TaxTMI Updates e-Newsletter
May 03,2022

Anticipatory bail under Section 438 Cr.P.C. - Bailable offence under GST for tax evasion below Rs.5 crores - Separate legal identity of distinct GST registrants - Custodial interrogation not necessary where documentary evidence predominates - Conditions of bail including cooperation, reporting and deposit of passport - Investigating agency's right to apply for police remand - Trial court not to be influenced by prima facie observations

Anticipatory bail under Section 438 Cr.P.C. - Bailable offence under GST for tax evasion below Rs.5 crores - Separate legal identity of distinct GST registrants - Custodial interrogation not necessary where documentary evidence predominates - Conditions of bail including cooperation, reporting and deposit of passport - Investigating agency's right to apply for police remand - Trial court not to be influenced by prima facie observations - Grant of anticipatory bail to the applicant in proceedings under the Gujarat and Central GST Acts read with Sections 463 and 120B IPC - HELD THAT: - The Court found that the tax evasion attributable to the applicant's company M/s. Heugo Metal is shown as Rs.4,51,05,130/-, i.e. below Rs.5 crores, and that the tax liability of another distinct entity (Dattatrey Corporation) was improperly aggregated with the applicant's company despite separate GST identities. The Court noted prior judicial relief granted to the applicant (quashing of cancellation of registration and expiry of attachment orders) and observed that more than three years have passed since the 2019 raid. Having regard to the statutory scheme, the maximum sentence attracted even on the allegation is five years, and the offence, insofar as the applicant's company is concerned, falls within the category of bailable offences under the GST enactments. The Court also observed that the investigation is documentary in nature and that custodial interrogation of the applicant is not necessary; it relied on precedents cited by the parties. Balancing the nature and gravity of allegations, role attributed to the accused, and the materials on record without traversing evidence in detail, the Court held that the applicant is entitled to protection under Section 438 Cr.P.C. but imposed conditions to secure cooperation with the investigation and to safeguard the investigation and trial. The Court preserved the prosecution's right to apply for police remand before the competent Magistrate, subject to judicial scrutiny, and clarified that the trial court must not be influenced by the prima facie observations in this order. [Paras 6, 8, 9, 10, 11]

Application under Section 438 Cr.P.C. allowed; applicant released on bail on executing bond and complying with specified conditions, while preserving the prosecution's right to seek police remand and directing that trial court not be influenced by the Court's prima facie observations.

Final Conclusion: Anticipatory bail granted to the applicant subject to execution of personal bond with surety and specified conditions (cooperation with investigation, periodic attendance, prohibition on tampering with evidence, furnishing address, restriction on travel and deposit of passport); investigating agency may still apply for police remand before the Magistrate, and the trial court shall remain uninfluenced by prima facie observations in this order.

Substantial compliance - technical failure of GST portal as a ground to deny relief - alternative compliance by filing claims in GSTR-3B - liberty to assess and verify genuineness of transitional input tax credit claims

Technical failure of GST portal as a ground to deny relief - alternative compliance by filing claims in GSTR-3B - Validity of the Single Judge's direction to open the portal for filing/revising TRAN-1 and the permissibility of an alternative remedy permitting assessees to claim transitional input tax credit through GSTR-3B for a specified month. - HELD THAT: - The Court held that while the learned Single Judge directed opening of the portal to enable filing/revision of TRAN-1, ordering such portal-opening may be impracticable at the level of individual assessing officers. Having regard to documented technical difficulties with the GST portal and consistent decisions of other High Courts accepting alternative mechanisms, the Court modified the direction by granting a workable, assessee-friendly alternative: liberty to the assessees to claim individual transitional input tax credit in their GSTR-3B return for the relevant month (here, April 2022) to be filed in the subsequent month (May 2022). The Court treated this route as a practical substitute for reopening the portal and as a mechanism that the assessing authorities can monitor and verify in the ordinary course.

The Single Judge's order was modified to permit claiming transitional input tax credit via GSTR-3B for April 2022 (fileable in May 2022) instead of directing reopening of the TRAN-1 portal.

Substantial compliance - liberty to assess and verify genuineness of transitional input tax credit claims - Applicability of the doctrine of substantial compliance and the scope of revenue's power to examine and verify transitional input tax credit claims filed by assessees through the alternative mechanism. - HELD THAT: - The Court accepted the principle that assessees who have substantially complied with transitional requirements should not be prejudiced by portal-technicalities, and that the doctrine of substantial compliance applies to claims of input tax credit in the transition to GST. Nonetheless, the Court confirmed that the concerned authorities and assessing officers remain entitled to examine and verify the legality and genuineness of the claims made through the alternative route; the modified relief does not confer automatic acceptance of the credit but only procedural facilitation subject to verification and adjudication in accordance with law.

Assessees are entitled to procedural relief based on substantial compliance, subject to verification by the concerned authorities/assessing officers who may examine and proceed on the merits of the claims.

Final Conclusion: The departmental appeal is dismissed by following precedent and on grounds of practicality: instead of mandating reopening of the TRAN-1 portal the Court granted liberty to assessees to claim transitional input tax credit in GSTR-3B for April 2022 (to be filed in May 2022), while preserving the revenue's right to verify and adjudicate the genuineness of such claims.

Maintainability of writ petition - laches/delay - Quashing of statutory notice - Attachment and sale of immovable property - Attachment of bank accounts - provisional nature - Remittance for fresh adjudication - Personal hearing before adjudicating authority - Proceedings subject to final outcome

Maintainability of writ petition - laches/delay - The writ petition challenging Form GST DRC-16 was filed belatedly and is not entitled to be entertained for quashing the proceedings. - HELD THAT: - The Court noted that the petitioner had earlier obtained conditional remand and/or challenged assessment orders but failed to comply with the directions of the single Judge and Division Bench. Having failed to pursue the earlier route and in view of the pendency of remitted proceedings, the present challenge to Form GST DRC-16 is belated and the petitioner cannot seek interlocutory quashing of the enforcement notice at this stage. The Court observed that the petitioner ought to participate in the statutory proceedings initiated by the respondent and not seek to stall them by a belated writ petition. [Paras 7]

Writ petition liable to be dismissed as belated; petitioner must participate in the proceedings before the respondent.

Quashing of statutory notice - Attachment and sale of immovable property - Attachment of bank accounts - provisional nature - Remittance for fresh adjudication - Quashing of Form GST DRC-16 was declined because the matter has been remitted to the respondent for fresh adjudication; the impugned notice merely records attachment of immovable property and any further enforcement is subject to the remitted proceedings. - HELD THAT: - The Court recorded that the learned single Judge had remanded the matter to the respondent to pass fresh orders on merits after opportunity and that the Division Bench had affirmed that order. In that context, it is not open for the petitioner to obtain an order quashing Form GST DRC-16; the attachment recorded therein relates to immovable properties and the question of any further enforcement must be decided in the remitted proceedings. The Court also noted the petitioner's failure to appear for personal hearing called by the respondent. [Paras 7]

Application for quashing of Form GST DRC-16 refused; petitioner must contest the attachment and related measures in the remitted proceedings.

Personal hearing before adjudicating authority - Proceedings subject to final outcome - The matter was remitted to the respondent for completion of proceedings in accordance with the earlier order and the respondent was directed to conclude the proceedings within a specified time; any sale of immovable property or attachment of bank accounts is to remain subject to the final outcome of those proceedings. - HELD THAT: - In exercise of supervisory jurisdiction, the Court directed the respondent to proceed further in terms of the notice dated 14.02.2022, afford opportunity of personal hearing, and bring the matter to a close one way or the other in accordance with the single Judge's order as affirmed by the Division Bench. The Court limited further enforcement steps by making them subject to the final adjudication to be completed within three months from receipt of the order. [Paras 8]

Respondent directed to proceed and conclude the remitted proceedings within three months; any sale or bank account attachment to be subject to final outcome of those proceedings.

Final Conclusion: The writ petition challenging Form GST DRC-16 was not entertained as belated; quashing was refused because the matter stands remitted for fresh adjudication, the petitioner is directed to participate in the proceedings, and the respondent is directed to conclude the remitted proceedings within three months, with any enforcement action remaining subject to the final outcome.

Quashing of assessment and effect of setting aside - scope of show cause notice and fresh proceedings after remand - prohibition against re-agitation of settled proposals - remand for fresh consideration and directions to adjudicating authority

Scope of show cause notice and fresh proceedings after remand - quashing of assessment and effect of setting aside - Impugned show cause notice dated 07.01.2022 is within the scope of the original show cause notice dated 20.12.2019 and valid in law after the earlier assessment was set aside. - HELD THAT: - The Court recorded that the assessment order dated 02.03.2020 was set aside by its order dated 31.08.2020 without any restriction or qualification, resulting in the complete quashing of that order. Consequent thereto, the department's appeal was dismissed as not maintainable. In that factual and legal position the department was entitled to proceed afresh and the content of the earlier show cause notice dated 20.12.2019 being incorporated into the impugned show cause notice dated 07.01.2022 did not render the latter impermissible. The Court observed that the so-called new proposals are prima facie interconnected with and covered by the first six proposals in the earlier notice and therefore do not exceed the scope of earlier proceedings. [Paras 6]

Challenge to the impugned show cause notice on the ground that it goes beyond the original notice is rejected and the notice is held to be maintainable.

Remand for fresh consideration and directions to adjudicating authority - prohibition against re-agitation of settled proposals - Proceedings are remitted to the respondent to consider the petitioner's detailed reply and objections and to pass appropriate orders on merits within a specified time. - HELD THAT: - Although the petitioner contested re-agitation of earlier-dropped proposals, the Court required the petitioner to file a detailed reply including objections raised in the writ petition. The respondent was directed to consider that reply and decide the matter on merits and in accordance with law. The Court thus remitted the matter for fresh consideration rather than deciding the substantive merits of the proposals itself. [Paras 7]

Petitioner to file detailed reply; respondent to consider the same and pass appropriate orders on merits within eight weeks from receipt of copy of the order.

Final Conclusion: The challenge to the impugned show cause notice is dismissed; the assessment order of 02.03.2020 having been quashed, the department may proceed afresh. The petitioner is directed to file a detailed reply and the respondent is directed to consider it and pass orders on merits within eight weeks.

Compounding of offences - Repeat offender - higher compounding rate - Guidelines for Compounding of Offences under Direct Tax Laws, 2014 - Principal officer liability under corporate attribution - Representation and power of attorney in compounding proceedings

Compounding of offences - Repeat offender - higher compounding rate - Guidelines for Compounding of Offences under Direct Tax Laws, 2014 - Imposition of five per cent per month compounding fee on the petitioners for the Financial Years 2013-14, 2014-15 and 2015-16. - HELD THAT: - The Court examined Clause 12.1 of the CBDT Guidelines (23.12.2014) which prescribes 3% per month for an offence disclosed in the compounding application and provides that if the same person comes forward for compounding through a subsequent application the applicable rate will be 5% per month. The expression "after compounding of the said offence" was interpreted to encompass the stage not only after the compounding order is passed but also after compliance with conditions stipulated in that order (including payments). The Court accepted the rationale underlying a higher rate for subsequent offences - to incentivize compliance - and, on the facts that the petitioning company was a repeat offender (having earlier obtained compounding for 2012-13 at 3%), held that the authorities were entitled in law to impose the higher compounding fee of 5% per month.

The challenge to levying compounding charges at the rate of five per cent per month for the impugned financial years is rejected; the higher rate is lawful in view of the CBDT Guidelines and repeat-offender status.

Principal officer liability under corporate attribution - Compounding fee on directors - Representation and power of attorney in compounding proceedings - Whether compounding fee should have been imposed on all directors of the petitioner company (rather than confined to the principal officer) and whether the absence of a power of attorney/vakalatnama for the Chartered Accountant who filed written submissions justified the levy. - HELD THAT: - The Court found these questions required further examination. It noted that in respect of Financial Year 2012-13 the compounding fee had been levied on only one director, which called for a reasoned consideration as to why, for the subsequent years, all directors were similarly charged instead of confining liability to the principal officer (identified in the petition as Mr. Rakesh Kumar). The Court also observed that if the Chartered Accountant who represented the petitioner before the Commissioner lacked a power of attorney or vakalatnama when filing written submissions, the Commissioner ought to have afforded an opportunity to file the requisite authorization rather than immediately levying compounding charges on all directors. Consequently, the matter was directed to be examined afresh by the respondents and instructions were to be obtained.

These aspects are not finally adjudicated on merits and are remitted to the Revenue for fresh consideration; interim direction given that the petitioners shall pay the compounding charges as per the impugned order within two weeks except insofar as amounts are concerned qua Mr. Aman Gulati, Sh. Abhinav Mahajan, Sh. Rajesh Mahajan and Sh. Pranab Mahajan.

Final Conclusion: The Court upheld the imposition of the higher compounding rate (5% per month) on the petitioners for being repeat offenders in respect of Financial Years 2013-14, 2014-15 and 2015-16, while remitting for fresh consideration the question whether compounding liability should have been imposed on all directors rather than only on the principal officer and whether procedural infirmity in representation warranted different treatment; an interim payment direction was made subject to reservations qua specified individuals.

Reopening of assessment - proviso to section 147 - failure to fully and truly disclose material facts - change of opinion - share premium and addition under section 56(2)(viib) - self-generated goodwill and recognition of internally generated goodwill - consideration during assessment proceedings - quashing of notice under section 148

Proviso to section 147 - failure to fully and truly disclose material facts - reopening of assessment - change of opinion - Validity of reopening the assessment after four years under the proviso to section 147 on the ground of alleged failure to truly and fully disclose material facts. - HELD THAT: - The notice under section 148 proposed reopening more than four years after the end of the relevant assessment year, invoking the proviso to section 147 which places onus on the Revenue to show failure to truly and fully disclose material facts. The Court examined the reasons recorded and the material on record and found that the queries about large share premium and goodwill were raised during the original assessment proceedings and the petitioner had responded with details, workings and supporting documents. The Assessing Officer had referred to notices under sections 143(2) and 142(1) and confirmed receipt of information. The Court applied the settled principle that where a query was raised during assessment and the assessee replied, the matter was considered by the Assessing Officer even if the assessment order does not expressly discuss that query. On the facts, the recorded reasons amounted to a mere change of opinion by the Assessing Officer and did not establish a failure by the petitioner to disclose material facts; the statement of failure in the reasons was held to be a device to evade the proviso to section 147 rather than a genuine satisfaction that income had escaped assessment. [Paras 7, 9, 10, 11, 12]

Reopening was invalid: Revenue failed to discharge the onus under the proviso to section 147 and the impugned notice under section 148 was quashed.

Share premium and addition under section 56(2)(viib) - self-generated goodwill and recognition of internally generated goodwill - consideration during assessment proceedings - Whether the questions (allegedly excess share premium chargeable to income and recognition of internally generated goodwill) were new matters not considered during assessment, justifying reopening. - HELD THAT: - The Assessing Officer's reasons alleged excess share premium per share and that goodwill was self-generated and should not have been recognized. The record shows that during assessment the petitioner furnished detailed information including the names, PANs, bank statements, share applications, and working of fair value of equity shares under Rule 11UA, which expressly included the goodwill figure. The assessment order records issuance of notices under sections 143(2) and 142(1) and confirmation that information was received. Relying on precedent cited by the Court, it held that these specific contentions had been the subject of consideration in the original assessment; therefore the reopening premised on the same contentions was an impermissible change of opinion rather than discovery of a new material fact or failure of disclosure. [Paras 6, 7, 8, 9, 11]

The matters of share premium and goodwill had been considered during the original assessment; they did not constitute fresh non-disclosure or new material warranting reopening.

Final Conclusion: Petition allowed; the notice dated 30.03.2021 under section 148 and the order on objections dated 15.12.2021 are quashed as the reopening amounted to a change of opinion and the Revenue did not establish failure to truly and fully disclose material facts.

Re-opening of assessment under Section 148 - sanction for issuance of notice under Section 151(1) - competence of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner to grant approval where four years have expired - competence of Additional Commissioner to grant sanction - extension of limitation under Taxation and other Laws (Relaxation of Certain Provisions) Act, 2020

Re-opening of assessment under Section 148 - sanction for issuance of notice under Section 151(1) - competence of Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner to grant approval where four years have expired - competence of Additional Commissioner to grant sanction - Validity of the notice dated 26th March, 2021 issued under Section 148 and the approval recorded from the Additional Commissioner when four years had expired from the end of the relevant assessment year. - HELD THAT: - The Court applied the requirement in Section 151(1) that once four years have expired from the end of the relevant assessment year, no notice under Section 148 can be issued unless the satisfaction is recorded by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner on the reasons recorded by the Assessing Officer. It was admitted on the face of the notice that the approval was given by the Additional Commissioner and not by any of the officers specified in Section 151(1). Because four years had elapsed for AY 2015-16 at the time of re-opening, the Additional Commissioner lacked authority to give the statutory sanction required by Section 151(1). On that ground the notice issued under Section 148 and the consequent orders were held to be invalid and were set aside. [Paras 3, 4, 7, 8]

The notice dated 26th March, 2021 issued under Section 148 and the consequential orders are quashed for want of valid sanction under Section 151(1).

