure. Judicial restraint and the presumption of constitutionality require that, where two constructions are possible, the Court should prefer one upholding the validity of the provision. On this basis the proviso to Section 272(3) need not be read down to extend the Registrar's pre sanction hearing requirement to persons authorised by the Central Government. [Paras 13, 51, 52, 53]

Section 272(1)(e) is not declared ultra vires and the proviso to Section 272(3) is not read down to apply to persons authorised by the Central Government.

Sanction by the Central Government as an administrative act - requirement of opportunity/natural justice in administrative sanction - malafide challenge to executive sanction - abuse of process where alternative forum is available - Whether the Central Government's sanction dated 18.01.2021 is vitiated by malafice or otherwise requires interference - HELD THAT: - The Court found no demonstrable malafide in the sanction process. The material on record, including the requisition and file notings, and the communications produced, did not establish bad faith by the Government. Administrative sanctions of the character in issue are not invariably subject to a pre decision hearing and the availability of alternative remedies before the appropriate adjudicatory forum (NCLT/NCLAT) militates against extraordinary intervention by writ jurisdiction where no civil consequence has accrued to the petitioner. The petitioner, being a small shareholder, had an adequate remedy and had taken steps in the statutory forums; bringing the writ a day before final hearing was treated as an abuse/proxy attempt to circumvent the tribunal process. Accordingly, interference with the sanction and the consequent proceedings was declined. [Paras 49, 50, 51, 53, 54]

No interference with the sanction dated 18.01.2021; allegations of malafide rejected and the writ petition dismissed as an abuse of process.

Final Conclusion: Writ petition dismissed; no relief against the Central Government's sanction or the NCLT proceedings, and the petitioner directed to pay costs to the Registrar General of the Court within the time specified by the order.

Identical or too nearly resembles - exclusive right of a registered trade mark limited to goods or services for which it is registered - application of Section 15(2) of the Limited Liability Partnership Act, 2008 - class distinction in trade mark registration

Identical or too nearly resembles - exclusive right of a registered trade mark limited to goods or services for which it is registered - class distinction in trade mark registration - application of Section 15(2) of the Limited Liability Partnership Act, 2008 - Whether the respondents were justified in rejecting the petitioner's FiLLiP application and refusing incorporation of the LLP on the ground that the proposed name includes the word "REEF" which is an existing trade mark registered under Class 05. - HELD THAT: - The Court found that the respondents repeatedly raised system-generated defects and ultimately rejected the FiLLiP on the ground that the word "REEF" is an existing trade mark in Class 05. Section 15(2) of the LLP Act prohibits registration of an LLP name that is, in the opinion of the Central Government, identical or too nearly resembles a registered trade mark. However, Section 28 of the Trade Marks Act confers exclusive rights on the registered proprietor only in relation to the goods or services for which the mark is registered. The respondents' communications (Exts. P4, P12, P14 and P15) and the materials show that the existing registrations for marks incorporating "REEF" relate to Class 05 goods, whereas the petitioner seeks the LLP name for services (falling under classes such as 35, 41 or 44). The Court relied on the principle, as applied by the Supreme Court in Nandhini Delux v. Karnataka Co-operative Milk Producers Federation Limited , that marks registered for goods in one class do not necessarily preclude use of the same or similar mark by others for services in different classes where there is no likelihood of confusion or deception. Applying that reasoning, and on the facts that the petitioner had earlier obtained name reservation and that the contested trademark registrations relate to a different class of goods, the respondents were not justified in declining incorporation solely because "REEF" appears in registered marks in Class 05. The Court thus concluded that the rejection in Ext.P15 was unsustainable. [Paras 19, 20, 21, 22, 23]

Ext.P15 is set aside and the 1st respondent is directed to incorporate the LLP without raising any dispute on the proposed name containing the word "REEF".

Final Conclusion: The writ petition is allowed; the rejection dated Ext.P15 is quashed and the Registrar is directed to proceed with incorporation of the LLP in the name proposed by the petitioner without objection on account of existing trade marks for Class 05.

Sanction of scheme of amalgamation under Sections 230 and 232 of the Companies Act, 2013 - Transfer of assets, liabilities and proceedings upon amalgamation - Continuity of employment on amalgamation - Share swap/exchange ratio in amalgamation - Statutory compliance and filing of prescribed forms and undertakings - Limits of tribunal's sanction: non-exemption from taxes, duties and prospective action for statutory violations

Sanction of scheme of amalgamation under Sections 230 and 232 of the Companies Act, 2013 - Sanction granted to the Scheme of Amalgamation of the Transferor Company into the Transferee Company. - HELD THAT: - Upon consideration of the approval by members and creditors, reports and no-objection/observations from Regional Director, Official Liquidator and Income Tax Department (addressed through undertakings), and satisfaction of statutory prerequisites, the Tribunal found no impediment to sanctioning the Scheme and accordingly sanctioned it under Sections 230 and 232 of the Companies Act, 2013. The petitioners remain bound to comply with statutory requirements in law. [Paras 13, 16]

The scheme is sanctioned under Sections 230 & 232 of the Companies Act, 2013 and the petition is allowed.

Statutory compliance and filing of prescribed forms and undertakings - Required statutory filings and undertakings were to be complied with and were accepted for purposes of sanction where filed. - HELD THAT: - The Tribunal noted the Regional Director's observations regarding omissions (including Form CAA-3 / eform GNL-1 and filing of MGT-14). The records show petitioners filed e-form GNL-1 and MGT-14 and furnished undertakings (including undertaking to pay additional fees under section 232(3)(i) and to clear outstanding Income Tax demand). On that basis the Tribunal treated statutory compliance as satisfied for sanction, while expressly binding petitioners to full legal compliance. [Paras 6, 7, 8, 9, 13]

Statutory filings and undertakings having been placed on record, compliance for sanction was accepted, subject to the petitioners' continuing obligation to comply with law.

Transfer of assets, liabilities and proceedings upon amalgamation - All properties, rights, liabilities and pending proceedings of the transferor company shall stand transferred to and vest in the transferee company. - HELD THAT: - The Tribunal ordered that, pursuant to Section 232, all assets, rights and powers of the transferor company shall transfer to and vest in the transferee company and that all liabilities, duties and existing proceedings by or against the transferor company shall become those of the transferee company, effecting continuity post-amalgamation. [Paras 16]

Assets, liabilities and pending proceedings of the transferor company are transferred to and shall be continued by the transferee company.

Continuity of employment on amalgamation - Employees of the transferor company in service immediately before the effective date shall become employees of the transferee company on terms not less favourable and without interruption. - HELD THAT: - The Tribunal confirmed that all employees in service on the date immediately preceding the effective date will become employees of the transferee company without break or interruption and on terms and conditions not less favourable than those subsisting in the transferor companies, thereby ensuring protection of service terms upon amalgamation. [Paras 16]

Employees of the transferor company shall continue in service with the transferee company on equivalent or better terms and without interruption.

Share swap/exchange ratio in amalgamation - The share exchange ratio between the transferor and transferee companies as provided in the Scheme is approved. - HELD THAT: - The Tribunal ordered allotment by the transferee company of equity and preference shares in the swap/exchange ratio set out in the Scheme (specific ratios recorded in the order), thereby giving effect to the agreed consideration and capital reorganisation contemplated by the Scheme. [Paras 16]

The share swap/exchange ratio as set out in the Scheme is approved and shall be implemented by the transferee company.

Limits of tribunal's sanction: non-exemption from taxes, duties and prospective action for statutory violations - Sanction does not confer exemption from stamp duty, taxes, GST or other charges and does not bar action for any statutory violation discovered later. - HELD THAT: - The Tribunal expressly clarified that its sanction is without prejudice to obligations relating to payment of stamp duty, taxes, GST or other statutory charges and that if any deficiency or violation of enactments, rules or regulations is subsequently found, the sanction will not impede action being taken in accordance with law against concerned persons, directors or officials. [Paras 14, 15]

Sanction is subject to payment of statutory dues and does not prevent lawful action for any later-found violations.

Final Conclusion: The Tribunal sanctioned the Scheme of Amalgamation under Sections 230 and 232 of the Companies Act, 2013, approved the transfer of assets, liabilities, proceedings and employees to the transferee company, authorised the prescribed share swap/exchange, accepted statutory filings and undertakings for purposes of sanction, and clarified that the sanction does not exempt the parties from statutory dues or preclude action for any violations in accordance with law.

Application under section 9 of the I & B Code, 2016 - service of notice and ex parte hearing - laches and limitation - power of the Adjudicating Authority to direct Registrar of Companies - order of admission and initiation of CIRP

Laches and limitation - application under section 9 of the I & B Code, 2016 - Whether the Adjudicating Authority was justified in dismissing the Section 9 petition on the ground of laches and limitation. - HELD THAT: - The Tribunal examined the chronology of invoices, the demand notice dated 12.06.2019 and the date of filing of the Section 9 application, and concluded that the petition was filed within the period of limitation as pleaded. The Adjudicating Authority's conclusion that the petition was barred by laches and limitation was held to be erroneous. The Tribunal accepted the appellant's case that the debt fell due in early 2017, that acknowledgement and correspondence supported the claim, and that delay, as found by the Adjudicating Authority, did not warrant dismissal of the petition on the stated grounds. [Paras 14, 16]

The finding of bar by laches and limitation recorded by the Adjudicating Authority is unsustainable and is set aside.

