TaxTMI Updates e-Newsletter
May 11,2022

Mixed supply - composite supply - unit of accommodation - natural bundling - tax liability on mixed or composite supply (Section 8) - exemption under entry no. 14 of Notification No. 12/2017 - services by hotel/inn/guest house/club/campsite

Mixed supply - composite supply - natural bundling - Whether the supply of hostel accommodation together with provision of meals (boarding and lodging charges) constitutes a composite supply or a mixed supply. - HELD THAT: - The Authority examined the statutory definitions of composite supply and mixed supply, and the criteria for natural bundling. A composite supply requires that the elements be naturally bundled in the ordinary course of business and that individual items cannot be supplied separately. The facts showed that the appellant provides a separate cafeteria where food and beverages are available to day scholars and that food can, in practice, be supplied independently. The Authority found that the provision of food is not naturally bundled with the hostel accommodation in the ordinary course of business and that the components are independent of each other. Reliance on analogous Advance Rulings was considered but the Authority treated each case on its facts and concluded that, on the facts of the appellant, the supply is not a composite supply but a mixed supply. [Paras 8]

Supply of hostel accommodation together with meals is a mixed supply and not a composite supply.

Unit of accommodation - What constitutes the 'unit of accommodation' for the purpose of the exemption under entry no. 14 of Notification No. 12/2017 in the appellant's case. - HELD THAT: - The Authority observed that GST law uses the term per unit of accommodation without defining it, and the industry practice varies (per room, per bed/seat, per person). Having regard to the appellant's business model and tariff fixation (tariff fixed on the basis of hostel seat), the Authority agreed with the appellant that a 'hostel seat' is the appropriate unit of accommodation for the appellant's services. [Paras 8]

For the appellant, 'hostel seat' is to be treated as the unit of accommodation.

Tax liability on mixed or composite supply (Section 8) - exemption under entry no. 14 of Notification No. 12/2017 - services by hotel/inn/guest house/club/campsite - Whether the appellant is eligible for exemption under entry no. 14 of Notification No. 12/2017 for the package charged to students. - HELD THAT: - Section 8 governs tax treatment of composite and mixed supplies. Where a supply is a mixed supply, it is to be treated as the supply attracting the highest rate of tax. Although the Authority accepted that the 'unit of accommodation' for the appellant is a hostel seat, it had already held that the overall service is a mixed supply. Consequently, the package cannot be treated as a composite supply of accommodation attracting the exemption in entry no. 14. The Authority also noted that precedents relied upon by the appellant from other AARs are factual and not binding on this forum. [Paras 8]

The exemption under entry no. 14 does not apply because the supply is a mixed supply and is taxable as the supply attracting the highest rate.

Final Conclusion: The appeal is disposed of: the Appellate Authority holds that (i) the combined supply of hostel accommodation and meals in the appellant's case is a mixed supply and not a composite supply, (ii) for the appellant the 'unit of accommodation' is the hostel seat, and (iii) because the supply is a mixed supply the exemption under entry no. 14 of Notification No. 12/2017 is not available and tax is to be determined as per Section 8 treating the bundle as the supply attracting the highest rate.

Provisional attachment and interim facilitation of receipts - direction to notify debtors to make payments into attached account - permitted transfer from current account to cash credit to avoid NPA subject to non-utilisation - permitted supply of attached finished goods to fulfil public and specified contracts - permitted utilisation of provisionally attached raw materials for completion of contractual obligations - processing of revocation of GST cancellation filed in physical form as exceptional measure - court-ordered undertakings by assessee and bank to safeguard interests of revenue and secured creditor - limited interim permission to make operational payments from cash credit after satisfaction