Extension of limitation under Taxation and other Laws (Relaxation of Certain Provisions) Act, 2020 - Whether the extension of limitation under the Relaxation Act, 2020 renders the sanction by the Range Head (Additional Commissioner) valid for AY 2015-16. - HELD THAT: - The respondents relied on the Relaxation Act to contend that limitation under provisions including Section 151(1) was extended to 31st March, 2021 and thereby the Range Head could have validly accorded approval. The Court observed that even if the extension applied to cases whose limitation was expiring on 31st March, 2020, that circumstance did not assist AY 2015-16 because the six-year limitation for that year would expire on 31st March, 2022. Further, the Court held that an extension of the time-limit does not effect an amendment of the statutory scheme in Section 151(1) regarding which officers are empowered to grant the requisite satisfaction; consequently the Relaxation Act did not validate the approval given by the Additional Commissioner in the present case. [Paras 5, 6]

The Relaxation Act, 2020 does not make the sanction given by the Additional Commissioner valid for AY 2015-16; the contention based on the Relaxation Act is rejected.

Final Conclusion: The petition is allowed; the notice dated 26th March, 2021 issued under Section 148 for Assessment Year 2015-16 and the consequential order dated 11th February, 2022 are quashed for want of valid sanction under Section 151(1).

Re-assessment - notice under Section 148 - procedure under Section 148A - time limits for reopening assessments - substituted reassessment provisions under Finance Act, 2021 - validity of delegated/subordinate legislation - presumption of constitutionality of subordinate legislation

Notice under Section 148 - procedure under Section 148A - time limits for reopening assessments - substituted reassessment provisions under Finance Act, 2021 - Validity of reassessment notice issued on 15.04.2021 for Assessment Year 2013-14 without following the procedure introduced by the Finance Act, 2021. - HELD THAT: - The Court held that the new statutory scheme for reopening assessments introduced by the Finance Act, 2021 - including modified time limits and the enquiry procedure under Section 148A - governs any notice issued after 01.04.2021. The substituted provisions both contract and expand the periods for issuance of notices depending on circumstances, and the first proviso prevents revival of notices which had already become time-barred prior to 01.04.2021 by invoking the extended period. Consequently, notices issued after 01.04.2021 that were not in accordance with the substituted scheme and which were issued without following the Section 148A procedure are invalid. Applying this reasoning to the facts, the impugned notice dated 15.04.2021 (pertaining to AY 2013-14) was issued after 01.04.2021 and without compliance with the reassessment procedure introduced by the Finance Act, 2021, and is therefore quashed.

The reassessment notice issued on 15.04.2021 for AY 2013-14 is invalid and is quashed.

Validity of delegated/subordinate legislation - presumption of constitutionality of subordinate legislation - Validity of CBDT notifications dated 31.03.2021 and 27.04.2021 insofar as they purported to clarify or preserve application of pre-amendment reassessment provisions for the period after 01.04.2021. - HELD THAT: - The Court applied the principle that subordinate legislation is presumptively intra vires but is subject to the limits of the enabling statute and may be struck down if it exceeds delegated power, conflicts with the parent Act, or is manifestly arbitrary. Under the Relaxation Act, 2020 the Government was empowered only to extend time limits; it had no power to alter or explain the substantive operation of the Income-tax Act or to defer the operation of amendments brought into force on 01.04.2021. The CBDT notifications, by introducing an explanation purporting to apply pre-amendment provisions after the substitution effected by the Finance Act, 2021, exceeded the delegated power and attempted to change the statutory scheme. Accordingly, those explanatory provisions are unconstitutional and invalid.

The explanatory portions of the CBDT notifications are ultra vires and invalid.

Final Conclusion: The reassessment notice dated 15.04.2021 for Assessment Year 2013-14 was issued after 01.04.2021 without complying with the reassessment scheme introduced by the Finance Act, 2021 and is quashed; the CBDT notifications attempting to preserve application of pre-amendment provisions are beyond delegated power and invalid.

Reopening of assessment under Sections 147 and 148 - reason to believe - failure to disclose fully and truly all material facts - audit party information as a basis for reopening - prima facie material test for validity of notice - change of opinion versus reassessment - limitation exception where non-disclosure vitiates four year bar - electronic communication of approval under Section 151

Reopening of assessment under Sections 147 and 148 - reason to believe - prima facie material test for validity of notice - audit party information as a basis for reopening - Validity of the notice under Section 148 to reopen assessment for Assessment Year 2013-2014 - HELD THAT: - The Court applied the settled test that at the notice stage the jurisdictional question is whether there is prima facie some material upon which the Department could form a reason to believe. The audit party had pointed out a factual error - that only 25% of deposits had been disallowed on a presumptive basis without verification, which the audit opined resulted in escapement of income - and the Assessing Officer recorded as a reason that identity, creditworthiness and genuineness of depositors were not verified in the original assessment. The Court held that such factual information from the audit party can furnish material from which a reason to believe may be formed and, on the record before it (including the paucity of KYC and bank evidence produced during assessment), the AO had material to form the requisite belief. The Court therefore found no legal infirmity in issuance of the notice under Section 148 or in subsequent proceedings up to the stage of the writ petition. [Paras 19, 21, 25, 44]

Notice under Section 148 was validly issued as the AO had prima facie material (including audit objection and incomplete disclosures) to form a reason to believe.

Failure to disclose fully and truly all material facts - limitation exception where non-disclosure vitiates four year bar - Whether reopening beyond four years was barred by the proviso to Section 147 - HELD THAT: - The proviso to Section 147 bars reopening after four years unless escapement is by reason of failure to disclose fully and truly all material facts. The assessment record and the material relied upon by the AO showed that the assessee had collected deposits from over two crore persons but produced KYC of only 1,051 exemplars, provided PANs/IT returns of very few depositors and no bank statements, and the original assessment had disallowed only 25% on presumptive basis. On these findings the Court held that the case fell within the exception in the proviso since the assessee had not made full and true disclosure, and consequently the four year bar did not preclude reopening. [Paras 18, 38, 40, 44]

Reopening after four years was permissible because the exception for non disclosure of material facts applied.

Change of opinion versus reassessment - reopening of assessment under Sections 147 and 148 - Whether the reassessment was a mere impermissible change of opinion - HELD THAT: - The Court examined whether the AO was simply revisiting an earlier concluded opinion. It found that the original assessment did not contain full material to examine identity, genuineness and creditworthiness because the assessee had not produced complete KYC, bank statements or returns for depositors. Citing authorities distinguishing change of opinion from reassessment based on fresh or subsequently available information, the Court concluded that initiation of reassessment was not a mere change of opinion but was founded on subsequent information and the absence of full and true disclosure in the original proceedings. [Paras 26, 31, 32, 44]

Reassessment was not vitiated as a mere change of opinion; AO acted on subsequent information and non disclosure.

Presumptive income - reopening of assessment under Sections 147 and 148 - Whether the issue of presumptive income (Section 44AD/44BBB) precluded reassessment on the audit objection - HELD THAT: - The petitioner contended that the AO's disallowance was presumptive and governed by provisions of Chapter IV (Sections 44AD/44BBB). The Court observed that the petitioner did not come within the statutory definitions or thresholds for those presumptive provisions and therefore the contention that reassessment was impermissible because the addition was merely presumptive was untenable. The question of correctness or quantum of any addition was left to reassessment proceedings; the legal point that presumptive provisions applied did not invalidate reopening on the present facts. [Paras 33, 36, 37, 44]

Presumptive income provisions did not preclude reassessment; Section 44AD/44BBB were inapplicable to the petitioner's case.

Electronic communication of approval under Section 151 - reopening of assessment under Sections 147 and 148 - Whether the notice was vitiated because the AO had not received physical paper approval before issuing the Section 148 notice - HELD THAT: - The Court held that physical receipt of the approving authority's paper is not a precondition to issuing a notice where approval has already been granted and communicated by other means. On the facts, approval under Section 151 had been uploaded on the Departmental portal before the AO issued the notice; the AO was entitled to act upon that communicated approval without awaiting the paper copy. Consequently, issuance of the notice prior to physical receipt of the approval did not invalidate the notice. [Paras 41, 43, 44]

Notice was not invalidated by the fact that the physical paper of approval was received after issuance; electronic/portal communication sufficed.

Final Conclusion: The writ petition was dismissed: the Court upheld the validity of the notice under Section 148 (Assessment Year 2013-2014), ruled that the four year bar did not apply due to non disclosure of material facts, rejected the contention of mere change of opinion, found presumptive income provisions inapplicable, and held that electronic communication of approval was sufficient; no interference with subsequent proceedings or the National Faceless Assessment Centre's order was warranted.

Validity of notice under Section 153C of the Income tax Act - Quashing of notice where assesssee did not exist for the assessment year - Interference under Article 226 at pre assessment stage - Remedy by statutory appeal against completed assessments

Validity of notice under Section 153C of the Income tax Act - Quashing of notice where assesssee did not exist for the assessment year - Interference under Article 226 at pre assessment stage - Impugned notices under Section 153C issued for A.Y.2013-14 to A.Y.2016-17 were quashed. - HELD THAT: - The Court declined to traverse disputed factual questions about the LLP's constitution but observed that assessments for A.Y.2013-14 to A.Y.2016-17 were not framed. In that factual matrix the Court held it was unnecessary to examine the correctness of the satisfaction note in detail and, on that basis, set aside the notices issued for those assessment years. The Court therefore allowed the writ petition in part and quashed the Section 153C notices insofar as they related to A.Y.2013-14, A.Y.2014-15, A.Y.2015-16 and A.Y.2016-17, leaving open substantive questions of law to be agitated in appropriate proceedings if required.

Notices under Section 153C for A.Y.2013-14 to A.Y.2016-17 quashed and set aside.

Remedy by statutory appeal against completed assessments - Interference under Article 226 at pre assessment stage - No interference was granted with notices for A.Y.2017-18 and A.Y.2018-19 where assessments have been completed; statutory appeal remedies preserved. - HELD THAT: - The Court declined to entertain further challenges relating to A.Y.2017-18 and A.Y.2018-19 because assessment orders for those years had already been passed. The writ petition was not allowed insofar as those years are concerned; the petitioner was left free to challenge the completed assessments before the appellate authorities in accordance with law. All questions of law were kept open for consideration before the CIT(A) or other competent fora.

No relief granted in respect of A.Y.2017-18 and A.Y.2018-19; petitioner may pursue statutory appeals.

Final Conclusion: Writ petition allowed in part: Section 153C notices for A.Y.2013-14 to A.Y.2016-17 quashed; no relief in respect of A.Y.2017-18 and A.Y.2018-19 where assessments are complete, statutory appeal remedies preserved and questions of law kept open.

Reopening of assessment - notice under Section 148 - reasonable belief for escapement of income - prima facie case - balance of convenience - investment in bonds/debentures as loan transaction - interest earnings taxable as income

Reasonable belief for escapement of income - reopening of assessment - Validity of the reasons recorded for issuance of notice under Section 148 insofar as they treat the entire amount invested in bonds/debentures as escaped income. - HELD THAT: - The Court examined the order containing the AO's reasons and found that, at this interlocutory stage, the AO's belief that the entire investment amount constituted escaped income was prima facie erroneous. The record showed only transactional information indicating investments in bonds/debentures and the fact that no return was filed; there was no material to establish that the corpus invested itself amounted to taxable income. The Court noted the settled principle that for issuance of a notice under Section 148 the AO must have cogent material leading to a reasonable belief of escapement, but observed that the present reasons equated investment corpus with income without supporting material. Consequently, on the limited record before it, the Court held that a prima facie case was made out that the AO's formation of belief was not justified. [Paras 5]

Court recorded that the AO, at this stage, had formed an erroneous belief by treating the entire investment as taxable income and that there was insufficient material to reach a conclusion on escapement of income.

Prima facie case - balance of convenience - notice under Section 148 - Interim relief in the form of stay on the operation of the notice dated 31.03.2021 and ancillary procedural directions. - HELD THAT: - Having found that the petitioner had established a prima facie case and that the balance of convenience favoured preservation of the petitioner's position, the Court granted interim relief. The petition was directed to be listed for further proceedings; the respondents accepted notice and were directed to file a counter-affidavit within four weeks, with liberty for the petitioner to file rejoinder. The Court stayed the operation of the impugned notice pending further hearing. [Paras 5, 6, 9]

Stay on the operation of the notice dated 31.03.2021 granted; directions made for filing of counter-affidavit and rejoinder and for listing on the next date.

Investment in bonds/debentures as loan transaction - interest earnings taxable as income - Requirement of further factual examination as to whether any interest accrued to the petitioner from the investment and related factual enquiries to be considered in the assessment/reopening proceedings. - HELD THAT: - The Court observed that ordinarily investments in bonds or debentures represent loan transactions and that only interest, if any, would ordinarily constitute taxable income. The Court noted that the investee's final accounts for the year ending 31.03.2014 reportedly indicated no interest accrual in favour of the petitioner, and directed that this factual aspect and any other material be examined at the next hearing. The matter of whether interest was earned or other material exists to support escapement of income was not decided on merits but left for consideration in the proceedings to follow. [Paras 5, 7]

Factual determination as to accrual of interest and related enquiries remitted for examination at the next hearing; no final adjudication on merits made at this stage.

Final Conclusion: Interim stay granted on the operation of the reopening notice dated 31.03.2021 (AY 2014-15); the Court recorded a prima facie conclusion that the AO had erred in treating the entire investment corpus as escaped income, directed the respondents to file a counter-affidavit and listed the matter for further consideration, leaving factual issues (including whether any interest accrued) to be examined on the next date.

Notice under Section 148 - Reopening of assessment under Section 147 - Jurisdictional defect - notice issued to non-existent entity - Merger / amalgamation intimation to tax authority and transfer of records - Quashing of assessment notice and termination of consequential proceedings

Jurisdictional defect - notice issued to non-existent entity - Merger / amalgamation intimation to tax authority and transfer of records - Notice under Section 148 - The impugned notices under Section 148 issued in the name of Shivganga Property Holders Private Limited were without jurisdiction because the erstwhile company had been amalgamated into the writ applicant and the merger had been intimated to the Assessing Officer prior to issuance of the notices. - HELD THAT: - The Court recorded that the subject notices dated 20.04.2021 sought reopening for AY 2013-14 and AY 2014-15 in the name of Shivganga Property Holders Private Limited. The writ applicant produced a letter dated 17.01.2019 informing the Assessing Officer of the amalgamation of Shivganga Property Holders Private Limited into Gauriputra Estate Holders Private Limited with effect from 01.04.2018 and requesting transfer of records and surrender of PAN/TAN. The Revenue's counsel conceded that in view of this intimation the notices could not have been issued in the name of the non-existent entity. On these facts the notices suffer from a jurisdictional defect by being addressed to an entity that had ceased to exist at the time of issuance, rendering them invalid. [Paras 4, 6]

The notices issued in the name of the dissolved/amalgamated entity were without jurisdiction and invalid.

Quashing of assessment notice and termination of consequential proceedings - Notice under Section 148 - Reopening of assessment under Section 147 - The impugned notices for AY 2013-14 and AY 2014-15 are quashed and all consequential proceedings pursuant thereto are terminated. - HELD THAT: - Having found that the notices were issued in the name of an entity that had been amalgamated and that the Revenue accepted the intimation of merger, the Court allowed the writ petition on that short legal ground. The Court exercised its supervisory jurisdiction under Article 226 to set aside the defective notices and to terminate any further proceedings arising from them. Other reliefs claimed by the petitioner were rendered otiose in view of this ruling. [Paras 7]

Both impugned Section 148 notices are quashed and all consequential proceedings stand terminated.

Final Conclusion: Writ petition allowed on the short legal ground that the Section 148 notices were issued in the name of a non-existent entity after its amalgamation; the notices for AY 2013-14 and AY 2014-15 are quashed and consequential proceedings terminated.