Service of notice and ex parte hearing - application under section 9 of the I & B Code, 2016 - Whether service of notice on the Corporate Debtor was sufficient and whether the Adjudicating Authority should have proceeded notwithstanding non-appearance of the Respondent. - HELD THAT: - The Tribunal noted the record of service relied upon by the Operational Creditor, including notices allegedly served on 03.02.2020 and 08.01.2021 and the Affidavit of Service filed before the Adjudicating Authority, as well as the Adjudicating Authority's own note that the Respondent did not appear on multiple dates. Applying the procedural scheme reflected in the NCLT Rules, including provisions permitting ex parte disposal where service is effective and the respondent does not appear, the Tribunal held that the Adjudicating Authority ought to have recorded service as sufficient and proceeded in accordance with Rule 49 rather than treating non-appearance as a reason to decline relief. [Paras 11, 13, 16]

Service was to be regarded as sufficient and non-appearance did not justify the Adjudicating Authority's refusal to proceed; the Adjudicating Authority erred in this regard.

Power of the Adjudicating Authority to direct Registrar of Companies - order of admission and initiation of CIRP - Whether the Adjudicating Authority could direct the Registrar of Companies to examine statutory compliance of the Corporate Debtor and take action affecting the Operational Creditor's remedy. - HELD THAT: - The Tribunal observed that the Adjudicating Authority issued directions to the Registrar of Companies to examine compliance and take action, and to consider the petitioner's interest while doing so. The Tribunal concluded that issuing such a 'slew of directions' to the ROC in lieu of deciding the Section 9 petition was not permissible in the exercise of powers under the Code. The appellate forum found those directions to be inappropriate and beyond what the Adjudicating Authority could legitimately substitute for admission or rejection of the petition under the Code. [Paras 16]

The directions issued to the Registrar of Companies were not countenanced and are set aside.

Final Conclusion: The appeal is allowed; the impugned order dated 23.02.2021 is set aside. The NCLT is directed to restore the Section 9 petition to its file, pass an order of admission and proceed in accordance with law. No costs.

Eligibility to submit a resolution plan in individual capacity - promoter of an MSME entitled to submit a resolution plan without competing with other resolution applicants in exceptional circumstances - registration as an MSME by Udyam Registration and issuance of Udyam Registration Certificate - tangible net worth eligibility criterion for prospective resolution applicants - power under Section 60(5) of the Insolvency and Bankruptcy Code to grant directions to the resolution professional - Committee of Creditors' discretion to fix or relax eligibility criteria

Eligibility to submit a resolution plan in individual capacity - tangible net worth eligibility criterion for prospective resolution applicants - Committee of Creditors' discretion to fix or relax eligibility criteria - The applicant cannot submit a resolution plan in the name of the Corporate Debtor but may submit in his individual capacity and must meet the eligibility criteria fixed by the Committee of Creditors unless this Tribunal directs otherwise. - HELD THAT: - The Tribunal observed that under the IBBI regulations the Corporate Debtor itself cannot submit a resolution plan during CIRP; accordingly the expression of interest filed in the name of the Corporate Debtor was defective. The applicant conceded that he would submit in his individual capacity. The Committee of Creditors had fixed a minimum tangible net worth requirement for prospective resolution applicants and, on the record, the applicant failed to produce the net worth certificate despite being given opportunity. The CoC considered and rejected the applicant's request for relaxation of the eligibility criterion. The Tribunal therefore directed that the applicant may submit the EOI/Resolution Plan in his individual capacity within two weeks, and that the RP shall consider and publish the list of prospective resolution applicants after the applicant complies with the eligibility requirements and produces the required net worth certificate. [Paras 3, 5, 10]

Applicant must file the EOI/Resolution Plan in his individual capacity and satisfy the tangible net worth eligibility criterion fixed by the Committee of Creditors; on compliance the RP shall consider and publish the list of prospective resolution applicants.

Promoter of an MSME entitled to submit a resolution plan without competing with other resolution applicants in exceptional circumstances - registration as an MSME by Udyam Registration and issuance of Udyam Registration Certificate - power under Section 60(5) of the Insolvency and Bankruptcy Code to grant directions to the resolution professional - The Corporate Debtor qualifies as an MSME under the revised MSME notification and, subject to production of Udyam Registration, the applicant as promoter may be permitted to submit a resolution plan with the RP registering the Corporate Debtor as an MSME for the purposes of the CIRP. - HELD THAT: - The Tribunal examined the Gazette Notification dated 26.6.2020 which revised the MSME classification and the Udyam Registration procedure. The RP accepted that the Corporate Debtor meets the revised MSME criteria and that the notification was issued after commencement of CIRP; the RP indicated willingness to accept a resolution plan from the applicant if directed by the Tribunal. Relying on NCLAT authority that Parliament intended to permit promoters of MSMEs to file resolution plans and that in exceptional circumstances promoters need not compete with other resolution applicants if the plan is viable and satisfies creditors, and on the overarching objects of the I&B Code to maximise asset value, the Tribunal directed that upon production of the Udyam Registration Certificate by the applicant the RP shall register the Corporate Debtor as an MSME and consider the applicant's EOI/RP. [Paras 6, 7, 8, 9, 10]

Since the Corporate Debtor qualifies as an MSME under the revised norms, the RP shall register it as an MSME upon production of the Udyam Registration Certificate and consider the applicant's EOI/RP accordingly.

Final Conclusion: Application disposed of: applicant permitted to submit EOI/Resolution Plan in his individual capacity within two weeks; upon production of Udyam Registration Certificate the Resolution Professional shall register the Corporate Debtor as an MSME and consider the applicant's submission and publish the list of prospective resolution applicants.

Condonation of delay - sufficient cause - ineligibility under Section 29A - competent forum for complaint against Resolution Professional - non-maintainability of relief under Part III provision invoked

Condonation of delay - sufficient cause - Condonation of delay of 381 days in filing the main application - HELD THAT: - The Applicants sought condonation of delay of 381 days relying primarily on alleged late receipt of records and administrative difficulties. The Tribunal examined the averments and the reply of Respondent No.2 which pointed to earlier litigation and finality of orders rejecting the Applicants' contentions. The Tribunal found that the Applicants have not furnished any explanation constituting sufficient cause for the extensive delay and that the only ground advanced - administrative reasons - was unsupported and inadequate. In view of the absence of a satisfactory explanation and having regard to the finality of earlier proceedings and implementation of the approved Resolution Plan, the Tribunal concluded that condonation of delay cannot be granted. [Paras 18, 19]

Application for condonation of delay of 381 days dismissed (without costs).

Competent forum for complaint against Resolution Professional - non-maintainability of relief under Part III provision invoked - ineligibility under Section 29A - Maintainability of the main reliefs invoking Section 87 and appropriate forum for allegations against the Resolution Professional - HELD THAT: - The Tribunal observed that the Applicants had sought substantive reliefs under Section 87 of the IBC, 2016; however, Section 87 falls under Part III of the Code which pertains to insolvency resolution for individuals and firms, and the Applicants did not explain their entitlement to invoke that provision in the present corporate insolvency context. Further, the Tribunal noted that challenges to the Applicants' eligibility (including reliance on Section 29A) had been raised and litigated earlier, with those challenges having attained finality. As to allegations concerning the conduct of the Resolution Professional, the Tribunal held that grievances of that nature fall to be pursued before the statutory regulator (the IBBI) and not before this Tribunal, so that, if established, regulatory action may follow under the appropriate regime. [Paras 7, 16, 17]

Reliefs predicated on Section 87 were held not to be properly invoked in this corporate insolvency matter and complaints about the Resolution Professional were directed to be pursued before the IBBI rather than before the Tribunal.

Final Conclusion: The application for condonation of delay is dismissed (without costs). The Tribunal declined to entertain substantive reliefs framed under Section 87 in this corporate insolvency matter and directed that any complaint regarding the conduct of the Resolution Professional be pursued before the IBBI as the appropriate regulator.

Corporate Insolvency Resolution Process - debt and default - moratorium - interim resolution professional appointment - public announcement and claims - jurisdiction to adjudicate insolvency application

Corporate Insolvency Resolution Process - debt and default - Admission of the application under Section 7 of the Insolvency and Bankruptcy Code, 2016 and initiation of CIRP against the corporate debtor. - HELD THAT: - The Tribunal found that a loan in the form of an inter-corporate deposit originally advanced and subsequently assigned to the financial creditor was due and the corporate debtor had defaulted in repayment. The corporate debtor admitted availing the loan with interest and its inability to repay. On the material placed before it, the Tribunal concluded that the existence of debt and occurrence of default were established and therefore the statutory preconditions for admission under Section 7 were satisfied.

The Section 7 application is admitted and the Corporate Insolvency Resolution Process against the corporate debtor is initiated.