Direction to notify debtors to make payments into attached account - provisional attachment and interim facilitation of receipts - permitted transfer from current account to cash credit to avoid NPA subject to non-utilisation - The department was directed to inform the list of 47 debtors to make contractually due payments into the writ applicant's specified Current Account and the Bank was permitted to transfer amounts from that Current Account to the Cash Credit Account solely to prevent the account being declared an NPA, subject to restrictions on utilisation. - HELD THAT: - The Court recorded the parties' consensus and directed immediate intimation to all 47 debtors to remit contractual payments into the Current Account maintained with the respondent Bank. The Bank was authorised to transfer a requisite amount from the Current Account to the Cash Credit Account only as a one time arrangement to save the Cash Credit Account from being declared a Non Performing Asset; the transferred sums may be used to discharge existing liabilities to the Bank arising therefrom but the writ applicant shall not be permitted to utilise any amounts so credited. The arrangement is temporal and does not alter the writ applicant's future obligations to the Bank under its normal banking rules. [Paras 4, 7, 8]

Department to notify debtors to pay into the specified Current Account; Bank may transfer amounts to Cash Credit to avoid NPA but the writ applicant shall not utilize the credited amounts; transferred amounts may discharge existing Cash Credit liability and this is a one time arrangement.

Permitted supply of attached finished goods to fulfil public and specified contracts - permitted utilisation of provisionally attached raw materials for completion of contractual obligations - provisional attachment and interim facilitation of receipts - The department was directed to permit supply of finished goods under provisional attachment to specified public sector entities and foreign contractees, and to permit utilisation of provisionally attached raw materials to manufacture goods to fulfil past contractual obligations, subject to compliance with the GGST Act and supervisory oversight. - HELD THAT: - The Court found it appropriate, in the interim, to allow the writ applicant to supply finished goods lying under provisional attachment to identified public sector entities (including BHEL and Indian Railways) and to two foreign contract parties, after following the procedures mandated by the GGST Act. The Court also authorised the use of raw materials under provisional attachment for manufacturing finished goods solely to enable fulfilment of past contractual obligations. The directions aim to secure payment receipts into the Current Account and to facilitate discharge of existing contracts while maintaining statutory compliance. [Paras 5, 6, 7, 8]

Department to permit supply of finished goods to specified contractees and permit utilisation of attached raw materials for manufacture to complete contractual obligations, subject to GGST Act procedures and supervision.

Processing of revocation of GST cancellation filed in physical form as exceptional measure - limited interim permission to make operational payments from cash credit after satisfaction - The Court directed the department to process the writ applicant's physical application for revocation of GST registration cancellation as an exceptional measure, decide it within one week, and permitted limited payments towards staff salaries and operational expenses from the Cash Credit Account after departmental satisfaction of the nature of such payments. - HELD THAT: - Recognising that the writ applicant had filed a revocation application in physical form and that insisting on online filing could create technical problems, the Court ordered the department to process and decide the application dated 12.04.2022 expediently, within one week. Further, to protect operational continuity, the department was directed to allow payments towards staff salary, electricity and other operational expenses from the Cash Credit Account, subject to the department being satisfied as to the nature of the payments. [Paras 11, 12, 13]

Department to process and decide the physical revocation application within one week; limited operational payments from the Cash Credit Account permitted after departmental satisfaction.

Court-ordered undertakings by assessee and bank to safeguard interests of revenue and secured creditor - provisional attachment and interim facilitation of receipts - The writ applicant and the Bank were directed to furnish specific undertakings to the Court and the department restricting utilisation of receipts and ensuring supervisory safeguards and maintenance of equivalent balances for transferred amounts. - HELD THAT: - To protect the interests of both the department and the Bank, the Court required the writ applicant to file an undertaking on oath undertaking, inter alia, to ensure that receivables from the 47 debtors are received only in the stated Current Account, that finished goods and raw materials under provisional attachment will be dealt with and supplied only as permitted and under supervision of the Deputy Commissioner (State Tax), and that amounts received shall not be utilised by the writ applicant while equivalent balances in the Cash Credit Account shall be maintained. The Bank must file an undertaking that the writ applicant shall not be permitted to use amounts credited in the Current Account or the amounts transferred into the Cash Credit Account and that equivalent balances will be maintained at all times. [Paras 9, 10]

Writ applicant and Bank to file the specified undertakings restricting use of credited amounts, ensuring maintenance of equivalent balances and supervisory oversight.