Stay of demand pending appeal - pre-deposit for grant of stay - interim protection from attachment of bank accounts - balancing of hardship and bona fide payments when fixing instalment conditions - levy and collection of tax within the four corners of law

Stay of demand pending appeal - pre-deposit for grant of stay - interim protection from attachment of bank accounts - balancing of hardship and bona fide payments when fixing instalment conditions - Whether the High Court's interim direction conditioning protection from attachment on payment of 20% of the disputed demand by instalments was reasonable and required interference - HELD THAT: - The court noted that the appellate authority had not quashed or stayed the assessment and had required a 20% deposit for stay. The learned Judge granted interim protection against attachment subject to payment of the 20% demand by monthly instalments and fixation of a timetable for final hearing only after payment. The High Court held that ordering payment as a condition for interim protection is permissible where the assessment stands and the appellate authority has not stayed it, provided the condition is reasonable. Having considered the appellant's pleaded hardship - dependence of about 3200 families on the company's cash flow and the fact that the appellant had already made a substantial payment and offered a lower instalment - the court found the instalment condition warranted modification. The court therefore retained the interim protection but reduced the monthly instalment directed by the learned Judge, fixing the revised instalment and its commencement date; other terms of the impugned order were left intact. The court reiterated that where an assessment is conclusively set aside no condition can be imposed, and that levy and collection must conform to law, but in the present factual matrix interim protection subject to a reasonable instalment plan was appropriate. [Paras 9, 10]

The High Court affirmed the principle that interim protection may be granted subject to payment of a reasonable pre-deposit and modified the learned Judge's direction by reducing the monthly instalment to be paid towards 20% of the disputed demand to Rs.15,00,000/- per month from 05.03.2022 until the specified 20% is paid; otherwise the impugned order remains unaltered.

Final Conclusion: Writ appeal disposed of by partly modifying the interim order: interim protection from attachment is continued subject to payment of the 20% pre-deposit by monthly instalments, which are reduced to Rs.15,00,000 per month with effect from 05.03.2022, and all other directions in the impugned order are left intact. No costs.

Bad debt - trading loss - objective honest judgment - question of fact - concurrent findings - non-interference by appellate court in factual findings

Bad debt - trading loss - objective honest judgment - question of fact - concurrent findings - The claim of bad debt/trading loss advanced by the assessee in the course of money lending business was rejected by the Tribunal and whether that conclusion warranted interference by this Court. - HELD THAT: - The Tribunal and the authorities below examined the circumstances in which the assessee treated the advance as irrecoverable and required that the assessee's conclusion that the debt had become bad must be an honest, objective judgment taken on relevant facts showing impossibility of recovery. The Court referred to precedents establishing that whether a debt has become bad, and when, are questions of fact. Given that the finding on recoverability was a factual conclusion supported by the materials considered by the Tribunal and the Commissioner (and formed part of concurrent findings), the High Court found no jurisdictional error or misapplication of law warranting interference. The court therefore upheld the concurrent factual conclusion rejecting the bad debt/trading loss claim and declined to reappraise the evidence. [Paras 7, 8, 9, 10]

Concurrent factual findings rejecting the claim of bad debt/trading loss are upheld and no interference is warranted.

Final Conclusion: The Court dismissed the appeal, holding that the question whether the debt had become bad was one of fact; the Tribunal's and lower authorities' concurrent factual findings rejecting the claim of bad debt/trading loss were not susceptible to interference.

Failure to afford effective opportunity of hearing - assessment under Section 144 read with Section 263 of the Income Tax Act, 1961 - set aside and remand for fresh assessment - penalty under Sections 271(1)(c) and 273(1)(b)

Failure to afford effective opportunity of hearing - assessment under Section 144 read with Section 263 of the Income Tax Act, 1961 - Impugned assessment order was passed without affording the assessee an effective opportunity of hearing and is therefore procedurally illegal. - HELD THAT: - The Court examined the dates of notices and the dates on which hearings actually took place. The assessment order records notices purportedly served on dates after the last admitted hearing (1st February 2021), and the Assessing Officer relied on non-compliance despite no hearings having been held after that date. The notice dated 28th December 2020 was issued by the earlier officer (DCIT) before transfer of the file, and the chronology as recorded shows that no hearing took place subsequent to 1st February 2021. In these circumstances the conclusion in the assessment that the assessee made no compliance is erroneous because the assessee was not given a real opportunity to be heard. The Court proceeded on this procedural illegality alone and declined to adjudicate the merits of the assessment. [Paras 5, 6]

Impugned assessment order dated 29th September 2021 and consequential penalty notices under Sections 271(1)(c) and 273(1)(b) are set aside and matter remanded to the AO for a fresh assessment after giving the assessee an effective opportunity of hearing.

Set aside and remand for fresh assessment - penalty under Sections 271(1)(c) and 273(1)(b) - Court directed remand to the Assessing Officer for fresh assessment and hearing, without touching the merits of the case. - HELD THAT: - Having found procedural irregularity in denial of effective hearing, the Court set aside the assessment and the consequential penalty notices and remanded the matter to the Assistant Commissioner of Income Tax (Central Circle-2), Bhubaneswar for a fresh assessment. The Court specified that the petition will be listed before the AO on 14th February 2022 and that a fresh assessment after hearing the petitioner shall be passed in accordance with law within three months thereafter. The Court clarified that its order addresses only procedural illegality and does not decide substantive issues. [Paras 6]

Matter remanded to the AO for fresh assessment after affording effective opportunity of hearing; temporal directions given for listing and completion; merits not adjudicated.

Final Conclusion: Writ petition allowed to the extent that the assessment order dated 29th September 2021 and consequential penalty notices are set aside on procedural grounds; matter remanded for fresh assessment after giving the assessee an effective opportunity of hearing, with specified timelines, without deciding the merits.

Re-opening of assessment - Reason to believe - Pre-mature challenge to reassessment proceedings - Opportunity of appeal

Pre-mature challenge to reassessment proceedings - Re-opening of assessment - Reason to believe - Opportunity of appeal - Maintainability of writ petition challenging initiation of proceedings under Section 147/148 of the Income Tax Act before a final decision is taken by the income tax authorities - HELD THAT: - The Court considered the challenge to the procedure adopted by the respondents in re-opening assessment proceedings initiated by notice dated 26.03.2021 under Section 148, which invoked the Assessing Officer's alleged reason to believe that income chargeable to tax for Assessment Year 2017-2018 had escaped assessment. The petitioner had responded to the notice and placed objections before the authorities, including a contention that the alleged loan transaction was not received but given by the petitioner and subsequently repaid. The respondents, however, had not reached a final decision on the assessment/reassessment proceedings. In these circumstances the Court held that an interlocutory challenge to the initiation of reassessment proceedings is premature where the authorities have not taken a final decision; the petitioner would have statutory remedies, including appeals to the Commissioner (Appeals), the ITAT and the High Court, after a final order is passed. Having regard to the absence of a final adjudication and the petitioner's participation in the ongoing proceedings, the petition was not maintainable at this stage. [Paras 5, 6]

Writ petition dismissed as premature for want of a final decision by the income tax authority; petitioner may pursue statutory remedies after final order.

Final Conclusion: The petition challenging the initiation of reassessment proceedings under Section 147/148 of the Income Tax Act was dismissed as premature since the respondents had not taken a final decision; the petitioner retains the right to challenge any eventual final order by invoking the prescribed appellate remedies.

Eligibility under Direct Tax Vivad se Vishwas Act - definition of "appellant" under Section 2(1)(a)(ii) of the VsV Act - commencement of limitation on receipt of certified copy under Section 260A(2)(a) of the Income-tax Act - specified date under the VsV Act - administrative non-application of mind in rejection of declarations

Definition of "appellant" under Section 2(1)(a)(ii) of the VsV Act - commencement of limitation on receipt of certified copy under Section 260A(2)(a) of the Income-tax Act - specified date under the VsV Act - Whether the petitioner qualified as an "appellant" under the VsV Act on the specified date because the time for filing an appeal had not expired in view of commencement of limitation from receipt of certified copy. - HELD THAT: - The Court held that for the purpose of Section 2(1)(a)(ii) of the VsV Act the petitioner fell within the definition of "appellant" because the time for filing an appeal is computed from the date of communication/receipt of the certified copy under Section 260A(2)(a) of the Income-tax Act. Although the ITAT order was dated 22.10.2019, the certified copy was not received by the petitioner until December 2020; accordingly the period of limitation of 120 days would not have expired by 20.02.2020 and the petitioner's right to file an appeal remained alive as on the specified date (31.01.2020). The respondent's rejection proceeded on the incorrect premise that an appeal was not pending on the specified date, without correctly applying the rule on commencement of limitation from receipt of certified copy. [Paras 6, 7]

The petitioner was eligible as an "appellant" under the VsV Act on the specified date because the period for filing an appeal had not expired in view of Section 260A(2)(a).

Eligibility under Direct Tax Vivad se Vishwas Act - administrative non-application of mind in rejection of declarations - Whether the rejection of Declaration Forms 1 and 2 dated 12.04.2021 ought to be quashed for failure to apply the correct legal test and to direct acceptance of the declaration. - HELD THAT: - The Court found that the respondent rejected the petitioner's declarations without applying the correct legal test under Section 2(1)(a)(ii) of the VsV Act read with the computation rule in Section 260A(2)(a) and thereby exhibited non-application of mind. Having concluded that the petitioner satisfied the statutory eligibility, the Court directed quashing of the rejection and ordered the respondent to accept the petitioner's declaration within three days of receipt of the order, subject to the petitioner fulfilling the payment requirement and other legal consequences to follow in accordance with law. [Paras 7, 8, 9]

Rejection of Forms 1 and 2 dated 12.04.2021 quashed; respondent directed to accept the petitioner's declaration within three days and proceed in accordance with law.

Final Conclusion: Writ petition allowed: the petitioner was held eligible as an appellant under the VsV Act on the specified date because limitation ran from receipt of the certified copy; the administrative rejection of Forms 1 and 2 was quashed and the respondent was directed to accept the declaration within three days and take consequential action as required by law.

Refund - interest on delayed refund - appeal effect order

Refund - interest on delayed refund - appeal effect order - Direction to the Assessing Officer to grant the refund along with applicable interest following an appeal effect order. - HELD THAT: - Learned counsel for the respondent informed the Court that, subsequent to the last hearing, an appeal effect order has been passed. In consequence of that representation, the Court directed the Assessing Officer to issue the refund together with the applicable interest. The direction fixes a timeline of eight weeks for compliance and results in disposal of the writ petition. No further adjudication was required since the appeal effect order formed the basis for immediate relief.

Assessing Officer directed to issue the refund with applicable interest within eight weeks; writ petition disposed of.

Final Conclusion: The Court disposed of the writ petition after being informed that an appeal effect order had been passed and directed the Assessing Officer to release the refund with applicable interest within eight weeks.

Faceless Assessment Scheme - show-cause notice - draft assessment order - principles of natural justice - mandatory procedural compliance by Government authorities - remand for fresh consideration

Faceless Assessment Scheme - show-cause notice - draft assessment order - principles of natural justice - mandatory procedural compliance by Government authorities - Validity of the assessment order, notice of demand and notice for initiation of penalty proceedings passed without issuance of a show-cause notice and draft assessment order as mandated by the Faceless Assessment Scheme. - HELD THAT: - The Court held that the Faceless Assessment Scheme mandatorily contemplates issuance of a prior show-cause notice and a draft assessment order by the assessment unit before finalising the assessment. The scheme provisions require the assessment unit to make and send a draft assessment order to the National e-Assessment Centre after taking into account relevant material. The Government is bound to follow the procedures and standards it prescribes, and failure to comply with such mandatory procedures renders the resulting action vulnerable to invalidation. Applying these principles, the Court found that no prior show-cause notice or draft assessment order was issued in the present case, resulting in a breach of the principles of natural justice and the mandatory procedure under the Scheme. In view of this breach, the appropriate relief is to set aside the impugned orders and remit the matter for fresh consideration in accordance with the prescribed procedure. [Paras 6, 7, 8, 9]

Impugned assessment order, notice of demand and notice for initiation of penalty proceedings set aside; matter remanded to the Assessing Officer to issue a draft assessment order and thereafter pass a reasoned order in accordance with law.

Final Conclusion: The assessment order, demand notice and penalty initiation notice dated February 13, 2021 were set aside for failure to comply with the mandatory show-cause and draft-order procedure under the Faceless Assessment Scheme; the matter is remanded to the Assessing Officer for issuance of a draft assessment order and a reasoned decision in accordance with law.

Maintainability of successive anticipatory bail application - no change of circumstances for grant of successive anticipatory bail - anticipatory bail at the stage of notice under Section 108 Customs Act - referral to Central Bureau of Investigation for criminal investigation - preliminary enquiry by CBI and conclusions on further scope of investigation

Maintainability of successive anticipatory bail application - no change of circumstances for grant of successive anticipatory bail - Second petition for anticipatory bail is not maintainable and is dismissed for want of change of circumstances and non-appearance of the petitioner. - HELD THAT: - The Court recorded that the petitioner had earlier filed and been refused anticipatory bail by a detailed order. Counsel for respondents placed reliance on precedent that successive anticipatory applications ought not to be entertained, particularly where the accused is not cooperating with investigation. The Court noted that the petitioner, despite being issued summons, was not appearing and there was no material change in circumstances since the earlier dismissal. On these facts and having regard to the department's contentions about the petitioner's non cooperation and allegations against him, the Court concluded that the second anticipatory bail petition could not be entertained and accordingly dismissed it.

Second anticipatory bail petition dismissed for lack of maintainability and absence of any change in circumstances.

Referral to Central Bureau of Investigation for criminal investigation - preliminary enquiry by CBI and conclusions on further scope of investigation - Status report from CBI filed; court recorded that a preliminary enquiry was registered, two officers have been arrested and there is no further scope for CBI enquiry; the report is to be kept in sealed cover. - HELD THAT: - Pursuant to the Court's earlier order directing reference to the CBI, a sealed status report was placed before the Court indicating that preliminary PE No.PE052021A0003 dated 16.11.2021 was registered and investigation carried out. The report records that a Special Investigating Team was constituted and two officers were arrested. On perusal of the report, the Court found that there was no further scope for inquiry by the CBI and directed that the report be kept in a sealed cover. The Court also noted prior directions (recorded earlier) for a preliminary enquiry by an officer not below the rank of Superintendent of Police and for production of documents/co operation, but the operative present finding was that CBI's investigation has proceeded and no further enquiry was warranted by CBI.

CBI's status report taken on record; preliminary enquiry registered and arrests made; Court finds no further scope for CBI enquiry and orders the report to be kept sealed.

Final Conclusion: The petition for second anticipatory bail is dismissed for lack of maintainability and absence of any change in circumstances; the CBI's sealed status report records a registered preliminary enquiry and arrests, and the Court finds no further scope for CBI investigation, keeping the report in sealed cover.

Directory versus mandatory character of regulatory time limits - Reasonable period for completion of inquiry - Accountability for unexplained delay in disciplinary/inquiry proceedings - Delay as a ground to set aside administrative action - Revocation of Custom Broker licence and forfeiture of security deposit

Directory versus mandatory character of regulatory time limits - Reasonable period for completion of inquiry - Accountability for unexplained delay in disciplinary/inquiry proceedings - Whether the delay in conducting inquiry under the Custom Broker Licensing framework was satisfactorily explained and whether the Tribunal's reliance on such unexplained delay to set aside the revocation/forfeiture was perverse. - HELD THAT: - The court applied the principle that time limits under the Regulations should not be read as absolutely mandatory but must be enforced by requiring the Revenue to record and justify deviations so that a court or tribunal can assess whether the delay was reasonable. The Tribunal scrutinised the chronology and found unexplained delays at multiple stages (issuance of notice beyond 90 days, unexplained gap before commencement of inquiry, delays in examination of the principal accused and completion of proceedings without his examination). The High Court examined the inquiry officer's explanation and concluded that the delay, particularly up to 14th August 2014, was not satisfactorily explained. Given the absence of adequate reasons attributing delay to exceptional or administrative exigencies and the Tribunal's fact based observations, the court found no perversity in CESTAT's conclusion that the delay was unexplained and significant enough to impugn the impugned action.

Tribunal's factual finding of considerable unexplained delay was upheld and not found to be perverse; the Regulations require reasons for deviation and accountability which were not furnished.

Delay as a ground to set aside administrative action - Revocation of Custom Broker licence and forfeiture of security deposit - Whether the CESTAT was justified in setting aside the revocation of the Custom Broker licence and the forfeiture of the security deposit in view of the unexplained delay. - HELD THAT: - The court accepted the editorial balance struck in earlier authority that prevents treating any delay as automatically fatal but requires the Revenue to justify deviations from the prescribed timeline. On the facts, because the Tribunal recorded unexplained delay at various critical stages and the inquiry officer's explanations were held to be unsatisfactory, the Tribunal's interference with the Commissioner's order revoking the licence and forfeiting the deposit was sustainable. The High Court found no error in law in CESTAT's approach and outcome.