Moratorium - public announcement and claims - Declaration and scope of moratorium consequent to admission of the CIRP and requirement of public announcement and claims submission. - HELD THAT: - Following admission, the Tribunal declared a moratorium in accordance with the Code, specifying that during the moratorium period suits or proceedings against the corporate debtor, transfer or disposal of assets, enforcement of security, and recovery of property occupied by the corporate debtor are prohibited. The Tribunal directed that the Interim Resolution Professional cause a public announcement of the initiation of CIRP and invite submission of claims as required by the Code, and recorded that the moratorium will continue until approval of a resolution plan or an order for liquidation, as applicable.

A moratorium is declared with the prescribed scope and a public announcement calling for claims is directed to be made immediately.

Interim resolution professional appointment - public announcement and claims - Appointment of Interim Resolution Professional (IRP) and delineation of immediate duties and timelines. - HELD THAT: - The Tribunal appointed the named IRP to ascertain particulars of creditors, make the public announcement, call for claims, convene the Committee of Creditors, and perform other functions under the Code. The IRP was directed to produce Form-2 and written communication within one week of receipt of the order and to convene the meeting of the Committee of Creditors and identify prospective resolution applicants within 105 days from the insolvency commencement date. The Registry was directed to communicate the order to the financial creditor, corporate debtor and the IRP.

Ms. Varalakshmi Narala is appointed as the Interim Resolution Professional and directed to perform the stated duties within the prescribed timelines; registry to communicate the order.

Jurisdiction to adjudicate insolvency application - Maintainability and jurisdiction of the Adjudicating Authority to hear the Section 7 application. - HELD THAT: - The Tribunal noted that the registered office of the corporate debtor falls within the territorial jurisdiction of the Bench and accordingly held that the Adjudicating Authority has jurisdiction to entertain the Section 7 application.

The Adjudicating Authority has jurisdiction to hear and decide the insolvency application.

Final Conclusion: The Tribunal admitted the Section 7 petition against the corporate debtor, declared the moratorium with the statutory prohibitions, appointed an Interim Resolution Professional with specific duties and timelines (including immediate public announcement and convening the Committee of Creditors), and directed communication of the order; the Bench also recorded its territorial jurisdiction to adjudicate the application.

Operational debt - Default under IBC, 2016 - Corporate Insolvency Resolution Process (CIRP) initiation under Section 9(5) of IBC, 2016 - Compliance with statutory demand notice under Section 8 of IBC, 2016 - Pecuniary jurisdiction and threshold limit under IBC, 2016 - Moratorium under Section 14 of IBC, 2016 - Appointment of Interim Resolution Professional

Operational debt - Default under IBC, 2016 - Existence of an operational debt and default by the Corporate Debtor payable to the Operational Creditor - HELD THAT: - The Tribunal considered the invoices, debit notes and statement of account placed in Part IV and Part V of the application and the unchallenged submissions of the Operational Creditor that services were rendered and payments remained outstanding for shipments handled between 25.08.2016 and 14.11.2016. In the absence of any defence or dispute from the Corporate Debtor despite service of notice, the Tribunal found that the claim was not disputed and that the Corporate Debtor had committed default in repayment of the operational debt. The Tribunal therefore concluded that the existence of an operational debt and default were established on the materials before it. [Paras 9, 11]

The operational debt and default were proved and accepted; the Corporate Debtor is liable to pay the claimed sum.

Compliance with statutory demand notice under Section 8 of IBC, 2016 - Sufficiency of statutory demand notice and affidavit in support of the Section 9 application - HELD THAT: - The Tribunal noted that the Operational Creditor issued the statutory demand notice under Section 8 on 05.06.2018 and filed the affidavit required under Section 9(3)(b), as placed on record. The Corporate Debtor did not raise any dispute in relation to the amounts after service of the demand notice and did not appear before the Tribunal. On these facts, the Tribunal held that the statutory requirements relating to demand and supporting affidavit for initiation under Section 9 were satisfied. [Paras 7]

The demand notice and supporting affidavit were in order and sufficed for initiation of proceedings under Section 9.

Pecuniary jurisdiction and threshold limit under IBC, 2016 - Tribunal's pecuniary jurisdiction to admit the Section 9 application filed before the threshold enhancement - HELD THAT: - The Tribunal observed that the statutory threshold for filing applications under Section 9 was increased by notification effective 24.03.2020. The present application, however, was filed on 23.01.2020, i.e., prior to the notification effecting the increase. On that basis the Tribunal held that it retained pecuniary jurisdiction to entertain and admit the application as filed before the change in threshold. [Paras 12]

The Tribunal had pecuniary jurisdiction to hear and admit the petition filed on 23.01.2020.

Corporate Insolvency Resolution Process (CIRP) initiation under Section 9(5) of IBC, 2016 - Appointment of Interim Resolution Professional - Admission of the Section 9 petition and appointment of an Interim Resolution Professional - HELD THAT: - Applying the findings that operational debt and default were established, the Tribunal held that the petition met the requirements for admission under Section 9(5) of the Code. As the Operational Creditor had not proposed an IRP, the Tribunal appointed an Interim Resolution Professional from the IBBI list for January-June 2021, subject to requisite disclosures and the absence of pending disciplinary proceedings. The Tribunal directed communication of the order to the parties, IBBI and the Registrar of Companies. [Paras 13, 17]

The petition was admitted under Section 9(5); an Interim Resolution Professional was appointed subject to conditions.

Moratorium under Section 14 of IBC, 2016 - Operation and scope of moratorium consequent to admission of the Section 9 petition - HELD THAT: - On admitting the application, the Tribunal declared the moratorium as provided by Section 14(1), reproducing its prohibitions on institution or continuation of suits, transfer or disposal of assets, enforcement of security interests and recovery of property. The Tribunal further recorded the statutory exceptions and protections for supply of essential goods and services during the moratorium under Sections 14(2), 14(2A) and 14(3), and noted the duration of moratorium as prescribed by Section 14(4). [Paras 13, 14, 15]

Moratorium as envisaged under Section 14 came into effect from the date of the order and will operate until conclusion of the CIRP or earlier as prescribed.

Appointment of Interim Resolution Professional - Direction to deposit amounts for interim resolution professional's expenses - HELD THAT: - The Tribunal directed the Operational Creditor to pay a sum to the Interim Resolution Professional upon her filing the declaration required under the Code to meet expenses of performing her functions, in accordance with the applicable IBBI regulations. [Paras 16]

The Operational Creditor was directed to deposit the specified sum to meet the IRP's expenses upon compliance by the IRP with statutory formalities.

Final Conclusion: The Section 9 petition filed by the Operational Creditor was admitted under Section 9(5) of the IBC, 2016; an Interim Resolution Professional was appointed subject to disclosures and absence of disciplinary proceedings; the moratorium under Section 14 operates from the date of the order; consequential directions, including payment for IRP expenses and communication of the order to relevant authorities, were issued.

Validity of private sale under Regulation 33 of the Liquidation Process Regulations - sale above reserve price as justification for private sale - effect of delivery note and completion of sale - maintainability of challenge to sale after delivery and confirmation - requirement of prior permission for private sale where applicable

Validity of private sale under Regulation 33 of the Liquidation Process Regulations - sale above reserve price as justification for private sale - Sale of Surat material, scrap and sheds by the Liquidator through private sale is valid and not vitiated. - HELD THAT: - The Tribunal found on record that multiple e-auctions had failed and that the sale of the Surat material, scrap and sheds was effected at a price higher than the reserve price fixed in the last failed auction. Regulation 33 permits private sale where the asset is sold at a price higher than the reserve price of a failed auction, and the Liquidator acted within this mode of sale to maximise realizations for stakeholders. The Tribunal recorded that the sale consideration was received and the process was completed in accordance with the Liquidation Process Regulations and stakeholder consultation, and therefore no irregularity was made out in conducting the private sale under Regulation 33. (See findings at paras 20, 22.) [Paras 20, 22]

The private sale is valid as it was conducted above the reserve price and in accordance with Regulation 33.

Effect of delivery note and completion of sale - requirement of prior permission for private sale where applicable - Allegation that the Liquidator entered into private sale prior to obtaining the Adjudicating Authority's permission is not sustainable because the sale was completed only upon issuance of the delivery note after permission was granted. - HELD THAT: - The Tribunal distinguished between an agreement to sell and transfer of ownership, noting that a sale agreement is a promise for future transfer and that transfer is effective only upon satisfaction of conditions and issuance of delivery note. The delivery note in this case was issued on 07.12.2020, while the Adjudicating Authority's order permitting private sale was dated 02.12.2020; hence no transfer occurred before permission. On that basis the contention that the private sale preceded judicial permission was rejected. (See findings at paras 21-22.) [Paras 21, 22]

The contention of pre-permission transfer is unsustainable; the sale became complete only after the delivery note issued post-permission.

Maintainability of challenge to sale after delivery and confirmation - The application by LP Naval challenging the private sale is not maintainable and the interim status quo is to be vacated; the impleading applicant's plea is allowed. - HELD THAT: - Applying settled principle that objections after a sale confirmed should not ordinarily be entertained except on limited grounds like fraud, and having found no material irregularity or collusion, the Tribunal held that the challenge brought by the Applicant (who did not participate in earlier auctions and whose offer was belated and commercially non-viable) cannot be sustained. Consequently the status quo order previously granted was vacated and IA 136 of 2021 dismissed as not maintainable; IA 238 of 2021 was allowed as prayed. (See paras 16, 24-25.) [Paras 16, 24, 25]

The challenge to the private sale is not maintainable and the status quo is vacated; IA 238 of 2021 is allowed.