Final Conclusion: The Court granted interim reliefs by directing the department to notify debtors to pay into the writ applicant's specified Current Account, permitting a one time transfer to the Cash Credit Account to avoid NPA subject to non utilisation, authorising supply of attached finished goods and utilisation of attached raw materials to fulfil specified contracts, ordering expedited processing of the physical GST revocation application, permitting limited operational payments from Cash Credit after satisfaction, and requiring undertakings from the writ applicant and the Bank to safeguard the interests of the revenue and the secured creditor.

Cancellation of GST registration for non-filing of returns - conditional quashing of cancellation and revival of registration - revival of registration subject to payment of tax, interest, fine and filing of returns - prohibition on utilisation of Input Tax Credit pending scrutiny - requirement of cash payment for post-cancellation tax liability - direction to modify GST portal to enable filing and payment

Cancellation of GST registration for non-filing of returns - conditional quashing of cancellation and revival of registration - revival of registration subject to payment of tax, interest, fine and filing of returns - prohibition on utilisation of Input Tax Credit pending scrutiny - requirement of cash payment for post-cancellation tax liability - direction to modify GST portal to enable filing and payment - Whether the cancellation of the petitioner's GST registration for continuous non-filing of returns can be quashed and the registration revived subject to conditions laid down in the precedent order. - HELD THAT: - The Court applied the directions set out in the earlier judgment in Tvl.Suguna Cutpiece Center (para 229) and held that the petitioner's challenge to the cancellation is amenable to relief on the same conditional terms. The petitioner is to file the returns for the period prior to cancellation, pay the outstanding tax, interest, and the statutory fines/fees for belated filing within the stipulated period, and such payments shall not be made or adjusted from any unutilised Input Tax Credit. Any Input Tax Credit already reflected must be subjected to scrutiny and approval by the competent officer before utilisation; only approved credit may thereafter be used for future liabilities. The petitioner must also file returns and discharge GST for the period subsequent to cancellation with payment in cash, and respondents are permitted to impose safeguards to prevent misuse of Input Tax Credit. On compliance with these conditions, the registration shall be revived. The Court directed respondents to take steps, including instructing GSTN to permit filing and payment, in accordance with the precedent directions.

The writ petition is allowed by following the terms of para 229 of the Suguna Cutpiece Centre order: the cancellation is quashed and registration is ordered to be revived on fulfillment of the specified conditional requirements; no costs.

Final Conclusion: The High Court quashed the cancellation of GST registration subject to the conditional scheme laid down in the cited precedent (para 229 of Suguna Cutpiece Centre): the petitioner must file outstanding returns and pay tax, interest and prescribed fines/fees (without utilising unapproved Input Tax Credit), comply with post-cancellation filing and cash payments, and permit departmental scrutiny of ITC; on such compliance registration shall be revived. No costs.

Seizure and detention of goods and conveyance - Confiscation under Section 130 of CGST Act, 2017 - Provisional release under Section 129 of CGST Act, 2017 - E-way bill and goods in transit - Opportunity to deposit tax and penalty before confiscation - Availability of alternative remedy under Section 107 of CGST Act, 2017

Seizure and detention of goods and conveyance - E-way bill and goods in transit - Confiscation under Section 130 of CGST Act, 2017 - Opportunity to deposit tax and penalty before confiscation - Whether the authority was entitled to proceed with confiscation proceedings under Section 130 despite the goods being accompanied by a lawful e-way bill, without first determining and offering an opportunity to deposit tax, if any, and penalty. - HELD THAT: - The Court has not adjudicated the substantive legality of confiscation in these circumstances. The writ raises substantial questions about the interplay between lawful e-way bills, detention/seizure of goods in transit and initiation of confiscation under Section 130; those questions require detailed consideration of amendments to the Act and submissions of parties. The matter has been directed to be heard along with two other Special Civil Applications raising similar legal issues, and the Court has left these contentions for full hearing rather than deciding them at this stage. [Paras 8]

Remitted for detailed hearing; substantive question left open for consideration with allied matters.