CESTAT's setting aside of revocation and forfeiture on account of unjustified delay is sustained; appeal against that order is without merit.

Accountability for unexplained delay in disciplinary/inquiry proceedings - Whether the CESTAT's finding that the respondents were conducting business through their employee was based on no or irrelevant evidence and thereby perverse. - HELD THAT: - The appellant contended that the Tribunal's factual finding about the respondents conducting business through an employee lacked evidence. The High Court did not find any substantial question of law in this contention and concluded that, on analysis of the facts and application of the correct test, the Tribunal had not acted perversely or applied incorrect principles. The appeal did not demonstrate error warranting interference.

The CESTAT's factual findings on the manner of respondents' conduct of business were not shown to be perverse; no legal infirmity found.

Final Conclusion: The appeal is dismissed as devoid of merits. The Tribunal's factual findings of considerable unexplained delay and its consequent interference with the revocation of the Custom Broker licence and forfeiture of the security deposit were upheld; the Revenue failed to satisfactorily justify the deviation from the prescribed timeline and the High Court found no perversity or error of law in CESTAT's conclusions.

Duty drawback entitlement - conversion of EOU/free shipping bills to drawback shipping bills - discretion of Commissioner under Rule 12 - requirement of reasoned/speaking order - uniformity in exercise of discretion under the Customs Act, 1962 - fresh adjudication by an independent officer

Duty drawback entitlement - conversion of EOU/free shipping bills to drawback shipping bills - discretion of Commissioner under Rule 12 - requirement of reasoned/speaking order - uniformity in exercise of discretion under the Customs Act, 1962 - fresh adjudication by an independent officer - Whether the conflicting decisions of different Customs authorities on the respondent's claim for conversion of EOU/free shipping bills into drawback shipping bills and entitlement to duty drawback were sustainable, and the appropriate remedy. - HELD THAT: - The court noted that two different Customs authorities had taken divergent views on the respondent's claim for drawback in respect of exports made in the period in question, producing a dichotomy of stand. Rule 12 vests discretion in the Commissioner to exempt an exporter from the strictures of the rule in appropriate cases, but such discretion must be exercised by a reasoned, speaking order. Given the absence of adequate reasoning in the impugned orders and the need for consistency in construction and application of a central enactment, the court found the variation in authorities' stands to be unsustainable without detailed justification. In the interests of uniformity and to give the respondent a hearing on merits, the court set aside the earlier impugned orders and directed a fresh decision on the claim. The remedial direction required placement of the application before an independent officer of the rank of Chief Commissioner within specified timelines, permitting the respondent to file documentary evidence and directing that the officer decide the eligibility on merits and in accordance with law without being influenced by the Board's earlier observations. [Paras 11, 12, 13]

Impugned orders set aside; matter remitted for fresh adjudication by an independent officer of the rank of Chief Commissioner who shall decide the respondent's entitlement to duty drawback on merits after hearing and within the time limits specified.

Final Conclusion: The court set aside the earlier administrative orders for lack of reasoned application of discretion and ordered fresh consideration of the respondent's claim for conversion and duty drawback by an independent Chief Commissioner, directing a consistent, reasoned decision on merits after affording opportunity of hearing within stipulated timelines.

Mis-declaration of goods and country of origin - rejection of declared value under Rule 12 of the Customs Valuation Rules, 2007 - applicability of anti-dumping duty to imports after issuance of notification - confiscation under Section 111(f) of the Customs Act, 1962 - appellate interference with factual findings and reduction of penalties

Mis-declaration of goods and country of origin - rejection of declared value under Rule 12 of the Customs Valuation Rules, 2007 - Mis-declaration of country of origin and goods warranted rejection of declared value and sustained adverse treatment. - HELD THAT: - The Tribunal recorded that the appellants declared the country of origin as Malaysia whereas the actual origin was Europe, constituting mis-declaration. In view of this mis-declaration the declared value was liable to be rejected under Rule 12 of the Customs Valuation Rules, 2007. The bills of entry were filed after the anti-dumping notification had been issued, so the appellants' contention that anti-dumping duty was not leviable was factually incorrect. The appellants failed to produce plausible evidence to rebut these findings, and the appellate authority's conclusions on value and origin were accordingly upheld. [Paras 4]

Findings of mis-declaration and consequent rejection of declared value under Rule 12 were upheld and the plea against applicability of anti-dumping duty was rejected.

Mis-declaration of goods and country of origin - confiscation under Section 111(f) of the Customs Act, 1962 - Incorrect description in the Import General Manifest (IGM) rendered the goods liable to confiscation under Section 111(f). - HELD THAT: - The Tribunal noted that the IGM contained incorrect particulars of dutiable goods and that no amendment to the IGM had been sought by the person in-charge of the vessel prior to filing of bills of entry. Because the IGM mis-declared dutiable goods, the conditions for confiscation under Section 111(f) of the Customs Act, 1962 were satisfied. The appellants did not present evidence sufficient to overturn this conclusion reached by the adjudicating and appellate authorities. [Paras 4]

Confiscation under Section 111(f) was justified and sustained.

Appellate interference with factual findings and reduction of penalties - No interference with the Commissioner (Appeals)'s order which reduced fines and penalties from the original adjudication. - HELD THAT: - The Tribunal observed that the Commissioner (Appeals) had considered the role of the appellants in mis-declaration and, exercising discretion, reduced the quantum of redemption fine and penalties. As the appellants failed to produce plausible evidence to demonstrate error in the appellate authority's exercise of discretion or its factual findings, the Tribunal found no infirmity warranting interference with the impugned order. [Paras 4]

The appellate authority's modification of fines and penalties was not disturbed.

Final Conclusion: The appeals were dismissed; the findings of mis-declaration, rejection of declared value, applicability of anti-dumping duty, liability to confiscation under Section 111(f), and the appellate authority's reduction of penalties were upheld.

Refund of anti-dumping duty - applicability of anti-dumping notification on date of import - refund under Section 27 of the Customs Act, 1962 - interest on delayed refund

Refund of anti-dumping duty - applicability of anti-dumping notification on date of import - refund under Section 27 of the Customs Act, 1962 - Whether the anti-dumping duty deposited on import under Bill of Entry No. 9706294 dated 26.06.2015 was refundable because the controlling anti-dumping notification had lapsed on 25.06.2015. - HELD THAT: - The Tribunal recorded that the anti-dumping notification relied upon by the Department had been valid only up to 24.06.2015 and had lapsed with effect from 25.06.2015. The import in question was covered by Bill of Entry dated 26.06.2015; therefore, the anti-dumping duty was not applicable on that date. In consequence, the deposit of anti-dumping duty was erroneous and a refund claim filed under Section 27 of the Customs Act, 1962 was maintainable. The Tribunal set aside the impugned order rejecting the refund and directed the Adjudicating Authority to grant the refund along with interest as per the rules within 45 days of receipt of the Tribunal's order. [Paras 6]

Refund of the anti-dumping duty deposited on the Bill of Entry dated 26.06.2015 allowed; adjudicating authority directed to grant refund with interest within 45 days.

Final Conclusion: The appeal is allowed: the anti-dumping duty notification had lapsed before the date of import, the duty was not payable on 26.06.2015, and the appellant is entitled to refund with interest; the Adjudicating Authority to effect refund within 45 days.

Limitation for refund claims under an amending notification - reading down an amending notification to exclude retrospective limitation - binding effect of a jurisdictional High Court's precedent on the tribunal within its territory

Reading down an amending notification to exclude retrospective limitation - limitation for refund claims under an amending notification - precedent of jurisdictional High Court - Whether the Commissioner (Appeals) correctly allowed the refund by applying the Delhi High Court's decision in Sony India and reading down Notification No. 93/2008 so that the limitation period does not apply. - HELD THAT: - The Tribunal held that the Commissioner (Appeals) correctly relied on the jurisdictional Delhi High Court's decision in Sony India, which held that the amending notification imposing a limitation period must be read down to the extent it imposes such a limitation. Although the Sony India case was framed in the context of imports made prior to the amending notification, the operative holding-that the amending notification's limitation cannot be applied to restrict refund claims-was treated as a general principle applicable within the Delhi High Court's territorial jurisdiction. The Tribunal noted the contrary view in CMS Info Systems of the Bombay High Court but found that, since the parties and the impugned order fall within the Delhi High Court's territory, the Delhi High Court's ratio governs. Applying that precedent, the Commissioner (Appeals) properly set aside the original order rejecting the refund as time-barred and allowed the refund claim. [Paras 7, 8]

The Commissioner (Appeals) correctly followed the Delhi High Court's ratio in Sony India to read down Notification No. 93/2008 and allow the refund; Revenue's appeal is dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, upholding the Commissioner (Appeals)'s allowance of the refund by applying the Delhi High Court's ruling that the amending notification's limitation period must be read down and does not bar the refund claim within the Delhi jurisdiction.

Exemption from customs duty to 100% EOU - compliance of procedural condition under Rule 5 of Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 - distinction between procedural (technical) condition and substantive condition for exemption - strict compliance of conditions of exemption notification - manufacture includes packing/repacking for purpose of export benefits

Exemption from customs duty to 100% EOU - compliance of procedural condition under Rule 5 of Customs (Import of Goods at Concessional Rate of Duty) Rules, 2017 - distinction between procedural (technical) condition and substantive condition for exemption - strict compliance of conditions of exemption notification - Whether denial of exemption was justified for non-compliance of the procedural requirements introduced w.e.f. 30.6.2017 (Rule 5) when the substantive entitlement to exemption otherwise existed. - HELD THAT: - The Tribunal examined Rule 5 (as incorporated by the June 2017 amendment) and held that the obligations under it-submission of information and a continuity bond-are procedural in nature. Applying the principle drawn from Mangalore Chemicals & Fertilizers and other authorities distinguishing technical/procedural conditions from substantive conditions, the Tribunal found no material on record showing any administrative prejudice or element of fraud arising from non-compliance. The Amendment introducing Rule 5 was recent and the bills of entry related to the immediate period after that amendment; non-observance was therefore attributable to lack of knowledge and was of a technical character. The Tribunal held that denial of the substantive exemption benefit to a 100% EOU on account of failure to comply with a procedural/technical requirement was not sustainable and amounted to an impermissible frustration of the substantive entitlement. [Paras 14, 15, 16]

Denial of exemption on account of non-compliance with Rule 5 was disallowed; the procedural non-compliance was treated as a technical defect not warranting denial of the substantive exemption.

Manufacture includes packing/repacking for purpose of export benefits - exemption from customs duty to 100% EOU - Whether the goods re-exported by the appellant qualified as 'manufactured goods' where the appellant undertook cleaning and repacking before re-export. - HELD THAT: - The Tribunal relied on Board Circular No. 489/55/99 which adopts a wide connotation of 'manufacture' for the purpose of export benefits to include operations such as blending, packing and repacking. Earlier Tribunal decisions were noted to have held that packing/repacking amounts to manufacture for entitlement to exemption. The appellant undisputedly carried out cleaning and repacking in its 100% EOU premises before re-export. Absent any finding of contrary fact by the Department, the Tribunal concluded that the activity satisfied the requirement that the goods be 'manufactured' for the purpose of the relevant exemption notifications and that the adjudicating authority erred in treating the goods as non-manufactured. [Paras 17, 18]

The repacking/cleaning activity amounted to manufacture for the purpose of claiming the exemption; therefore the condition that the goods be manufactured goods was satisfied.

Final Conclusion: The appeal is allowed: the order under challenge is set aside as the denial of exemption on procedural grounds was unsustainable and the repacked goods qualified as manufactured goods; consequential relief follows.

Sanction of a Scheme of Amalgamation under Section 230(6) read with Section 232(3) of the Companies Act, 2013 - Scheme of Amalgamation - vesting of transferor's properties, rights, interests, liabilities and obligations in the transferee - dissolution of transferor company without winding up - continuance of suits, actions and proceedings by or against the transferee - compliance with applicable accounting standards in accounting treatment of the scheme - filing of certified copy of order with Registrar of Companies and consequential consolidation of records - regulatory observations of the Regional Director and undertakings given by petitioners

Sanction of a Scheme of Amalgamation under Section 230(6) read with Section 232(3) of the Companies Act, 2013 - Scheme of Amalgamation - Sanction of the Scheme of Amalgamation between the transferor companies and the transferee company - HELD THAT: - The Tribunal examined the Scheme filed by the petitioner companies, the board approvals, the auditors' certificate on accounting treatment, the report of the Regional Director and the rejoinder affidavits, and noted absence of any objector opposing the Scheme. The Tribunal found the Scheme to be fair and reasonable and not violative of law or contrary to public interest. Although the Official Liquidator expressed a view that the affairs of one Transferor Company had been conducted in a manner prejudicial to members or public, the Tribunal nevertheless recorded that requisite statutory compliances had been fulfilled and therefore sanctioned the Scheme on the terms set out in the order. The sanction is made operative with effect from the appointed date specified in the Scheme. [Paras 14, 15]

The Scheme of Amalgamation is sanctioned and ordered to be binding on all equity shareholders and concerned parties with effect from the appointed date.

Vesting of transferor's properties, rights, interests, liabilities and obligations in the transferee - continuance of suits, actions and proceedings by or against the transferee - dissolution of transferor company without winding up - Transfer and vesting of the transferor company's assets, rights and liabilities in the transferee and legal consequences thereof - HELD THAT: - The Tribunal directed that all properties, rights, interests, liabilities and obligations of the specified Transferor Company shall, without further act or deed, be transferred to and vested in the Transferee Company and shall become the debts, liabilities, duties and obligations of the Transferee Company. It further directed that all legal proceedings, suits and appeals, if any, relating to the transferor's undertaking shall continue by or against the Transferee Company as effectually as if they had been pending against the Transferee Company. Consequent upon filing of the certified copies of the order with the Registrar of Companies, dissolution of the Transferor Company will take place without winding up in accordance with the terms of the order. [Paras 15]

Assets, rights and liabilities of the Transferor Company are vested in the Transferee Company; pending proceedings continue against the Transferee; dissolution of the Transferor will occur without winding up on compliance with filing directions.

Filing of certified copy of order with Registrar of Companies and consequential consolidation of records - compliance with applicable accounting standards in accounting treatment of the scheme - regulatory observations of the Regional Director and undertakings given by petitioners - Statutory and regulatory compliances, interim undertakings and directions incidental to sanction - HELD THAT: - The Tribunal recorded the Regional Director's observations concerning non-filing of certain statutory forms by a Transferor Company and other compliance matters, and accepted the undertakings furnished by the petitioners in their rejoinder affidavit that they would comply with the statutory requirements including filing pending returns/forms, pay applicable stamp duty on transfer of immovable property if applicable, and make accounting entries to comply with the applicable accounting standards. The Tribunal directed that the Transferor Company file its Schedule of Assets within the time stipulated and that certified copies of the order be delivered to the Registrar of Companies within the time stipulated so that the Transferor's records may be consolidated with those of the Transferee. [Paras 11, 12, 15]

Petitioners' undertakings on compliance are recorded; Transferor to file Schedule of Assets within the time ordered and certified copy of the order to be filed with the Registrar of Companies within the time ordered.

Final Conclusion: The Tribunal allowed and sanctioned the Scheme of Amalgamation on the terms set out in the order, directed ancillary filings and compliances by the petitioners and ordered consolidation of records upon filing of certified copies, while noting that sanction does not protect the companies from consequences of any prior contraventions of law; the petition is disposed of accordingly.

Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013 - dispensing with meetings of shareholders and creditors - merger of wholly owned subsidiaries into holding company - no prejudice to rights of shareholders or creditors - service of notices to creditors and regulatory authorities and publication - appointment of auditors to assist Official Liquidator for scrutiny

Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013 - dispensing with meetings of shareholders and creditors - merger of wholly owned subsidiaries into holding company - no prejudice to rights of shareholders or creditors - Whether meetings of the equity shareholders, preference shareholders, secured creditors and unsecured creditors could be dispensed with in respect of the proposed amalgamation of wholly owned subsidiaries into their holding company. - HELD THAT: - The Tribunal accepted the applicant companies' case that the three Transferor companies are wholly owned subsidiaries of the Transferee company and that no consideration by way of share allotment is payable on account of the merger. The Scheme was held to be an internal consolidation that would not dilute shareholding of the Transferee, nor reduce amounts payable to or adversely alter the terms of creditors. The Transferee's assets and net worth were found sufficient post-amalgamation to discharge creditors' claims. On these factual and legal foundations the Tribunal concluded that the Scheme does not constitute a compromise or arrangement affecting shareholders or creditors in the manner envisaged by Section 230(1)(a) and (b) so as to require holding of the meetings sought to be dispensed with.