Final Conclusion: The Tribunal upheld the validity of the Liquidator's private sale of the Surat material, scrap and sheds-concluding the sale was effected post-permission and above the reserve price-and held the challenge by LP Naval to be not maintainable, vacating the earlier status quo; IA 136 of 2021 is dismissed and IA 238 of 2021 is allowed.

Revision of Approved Resolution Plan - Permissibility of change in infusion mechanics and shareholding - Implementation timelines under Approved Resolution Plan - Exclusion of time period from timelines due to external regulatory delay - Role of Asset Reconstruction Companies as Resolution Applicants - Regulation 40C COVID-19 timeline exclusion - Power under Section 60(5) of the IBC and Rule 11 of the NCLT Rules

Revision of Approved Resolution Plan - Permissibility of change in infusion mechanics and shareholding - Power under Section 60(5) of the IBC and Rule 11 of the NCLT Rules - Revision of the Approved Resolution Plan to permit change in infusion mechanics and consequent amendment of shareholding pattern was allowed without affecting stakeholders' rights. - HELD THAT: - The Tribunal found that the proposed amendment-having WLSPL, a consortium member, undertake the equity and debt infusion in place of UVARC-falls within the scope of the Approved Resolution Plan which expressly permits the Resolution Applicant to change the mode and manner of funding and sources of finance subject to intimation to the Monitoring Committee. No stakeholder has objected to the change, the amendment does not alter the treatment of any creditor and is administrative in nature. In view of the Code's objective to revive the corporate debtor and the preservation of stakeholders' rights, the Adjudicating Authority exercised its powers under Section 60(5) IBC read with Rule 11 NCLT Rules to permit the revision so as to enable implementation of the plan. [Paras 21, 22, 24, 25]

Revision permitting change in infusion mechanics and amendment of shareholding pattern is approved; all material terms and creditors' treatment remain unaltered and must be implemented.

Implementation timelines under Approved Resolution Plan - Exclusion of time period from timelines due to external regulatory delay - Regulation 40C COVID-19 timeline exclusion - Power under Section 60(5) of the IBC and Rule 11 of the NCLT Rules - The period between 19.08.2020 and the date of the Tribunal's order is excluded from the timelines for implementing the Approved Resolution Plan. - HELD THAT: - The Tribunal accepted that RBI's rejection dated 19.08.2020 of UVARC's request for permission to infuse equity constituted an external regulatory impediment that prevented implementation. Considering the absence of objection from stakeholders, the invocation of Regulation 40C (which excludes periods of lockdown-related inability to complete activities) and the peculiar circumstances including the pandemic, the Adjudicating Authority exercised its Rule 11 powers to exclude the period from 19.08.2020 to the date of the order from the plan timelines. The Applicant was nonetheless directed to adhere strictly to the timelines as prescribed otherwise. [Paras 26, 27]

Period from 19.08.2020 till date of this order is excluded from the implementation timelines; Applicant must otherwise comply with prescribed timelines.

Role of Asset Reconstruction Companies as Resolution Applicants - Permissibility of change in infusion mechanics and shareholding - There is no bar under the Code for an Asset Reconstruction Company (ARC) to participate as a Resolution Applicant, subject to RBI permissions for infusion of funds or acquisition where required by RBI guidelines and the SARFAESI framework. - HELD THAT: - The Tribunal recorded that ARCs are expressly contemplated by the statutory framework and that ARCs can undertake measures including management takeover and conversion of debt into equity under the SARFAESI regime. While the NCLT noted that an ARC may participate as a Resolution Applicant, it also recorded the Applicant's position that RBI permission is necessary for direct equity infusion by an ARC into the SPV and that RBI had declined such permission in the present case. The Adjudicating Authority further noted stakeholder consensus that no bar exists and approved the administrative revision to funding subject to compliance with applicable regulatory requirements. [Paras 16, 20]

ARCs are not barred from being Resolution Applicants; regulatory permissions (RBI/SARFAESI) required for specific modes of infusion must be observed.

Final Conclusion: Application IA/858/IB/2020 allowed: the Tribunal permitted administrative revision of the Approved Resolution Plan to change infusion mechanics and consequent shareholding amendments (without altering creditors' treatment), recorded that ARCs are not barred from acting as Resolution Applicants while noting applicable RBI permissions, and excluded the period 19.08.2020 to date of the order from the implementation timelines so as to enable execution of the Approved Resolution Plan.

Invocation of performance bank guarantee - moratorium under section 14(1)(c) of the Insolvency and Bankruptcy Code, 2016 - performance bank guarantee excluded from security interest proviso - effect of completion certificate and commercial operation on guarantee invocation - erosion of value of assets and irretrievable loss during corporate insolvency resolution process - case-specific factual enquiry before permitting encashment of bank guarantees

Invocation of performance bank guarantee - moratorium under section 14(1)(c) of the Insolvency and Bankruptcy Code, 2016 - performance bank guarantee excluded from security interest proviso - effect of completion certificate and commercial operation on guarantee invocation - erosion of value of assets and irretrievable loss during corporate insolvency resolution process - Whether respondent No. 1 is entitled to invoke the performance bank guarantee issued by the corporate debtor during the corporate insolvency resolution process when the principal employer has not invoked its guarantee and the project stands completed and in commercial operation. - HELD THAT: - The Tribunal accepted that, as a general principle, performance bank guarantees (PBGs) fall outside the definition of 'security interest' and therefore are not automatically barred by the moratorium. However, the Tribunal examined the facts: the principal employer (NEA) had issued a Completion Certificate and the project was in commercial operation though minor works remained; NEA had not invoked its bank guarantee; respondent No. 1 invoked the counter PBG without showing invocation or demand by NEA and without establishing breach by the corporate debtor in accordance with the contractual notice requirements. Applying the principle that each case must be decided on its facts, the Tribunal concluded that permitting respondent No. 1 to encash the PBG in these circumstances would lead to erosion of the corporate debtor's assets and cause irretrievable loss during CIRP, thereby defeating the objectives of the Code. On that factual basis the Tribunal found no ground to permit invocation by respondent No. 1 despite the general proviso excluding PBGs from the moratorium, and accordingly restrained the invocation. The Tribunal directed respondent No. 1 to quantify any residual works and submit a claim to the Resolution Professional rather than encashing the BG. [Paras 19, 20, 21, 22, 23]

Application allowed; respondent No. 1 restrained from invoking the bank guarantee and directed to crystallise residuary works and file a claim with the Resolution Professional.

Final Conclusion: On the facts, although performance bank guarantees are generally not covered by the moratorium, respondent No. 1 was restrained from invoking the PBG because the principal employer had not invoked its guarantee, the project was in commercial operation with only minor pending works, and encashment would erode the corporate debtor's assets during CIRP; respondent No. 1 was directed to quantify residual works and file a claim with the Resolution Professional.

Initiation of corporate insolvency resolution process - admission of insolvency petition filed by a financial creditor - debt and default not in dispute - appointment of interim resolution professional - provisional eligibility of insolvency professional - declaration of moratorium - duties and reporting obligations of the interim resolution professional - obligation of board of directors to cooperate with the IRP

Debt and default not in dispute - admission of insolvency petition filed by a financial creditor - The Company Petition filed by the financial creditor was admissible and fit for initiation of CIRP as the debt and default were not disputed by the corporate debtor. - HELD THAT: - The Tribunal noted that the corporate debtor did not dispute the existence of the loan agreement, the advancing of the loan, or the amount claimed by the petitioner. The pleadings and submissions established that the debt and default existed and were admitted by the corporate debtor. Having regard to the extant provisions of the Code and the rules, and in view of the admitted default, the Tribunal found the petition filed by the financial creditor to be maintainable and appropriate for admission and initiation of the corporate insolvency resolution process. [Paras 8]

C.P.(IB) No. 204/BB/2020 was admitted and CIRP initiated against the corporate debtor.

Appointment of interim resolution professional - provisional eligibility of insolvency professional - A suggested insolvency professional was appointed as Interim Resolution Professional (IRP) after being found provisionally eligible. - HELD THAT: - The petitioner proposed an insolvency professional who filed a written consent in the prescribed Form-2 and declared that no disciplinary proceedings were pending against him. The Tribunal observed that the proposed professional was currently serving as a liquidator in one liquidation proceeding but, on the material before it, was provisionally eligible to be appointed as IRP. Consequently, the Tribunal exercised its powers to appoint the proposed professional to carry out the CIRP in accordance with the Code and applicable rules. [Paras 8, 9]

Shri Venkata Subbarao Kalva was appointed as the Interim Resolution Professional in respect of the corporate debtor.