Provisional release under Section 129 of CGST Act, 2017 - Availability of alternative remedy under Section 107 of CGST Act, 2017 - Admission of the petition and interim treatment pending final hearing. - HELD THAT: - The Court, noting that the petitioner is not a registered dealer and that amendments came into effect from 1.1.2022, observed that the existence of an alternative efficacious remedy under Section 107 may have bearing on maintainability but, given the common questions raised, admitted the petition for hearing. The Court declined to grant immediate interim relief at this stage but reserved liberty to the petitioner to address the Court on interim relief on the next date. The petition was directed to be heard with Special Civil Application Nos. 7425 and 7426 of 2022 and the rule made returnable on 23.06.2022. [Paras 9]

Petition admitted for final hearing; interim relief not granted at this stage; liberty to seek interim relief on next date; matter to be heard with allied matters and rule made returnable on 23.06.2022.

Final Conclusion: Petition admitted for substantive hearing; the core legal question regarding confiscation when goods are accompanied by an e-way bill is left for detailed consideration and the matter is directed to be heard with two allied Special Civil Applications; interim relief was reserved and the rule is returnable on 23.06.2022.

Pure services - Governmental Authority - Function entrusted to a Municipality under Article 243W - 90 per cent. participation by way of equity or control - exemption under Notification No. 12/2017 - Central Tax (Rate) - distinction between Government and statutory corporations

Governmental Authority - 90 per cent. participation by way of equity or control - distinction between Government and statutory corporations - exemption under Notification No. 12/2017 - Central Tax (Rate) - Whether Rajasthan Urban Drinking Water Sewerage & Infrastructure Corporation Limited (RUDSICO) qualifies as a "Governmental Authority" under Notification No. 12/2017 - Central Tax (Rate) and thereby entitles the appellant to exemption. - HELD THAT: - The Authority accepted that the services are "Pure services" and relate to functions entrusted to a Municipality under Article 243W; the determinative question was whether RUDSICO meets the definition of "Governmental Authority" which requires 90% or more participation by way of equity or control by the Government. The paid-up capital of RUDSICO shows Rs. 40.99 crore held directly by the Government through the Governor, which is less than 90% of the paid-up capital. The appellant's contention that holdings of Rajasthan Housing Board and Jaipur Development Authority (both governmental or statutory bodies) should be treated as Government's holding was rejected: the notification requires that the 90% participation be by the "Government" itself, and not through other entities established by the Government. Relying on statutory definitions in the GST Acts and the General Clauses Act, the Authority explained that "Government" denotes the executive (President/Governor and subordinate officers) and distinguished statutory bodies or corporations as separate legal entities which are not to be equated with the Government for this purpose. The Authority noted the settled principle that a corporation created by statute has an independent existence distinct from the State (Agarwal Vs. Hindustan Steel ) and held that equity held by other government-created entities cannot be aggregated as equity held by the Government. Applying these principles to the shareholding structure, RUDSICO does not have 90% participation by the Government and therefore does not qualify as a "Governmental Authority" under the notification; consequently the appellant cannot claim the exemption under Notification No. 12/2017 - Central Tax (Rate).

RUDSICO is not a "Governmental Authority" as it does not have 90% or more government participation; the appellant is not eligible for exemption under Notification No. 12/2017 - Central Tax (Rate).

Final Conclusion: The appeal is dismissed: the Advance Ruling's findings that the services are "Pure services" and relate to municipal functions stand, but because RUDSICO does not qualify as a "Governmental Authority" under Notification No. 12/2017 - Central Tax (Rate), the appellant is not entitled to the claimed exemption.