Application allowed insofar as meetings are dispensed with for the equity shareholders of Transferor Cos. 1-3 and Transferee Co., the preference shareholders of Transferor Co.1 and Transferee Co., the secured creditors of the Transferee Co., and the unsecured creditors of Transferor Cos.1-3 and the Transferee Co.

Service of notices to creditors and regulatory authorities and publication - presumption of no objection after 30 days - appointment of auditors to assist Official Liquidator for scrutiny - affidavit of service and proof of dispatch - What procedural directions should be issued in lieu of holding meetings when meetings are dispensed with. - HELD THAT: - Although meetings were dispensed with, the Tribunal directed procedural safeguards to protect stakeholders and regulatory oversight. The Applicant Companies were ordered to send individual notices enclosing the Scheme to all secured and unsecured creditors at their last known addresses or emails and to advertise the notice in two local newspapers (one English, one vernacular), inviting representations within thirty days. The Tribunal further directed service of the application and Scheme upon the Regional Director, Registrar of Companies and the Income Tax Authority with a 30-day period after which absence of response would be treated as no objection. Service upon the Official Liquidator was ordered and B.A. Ved & Company was appointed to assist the Official Liquidator to scrutinize the Transferor Companies' books for the last five years, with specified fees payable by the Transferor Companies. Finally, the Applicant Companies were required to file an affidavit of service proving compliance and enclosing dispatch proofs.

The Tribunal directed detailed notice, publication and service requirements, appointed auditors to assist the Official Liquidator in account scrutiny, and required filing of an affidavit of service confirming compliance with these directions.

Final Conclusion: The Company Scheme Application is allowed: the Tribunal dispensed with the statutory meetings of specified shareholders and creditors in respect of the amalgamation of wholly owned subsidiaries into the holding company, subject to prescribed notice, publication, service, Official Liquidator scrutiny assisted by appointed auditors, and filing of affidavits of service; absence of response from statutory authorities/Official Liquidator within 30 days will be deemed no objection.

Scheme of Amalgamation - sanction under Section 230(6) read with Section 232(3) - vesting of assets and liabilities - issue and allotment of shares as consideration - continuation of pending proceedings - accounting treatment under applicable IND AS / Accounting Standards (pooling of interests) - compliance with filing and registration formalities and payment of stamp duty

Scheme of Amalgamation - sanction under Section 230(6) read with Section 232(3) - Sanction of the Scheme of Amalgamation between the Transferor Companies and the Transferee Company. - HELD THAT: - After hearing the parties, considering statutory compliance, votes cast by shareholders and creditors, and the representations filed by the Regional Director, the Tribunal found that the Scheme as filed is bona fide and in the interest of the companies, shareholders and all concerned. The Tribunal noted compliance with the directions for convening meetings, the filing of statutory notices and advertisements, and the reports of the Chairperson and Scrutinizer showing unanimous shareholder approval by e-voting and postal ballot. On this basis the Scheme annexed to the petition was sanctioned to be binding with effect from the Appointed Date stated therein.

The Scheme of Amalgamation is sanctioned and ordered to be binding from the Appointed Date.

Vesting of assets and liabilities - continuation of pending proceedings - Consequences of sanction: transfer and vesting of assets, liabilities and continuation of proceedings. - HELD THAT: - The Tribunal ordered that, from the Appointed Date, all properties, rights and powers of the Transferor Companies shall, without further act or deed, be transferred to and vest in the Transferee Company and that all debts, liabilities, duties and obligations of the Transferor Companies shall similarly be transferred to and become the liabilities of the Transferee Company. It further directed that all suits, appeals and proceedings pending by or against the Transferor Companies shall be continued by or against the Transferee Company as provided in the Scheme.

Assets, rights, liabilities and pending proceedings of the Transferor Companies stand transferred to and vested in the Transferee Company from the Appointed Date.

Issue and allotment of shares as consideration - Mechanism for giving effect to consideration under the Scheme. - HELD THAT: - The Tribunal directed that the Transferee Company shall, without further application, issue and allot to the shareholders of the Transferor Companies the shares to which they are entitled under the terms of the Scheme. The exchange ratio had been fixed on the basis of a registered valuer's report and certified as fair in the record, and the Tribunal sanctioned the allotment process as part of the order giving effect to the Scheme.

Transferee Company to issue and allot shares to Transferor Companies' shareholders as per the Scheme.

Accounting treatment under applicable IND AS / Accounting Standards (pooling of interests) - Accounting treatment to be adopted consequent to amalgamation. - HELD THAT: - Having noted the Regional Director's observation regarding pooling of interests and applicable accounting standards, the Tribunal recorded the petitioners' undertaking that differences arising would be adjusted against reserves and that accounting entries shall be passed in accordance with the applicable IND AS/Accounting Standards (including IND AS 103 as applicable) and Section 133 of the Companies Act, 2013. The petitioners' statutory auditors had certified conformity of the accounting treatment in the Scheme with accounting standards.

Accounting consequences to be effected in accordance with the applicable IND AS/Accounting Standards and adjustments (if any) to be made to reserves as undertaken.

Compliance with filing and registration formalities and payment of stamp duty - Post-sanction compliance directions including filing, registration and ancillary obligations. - HELD THAT: - The Tribunal granted leave to file the Schedule of Assets in the prescribed form within three weeks of receipt of the order and directed that certified copies of the order be delivered to the Registrar of Companies within thirty days, upon which the Transferor Companies shall be dissolved in accordance with the Scheme. The Transferee Company was directed to pay applicable stamp duty on transfer of immovable properties if any. The Tribunal also directed supply of a legible printout of the Scheme and Schedule of Assets to the concerned department for verification and annexure to the certified copy of the order.

Petitioners directed to comply with filing, registration, schedule submission and stamp duty obligations; certified copies to be delivered to ROC and printouts supplied for annexure.

Final Conclusion: The National Company Law Tribunal, Kolkata Bench, allowed the company petition and sanctioned the Scheme of Amalgamation, ordered vesting of assets and liabilities and continuation of proceedings in the Transferee Company, directed issuance of shares as consideration, required compliance with accounting and filing formalities and payment of applicable stamp duty, and disposed of C.A.A. No. 171/KB/2021.

Liquidator's duty to preserve and protect assets in the liquidation estate - financial creditor realising security interest under Admiralty jurisdiction and opt out under section 52 - payment of expenses for securing a charged asset where securing undertaken with creditor's consent - claim submission obligations under the Liquidation Process Regulations - proportionate deduction of liquidator's fees and costs from proceeds under section 53 - presumption of security interest under section 21 A

Payment of expenses for securing a charged asset where securing undertaken with creditor's consent - liquidator's duty to preserve and protect assets in the liquidation estate - Liability for the salvaging/securing expenses incurred in protecting m.v. TAG 22 and m.v. TAG 6. - HELD THAT: - The Tribunal found that the liquidator initiated and carried out the securing operation during 3-5 October 2019 after communicating with both charge holders and with the explicit consent of the Appellant, who had offered to contribute funds (including an email offering 50% contribution). The Appellant had earlier invoked Admiralty jurisdiction and obtained arrest/auction orders in March-April 2019; consequently the Tribunal treated the securing operation as undertaken at the Appellant's request and for its benefit rather than as an unconditional liquidation expense. The Tribunal also held that the salvaging vendor need not await further orders of the Admiralty Court for payment from sale proceeds, because the securing was undertaken on the Appellant's request by the liquidator during the liquidation process. [Paras 12, 14, 15, 18]

The Appellant is liable to pay its proportional share of the expenses incurred in securing m.v. TAG 22 (and TAG 6) as ordered by the Adjudicating Authority.

Financial creditor realising security interest under Admiralty jurisdiction and opt out under section 52 - claim submission obligations under the Liquidation Process Regulations - Effect of the Appellant's prior Admiralty proceedings and failure to file claim under Liquidation Process Regulations on its entitlement to keep TAG 22 out of the liquidation estate. - HELD THAT: - The Tribunal recorded that the Appellant had invoked the Admiralty (Jurisdiction and Settlement of Maritime Claims) Act, 2017 and obtained orders for arrest/auction of TAG 22 prior to initiation of CIRP, and that the Appellant had not filed a claim under Regulations 16 and 18 of the Liquidation Process Regulations, apparently because it sought to realise its security in Admiralty proceedings. The Adjudicating Authority permitted the Appellant to opt out of the liquidation estate under section 52 subject to clearance of proportionate CIRP costs and payment of expenses incurred by the liquidator in securing TAG 22. The Tribunal found no error in that approach, noting the sequence of Admiralty orders predating CIRP and the Appellant's consent to the securing operation. [Paras 13, 14, 16]

Permission to keep TAG 22 out of the liquidation estate is subject to the conditions imposed by the Adjudicating Authority - clearing proportionate CIRP costs and payment of the expenses incurred in securing the vessel.

Proportionate deduction of liquidator's fees and costs from proceeds under section 53 - liquidator's duty to preserve and protect assets in the liquidation estate - Imposition of litigation costs on the Appellant for contesting payment of the securing expenses and the timing for payment. - HELD THAT: - The Tribunal observed that after the securing operation the Appellant refused to pay the invoice and engaged in protracted litigation, which the Tribunal found to be illogical in view of the Appellant's prior actions to realise its charge. The litigation increased expenditure and reduced the value available to stakeholders. In consequence, the Tribunal affirmed the Adjudicating Authority's direction that the Appellant must pay its proportional share of securing expenses and further ordered the Appellant to pay costs as compensation for litigation expenses, to be credited to the liquidation estate. [Paras 18, 19]

The Appellant shall pay its proportionate share of the securing expenses and a litigation cost (ordered by the Tribunal) within 15 days; the litigation cost is to be added to the liquidation estate.

Final Conclusion: The appeal is dismissed. The Adjudicating Authority's directions are upheld: the Appellant must pay its proportionate share of the expenses incurred in securing m.v. TAG 22 (and TAG 6), clear proportionate CIRP costs as a condition for opting out under section 52, and pay the litigation cost ordered by the Tribunal within the time directed.

Revival/restoration of Corporate Insolvency Resolution Process (CIRP) - liberty to file a fresh company petition versus liberty to revive/resume CIRP - termination of CIRP on settlement and recording settlement under Section 12A and Rule 11 - effect of non-compliance with settlement - liberty to seek revival of CIRP - precedential effect of Appellate Tribunal orders

Revival/restoration of Corporate Insolvency Resolution Process (CIRP) - liberty to file a fresh company petition versus liberty to revive/resume CIRP - effect of non-compliance with settlement - liberty to seek revival of CIRP - precedential effect of Appellate Tribunal orders - Impugned direction permitting the financial creditor to file a fresh company petition instead of granting liberty to revive/resume the earlier CIRP was erroneous and set aside. - HELD THAT: - The Tribunal examined the facts that the Adjudicating Authority admitted the Section 7 petition and initiated CIRP, that the parties reached a settlement recorded before the Adjudicating Authority under the procedure permitted by this Tribunal's order directing invocation of Rule 11 and Section 12A, and that the settlement expressly contemplated revival of CIRP in case of non-compliance. The Adjudicating Authority, however, granted only liberty to file a fresh company petition rather than liberty to revive the existing CIRP. Having regard to the prayer in the IA which sought disposal as settled with liberty to resume CIRP on default, and to this Tribunal's earlier decision recognising that an operational/financial creditor may seek revival/restoration of CIRP on default under a settlement, the Adjudicating Authority's liberty-to-file-a-fresh-petition direction was held to be without application of mind and contrary to the Appellate Tribunal's precedent. The Tribunal therefore quashed that portion of the impugned order and substituted a direction that in the event of default in adhering to settlement terms the financial creditor shall be at liberty to seek revival/restoration of the CIRP in CP No. 199 of 2018. [Paras 23, 24]

Sub paragraph 4 of paragraph 9 of the impugned order dated 17.08.2020 is quashed and set aside; replaced with a direction that on default in the settlement the financial creditor is entitled to seek revival/restoration of the CIRP in CP No.199 of 2018.

Final Conclusion: Appeal allowed in part: the Adjudicating Authority's direction permitting filing of a fresh company petition is quashed and substituted with a direction that the financial creditor may seek revival/restoration of the CIRP on non compliance with the settlement; no costs.

Impleading as party - Proper and necessary party - Pari-passu charge - Floating charge - Crystallisation of charge - Concurrent remedy and forum competence - Attachment in execution proceedings - Adjudicating Authority under the I&B Code

Impleading as party - Proper and necessary party - Concurrent remedy and forum competence - Whether the Applicant/Bank is entitled to be impleaded as Respondent No.4 in the Company Appeal before the Appellate Tribunal. - HELD THAT: - The Tribunal examined the Applicant/Bank's prayer to be impleaded as a secured lender claiming pari-passu charges and interest in amounts subject to attachment in execution proceedings. It noted that parallel proceedings and disputes touching the same subject-matter were pending before other fora, including an SLP before the Supreme Court and earlier proceedings before the High Court, and that the Applicant had not taken steps to implead itself in those proceedings or sought verification of its claim before the Adjudicating Authority. The Tribunal observed that the I&B Code and the surrounding procedural matrix require parties who have disputes or competing processes to pursue appropriate steps before the competent forum rather than seek impleadment at the appellate stage of a different proceeding. Having considered the contentions and surrounding facts, the Tribunal concluded that the Applicant, having failed to approach the competent fora for adjudication or impleadment and with substantive disputes pending before higher courts, could not be treated as a proper and necessary party for purposes of impleadment in the present appeal. The Tribunal therefore found no justification to allow the impleading application and directed the Applicant to await final decision in the pending SLP or to take steps to implead itself before the competent forum if so advised. [Paras 21]

I.A. No.450 of 2021 in Comp. App (AT) (CH) (INS) No.215 of 2021 to implead the Applicant/Bank is dismissed.

Final Conclusion: The Tribunal dismissed the application to implead the bank as a party, holding that the bank must await the outcome of the pending Supreme Court proceedings or seek impleadment/appropriate relief before the competent forum; no costs were awarded.

Maintainability of Section 7 application against a corporate guarantor - liability of corporate guarantor coextensive with principal borrower - effect of invocation/demand on accrual of cause of action and limitation - assignment of financial debt to an asset reconstruction company and assignee stepping into the shoes of assignor - irrelevance of quantum of liability at the stage of initiation of CIRP - conclusive effect of lender's certificate/claim under guarantee agreement

Effect of invocation/demand on accrual of cause of action and limitation - the appeal challenging limitation was negatived and the appeal was filed within time after exclusion of the pandemic period - HELD THAT: - The Tribunal accepted the appellant's submission that the appeal was filed within limitation because the Supreme Court had excluded the period from 15.03.2020 to 28.02.2022 for computing limitation; accordingly the impugned order dated 04.02.2022 was treated as having its first operative day from 01.03.2022 and the instant appeal was held to be time barred only if counted without that exclusion. The IA for condonation was disposed of on that basis and the appeal was admitted to be within time. [Paras 2]

IA No.237 of 2022 disposed; the Company Appeal was held to be filed within limitation.

Maintainability of Section 7 application against a corporate guarantor - liability of corporate guarantor coextensive with principal borrower - the Section 7 application against the corporate guarantor was maintainable and the financial creditor had proved financial debt and default - HELD THAT: - On consideration of the guarantee deed, the assignment and the communications between parties, the Tribunal held that when the principal borrower defaulted the corporate guarantor's liability, being coextensive with the principal borrower under Section 128 of the Contract Act, was triggered. The Tribunal applied precedents and clause provisions in the guarantee deed to conclude that the financial creditor had established the existence of financial debt and default for the purposes of admitting a Section 7 petition and that the Adjudicating Authority's admission of the petition was free from legal infirmity. [Paras 55]

The impugned order admitting CP(IB)/82/CHE/2021 under Section 7 stands affirmed and the appeal fails.

Assignment of financial debt to an asset reconstruction company and assignee stepping into the shoes of assignor - the assignment of the debt to the asset reconstruction company was effective and the assignee could invoke the guarantee - HELD THAT: - The Tribunal noted the Assignment Agreement dated 30.12.2020 transferring rights, title and interest in the loan and underlying securities/guarantees from the Bank to ASREC (India) Ltd. The assignee issued the invocation notice and acted as the assign of the original creditor; the Tribunal found the assignment and subsequent invocation to be effective and admissible as the basis for the Section 7 application. [Paras 39, 40, 55]

The assignment to the 1st respondent/ASREC (India) Limited was recognized and the assignee was competent to invoke the guarantee and proceed under Section 7.