Declaration of moratorium - duties and reporting obligations of the interim resolution professional - obligation of board of directors to cooperate with the IRP - A moratorium was declared and consequential directions were issued to the IRP and the corporate debtor's board regarding conduct of the CIRP. - HELD THAT: - On admission of the petition and appointment of the IRP, the Tribunal declared the statutory moratorium prohibiting initiation or continuation of suits, transfer or disposal of assets, enforcement of security interests, recovery of leased property, and termination of essential supplies as set out in the order, to remain in effect for the duration of the CIRP. The IRP was directed to perform functions under the Code and applicable rules, file progress reports with the Adjudicating Authority, and follow fee and other regulatory prescriptions; the board of directors and staff were directed to extend full cooperation to the IRP. Administrative directions for service of the order and listing for the IRP's report were also given. [Paras 9]

Moratorium declared with specified prohibitions; IRP directed to carry out CIRP duties and report to the Adjudicating Authority; board and staff directed to cooperate; matter listed for IRP's report.

Final Conclusion: The Tribunal admitted the petition filed by the financial creditor, initiated CIRP against M/s. SWE Fashions Private Limited, appointed a provisionally eligible IRP, declared the statutory moratorium, and issued consequential directions to the IRP and the corporate debtor for conduct of the resolution process.

Time-bar/limitation of tax demand - extended period invocation requires suppression, fraud or collusion - penalty invalid where demand is barred by limitation - genuine doubt arising from departmental clarification

Time-bar/limitation of tax demand - extended period invocation requires suppression, fraud or collusion - genuine doubt arising from departmental clarification - penalty invalid where demand is barred by limitation - Demand of service tax for the period prior to registration is time barred and consequent penalties are not sustainable. - HELD THAT: - The writ court applied the reasoning in the appellate order in Appeal No.170 of 2010 which held that the departmental clarification by the Chief Commissioner (C.No.IV/623/2007 CZO (ST) dated 16.03.2007) established that the concerned regional testing laboratory had bona fide doubts regarding classification as Sovereign / Public Authority. The department had actual knowledge that the laboratory had not paid service tax prior to October 2004 yet delayed issuing the show cause notice until April 2007. Invocation of the extended limitation period requires affirmative elements such as suppression, fraud or collusion with intent to evade tax; such elements were not satisfied where the assessee had sought clarification and subsequently registered and began payment. On these facts the demand for the earlier period was held to be barred by limitation and the penalties imposed in the original order could not be sustained.

Impugned order upholding demand and penalty set aside; writ petition allowed on the ground that the demand for the earlier period is time barred and penalties are invalid.

Final Conclusion: The writ petition was allowed: the tax demand for the pre registration period was held to be barred by limitation and the penalties imposed in the original order were set aside; the impugned appellate order was quashed to this extent.

Computation of limitation - date of original filing - refund under Rule 5 of Cenvat Credit Rules, 2004 - compliance with Notification No.07/2012-CE(NT) - clauses 2(g) and 2(h) - evidence of debit in Cenvat account by ST-3 returns - processing of refund claims on merits

Computation of limitation - date of original filing - refund under Rule 5 of Cenvat Credit Rules, 2004 - Date of original submission of refund claim is the relevant date for computing the one-year limitation; re-submission date cannot be treated as the date of filing. - HELD THAT: - The Tribunal found from the impugned order's table that the lower authorities had computed the limitation period from the dates on which refund claims were re-submitted after departmental scrutiny. This approach was held to be contrary to law. The date on which the refund claims were originally submitted must be reckoned for computing the one-year limitation under the relevant statutory scheme. Reliance placed on earlier decisions supporting that the date of re-submission cannot be taken for limitation was accepted. When limitation is computed from the original filing date, the refund claims in these appeals fall within time and the finding that they are time-barred was set aside. [Paras 6]

Finding that the refund claims were time-barred is set aside; original filing date governs computation of limitation and the claims are within time.

Compliance with Notification No.07/2012-CE(NT) - clauses 2(g) and 2(h) - evidence of debit in Cenvat account by ST-3 returns - Rejection of the refund claim for April 2017 to June 2017 on the ground of non-compliance with clauses 2(g) and 2(h) of Notification No.07/2012-CE(NT) is unsustainable where ST-3 returns show the required debit in the Cenvat account. - HELD THAT: - The impugned order alleged that the appellant had not debited the claimed amount in the Cenvat account prior to filing the refund claim and that the balance in the Cenvat account had not been brought below the refund claim as required by the notification. The Tribunal examined the appellant's ST-3 returns submitted in the appeal papers and concluded that the returns evidenced the debit in the Cenvat account corresponding to the refund claims. On that basis both clause 2(h) (debit requirement) and clause 2(g) (balance requirement) were found to be complied with for the quarter in question. Consequently, the rejection of the refund claim for April, 2017 to June, 2017 was held not sustainable and was set aside. [Paras 7]

Rejection of the refund claim for April, 2017 to June, 2017 for non-compliance with clauses 2(g) and 2(h) is set aside; the ST-3 returns evidence compliance.

Processing of refund claims on merits - All refund claims are to be processed afresh on merits by the Refund Sanctioning Authority. - HELD THAT: - Having set aside the findings of time-bar and of non-compliance for the specified period, the Tribunal directed that the refund claims not be finally rejected on those grounds and ordered that the Refund Sanctioning Authority proceed to process the refund claims on merits. The appeals were allowed to the extent of directing merit consideration by the authority below. [Paras 8]

Refund Sanctioning Authority directed to process the refund claims on merits; appeals allowed accordingly.

Final Conclusion: The Tribunal set aside the impugned rejections: (1) the original filing date governs computation of the one-year limitation and the claims are within time; (2) the rejection for April-June 2017 for non-compliance with clauses 2(g) and 2(h) is unsustainable in view of ST-3 returns evidencing the debit; and the Refund Sanctioning Authority is directed to process all refund claims on merits.

Debit of Cenvat credit on filing refund claim - refund of unutilized Cenvat credit for export of service under Rule 5 of Cenvat Credit Rules, 2004 - effect of transition to GST on deemed reversal of Cenvat credit - Notification No.27/2012-CE (NT) dated 18.6.2012

Debit of Cenvat credit on filing refund claim - Notification No.27/2012-CE (NT) dated 18.6.2012 - effect of transition to GST on deemed reversal of Cenvat credit - refund of unutilized Cenvat credit for export of service under Rule 5 of Cenvat Credit Rules, 2004 - Whether the appellant complied with the requirement to debit the Cenvat credit account in terms of Notification No.27/2012-CE (NT) dated 18.6.2012 and whether non-reversal at the time of transition to GST vitiated the refund claim. - HELD THAT: - The appellate tribunal found on the record that the appellant had debited the amount of the refund claim in the Cenvat credit account at the time of filing the refund application, as reflected in paragraphs 3 and 4 of the Order-in-Original. Notification No.27/2012-CE (NT) dated 18.6.2012 mandates debit of the amount of refund claim in the Cenvat credit account at the time of filing the refund claim. The authorities below held that a reversal was required on introduction of the GST regime on 1.7.2017 (i.e., a deemed reversal on transition) and treated the absence of such reversal on that date as fatal to the refund claim. The Tribunal held those observations to be contrary to the clear requirement of the Notification which links the debit obligation to the act of filing the refund claim. Because the appellant had complied with the Notification by debiting the Cenvat credit account when filing the refund, the rejection by the authorities below was not sustainable. [Paras 3, 4, 5, 6]

Impugned order rejecting the refund claim is set aside; appeal allowed and refund claim accepted subject to consequential relief, if any.

Final Conclusion: The Tribunal allowed the appeal, holding that the appellant complied with Notification No.27/2012-CE (NT) dated 18.6.2012 by debiting the Cenvat credit account at the time of filing the refund claim and that the authorities erred in rejecting the claim on the ground of non-reversal on transition to GST; the rejection is set aside with consequential relief.

Manufacture - repacking versus manufacture - excisability of goods - judicial review of factual/adjudicatory determinations - expert inspection and departmental adjudication - remand to appellate/adjudicatory authority - refund under Section 11B of the Central Excise Act, 1944

Manufacture - repacking versus manufacture - excisability of goods - expert inspection and departmental adjudication - remand to appellate/adjudicatory authority - Whether the petitioner's process of cutting, mixing and packing raw tobacco results in 'manufacture' rendering the product excisable, and whether the High Court can decide that question in writ proceedings. - HELD THAT: - The affidavit (paragraph 13) admits that the petitioner procures raw tobacco and other ingredients, cuts tobacco, powders and mixes ingredients, prepares jaggery paste and mixes and allows settling before pouching. Those factual admissions indicate processes beyond mere mechanical repacking and require detailed adjudication with reference to the final product and the processes undertaken. The High Court observed that it is not an expert fact-finding forum to determine whether such processes amount to manufacture; that determination must be made by the competent departmental authorities after inspection and by the appellate forum on evidence. Given that appeals are pending/closed for statistical purposes before the Tribunal, the appropriate course is to permit the petitioner to pursue reopening/relief before the Tribunal or seek departmental adjudication rather than have the High Court decide the factual question in writ jurisdiction. The Court therefore did not adjudicate the excisability on merits but left the matter to the competent authorities and the Tribunal for adjudication in accordance with law. [Paras 8, 9, 10, 11, 12]

Petition seeking declaration that the product is not excisable is not decided on merits; matter is left for adjudication by the departmental authorities and the Tribunal and the petitioner is at liberty to pursue reopening/appeal in the manner known to law.