Value that represents the margin - selling price and purchase price - purchase price versus purchase cost - interpretation of Notification No. 8/2018-C.T. (Rate) - optional benefit of margin notification and exclusion of input tax credit

Selling price and purchase price - purchase price versus purchase cost - value that represents the margin - interpretation of Notification No. 8/2018-C.T. (Rate) - optional benefit of margin notification and exclusion of input tax credit - Whether the cost of refurbishment incurred by the appellant is includible in the "purchase price" for computing the margin under Explanation (ii) to Notification No. 8/2018-C.T. (Rate) dated 25.01.2018 - HELD THAT: - The Appellate Authority examined Explanation (ii) which prescribes that the value representing the margin is the difference between the selling price and the purchase price. On a plain reading the Explanation uses the term "purchase price" and not "purchase cost". The Authority held that the Notification itself defines the value for the limited purpose of granting the optional margin-based benefit and, therefore, the general valuation provision in Section 15(1) of the Act is not applicable to compute value under this Notification. The Authority further observed that the Notification is an optional concessional scheme available only to persons who do not avail input tax credit; if a taxpayer prefers to claim input tax credit, they cannot simultaneously avail the margin-based benefit. Given the object of the Notification to tax only the margin (and thus avoid double taxation), the legislature has deliberately used "purchase price" and limited the scope of deduction to the amount paid at the time of purchase. Consequently, costs of refurbishment paid after acquisition were held not to form part of the "purchase price" for the purpose of calculating margin under Explanation (ii). The Authority noted that case-specific precedents relied upon by the appellant need not be examined in view of the clear language of the CGST Notification. [Paras 6]

Refurbishment costs are not includible in the "purchase price" under Explanation (ii) to Notification No. 8/2018-C.T. (Rate); only the amount paid at the time of purchase of the used/old car is to be considered as "purchase price" for computing the margin.

Final Conclusion: The appeal is disposed of by upholding the AAR ruling: for the purpose of computing the margin under Explanation (ii) to Notification No. 8/2018-C.T. (Rate), "purchase price" means the amount paid at the time of purchase and does not include subsequent refurbishment costs; the Notification is optional and its benefit is restricted where input tax credit is not availed.

Power of Municipalities to levy advertisement tax/fee post-GST - Distinct incidence of tax on separate transactions (GST on supply; municipal fee for licence) - Article 246A and GST subsuming indirect taxes - Power of Municipality under Article 243-X and Section 134 of the KMC Act - Doctrine against impermissible double taxation

Power of Municipalities to levy advertisement tax/fee post-GST - Distinct incidence of tax on separate transactions (GST on supply; municipal fee for licence) - Section 134 of the Karnataka Municipal Corporations Act - Article 246A and Article 243-X of the Constitution - Municipal Corporation's authority to levy advertisement tax/fee is not ousted by the GST Act and there is no impermissible double taxation. - HELD THAT: - The Court held that the transactions involved are two distinct and independent incidents: (a) the petitioner's supply of advertising services to its clients, which attracts GST on the supply and is collectible from the clients; and (b) the permission or licence granted by the Municipal Corporation to put up or use hoardings, on which the Corporation levies advertisement tax/fee under Section 134 of the KMC Act. GST applies to the supply of services/goods and its incidence lies on the recipient of the service/goods as per the GST scheme; the municipal charge is a fee/tax for the licence/permission to use public or private land for display of advertisements. Relying on constitutional scheme introduced by the 101st Amendment (Article 246A) and the power conferred by Article 243-X to empower municipalities to levy and appropriate specified taxes, duties and fees, the Court accepted the reasoning in the Gujarat High Court decisions that such municipal charges are distinguishable from GST. Consequently, the levy of advertisement tax/fee by the Municipal Corporation under Section 134 does not conflict with or get displaced by the GST Act, and treating both as amounting to double taxation is untenable where the incidence attaches to separate transactions. [Paras 25, 28, 30, 32, 33]

The writ petition is dismissed and it is declared that there is no conflict between GST and the Municipal Corporation's power to levy advertisement fee/tax under Section 134 of the KMC Act.