Conclusive effect of lender's certificate/claim under guarantee agreement - terms of the guarantee (including clause making lender's certificate conclusive) and related clauses supported the creditor's claim and were held binding on the guarantor - HELD THAT: - The Tribunal examined clauses of the Guarantee Agreement (including clauses providing that a certificate or claim in writing by the lender/security trustee stating the amount due shall be conclusive against the guarantor, and clauses treating acknowledgements by the borrower as binding on the guarantor). Reading these clauses together, the Tribunal held that the guarantee was a live instrument, that acknowledgements and confirmations by the borrower/authorized agent could be imputed to the guarantor under the deed, and that such contractual provisions supported the conclusion that the creditor had established the debt owed by the guarantor. [Paras 35, 36, 37, 38, 50]

The contractual provisions in the guarantee deed were operative and supported the admission of the Section 7 application.

Irrelevance of quantum of liability at the stage of initiation of CIRP - the quantum of liability contested by the guarantor was not a bar to initiation of CIRP once default of a qualifying financial debt was established - HELD THAT: - The Tribunal observed that the Insolvency and Bankruptcy Code requires the Adjudicating Authority to record satisfaction as to occurrence of default in a summary manner and is not intended to adjudicate money claims or quantify liability. Consequently, disputes about the exact quantum of liability are to be addressed in the CIRP process and do not preclude initiation of CIRP if a debt of the threshold amount is shown. Applying that approach to the present facts, the Tribunal held that the challenge to quantum did not vitiate the admission under Section 7. [Paras 52, 53, 54]

Disputes as to the quantum of liability did not vitiate the admission of the Section 7 petition and were not relevant at the initiation stage.

Final Conclusion: The Tribunal dismissed the Company Appeal, affirmed the Adjudicating Authority's admission of the Section 7 application and the initiation of CIRP against the corporate guarantor, recognized the assignment to ASREC (India) Ltd and disposed of the interim application; no costs were awarded.

Restoration of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - enforcement of settlement agreements vs. insolvency resolution - breach of settlement giving rise to a separate cause of action - object and purpose of the Insolvency and Bankruptcy Code

Restoration of petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 - breach of settlement giving rise to a separate cause of action - object and purpose of the Insolvency and Bankruptcy Code - Whether the Restoration Application for revival of C.P. (IB) No. 09/KB/2018 should be allowed where the parties had entered into a settlement and an alleged breach is relied upon by the Operational Creditor. - HELD THAT: - The Tribunal recorded that the parties had entered into terms of settlement and that any alleged breach of those settlement terms would create a distinct cause of action separate from the remedy of restoring the original Section 9 petition. The Tribunal emphasised that the Code is designed to resolve the insolvency of the corporate debtor and is not a mechanism for enforcement of settlements. Consequently, restoration of the dismissed Section 9 petition was not the appropriate remedy for enforcement of the settlement; the Operational Creditor was instead left free to pursue other remedies available under law for breach of the settlement. [Paras 9]

Restoration Application dismissed; Operational Creditor at liberty to pursue other legal remedies for enforcement of the settlement.

Final Conclusion: Restoration Application (REST. A (IBC)/1/KB/2021) dismissed on the ground that enforcement of the parties' settlement and any breach thereof give rise to a separate cause of action and are not matters for restoration of the Section 9 petition under the Code; the Operational Creditor may pursue other available remedies.

No-objection certificate for transfer of assets under approved resolution plan - implementation of Resolution Plan by the Successful Resolution Applicant - role and duties of the Implementation and Monitoring Committee in post-approval phase - disposal of non-business assets in accordance with Regulation 37 of the CIRP Regulations - rights of financial creditors to proceed against personal guarantors notwithstanding sale of corporate debtor's assets

No-objection certificate for transfer of assets under approved resolution plan - disposal of non-business assets in accordance with Regulation 37 of the CIRP Regulations - Financial creditors directed to issue a clear no-objection certificate required under the terms of the approved resolution plan for disposal/transfer of specified non-business properties. - HELD THAT: - The Tribunal found on the uncontested averments that the Successful Resolution Applicant (SRA) had, in the approved resolution plan, proposed disposal of non-business assets to meet outstanding payments and had sought NOCs from the financial creditors which were not issued in a timely or clear manner. The record shows that the sale of such assets was an intrinsic part of the resolution plan and that withholding of the requisite NOC by the financial creditors/IMC impeded the SRA's ability to implement the plan, despite receipt of substantial payments. In view of these findings the Tribunal allowed the application and directed the financial creditors to issue a clear NOC as required under the terms of the approved resolution plan so as to enable disposal/transfer of the properties in accordance with the plan and Regulation 37 of the CIRP Regulations. [Paras 24]

Directed financial creditors to issue a clear NOC to facilitate transfer/disposal of the specified non-business properties in terms of the approved resolution plan.

Implementation of Resolution Plan by the Successful Resolution Applicant - SRA directed to implement the approved resolution plan expeditiously within a specified limited period. - HELD THAT: - The Tribunal noted that although upfront payments had been made, the SRA failed to complete payments within the scheduled time due to pandemic-related difficulties and because the IMC had not facilitated handover of business units and had delayed NOCs. Having found that the SRA must resume serious implementation and that delay had been caused in part by failures of implementation by the IMC and withholding of NOCs, the Tribunal ordered the SRA to take further action and implement the resolution plan within six weeks from the date of the order. [Paras 24]

SRA to implement the resolution plan within six weeks from the date of the order.

Role and duties of the Implementation and Monitoring Committee in post-approval phase - IMC directed to supervise implementation of the Resolution Plan and to file a status report within a stipulated time. - HELD THAT: - The Tribunal recorded that the IMC, constituted to implement the approved resolution plan, had not adequately facilitated or professionally managed operations and implementation, including handover of business units and issuing requisite approvals. Given the IMC's supervisory role under the approved plan, the Tribunal directed the IMC to supervise implementation and to file a status report of its implementation before the Adjudicating Authority within eight weeks. [Paras 24]

Implementation & Monitoring Committee to supervise implementation and file a status report within eight weeks.

Rights of financial creditors to proceed against personal guarantors notwithstanding sale of corporate debtor's assets - Financial creditors are at liberty to proceed against personal guarantors for recovery of remaining sums, but not against corporate debtor's properties being disposed of under the approved resolution plan; such qualification should not be recorded in the NOC as it may deter prospective buyers. - HELD THAT: - While protecting the ability of financial creditors to pursue recovery from personal guarantors, the Tribunal emphasised that the properties being sold in accordance with the approved resolution plan should not be encumbered by qualifications in the NOC that would deter buyers. The Tribunal therefore clarified that financial creditors may pursue personal guarantors but should not include restrictive language in the NOC affecting the properties sold under the plan. [Paras 24]

Financial creditors may proceed against personal guarantors, but shall not act against properties of the corporate debtor disposed of in accordance with the approved Resolution Plan; the NOC should not contain caveats that would put off prospective buyers.

Final Conclusion: The interlocutory application was allowed: the financial creditors were directed to issue a clear NOC for the disposal/transfer of specified non-business properties under the approved resolution plan; the SRA was ordered to implement the plan within six weeks; the IMC was directed to supervise implementation and file a status report within eight weeks; and the financial creditors were clarified to be free to pursue personal guarantors but not to encumber properties being sold under the plan. The IA is disposed of accordingly.

Default and admissibility of Section 9 IBC application - appointment of Interim Resolution Professional - declaration of moratorium under section 14 of the IBC, 2016 - public announcement and claims under section 15 of the IBC, 2016 - duty of directors and cooperation with IRP under section 19 of the IBC, 2016 - prohibition on institution or continuation of proceedings and on transfer or disposal of assets during moratorium

Default and admissibility of Section 9 IBC application - The Section 9 application by the operational creditor is admitted on the ground of proved default. - HELD THAT: - The Tribunal found that the corporate debtor had contracted for supply of goods and that three invoices remained unpaid. The corporate debtor admitted the default in response to the Section 8 demand notice and further filed an affidavit describing its financial position. The record shows part payments were made earlier but an unpaid balance remained and the last payment was prior to the relevant threshold date; accordingly the debt was held to be due and payable and a clear case of default was established, warranting admission of the Section 9 application. [Paras 2, 5, 6]

Section 9 application admitted and corporate insolvency resolution process to be initiated.

Appointment of Interim Resolution Professional - public announcement and claims under section 15 of the IBC, 2016 - An Interim Resolution Professional proposed by the operational creditor is appointed and directed to take immediate charge and make the public announcement and call for claims. - HELD THAT: - The Tribunal accepted the operational creditor's proposed insolvency professional and appointed him as Interim Resolution Professional. The IRP was directed to take charge of the management immediately, to cause the public announcement as prescribed under section 15 of the Code within three days of receipt of the order, and to call for submission of claims in the manner prescribed under the Code. [Paras 7]

Mr. Alok Kumar Agarwal appointed as IRP; IRP to take charge, make public announcement and call for claims forthwith.

Declaration of moratorium under section 14 of the IBC, 2016 - prohibition on institution or continuation of proceedings and on transfer or disposal of assets during moratorium - duty of directors and cooperation with IRP under section 19 of the IBC, 2016 - Moratorium is declared with the statutory prohibitions and the corporate debtor's management is obliged to cooperate with the IRP. - HELD THAT: - The Tribunal declared the moratorium to operate from the date of the order until completion of the corporate insolvency resolution process. The order enjoins prohibition on institution or continuation of suits or execution of decrees, on transferring, encumbering or disposing of assets, on actions to enforce security interests, and on recovery of property by owners or lessors in possession. The order also protects supply of essential goods or services as provided by law. The IRP was directed to comply with statutory provisions and the directors, promoters and persons associated with management were directed to extend all assistance and cooperation to the IRP. [Paras 8, 9, 10]

Moratorium imposed with specified prohibitions; IRP and corporate management to perform statutory duties and cooperate.

Registry directions and public record update - Registry and Registrar of Companies to be informed so as to update public records regarding the corporate debtor's status. - HELD THAT: - The Tribunal directed the operational creditor to send a copy of the order to the IRP and directed the Registry to serve the order on the Registrar of Companies, Delhi & Haryana for appropriate updation of the corporate debtor's status on the Ministry of Corporate Affairs website. The RoC was directed to file a compliance report in relation to such updation. [Paras 11, 12]

Operational creditor to send order to IRP; Registry to serve order on RoC for updating public records and to file compliance report.

Final Conclusion: The Tribunal admitted the Section 9 petition on proof of default, appointed the proposed Interim Resolution Professional who is to take immediate charge and make statutory public announcements and claim calls, declared the moratorium with the statutory prohibitions and obligations on management to cooperate, and directed the Registry and Registrar of Companies to update public records and file compliance.

Corporate insolvency resolution process - admissibility under Section 7 of the Insolvency and Bankruptcy Code - default and financial debt - limitation and acknowledgement of debt - intervention applications not maintainable in Section 7 proceedings - malicious initiation and fraud under Section 65 - moratorium under Section 14 of the Code - appointment of interim resolution professional

Admissibility under Section 7 of the Insolvency and Bankruptcy Code - default and financial debt - Application under Section 7 was complete, a financial debt and default stood established on the basis of the record and the petition was admissible. - HELD THAT: - The Tribunal applied the settled principle that on an application under Section 7 the Adjudicating Authority's task is to verify from the record (Form 1 and supporting documents) whether a financial debt is due and a default has occurred, without embarking upon a full adjudication of disputed commercial causes. The applicant produced loan agreements, the recall notice, credit reports and balance-sheet acknowledgements to demonstrate debt and default. The corporate debtor did not deny receipt of disbursements and the core defence that default resulted from the applicant's conduct could not be resolved in Section 7 proceedings. On this basis the Tribunal found the application to be complete and a default to have occurred and proceeded to admit the petition. [Paras 27, 34, 36, 38, 48]

The Section 7 application is admitted as a valid petition establishing debt and default; the CIRP is triggered.

Limitation and acknowledgement of debt - The Section 7 application was not barred by limitation because acknowledgements in subsequent balance sheets and later loan documentation revived limitation. - HELD THAT: - Although the corporate debtor's loan accounts were declared NPA in 2012, the Tribunal held that subsequent acknowledgements of indebtedness in the corporate debtor's balance sheets (FY 2013-14 and FY 2016-17) and the signing of the Additional Loan Agreement on 27.04.2017 operate to restart limitation. Relying on the principle that an admission of liability in the balance-sheet gives a fresh lease of limitation, the Tribunal concluded that the application filed on 16.02.2018 fell within the revived limitation period. [Paras 25, 40, 41, 47]

The petition is within limitation and is not time-barred.

Intervention applications not maintainable in Section 7 proceedings - malicious initiation and fraud under Section 65 - Intervention applications were rejected and the allegation of fraud/malicious initiation under Section 65 was not made out. - HELD THAT: - The Tribunal followed the NCLAT precedent that, prior to admission of a Section 7 application, intervention by third parties is not permissible and the Adjudicating Authority should confine itself to the applicant and the corporate debtor. Consequently IA Nos. 53 and 54 for impleadment were rejected. The separate application under Section 65 alleging fraud and malicious initiation failed on the material: promoters/interveners did not establish requisite mens rea or documentary proof of fraud by the financial creditor. The Tribunal therefore held the Section 65 plea to be misconceived and disposed of it. [Paras 36, 42, 56]

Intervention applications are dismissed and Section 65 claim is rejected for lack of cogent evidence of fraud or malicious intent.

Moratorium under Section 14 of the Code - appointment of interim resolution professional - On admission, moratorium under Section 14 is to operate and an Interim Resolution Professional is appointed with directions for deposit to meet IRP expenses. - HELD THAT: - As a consequence of admitting the Section 7 petition, the Tribunal directed the statutory moratorium to follow in terms of Section 14(1) and its provisos and applied Sections 14(2)-14(4) as appropriate. The Tribunal appointed the named professional as Interim Resolution Professional and required the financial creditor to deposit a specified amount with the IRP to meet immediate costs, subject to adjustment by the Committee of Creditors. Directions were also given for communication of the order to relevant authorities and for the IRP to complete statutory formalities. [Paras 49, 50, 51, 52]

Moratorium is declared and the named IRP is appointed; the financial creditor must deposit funds to enable the IRP to function.

Final Conclusion: The Section 7 application by the financial creditor is admitted: the Tribunal found a financial debt and default, held the petition within limitation due to subsequent acknowledgements, rejected third party interventions and the Section 65 fraud/malicious initiation plea, declared the statutory moratorium and appointed an Interim Resolution Professional with directions for payment to the IRP.

Pre-consultation procedure - authority who conducts pre-consultation should issue the show cause notice - man who hears shall decide - requirement to refer to pre-consultation in the show cause notice - quashing of show cause notice and remand for fresh adjudication - opportunity of personal hearing and reasoned adjudication

Pre-consultation procedure - authority who conducts pre-consultation should issue the show cause notice - man who hears shall decide - Validity of the show cause notice issued by Audit II Commissionerate when pre-consultation was conducted by the Bolpur Commissionerate. - HELD THAT: - The Court held that the Central Board's pre-consultation process, though not statutory, is a meaningful procedure intended to promote compliance and reduce issuance of show cause notices. The Board's master circular directs that the authority which issues the pre consultation notice should ordinarily be the authority to issue the show cause notice and adjudicate the matter, reflecting the principle that the person who hears should decide. In the instant case, pre consultation was conducted by the Commissioner, Bolpur, but the show cause notice was issued by Audit II Commissionerate. That divergence is in contravention of the Board's instructions and undermines the procedural purpose of pre consultation; accordingly the Court found the show cause notice flawed on that ground. [Paras 5, 8, 9]

The show cause notice issued by Audit II Commissionerate, after pre consultation with Bolpur Commissionerate, was procedurally defective and could not be permitted to stand.

Requirement to refer to pre-consultation in the show cause notice - quashing of show cause notice and remand for fresh adjudication - opportunity of personal hearing and reasoned adjudication - Consequential relief and directions where the show cause notice did not record the pre consultation and the issuing authority differed from the pre consultation authority. - HELD THAT: - The Court observed that when a procedural regime of pre consultation is adopted, the subsequent show cause notice should meaningfully record that process; absence of any reference to the pre consultation in the notice was incorrect. Rather than simply directing re referral back to pre consultation, the Court quashed the show cause notice and remanded the matter to the Commissioner, Central Excise & Service Tax, Bolpur, with directions to issue a fresh show cause notice. The fresh notice must include a brief discussion of the pre consultation procedure actually adopted, afford the assessee 30 days to reply, provide an opportunity of personal hearing to the authorised representative, and culminate in a reasoned order passed on merits and in accordance with law. The Court also preserved the assessee's position on limitation by noting the prior interim stay and directing that fresh proceedings be commenced and concluded in accordance with law. [Paras 10, 12, 13, 14]

Quash the show cause notice dated 14th October, 2016 and remit the matter to the Bolpur Commissionerate for issuance of a fresh notice complying with directions to record the pre consultation, permit reply and personal hearing, and pass a reasoned adjudication.