Refund under Section 11B of the Central Excise Act, 1944 - remand to departmental authorities - Application for refund of central excise duty and the procedure to be followed. - HELD THAT: - The Court directed that the petitioner, if seeking refund of central excise duty, should file an appropriate application under Section 11B of the Central Excise Act, 1944. The authorities are obligated to consider such application on merits and in accordance with law and procedures and decide it as expeditiously as possible. [Paras 13]

Petitioner to file appropriate application under Section 11B; competent authorities to decide the application on merits and in accordance with law expeditiously.

Final Conclusion: Writ petitions disposed: the High Court declined to decide on the excisability/manufacture question on merits, leaving detailed factual adjudication to the departmental authorities and the Tribunal (petitioner permitted to seek reopening); refund claim to be pursued by filing application under Section 11B to be decided by competent authorities expeditiously; no costs.

Extended period of limitation - time-barred show cause notice - cenvat credit - exemption notification - divergent adjudication

Extended period of limitation - time-barred show cause notice - cenvat credit - divergent adjudication - Whether the show cause notices issued by invoking the extended period of limitation are time barred, thereby rendering the demand and denial of cenvat credit unsustainable - HELD THAT: - The appellants confined their challenge to limitation. The Tribunal observed there was no statutory requirement compelling the appellants to file invoices before the department within a specified time. Noting that adjudicating authorities had allowed credit in certain instances and that divergent views were pending on appeal, the Tribunal held that invocation of the extended period of limitation was not permissible in the facts of the case. The Tribunal relied on earlier decisions of this forum which took a similar view in favour of the assessees, including Saraswati Agro Chemicals (India) Pvt. Ltd. and Dharampal Satyapal Limited , the latter having been considered on merits. Having found the show cause notices issued after invoking the extended period to be time barred, the Tribunal concluded that the denial of credit was barred by limitation. [Paras 6, 7]

Show cause notices issued invoking the extended period of limitation are time barred; the demand and denial of cenvat credit are barred by limitation and the impugned order is set aside.

Final Conclusion: The appeals are allowed; the impugned order denying cenvat credit is set aside on the ground that the show cause notices were time barred, with consequential relief, if any.

Eligibility for cenvat credit of service tax on goods transportation agency (GTA) services for outward transportation - inclusion of freight in assessable value and discharge of excise duty - followed precedent and binding effect of Tribunal/High Court decisions

Eligibility for cenvat credit of service tax on goods transportation agency (GTA) services for outward transportation - inclusion of freight in assessable value and discharge of excise duty - Appellant entitled to cenvat credit of service tax paid on GTA/freight services for transportation of goods from factory to buyer's premises where freight was included in assessable value and excise duty was discharged thereon. - HELD THAT: - The Tribunal found the issue covered by the appellant's earlier favourable final order and by the Division Bench decision in Ultratech Cement Ltd. v. CCE, which was affirmed by the High Court of Gujarat. The Commissioner (Appeals) had recorded that the appellants included freight charges in the assessable value and discharged excise duty on those charges; consequently, service tax paid on outward freight qualifies for cenvat credit. In view of the binding precedents and the admitted inclusion of freight in assessable value with duty paid, the demand for recovery of credit was unsustainable.

Impugned orders set aside; appeals allowed and appellant granted consequential relief as per law.

Final Conclusion: Where freight for outward transportation is included in the assessable value and excise duty is discharged thereon, service tax paid on GTA/freight services is eligible for cenvat credit; impugned demands set aside and appeals allowed following the Tribunal and High Court precedents.

Extended period of limitation - time-barred show cause notice - cenvat credit - divergent view of adjudicating authorities

Extended period of limitation - time-barred show cause notice - cenvat credit - divergent view of adjudicating authorities - The extended period of limitation invoked in the show cause notice is not invokable and the demand is barred by limitation. - HELD THAT: - The appellant challenged the show cause notice on limitation grounds for the period July 2012 to January 2014. The Tribunal observed that there is no legal provision obliging the appellant to file invoices with the department within the relevant period. The adjudicating authority had allowed credit to the assessee while the Revenue had preferred appeals, leading to divergent views among authorities. In such circumstances the Tribunal held that invocation of the extended period of limitation was not justified. The Tribunal noted and relied on its prior decisions in Saraswati Agro Chemicals (India) Pvt. Ltd. and Dharampal Satyapal Limited, the latter also addressing the merits in favour of entitlement to cenvat credit. Having found the show cause notice to be time-barred, the denial of credit was held to be barred by limitation. [Paras 6, 7]

Show cause notice issued by invoking the extended period is time-barred; the demand is barred by limitation and the impugned order is set aside, appeal allowed with consequential relief.

Final Conclusion: The Tribunal set aside the impugned order and allowed the appeal on the ground that the show cause notice issued by invoking the extended period of limitation in respect of July 2012 to January 2014 was time-barred, with consequential relief as appropriate.

Best judgment assessment - limitation for assessment - service and communication of assessment order - manual issuance of assessment orders under internal circular No.4A of 2020 - electronic service of orders and notices - alternative remedy and writ jurisdiction where lack of jurisdiction

Best judgment assessment - limitation for assessment - manual issuance of assessment orders under internal circular No.4A of 2020 - Assessment orders alleged to have been passed on 20.03.2020 were within limitation or otherwise validly passed on or before 31.03.2020. - HELD THAT: - The Court examined the record, statutory limitation under section 23(2) of the MVAT Act (four years for assessments under that subsection) and the internal circular No.4A of 2020 which prescribed a specific procedure for manual issuance and service of orders falling for limitation on 31.03.2020. The material shows that the impugned assessments were stated to be passed manually on 20.03.2020 but the record lacks the mandatory indicia required by the circular (sealed, dated, stamped and manually served with acknowledgment) and contains internal inconsistencies: absence of show-cause/administrative approvals mandated by departmental guidance for ex-parte best-judgment assessments, missing endorsement of date of service, contradictory system upload/download dates and versions, and emailed copies first sent only in July/September 2020. The internal circular also prohibited serving manually passed speaking orders electronically and required the date of manual service to govern legal consequences. Given these anomalies and the timing of uploading/signing and service, the only logical inference is that the impugned orders could not have been validly passed and served on or before 31.03.2020 and were therefore outside the limitation prescribed for the assessment period 01.04.2015 to 31.03.2016. [Paras 33, 36, 39, 40, 41]

Impugned assessment orders were not validly passed and served on or before 31.03.2020 and thus are barred by limitation and non est in law.

Service and communication of assessment order - electronic service of orders and notices - alternative remedy and writ jurisdiction where lack of jurisdiction - Whether an assessment order is effective if only kept in file and not communicated to the assessee; and whether alternative statutory remedy bars writ relief when order is beyond jurisdiction. - HELD THAT: - The Court applied established principles that an order affecting rights must be communicated to the party-mere preparation or retention of an order in file does not constitute an effective order for limitation or for invoking appellate remedies. Authorities cited in the judgment establish that actual or constructive communication is essential to make an order operative for purposes of appeal or limitation. Rule 87 of the MVAT Rules permits electronic service, but the departmental internal circular specifically required manual service for orders passed manually and treated the date of manual service as determinative; this reinforces that an order kept in file without proper communication cannot be treated as made for legal purposes. On the question of alternative remedy, the Court held that where an order is vitiated for want of jurisdiction (here being time-barred), the availability of an appellate remedy does not preclude exercise of writ jurisdiction; in such circumstances requiring exhaustion of appeal would be an idle formality. [Paras 36, 37, 43, 44, 45]

An order kept in file but not communicated in the prescribed manner is not effective; when an order is beyond jurisdiction (time-barred), the petitioner is not restricted to the appellate forum and may seek writ relief.

Final Conclusion: The impugned assessment orders and consequential demand notices dated 20.03.2020 (for the assessment period 01.04.2015 to 31.03.2016) are set aside and quashed as they were not validly passed and served on or before the expiry of limitation and are thus non est in law; the writ petition is allowed with no order as to costs.

Prescribed form under statutory Rules - audit of accounts and furnishing of audit report - penalty for failure to furnish audit report - strict construction of penal provision - incorporation by reference of external statute - estoppel by subsequent conduct

Prescribed form under statutory Rules - penalty for failure to furnish audit report - strict construction of penal provision - Validity of imposing penalty under Section 53(3) where no 'prescribed form' for the audit report was provided under the Rules. - HELD THAT: - Section 53(1) requires a dealer whose turnover exceeds the threshold to obtain an audit report "in the prescribed form" and to set forth particulars "as may be prescribed", and subsection (2) requires furnishing a true copy of that report within the specified time. The statutory definition of "prescribed" refers to prescription by the Rules under the Act. Since the Rules made under the TVAT Act did not prescribe the form or the particulars to be furnished, the pre-condition for invocation of the penal provision in subsection (3) was not satisfied. Subsection (3) is penal in nature and must be strictly construed; therefore penalty could not be imposed in the absence of the rule-making prescription. The State's contention that the form under the Chartered Accountants Act could be adopted by implication or incorporation by reference was rejected because no notification or rule adopted such incorporation and the Legislature had required prescription under the Rules. [Paras 10, 11]

Penalty under Section 53(3) could not be imposed for the years in question because the Rules did not prescribe the form or particulars required under Section 53(1) and (2).