Final Conclusion: The petition challenging the demand for advertisement tax was dismissed; the Court declared that GST on supplies by advertisers and the advertisement fee/tax levied by the Municipal Corporation under Section 134 of the KMC Act operate on distinct transactions and do not conflict.

Validity of deeming fiction of one-third deduction for land value in valuation notification - Interpretation of value of supply under Section 15(1) and limitation of delegated deeming to cases where actual value is not ascertainable - Arbitrariness and discrimination violating Article 14 of the Constitution - Measure of tax must have nexus with the taxable event/charge - Refund to recipient who has borne tax under Section 54 principles

Validity of deeming fiction of one-third deduction for land value in valuation notification - Interpretation of value of supply under Section 15(1) and limitation of delegated deeming to cases where actual value is not ascertainable - Impugned paragraph 2 of Notification No. 11/2017-Central Tax (Rate) prescribing a mandatory deeming fiction that one third of the total amount charged shall be treated as value of land is ultra-vires the scheme of the CGST Act and is not sustainable where actual value of land or construction value is ascertainable. - HELD THAT: - The Court held that Section 15(1) mandates valuation on the transaction value (actual price paid or payable) and that a deeming fiction may be resorted to only where actual value is not ascertainable. Reliance on precedents (including the 2nd Gannon Dunkerley and Larsen & Toubro decisions) shows that statutory or rule making measures fixing presumptive percentages are permissible only as a fallback when books or actual values are not available and must approximate actual value. A uniform mandatory deduction of one third irrespective of whether the agreement records separate and ascertainable values is therefore contrary to the statutory valuation scheme and Wipro type precedents and is ultra vires to that extent. [Paras 96, 97, 98, 100, 122]

Paragraph 2 insofar as it makes the one third deduction mandatory is ultra vires; the deeming fiction cannot be compulsorily applied where actual value is ascertainable.

Arbitrariness and discrimination violating Article 14 of the Constitution - Measure of tax must have nexus with the taxable event/charge - The uniform mandatory one third deeming fiction is arbitrary, discriminatory and causes the measure of tax to lose nexus with the taxable event, thereby violating Article 14. - HELD THAT: - The Court observed that applying a flat one third deduction across divergent factual matrices (e.g., flats vs bungalows; varying plot sizes and relative construction value) produces manifestly unequal and arbitrary outcomes. Illustrations demonstrate that identical taxable construction activity may attract widely different tax measures solely by reference to a uniform percentage, severing the required nexus between the measure and the charge. The GST Council minutes show the deduction was conceived mainly for flats, yet the notification applies it generally, reinforcing arbitrariness. [Paras 102, 103, 104, 105, 106]

The deeming fiction in paragraph 2 is arbitrary and discriminatory and therefore violative of Article 14.

Interpretation of value of supply under Section 15(1) and limitation of delegated deeming to cases where actual value is not ascertainable - Refund to recipient who has borne tax under Section 54 principles - Paragraph 2 of the notification is read down to make the one third deeming fiction optional - available only where actual value of land or undivided share of land is not ascertainable; the writ applicant (SCA No.1350/2021) whose agreement records land value is entitled to refund of excess tax paid, with interest; advance ruling appellate orders based on the mandatory deeming fiction are set aside. - HELD THAT: - Rather than striking down the notification in toto, the Court read down paragraph 2 to permit the one third fiction only at the option of the taxable person when actual value is not ascertainable or where valuation rules cannot produce the correct value. Where the contract records separate, ascertainable values for land and construction, valuation must follow actual transaction value and statutory valuation rules (including Rules 27-31) or Section 15(4) procedures. Consequent upon this reading down, the writ applicant who paid tax under protest and where land value in the agreement is unchallenged is entitled to a refund of excess tax calculated on actual construction value, with statutory interest; the Court directed completion of refund within 12 weeks. The advance ruling appellate orders founded on the mandatory fiction were quashed and set aside, and maintainability objections were overruled as the challenge was incidental to the notification. [Paras 123, 124, 125, 126, 127]