Final Conclusion: The intra Court appeal is allowed; the writ Court's order is set aside, the show cause notice dated 14th October, 2016 is quashed, and the matter is remitted to the Commissioner, Bolpur Commissionerate to issue a fresh show cause notice within the prescribed time, record the pre consultation, afford time for reply and personal hearing, and decide the matter by a reasoned order in accordance with law.

Rule 5 of Service Tax (Determination of Value) Rules held ultra vires - valuation of taxable services excludes reimbursable expenses unless statute so provides - subordinate legislation cannot override the statutory mandate - remand for fresh consideration in the light of binding Supreme Court precedent

Rule 5 of Service Tax (Determination of Value) Rules held ultra vires - valuation of taxable services excludes reimbursable expenses unless statute so provides - subordinate legislation cannot override the statutory mandate - Validity of the High Court order directing the appellant to file statutory appeals without adjudicating the challenge to demands in the light of the Supreme Court's decision on Rule 5. - HELD THAT: - The Court held that the issues raised by the appellant were squarely covered by the Supreme Court's decision in Union of India v. Intercontinental Consultants and Technocrafts Pvt. Ltd., which affirmed that Rule 5 went beyond the mandate of Section 67 and that reimbursable expenses were not includible in valuation of taxable services prior to the statutory amendment. The learned Judge below failed to take that binding precedent into account and instead directed the appellant to file statutory appeals merely because the matters were treated as factual. That course was impermissible where a controlling legal principle had been authoritatively declared by the Supreme Court and was directly applicable to the controversy. Accordingly, the High Court's order of 17.06.2021 was set aside. [Paras 9]

Order dated 17.06.2021 directing the appellant to file statutory appeals was set aside for failure to consider the binding Supreme Court authority.

Remand for fresh consideration in the light of binding Supreme Court precedent - opportunity of being heard and consideration on merits - Disposition of the demands and order-in-original challenging levy of service tax on amounts described as 'non taxable services' and consequential directions for further proceedings. - HELD THAT: - The Court remanded the matters to the concerned authority for fresh consideration in accordance with law and in light of the Supreme Court's decision. For WA.Nos.2857 and 2807 (challenging statements of demand dated 15.04.2019 and 11.02.2020) the appellant was directed to submit explanations within two weeks, after which the authority shall consider and pass orders on merits within four weeks, after hearing the appellant. For WA.No.2808 (challenging order-in-original dated 06.02.2020 for the period October 2006 to 2007-08) the order-in-original was set aside and the authority was directed to receive any material the appellant files within two weeks and decide afresh on merits within four weeks; failure by the appellant to submit explanations will not preclude the authority from deciding on available materials. [Paras 10, 11]

Matters remanded to the authority concerned for fresh adjudication on merits in accordance with law and the Supreme Court's decision, with timelines for submission and decision specified.

Final Conclusion: The High Court's order directing the appellant merely to file statutory appeals was set aside for neglecting the binding Supreme Court ruling that Rule 5 was ultra vires; the demands and the order-in-original (including for the period October 2006 to 2007-08) are remanded to the authority for fresh consideration and decision on merits in accordance with law and after affording opportunity to the appellant, subject to the timelines directed by this Court.

Transfer of CENVAT credit on amalgamation/merger/sale - eligibility of service tax credit on transfer of business - condition of transfer of inputs or capital goods under Rule 10(3) - accounting and disclosure in ST 3 returns - imposition of penalty for non compliance with Cenvat transfer provisions

Transfer of CENVAT credit on amalgamation/merger/sale - eligibility of service tax credit on transfer of business - Transfer and availment of unutilized Cenvat credit of service tax by a transferee on acquisition/merger is permissible under Rule 10(1) and (2). - HELD THAT: - On a plain reading of sub rules (1) and (2) of Rule 10, transfer and availment of unutilized Cenvat credit is permitted where the business is transferred on account of change of ownership or by sale, merger, amalgamation, lease or transfer to a joint venture and there is a specific provision for transfer of liabilities. The Tribunal found that the appellants acquired the businesses through business transfer agreements and that the transfers were effected in accordance with the statutory conditions in Rule 10(1) and (2). The adjudicating authority erred in holding that transfer of credit of service tax is not permissible; the statutory text allows transfer of Cenvat credit held by a provider of output service upon transfer of the business as specified. The Tribunal therefore concluded that the appellants were entitled to avail the transferred service tax credit. [Paras 5, 7, 10]

Allowing the transferred Cenvat credit of service tax under Rule 10(1) and (2); impugned denial set aside.

Condition of transfer of inputs or capital goods under Rule 10(3) - eligibility of service tax credit on transfer of business - The condition in Rule 10(3) requiring transfer of stocks of inputs or capital goods does not preclude transfer of service tax credit where no such inputs or capital goods credits exist in the transferor's books. - HELD THAT: - Rule 10(3) conditions the transfer under sub rules (1) and (2) upon transfer of stock of inputs or capital goods and satisfactory accounting of inputs or capital goods on which credit was availed. The Tribunal observed that the transferor entities in this case had only service tax Cenvat credit and no input or capital goods credits. The appellants had recorded the transferred credit particulars in their ST 3 returns and explained that column 5B showed '-' indicating absence of goods/capital goods credit. Consequently, the requirement in Rule 10(3) concerning transfer of inputs or capital goods did not operate to deny transfer of service tax credit where none existed to be transferred, and the adjudicating authority's strict application of Rule 10(3) to deny the service credit was not sustainable. [Paras 7, 8, 9, 10]

Rule 10(3) does not bar transfer of service tax Cenvat credit in the absence of inputs or capital goods credits; denial on this ground set aside.

Accounting and disclosure in ST 3 returns - imposition of penalty for non compliance with Cenvat transfer provisions - The appellants complied with accounting and disclosure requirements regarding the transferred credit in ST 3 returns; consequent demands and penalty were not sustainable. - HELD THAT: - The Tribunal examined the records and found that the appellants had duly reflected the transferred Cenvat credit particulars in ST 3 returns with appropriate narration of transfer from the transferor companies and had accounted for the credits in their books. The Revenue did not dispute the existence of transfer agreements or court approval of the scheme. Given the proper disclosure and the statutory permissibility of transfer, there was no element of suppression, fraud or willful misstatement warranting imposition of an equal penalty. The judgments relied upon by the appellants were held to support non sustainability of the adjudged demands. [Paras 8, 9, 10]

Findings of non compliance and the equal penalty imposed are set aside as the appellants had properly disclosed and accounted for the transferred credit.

Final Conclusion: The Tribunal allowed the appeal, set aside the adjudicating authority's order denying transferred service tax Cenvat credit and imposing equal penalty, holding that transfer and availment of the unutilized service tax credit complied with Rule 10 and that the appellants had made requisite disclosures in ST 3 returns.

Refund of revenue deposit - pre-deposit adjustment under SVLDRS - appropriation of tax deposits - limitation under Section 11B of the Central Excise Act - interest under Section 11BB

Refund of revenue deposit - appropriation of tax deposits - pre-deposit adjustment under SVLDRS - limitation under Section 11B of the Central Excise Act - interest under Section 11BB - The appellant is entitled to refund of the Rs.2,00,000/- deposit which was neither appropriated in adjudication nor adjusted under the SVLDR scheme, and such refund is not barred by limitation under Section 11B. - HELD THAT: - The deposit of Rs.2,00,000/- made on 02.08.2019 was recorded in the audit report and was not appropriated in the Order-in-Original nor adjusted during settlement under the SVLDR scheme. Although the deposit was made under a different registration number, the record shows the amount remained with the Department as a revenue deposit and was not applied against any liability. Where a sum is a revenue deposit and has not been appropriated or utilised, the limitation provisions under Section 11B do not operate to bar refund of such deposit. Consequently the appellant's claim for refund of the unadjusted deposit succeeds. The adjudicating authority is directed to grant the refund with interest as provided under Section 11BB in accordance with the rules. [Paras 10, 11]

Impugned order set aside; refund of Rs.2,00,000/- to be granted with interest under Section 11BB as per rule.

Final Conclusion: The appeal is allowed; the Adjudicating Authority is directed to refund the unadjusted deposit of Rs.2,00,000/- with interest under Section 11BB in accordance with the rules.

Pre-deposit as condition for entertainment of appeal - statutory right of appeal is conditional - substituted Section 35F: mandatory percentage deposit subject to cap - entertainment of appeal versus filing of appeal - judicial discretion curtailed by statutory amendment

Pre-deposit as condition for entertainment of appeal - entertainment of appeal versus filing of appeal - statutory right of appeal is conditional - Interpretation and effect of substituted Section 35F of the Central Excise Act, 1944 as to whether compliance with the prescribed pre-deposit is required for entertainment (not filing) of an appeal. - HELD THAT: - The Court held that the amended Section 35F (with effect from 06.08.2014) makes the pre-deposit requirement a condition for 'entertainment of appeal' and not for mere filing of the memorandum of appeal. The right to appeal is a statutory right which can be made conditional by the Legislature; where the statutory language conditions entertainment of the appeal on deposit, the Court must give effect to that language. The substituted provision curtails the earlier discretion of the Appellate Authority to waive deposit and prescribes deposit of the specified percentage (subject to the statutory cap) as a precondition to entertaining the appeal. The Court relied on prior decisions emphasising that courts cannot override clear statutory mandate or read in a different condition where the statute is clear. [Paras 18]

Section 35F, as substituted, requires compliance with the prescribed pre-deposit for entertainment of the appeal; filing alone is not sufficient.

Substituted Section 35F: mandatory percentage deposit subject to cap - judicial discretion curtailed by statutory amendment - Whether the petitioner had complied with the pre-deposit condition in respect of the appeal before CESTAT by depositing the amount specified under the first proviso to Section 35F and whether relief should be granted accordingly. - HELD THAT: - The petitioner did not make the statutory pre-deposit at the time the appeal was originally entertained; however, on the record before this Court (Memo dated 19.04.2022 and accompanying e-receipt) it is demonstrated that the petitioner has since deposited the maximum amount allowable under the first proviso to Section 35F. The Revenue raised no objection to taking up the main writ petition for hearing. In view of the subsequent compliance with the statutory pre-deposit condition, the Court found it appropriate to set aside the order impugned before it and to permit further proceedings subject to conditions imposed by the Court. [Paras 8, 19]

Having deposited the statutory amount (within the cap) post factum, the petitioner is to be permitted to proceed and the order dated 19th March, 2018 is set aside subject to court-imposed conditions.

Judicial discretion curtailed by statutory amendment - entertainment of appeal versus filing of appeal - Relief to be granted where pre-deposit was not made earlier but is subsequently complied with, and consequent direction to the Appellate Tribunal. - HELD THAT: - While the substituted Section 35F limits the discretionary power of the Appellate Authority to waive pre-deposit, the High Court exercised its supervisory jurisdiction to set aside the CESTAT order of 19.03.2018 because the petitioner had deposited the statutory amount by the time of the writ proceeding and the Revenue did not object to hearing on merits. The Court imposed a cost to be paid to the Orissa High Court Bar Association as a condition for condoning the delay in pre-deposit and directed restoration of the appeal for hearing on merits by the CESTAT. The CESTAT was directed to proceed to decide the appeal on merits upon proof of payment of the court-imposed cost. [Paras 19]

Order dated 19th March, 2018 set aside; appeal to be restored and decided on merits by CESTAT upon proof of payment of costs and subject to no coercive recovery till disposal.

Final Conclusion: The substituted Section 35F requires the prescribed pre-deposit for entertainment of an appeal; filing alone is not sufficient. The petitioner, having deposited the statutory capped amount subsequently and on terms imposed by this Court (payment of costs), is permitted to have the appeal restored and decided on merits by the CESTAT, and no coercive recovery shall be taken till the appeal is disposed of.

Claim for refund under executive notification - procedural requirement of filing monthly statement by 7th of next month - applicability of limitation under Section 11B to refunds under notification - waiver of statutory/notification procedural requirement - twin-condition test for entitlement to refund under Notification No. 33/99-CE

Procedural requirement of filing monthly statement by 7th of next month - claim for refund under executive notification - waiver of statutory/notification procedural requirement - Whether refunds under Notification No. 33/99-CE dated 08.07.1999 can be allowed despite non-compliance with the procedure of filing the monthly statement of duty paid by the 7th of the next month, or whether that procedure can be unilaterally waived by the claimant. - HELD THAT: - The Court construed Clause 2(a) of Notification No. 33/99-CE (08.07.1999) as prescribing the manner in which the exemption/refund is to be claimed - namely, submission of a statement of duty paid from the account current to the Assistant/Deputy Commissioner by the 7th of the next month and consequent verification/refund procedures. The Board's clarifications regarding non-applicability of Section 11B do not amend the notification or its procedural requirement. In the absence of an amendment or express waiver by the Central Government/Department, beneficiaries cannot unilaterally dispense with the procedure laid down in the notification. The appellant did not plead or establish that the procedure under Clause 2(a) was followed; its pleadings admitted delay and attributed it to departmental inconsistencies. The Court relied on the twin-condition approach adopted by earlier coordinate bench decisions - that exemption/refund is not barred by Section 11B only where (i) the prescribed substantive condition of expansion is satisfied and (ii) the procedural condition of filing the monthly statement by the 7th is complied with. Because the appellant failed to aver or prove compliance with the procedural requirement, the appellant cannot invoke the protection of earlier decisions and the notification's benefit cannot be allowed merely on account of delay or RT-12 filings alone. [Paras 13, 14, 15, 16, 17]

The procedure prescribed by Notification No. 33/99-CE (submission of monthly statement by the 7th) cannot be waived by the claimant; non-compliance where not pleaded or established defeats the claim to refund under the notification.

Applicability of limitation under Section 11B to refunds under notification - twin-condition test for entitlement to refund under Notification No. 33/99-CE - Whether the claim is barred by limitation under Section 11B of the Central Excise Act in respect of refunds under Notification No. 33/99-CE, having regard to earlier decisions. - HELD THAT: - The Court acknowledged that clarificatory communications and coordinate-bench decisions have held that Section 11B does not apply to refunds under Notification No. 33/99-CE provided the twin conditions are met: substantial expansion (as prescribed) and timely filing of the monthly statement. The Court held that the present controversy is not about the general applicability of Section 11B but about fulfilment of the procedural condition; since the appellant did not plead compliance with Clause 2(a), it cannot invoke the protection from limitation. The Court therefore followed the approach of the coordinate-bench decisions (M/s Jokai and Vernerpur) that relief from Section 11B is contingent on satisfaction of both substantive and procedural conditions. [Paras 12, 14, 15, 16]

Section 11B's limitation protection for refunds under the notification is available only where the twin conditions (substantive expansion and prescribed monthly statements) are satisfied; absent pleaded compliance, the appellant cannot claim the benefit.

Substantial question of law - scope of appellate jurisdiction under Section 35G - Whether a substantial question of law arises warranting interference under Section 35G of the Central Excise Act. - HELD THAT: - Applying the tests for 'substantial question of law' as articulated by higher authority, the Court found no substantial question of law because the appellant failed to plead facts essential to entitlement (compliance with procedural requirement) and there was no finding of fact by the authorities establishing such compliance. The dispute thus turned on unestablished facts and not on a pure point of law suitable for appellate interference under Section 35G. Consequently, the High Court declined to entertain the appeal on merits. [Paras 17, 18, 19]

No substantial question of law arises; the appeal is without merit and is dismissed.

Final Conclusion: The appeal is dismissed. The Court held that the procedural requirement in Notification No. 33/99-CE (monthly statement by the 7th) is mandatory and cannot be unilaterally waived; entitlement to relief from limitation under Section 11B depends on satisfying both the substantive and procedural conditions, which the appellant did not plead or establish.