Estoppel by subsequent conduct - audit of accounts and furnishing of audit report - Whether the petitioner's later filing of audit reports for other years estops it from challenging the absence of prescribed form for the periods in question. - HELD THAT: - The Court held that the petitioner filing an audit report for a later year (2018-19) does not estop it from asserting the legal contention that no form was prescribed for the years 2010-11 to 2012-13. The department's oral assertion about subsequent filings was not part of the penalty order or the affidavits, and even if the petitioner had filed reports for other years that conduct would not extinguish a pure legal defence that the statutory pre-condition for penalty was not met for the years under challenge. [Paras 12]

Subsequent or other-year filings did not preclude the petitioner from contending that absence of prescription under the Rules precluded penalty for 2010-11, 2011-12 and 2012-13.

Prescribed form under statutory Rules - Whether the Division Bench decision in Ruchi Soya Industries Ltd. disposes of the legal contention that absence of a prescribed form under the Rules precludes penalty under Section 53(3). - HELD THAT: - The Court observed that the Division Bench in Ruchi Soya proceeded on the factual basis that the petitioner there had not pleaded non-availability of a prescribed form as a reason for non-submission; accordingly that decision did not examine or decide the legal point raised in the present petitions regarding the necessity of prescription under the Rules. Therefore Ruchi Soya does not preclude consideration of the legal contention raised here. [Paras 13, 14]

Ruchi Soya Industries Ltd. did not decide the present legal question and therefore does not bar the petitioner's challenge.

Final Conclusion: The penalty order dated 10.06.2019 was quashed and the petitions allowed because the Rules under the TVAT Act did not prescribe the audit report form or particulars required by Section 53(1)-(2), hence subsection (3) could not be invoked for the years 2010-11, 2011-12 and 2012-13.

Registration necessary to claim concessional rate under the Central Sales Tax regime - liability to pay tax under the CST Act independent of registration - amendment of certificate of registration under Section 19(5) of the T VAT Act - power to amend registration with retrospective effect - procedure for amendment under Rule 16 of the TVAT Rules

Registration necessary to claim concessional rate under the Central Sales Tax regime - liability to pay tax under the CST Act independent of registration - Whether C Forms could be issued in favour of the petitioner without amendment of the dealer's registration following death of the sole proprietor. - HELD THAT: - The Court held that while liability to pay tax under Section 6 of the CST Act is independent of registration, entitlement to the concessional rate (and hence issuance of C Forms) is linked to registration status. Section 7 contemplates registration of dealers liable to tax and Section 8 prescribes concessional tax for sales to a registered dealer; accordingly a valid registration is necessary to claim the concessional rate on inter State sales. The petitioner's demand for issuance of C Forms without first amending the registration therefore could not be acceded to. [Paras 6]

C Forms cannot be demanded and issued as of right without amendment of the registration; entitlement to concessional inter State rate requires valid registration.

Amendment of certificate of registration under Section 19(5) of the T VAT Act - power to amend registration with retrospective effect - procedure for amendment under Rule 16 of the TVAT Rules - Whether and how the registration may be amended given the department's awareness of succession to the proprietary concern, and what further steps are to follow. - HELD THAT: - The Court observed that information of the proprietor's death and continuation of business by legal heirs was available with the department. Section 19(5) of the T VAT Act permits the Commissioner to amend a certificate of registration (including with retrospective effect) in accordance with information furnished or otherwise received, and Rule 16 prescribes the application and inquiry procedure for amendment. The Court directed the petitioner to apply within two weeks for amendment of the registration; the Superintendent must consider the application expeditiously under Section 19(5) and Rule 16 and, if accepted, make the amendment effective from the date of death of the sole proprietor. The question of issuing C Forms on inter State transactions was not decided on merits and is left to be decided by the authorities after amendment of registration. [Paras 7, 8, 9, 10]

Petitioner to apply for amendment of registration within two weeks; authorities to decide expeditiously under Section 19(5) T VAT Act and Rule 16 TVAT Rules, with any accepted amendment to have effect from the date of death; grant of C Forms to be considered afresh on merits thereafter.

Final Conclusion: Petition disposed with directions that the petitioner may apply within two weeks for amendment of the dealer's registration; the Superintendent/Commissioner shall consider and dispose of the application under Section 19(5) T VAT Act and Rule 16 TVAT Rules (any amendment accepted to operate from date of death of the sole proprietor); entitlement to C Forms is contingent on valid registration and the question of issuing C Forms is left to be decided by the authorities on merits after amendment.

Classification under a specific entry v. residuary entry - brand name v. mere producer's name on packaging - procedural fairness / absence of personal hearing for departmental clarification - quashing of departmental clarification and reassessment - refund/adjustment of excess tax collected

Classification under a specific entry v. residuary entry - brand name v. mere producer's name on packaging - Whether confectionery produced and sold by the petitioners, bearing the producer's name on the packing, is taxable at 12% under the residuary entry or at 4% under the specific entry for confectionery. - HELD THAT: - The Court applied the reasoning adopted in the earlier decision in W.P.No.47913 of 2006, holding that the mere mention of the producer's name on packaging does not convert the product into a branded article or a trade mark. A specific entry in Part B of the first schedule of the TNGST Act expressly covers confectionery at the lower rate, and a residuary entry can be invoked only when a product cannot be brought within any specific entry. Consequently, confectionery produced by the petitioners falls under the specific entry taxable at 4% and not under the residuary entry attracting 12%.

Impugned orders imposing 12% under the residuary entry are quashed; petitioners are liable to tax at 4%.

Procedural fairness / absence of personal hearing for departmental clarification - quashing of departmental clarification and reassessment - refund/adjustment of excess tax collected - Whether the Commissioner's clarification holding unregistered names as brands could be enforced against the petitioners where no adequate opportunity of hearing was afforded. - HELD THAT: - The Court endorsed the earlier finding that the departmental clarification was issued without giving the petitioners an adequate opportunity of personal hearing and therefore could not be enforced against them. In consequence, the assessments made pursuant to that clarification were unsustainable. The Court ordered that any excess tax collected pursuant to the impugned orders shall be refunded or adjusted in accordance with the prescribed procedures.

Clarification issued without adequate hearing is not enforceable against the petitioners; impugned assessments set aside and excess tax to be refunded/adjusted.

Final Conclusion: Writ petitions allowed; orders dated 25.10.2006 imposing tax at 12% quashed and petitioners held taxable at 4% for the matters in question (2004-05); any excess tax collected shall be refunded or adjusted in accordance with procedure.

Value Added Tax - contract for hiring of services - transfer of right to use goods - composite contract - dominant nature test - pre-emption of central law in indivisible contracts - service tax - refund of tax deducted

Value Added Tax - contract for hiring of services - transfer of right to use goods - composite contract - dominant nature test - pre-emption of central law in indivisible contracts - The transactions between the petitioner and ONGC do not amount to sale and are not exigible to Value Added Tax under the TVAT Act, 2004. - HELD THAT: - Relying on the Court's earlier decision in Quippo Oil and Gas Infrastructure Ltd. v. State of Tripura, the contract for drilling and work-over services was held to be predominantly a contract for hiring of services with only a very small, indivisible element relating to the right to use goods. The Court observed that where the contract cannot be sensibly divided and the parties intended the agreement to be for services, the State cannot treat a part of the contract as a transfer of right to use goods for VAT purposes. The judgment noted that division of such composite contracts is not feasible in the absence of clear apportionment and that, in such cases, central law prevails over attempts to tax a purported goods component. The earlier decision was rendered final by dismissal of the Special Leave Petition, and this Court applied that ratio to the facts of the present petition, concluding that the State is not competent to levy VAT on the transactions in question. [Paras 2, 3]

Petition allowed insofar as it is declared that respondents are not competent to levy Value Added Tax on the transactions between the petitioner and ONGC.

Service tax - refund of tax deducted - No refund order was required because the Court had stayed levy of the tax pending the petition. - HELD THAT: - The Court noted that, unlike the earlier Quippo direction to refund amounts already deducted, in the present proceeding the respondents had been restrained from levying VAT during the pendency of the writ petition. Consequently there was no amount requiring refund to the petitioner, and the declaratory relief sufficed. [Paras 4]

Since the Court had prevented respondents from levying the tax pending the petition, no refund arises; the petition is allowed and disposed of.

Final Conclusion: The writ petition is allowed: the transactions between the petitioner and ONGC are not exigible to Value Added Tax and the State is not competent to levy VAT on those transactions; no refund is directed as the tax had been stayed during the proceedings.