Paragraph 2 is read down to be optional where actual value is not ascertainable; refund directed to the writ applicant of SCA No.1350/2021 with interest and advance ruling appellate orders (SCA Nos.6840/2021 and 5052/2022) quashed and set aside.

Final Conclusion: The Court declared the mandatory character of the one third deeming fiction in paragraph 2 of Notification No.11/2017 (and its State counterpart) to be ultra vires the CGST Act and violative of Article 14; paragraph 2 is read down so that the one third deeming is available only as an optional fallback where actual value of land or undivided share is not ascertainable. The writ applicant in SCA No.1350/2021 is entitled to refund of excess tax paid (with interest) calculated on actual construction value; advance ruling appellate orders based on the mandatory deeming fiction are set aside.

Addition under Section 68 - jurisdiction under Section 153A - reliance on precedent where additions are not based on seized material - raising jurisdictional objection at a belated stage - substantial question of law

Addition under Section 68 - reliance on precedent where additions are not based on seized material - Validity of deletion by ITAT of addition made under Section 68. - HELD THAT: - The Court held that the present case is covered by the Division Bench decision in CIT vs Kabul Chawla, which governs situations where additions are not founded on seized material. Given that coverage, the ITAT's deletion of the addition under Section 68 was in accordance with the binding precedent and raised no substantial question of law for this Court to entertain.

Deletion of the addition under Section 68 sustained; no substantial question of law arises from this issue.

Jurisdiction under Section 153A - raising jurisdictional objection at a belated stage - Permissibility and effect of raising jurisdictional objection under Section 153A at a belated stage and ITAT's treatment of the jurisdictional point. - HELD THAT: - The Court noted the settled principle that jurisdictional questions go to the root of the matter and may be raised at a belated stage, including on appeal, citing authority to that effect. In the present proceedings the question of jurisdiction under Section 153A was not decided against the assessee in the earlier round and the matter falls to be considered in light of the governing jurisprudence; accordingly the Court found no substantial question of law requiring its interference with the ITAT's conclusion on jurisdiction.

Jurisdictional objection under Section 153A may be raised belatedly; no substantial question of law arises from ITAT's disposal of the jurisdictional issue.

Final Conclusion: The appeal is dismissed as no substantial question of law arises; the ITAT's deletion of the addition and its treatment of the jurisdictional contention do not warrant interference.

Faceless appeal regime - stay petition in pending appeals - electronic filing / upload link - time bound consideration of interim relief - abeyance of coercive proceedings - principles of Rule of Law

Faceless appeal regime - stay petition in pending appeals - electronic filing / upload link - principles of Rule of Law - Direction to provide facility to upload stay petition in the pending faceless appeal and opportunity to file the stay petition in a time bound manner. - HELD THAT: - The Court recognised that under the present faceless appeal regime there is no facility to upload a stay petition in pending appeals, causing practical difficulty to assessees and impinging on the principles of Rule of Law. Having regard to those difficulties and earlier similar orders in like cases, the Court directed that the 3rd respondent must provide an electronic filing / upload link for the petitioner to file the stay petition in the pending appeal. The period for providing the link was fixed to ensure effective remedy: the link must be provided within one month from receipt of the judgment, and the petitioner is to upload the stay petition within two weeks of receiving the link. The direction is framed as a time bound administrative mandate to cure the procedural lacuna in the faceless appeal process and to afford the petitioner an effective opportunity to seek interim relief. [Paras 3, 4, 5]

3rd respondent to provide a link to upload the stay petition in the pending appeal within one month; petitioner to upload within two weeks of receipt of the link, to enable time bound consideration.