Clandestine manufacture and removal - burden of proof - admissibility of statements under Section 14 and cross-examination under Section 9D - requirement of corroborative evidence for clandestine clearances - penalty liability of a partner

Clandestine manufacture and removal - burden of proof - requirement of corroborative evidence for clandestine clearances - admissibility of statements under Section 14 and cross-examination under Section 9D - Sufficiency of evidence to sustain the excise duty demand confirmed against the appellants for alleged clearances on parallel invoices (Annexure A-2). - HELD THAT: - The Tribunal found that the materials seized (pink duplicate transporter invoices) and statements relied upon by Revenue did not amount to cogent, unimpeachable evidence of manufacture and removal of goods. No variation in inventory was found at the time of search, no offending goods were recovered from alleged buyers or dealer premises, and most buyers listed in the demand were not examined; Revenue produced no direct evidence of receipt of goods by the buyers. Cross-examination under Section 9D was not allowed in respect of all witnesses despite directions, and therefore statements under Section 14, relied upon by Revenue, could not be treated as admissible and conclusive. The adjudicating authority had already dropped the demand in Annexure A-3 after cross-examination; those findings and the absence of corroborative evidence for the parallel invoices in Annexure A-2 led the Tribunal to conclude that the remaining demand of Rs. 8,66,588/- was not proved. The Tribunal applied the settled principle that clandestine manufacture and clearances must be established by tangible corroborative evidence and not by conjecture or mere statements that have not been properly tested by cross-examination. [Paras 4]

Duty demand confirmed in respect of the Annexure A-2 invoices (Rs. 8,66,588/-) is unsustainable and is to be dropped.

Penalty liability of a partner - Validity of the separate penalty imposed on Shri Dineshbhai Patel. - HELD THAT: - Having found that the foundational demand of clandestine clearances was not established, the Tribunal held that the penalty imposed on Shri Dineshbhai Patel could not stand. The Tribunal also relied on relevant precedents to the effect that personal penalty on a partner is not justified where the substantive charge is not proved. In view of the lack of cogent evidence supporting the duty demand, the separate penalty imposed on the partner was set aside. [Paras 4]

Penalty imposed on Shri Dineshbhai Patel is set aside.

Final Conclusion: Both appeals are allowed: the excise duty confirmed in respect of the parallel invoices is quashed for want of proof and inadmissible/unimpeached statements, the consequential interest and penalties are set aside (including the separate penalty on Shri Dineshbhai Patel), and the impugned appellate order is modified accordingly with consequential reliefs as per law.

Intention to evade payment of tax as necessary ingredient for imposing penalty under Section 54(1)(14) of the UP VAT Act - detention/seizure of goods under Section 50 read with Section 50(4) requires material to indicate attempt to evade assessment or payment of tax - incomplete Form 38 or omission of entries may justify seizure but not automatic imposition of penalty prior to amendment - penalty cannot be sustained where books and prescribed documents are produced and entries are made in dealer's account

Intention to evade payment of tax as necessary ingredient for imposing penalty under Section 54(1)(14) of the UP VAT Act - penalty cannot be sustained where books and prescribed documents are produced and entries are made in dealer's account - Whether penalty under Section 54(1)(14) could be imposed despite production of prescribed documents and accounting entries in the absence of any material showing intention to evade payment of tax. - HELD THAT: - The Court held that the determinative requirement for imposing a penalty under Section 54(1)(14) is a satisfaction, supported by material, that the goods were imported or transported with the intention of evading assessment or payment of tax. Where, as in the present case, the goods were accompanied by the documents prescribed under the Act, books of account contained the relevant entries and there was no material to demonstrate a guilty mind or attempt to evade tax, the statutory pre condition for penalty was not made out. Relying on the Division Bench precedent (Jain Shudh Vanaspati Ltd. and subsequent decisions), the Court applied the principle that seizure or detention based solely on procedural omissions does not automatically justify punitive action unless intention to evade tax is established.

Penalty under Section 54(1)(14) set aside as there was no material to show intention to evade payment of tax.

Detention/seizure of goods under Section 50 read with Section 50(4) requires material to indicate attempt to evade assessment or payment of tax - incomplete Form 38 or omission of entries may justify seizure but not automatic imposition of penalty prior to amendment - Whether incomplete filling of Form 38 (blank or incorrect columns) prior to the 2014 amendment by itself justified imposition of penalty and whether the law then in force required that all columns be filled for penal liability. - HELD THAT: - The Court explained that while omissions in Form 38 (for example blank columns) may furnish a basis for detention or seizure of goods, the law as it stood at the time (October 2011) did not convert such procedural incompleteness into an automatic ground for imposing the penal consequence under Section 54(1)(14). The Division Bench authorities were held to require a recorded satisfaction, founded on material, that the incompleteness pointed to an attempt to evade tax before a penalty could be imposed. The subsequent statutory amendment (substituting language requiring 'duly filled' declarations) post dates the interception and therefore does not supply the missing statutory ingredient for the period in question.

Incomplete or incorrectly filled columns in Form 38, without material establishing intent to evade tax, do not justify imposing penalty for the period prior to the 2014 amendment; seizure may be justified but penalty cannot be sustained on that ground alone.

Final Conclusion: The revision is allowed; the Tribunal's order upholding the penalty is set aside because the record does not demonstrate the requisite intention to evade payment of tax and procedural defects in Form 38, before the 2014 amendment, do not alone warrant penal consequences for assessment year 2011-12.

Priority of secured creditor over State tax claims - overriding effect of SARFAESI Act on competing recovery provisions - first charge on secured assets - quashing of attachment and mutated revenue entry - direction to release registered sale deed

Priority of secured creditor over State tax claims - overriding effect of SARFAESI Act on competing recovery provisions - first charge on secured assets - The State does not have a first charge over the subject land by virtue of its VAT claim where the property was a secured asset of the bank and sold under SARFAESI proceedings. - HELD THAT: - The Court held that the parcel purchased in the bank's SARFAESI auction was a secured asset subject to the bank's prior charge; consequently the State cannot claim preference over that property for recovery of VAT dues. The Court relied on this High Court's earlier decisions and the Supreme Court's jurisprudence affirming that, absent a statutory first charge in the revenue enactment, the secured creditor's rights under the SARFAESI Act prevail and the SARFAESI Act has overriding effect over competing recovery provisions. The Court therefore concluded that the State cannot assert a first charge under Section 48 of the GVAT Act to defeat the bank's prior security and the purchaser's title. [Paras 8, 9, 11, 12]

Declared that the State cannot claim any first charge over the subject land and that the bank's secured interest (and its SARFAESI sale) prevails over the VAT recovery.

Quashing of attachment and mutated revenue entry - direction to release registered sale deed - The attachment order dated 19.01.2022 and the mutated revenue entry against the subject land are quashed and set aside, and the Sub-Registrar is directed to release the conveyance in favour of the purchaser. - HELD THAT: - Applying the legal conclusion on priority, the Court quashed the impugned attachment by the Sales Tax Authority and the mutation entry in the revenue records insofar as they affect the subject land. The Court noted that the sale deed, though registered, had not been released due to the State's claim; in view of the declared priority of the secured creditor and the purchaser's rights, the Court directed the Sub-Registrar to release the deed of conveyance in favour of the writ applicant at the earliest and set aside the challenged entries. [Paras 12]

Impugned attachment and mutation quashed and set aside; Sub-Registrar directed to release the registered sale deed in favour of the writ applicant.

Final Conclusion: Writ petition allowed: State's claim of first charge over the mortgaged land held untenable in view of SARFAESI priority; attachment and revenue mutation set aside and conveyance ordered to be released in favour of the purchaser.

Maintainability of writ petition under Article 226 - Alternative statutory remedy and appellate jurisdiction under Section 55 - Appreciation of disputed facts not appropriate in writ jurisdiction - Burden to demonstrate exceptional circumstances for exercise of extraordinary jurisdiction - Exclusion of time spent in proceedings for limitation

Maintainability of writ petition under Article 226 - Alternative statutory remedy and appellate jurisdiction under Section 55 - Appreciation of disputed facts not appropriate in writ jurisdiction - Whether the petitioner could invoke extraordinary writ jurisdiction under Article 226 to challenge the Assessing Officer's order rejecting the refund claim instead of pursuing the appeal under the statutory remedy. - HELD THAT: - The Court found that the Assessing Officer's order contains findings reached after perusal and appreciation of the records produced, including assessment of the authenticity of the delivery book and absence of identifying features such as an identifiable name, signature, designation or office seal. Those findings involve disputed questions of fact which require re-appreciation by the Appellate Authority and are not amenable to determination in writ proceedings. While an alternative statutory remedy is not an absolute bar to writ jurisdiction, the petitioner bears the burden of demonstrating exceptional circumstances warranting interference by this Court. No such circumstances were shown; therefore the appropriate forum for contesting the factual findings in Ext.P12 is the appellate process under Section 55 of the Act rather than exercise of Article 226 jurisdiction. [Paras 7, 8]

Writ petition not maintainable on merits; petitioner should pursue the statutory appellate remedy under Section 55.

Burden to demonstrate exceptional circumstances for exercise of extraordinary jurisdiction - Exclusion of time spent in proceedings for limitation - Whether there were circumstances warranting exercise of this Court's extraordinary jurisdiction and whether time spent in these proceedings should be excluded for limitation purposes. - HELD THAT: - The Court held that the petitioner failed to establish the exceptional circumstances necessary to displace the normal rule favouring pursuit of the statutory appeal. Consequently, the writ petition is dismissed. However, the Court granted limited relief by reserving liberty to the petitioner to pursue statutory remedies and clarified that the period during which the petition was pending before this Court (from 14.12.2021 until the date of judgment) shall be excluded for the purpose of limitation in subsequent proceedings. [Paras 9]

Writ petition dismissed; petitioner permitted to pursue statutory remedies and entitled to exclude the period of pendency of this writ from 14.12.2021 to date of judgment for limitation purposes.

Final Conclusion: Writ petition dismissed for want of exceptional circumstances to exercise Article 226 where disputed facts require appellate re appreciation; petitioner granted liberty to pursue the statutory appeal under Section 55 and the period of pendency of this writ from 14.12.2021 to the date of judgment is excluded for limitation purposes.

Attachment of bank account - quashing of attachment order - special mode of recovery / garnishee provision under Section 44 of the GVAT Act - provisional attachment under Section 45 of the GVAT Act - recovery as arrears of land revenue under Section 46 of the GVAT Act - stay against recovery proceedings - remand for fresh hearing by the First Appellate Authority

Attachment of bank account - special mode of recovery / garnishee provision under Section 44 of the GVAT Act - quashing of attachment order - Validity of the attachment of the company's current bank account dated 3rd February 2022 on the strength of powers claimed under Section 44 of the GVAT Act. - HELD THAT: - The Court held that Section 44, being the special mode of recovery or garnishee provision, had no application at the present stage because the Tribunal had already passed an order remitting the appeals to the First Appellate Authority and had stayed recovery proceedings. The Court further observed that Section 45 (provisional attachment) applies only during the pendency of an assessment or reassessment proceeding, and Section 46 (recovery as arrears of land revenue) likewise did not apply at this point. In view of the Tribunal's specific order that recovery proceedings shall remain stayed until final disposal by the First Appellate Authority, the impugned attachment could not continue to operate and required quashing. [Paras 11, 12, 13]

The impugned order of attachment dated 3rd February 2022 is quashed and set aside; the attachment of the bank account cannot operate further.

Stay against recovery proceedings - remand for fresh hearing by the First Appellate Authority - Effect of the VAT Tribunal's order dated 14th March 2022 remitting the appeals for fresh hearing and staying recovery, and the consequent direction to the First Appellate Authority. - HELD THAT: - The Tribunal had quashed the First Appellate Authority's ex parte orders, remanded the matters for fresh hearing on merits, declined to direct any pre-deposit, and ordered that stay against recovery proceedings continue until final disposal. Relying on that order, this Court recorded that the appeals are to be heard afresh by the First Appellate Authority and directed that recovery or attachment in furtherance of the earlier assessment orders cannot be pressed while the stay remains. The Court therefore disposed of the writ by enforcing the Tribunal's directions and leaving the matters to be decided on merits by the First Appellate Authority. [Paras 6, 7, 8, 13]

The matters stand remitted to the First Appellate Authority for fresh hearing on merits in accordance with the Tribunal's order; recovery proceedings remain stayed and the First Appellate Authority shall proceed to hear the appeals.

Final Conclusion: The attachment of the company's bank account dated 3rd February 2022 is quashed in view of the VAT Tribunal's order remitting the appeals for fresh hearing and staying recovery; the First Appellate Authority is directed to hear the appeals on merits and recovery proceedings shall remain stayed until final disposal.

Compounding of offence under Section 138 of the Negotiable Instruments Act - Quashing of conviction in view of amicable settlement between parties - Acquittal consequent to compromise - Release of deposit subject to verification by trial court - Modification of compensation awarded by trial court

Compounding of offence under Section 138 of the Negotiable Instruments Act - Quashing of conviction in view of amicable settlement between parties - Whether the conviction and sentence under Section 138 N.I. Act could be quashed and the offences compounded in view of the settlement between the parties. - HELD THAT: - The court applied the principle laid down by the Apex Court in Vinay Devanna Nayak that compromise between parties in cases under Section 138 may be permitted and conviction can be quashed where a genuine settlement has been arrived at. The complainant (respondent No.1) filed an affidavit stating the dispute has been amicably settled, that he had no grievance and that he had received the deposit. Counsels for parties confirmed the settlement. Having regard to that settlement and the authoritative ratio permitting compromise in such matters, the revision was allowed and the impugned conviction and orders were quashed, resulting in acquittal of the accused under Section 138 insofar as no other offence was involved.

Impugned conviction and sentence under Section 138 N.I. Act quashed and the accused acquitted in view of the settlement; parties permitted to compound the offence.

Release of deposit subject to verification by trial court - Whether the amount deposited by the applicant before the trial court could be released to the complainant. - HELD THAT: - Respondent No.1 stated in affidavit that he had received the deposited amount and had no objection to withdrawal. Counsel for the applicant had no objection. The High Court directed that the amount deposited (Rs.2,00,000/- as recorded in the order) shall be released by the trial court in favour of the respondent after due verification, thereby permitting withdrawal subject to the trial court's verification of entitlement.

Deposit to be released by the trial court to the complainant after due verification.

Modification of compensation order - Whether the compensation ordered by the trial court should be modified in consequence of the settlement and quashing of conviction. - HELD THAT: - While quashing the conviction on account of settlement, the High Court modified the compensation imposed by the trial court. The court directed that the applicant shall pay a reduced amount (ordered in the judgment) to the complainant within a specified period, and that this amount shall be permitted to be withdrawn by the complainant before the trial court. The direction balances the amicable settlement with a modified compensatory obligation.

Compensation awarded by the trial court modified; applicant to pay the specified reduced amount within the time directed and the complainant may withdraw the same.

Final Conclusion: The Criminal Revision Application is allowed; the convictions and sentences under Section 138 N.I. Act as recorded by the trial and first appellate courts are quashed and the applicant is acquitted in view of the amicable settlement. The deposit shall be released to the complainant after verification by the trial court and the compensation ordered by the trial court is modified as directed by this Court.

Right to legal representation - Natural justice - Audi alteram partem (right to be heard) - Equality before law (Article 14) - Arbitrariness and discriminatory classification - Judicial review and reading down - Presumption of constitutionality - Authorised representative

Right to legal representation - Equality before law (Article 14) - Natural justice - Judicial review and reading down - Validity of Section 56 of the Rajasthan Real Estate (Regulation and Development) Act, 2016 insofar as it grants a right of representation to the applicant/appellant but omits the respondent; and whether the provision should be read down to include 'respondent'. - HELD THAT: - Section 56, as enacted, permits an applicant/appellant to appear in person or authorise specified professionals or officers to represent before the Appellate Tribunal, Regulatory Authority or adjudicating officer but omits any parallel right for the respondent. The Court held that denying the respondent the same right of representation amounts to unequal treatment of similarly situated parties and infringes the principle of equality before law (Article 14) and the rule of natural justice, in particular audi alteram partem, because it curtails the respondent's right to be fairly heard and to choose a representative. The presumption of constitutionality was acknowledged, but the omission was found arbitrary and lacking rational basis in relation to the Act's objects of speedy and fair dispute resolution. Applying established principles permitting remedial reading down where a provision is discriminatory but salvageable, and having regard to precedents on reading down to cure constitutional infirmity, the Court exercised judicial review to read the provision so as to include respondents within the scope of authorised representation. The Court therefore confined its interference to reading down the provision rather than striking it down entirely, so as to render Section 56 constitutionally valid and consistent with Articles 14 and the requirements of fair hearing.

Section 56 is read down to include 'respondent' so that the applicant or appellant or respondent may appear in person or authorise one or more chartered accountants, company secretaries, cost accountants, legal practitioners or any of its officers to present the case before the Appellate Tribunal, Regulatory Authority or adjudicating officer.

Final Conclusion: The writ petition is allowed; Section 56 of the RERA Act is read down to include 'respondent', thereby securing equal right of representation to respondents and aligning the provision with principles of natural justice and Article 14.