Right to purchase at concessional rate - use of C Forms for inter-state purchases of specified commodities - inclusion of commodity in registration certificate as entitlement - permissibility of online downloading of declaration in C Forms - invidious classification contravening Article 14 - precedential effect of higher court dismissal of Special Leave Petitions

Right to purchase at concessional rate - use of C Forms for inter-state purchases of specified commodities - inclusion of commodity in registration certificate as entitlement - precedential effect of higher court dismissal of Special Leave Petitions - Entitlement of the petitioner to inclusion of High Speed Diesel Oil in the registration certificate and to obtain 'C' Forms for inter state purchase at concessional rate. - HELD THAT: - The Court rejected the respondent's reliance on the administrative circular as being inconsistent with subsequent judicial pronouncements. It followed the Division Bench decision holding that a dealer's right to purchase specified commodities at concessional rate cannot be taken away merely because the dealer is not selling those goods, and that denial would constitute an invidious classification under Article 14. The Division Bench ordered that State authorities not restrict use of 'C' Forms for inter state purchases of the six commodities and directed permitting online downloading of such declarations. The State challenged that decision by filing Special Leave Petitions which this Court records were dismissed by the Supreme Court, the dismissal reinforcing the precedential position taken by multiple High Courts and rendering the departmental circular inapplicable. In view of these authoritative rulings, the petitioners are entitled to inclusion of High Speed Diesel Oil in their registration certificate and to issuance of 'C' Forms for purchases at concessional rate. [Paras 3, 4, 5]

Writ petition allowed; petitioner entitled to inclusion of High Speed Diesel Oil in the registration certificate and to issuance of 'C' Forms; exercise to be completed within four weeks.

Final Conclusion: The writ petition is allowed on the basis of binding judicial precedent; the petitioner shall be permitted to include High Speed Diesel Oil in its registration certificate and to obtain 'C' Forms for concessional inter state purchase, with the administrative exercise to be completed within four weeks.

Principles of natural justice - service of departmental written statement and right to reply - quashing and remittal for fresh adjudication - compliance with appellate procedure under Rule 14(5) of the Tamil Nadu Value Added Tax Rules, 2007 - administrative redistribution of appellate work - conferment of territorial jurisdiction on an Additional Bench - upgradation of infrastructural facilities and posting of judicial member

Principles of natural justice - service of departmental written statement and right to reply - compliance with appellate procedure under Rule 14(5) of the Tamil Nadu Value Added Tax Rules, 2007 - quashing and remittal for fresh adjudication - Whether the impugned appellate order suffered from violation of natural justice for non-service of the departmental written statement and consequent denial of the assessee's right to reply, warranting quashing and remand. - HELD THAT: - The appellate procedure in Rule 14(5) requires that the Departmental Representative shall file a written statement and the appellant shall be entitled to reply. The petitioner specifically stated that the departmental written statement relied upon by the appellate authority was not served on the assessee; this contention was not controverted by the respondents. The Court found that such non-service amounted to an infraction of the procedure and a breach of the principles of natural justice. In view of the procedural defect, the appellate order could not be allowed to stand and the appropriate remedy is to quash the impugned order and remit the matter to the appellate authority for fresh disposal after ensuring service of the departmental written statement and affording the assessee an opportunity to reply. [Paras 3, 4, 5]

Impugned order quashed; matter remitted to the appellate authority with direction to serve copy of the departmental written statement on the appellant and to pass fresh orders in accordance with law.

Administrative redistribution of appellate work - conferment of territorial jurisdiction on an Additional Bench - upgradation of infrastructural facilities and posting of judicial member - Directions regarding re-distribution of workload among Sales Tax Appellate Tribunal benches and administrative steps required to enable transfer of territorial jurisdiction and effective functioning of the Coimbatore Bench. - HELD THAT: - The Court observed significant disparity in pendency across the Tribunal benches and suggested redistribution of appeals from certain revenue districts to the Coimbatore Additional Bench to reduce workload at the Madurai Bench. The Court recorded that conferring territorial jurisdiction on Coimbatore, posting a full-time judicial member and upgrading infrastructural facilities are necessary prerequisites. On instructions, the Court placed on record correspondence indicating that amendment to relevant regulations and Government orders would be required and directed the Principal Secretary, Commercial Taxes and Registration Department to expedite the process so that the Chairman of the Tribunal may effect redistribution as appropriate. [Paras 6, 7, 8, 9]

Court directed administrative action: process for amending Tribunal regulations and conferring jurisdiction, upgrading infrastructure and posting a judicial member at Coimbatore to be expedited by the Principal Secretary so as to permit redistribution of work.

Final Conclusion: Writ petition allowed: the appellate order is quashed and the matter is remitted for fresh adjudication after service of the departmental written statement and opportunity to reply; the Principal Secretary, Commercial Taxes and Registration Department is directed to expedite steps to enable redistribution of Tribunal work by amending regulations, upgrading infrastructure, and posting requisite judicial member(s).

Compounding of offence under Section 147 of the Negotiable Instruments Act - Offence under Section 138 of the Negotiable Instruments Act - Effect of compromise/one-time settlement on criminal prosecution - Power to compound after recording of conviction - Refund of deposit and discharge of bail on acquittal

Compounding of offence under Section 147 of the Negotiable Instruments Act - Effect of compromise/one-time settlement on criminal prosecution - Power to compound after recording of conviction - Court may compound an offence under Section 147 of the Negotiable Instruments Act and acquit the accused after a compromise/one-time settlement, even where conviction has been recorded by the courts below. - HELD THAT: - The High Court, on the basis of an unchallenged receipt showing that the bank and the accused had entered into a one time settlement and on the bank's express statement of no objection, exercised its statutory power under Section 147 of the Act to compound the offence. The Court relied upon the settled principle that compounding may be permitted even after conviction, as recognised by the Apex Court, and found no impediment to accepting the compromise and quashing the criminal proceedings in view of the settlement between the parties.

Prayer for compounding accepted; matter ordered to be compounded and the petitioner acquitted of the charge under Section 138 of the Act.

Refund of deposit and discharge of bail on acquittal - Consequential reliefs flowing from compounding and acquittal were granted. - HELD THAT: - Following acceptance of the compromise and consequent acquittal, the Court quashed and set aside the convictions and sentences recorded by the courts below, vacated the interim order, directed discharge of bail bonds if any, and provided that any amount deposited before the court below may be refunded to the petitioner on formal application.

Convictions and sentences quashed and set aside; interim order vacated; bail bonds discharged; deposited amount to be refunded on formal application.

Final Conclusion: The High Court, exercising power under Section 147 of the Negotiable Instruments Act, accepted the one time settlement between the parties, compounded the offence, acquitted the petitioner of the offence under Section 138, quashed the convictions and sentences of the courts below, vacated the interim order, discharged bail bonds and directed refund of any court deposit on formal application.

Compounding of offence under the Negotiable Instruments Act - Inherent jurisdiction under Section 482 of the Code of Criminal Procedure - Power under Section 147 of the Negotiable Instruments Act to compound offences - Payment of entire cheque amount as basis for compromise - Obligation to pay 15% to State Legal Services Authority on compromise - Nature of offence under Section 138 of the Negotiable Instruments Act as quasi civil

Compounding of offence under the Negotiable Instruments Act - Inherent jurisdiction under Section 482 of the Code of Criminal Procedure - Power under Section 147 of the Negotiable Instruments Act to compound offences - Payment of entire cheque amount as basis for compromise - Nature of offence under Section 138 of the Negotiable Instruments Act as quasi civil - Proceedings under Section 138 of the Negotiable Instruments Act were quashed and the accused acquitted on the basis of compromise and payment of the cheque amount. - HELD THAT: - The Court recorded that the parties had compromised and that the cheque amount had been paid and received. Applying the jurisprudence that offences under Section 138 are quasi civil in character and having regard to the settled position that where the entire money is paid a complainant cannot object to compromise, the High Court invoked its inherent jurisdiction under Section 482 CrPC read with Section 147 of the N.I. Act to compound the offence. The Court held that continuation of the proceedings would serve no fruitful purpose and, on the compromise, quashed the conviction of the petitioner and all consequential proceedings. [Paras 5, 6, 7, 9, 11]

Proceedings quashed and petitioner acquitted of the offence under Section 138 of the Negotiable Instruments Act consequent to the recorded compromise and payment of the cheque amount.

Obligation to pay 15% to State Legal Services Authority on compromise - The petitioner was directed to pay 15% of the cheque amount to the concerned Himachal Pradesh Legal Services Authority as a condition of compounding. - HELD THAT: - Relying on the authority that where the entire cheque amount has been paid the accused must pay 15% of the cheque amount to the State Legal Services Authority, the Court imposed as a condition of compounding the deposit of the statutory 15% to the HP Legal Aid Authority. The Court fixed the timeline for deposit, provided for filing the receipt in the Registry and stipulated that failure to deposit would automatically recall the compounding and revive the proceedings, subject to limited relief in extraordinary circumstances on application. [Paras 5, 10, 11]

Petitioner to deposit 15% of the cheque amount with the HP Legal Aid Authority by the stipulated date; failure to do so will recall the compounding and revive the petition for hearing on merits.

Final Conclusion: On the parties' recorded compromise and receipt of the cheque amount, the High Court exercised its inherent jurisdiction under Section 482 CrPC read with Section 147 of the N.I. Act to compound the offence under Section 138, quashed the conviction and consequential proceedings, and conditioned the compounding upon payment of 15% of the cheque amount to the Himachal Pradesh Legal Services Authority within the time fixed.