Time bound consideration of interim relief - abeyance of coercive proceedings - Interim protection by keeping coercive proceedings in abeyance pending consideration of the uploaded stay petition within a specified time frame. - HELD THAT: - The Court ordered that once the petitioner uploads the stay petition, the 3rd respondent shall consider it expeditiously and in any event within four weeks from the date of uploading, after hearing the petitioner. To secure the effectiveness of that limited remedy, the Court directed that all coercive proceedings pursuant to the impugned assessment and related orders shall be kept in abeyance until orders are passed on the stay petition. The relief is interlocutory and limited to maintaining the status quo until the prescribed adjudicatory timeline is complied with. [Paras 5]

Stay petition to be considered within four weeks of uploading; till such orders are passed, all coercive proceedings arising from the assessment and related orders shall be kept in abeyance.

Final Conclusion: Writ petition disposed by directing the 3rd respondent to provide an upload link within one month, permitting the petitioner to file the stay petition within two weeks of receipt of the link, directing consideration of the stay petition within four weeks of filing, and keeping coercive proceedings in abeyance until the stay petition is decided.

Violation of principles of natural justice - Personal hearing - Video Conferencing personal hearing - Insufficient notice for hearing - Speaking order - Remand for fresh consideration - Directions to facilitate participation through web portal

Violation of principles of natural justice - Personal hearing - Insufficient notice for hearing - Video Conferencing personal hearing - Whether the Impugned Order suffered from violation of principles of natural justice by reason of inadequate notice for a personal hearing conducted through Video Conferencing. - HELD THAT: - The Court found that the respondents had communicated a personal hearing by Video Conferencing scheduled at about 5.00 p.m. on 29.09.2021 and that the notice for that hearing was sent to the petitioner at about 13.39 hours on the same date. Although the respondents contended that written submissions had been requested on 28.09.2021, the short interval between the notice and the hearing meant the petitioner was not afforded sufficient time to prepare and participate. The Court concluded that, on the material placed before it, a personal hearing had been granted but the extremely limited notice period effectively deprived the petitioner of a meaningful opportunity to be heard, thereby constituting a breach of the principles of natural justice. [Paras 3, 4, 5]

Impugned Order set aside on the ground of violation of principles of natural justice; petitioner found to have been denied adequate opportunity to participate in the personal hearing through Video Conferencing.

Remand for fresh consideration - Speaking order - Directions to facilitate participation through web portal - Personal hearing - Relief to be granted and directions for further proceedings following the finding of breach of natural justice. - HELD THAT: - In view of the procedural defect, the Court directed that the matter be remitted to the respondents for passing a fresh speaking order after considering the petitioner's reply/representation dated 29.09.2021. The Court required that the petitioner be afforded a personal hearing before any fresh Assessment Order is passed and directed the respondents to issue suitable instruction to the Administrator of the Income Tax Web Portal to enable the petitioner to participate through Video Conferencing. A time frame of preferably sixty days from receipt of a copy of the order was imposed for passing the speaking order. These directions were given to ensure that the petitioner is heard meaningfully and that the assessment process proceeds with recorded reasoning and appropriate facilitation for participation. [Paras 6, 7]

Matter remitted to respondents to pass a speaking order after considering the petitioner's representation; petitioner to be heard before any fresh assessment; respondents to facilitate Video Conferencing participation via the web portal; order to be passed preferably within sixty days.

Final Conclusion: The Writ Petition was allowed by setting aside the Impugned Order for breach of natural justice due to inadequate notice for a Video Conferencing personal hearing; the matter is remitted for a fresh speaking order after considering the petitioner's representation, with a direction to afford a fresh personal hearing (including necessary web-portal facilitation) preferably within sixty days.

Search assessment framed under 143(3) r.w.s. 153A - lack of incriminating material seized during search - reliance on new material in search-based assessment - onus to substantiate revenue expenses - quashing of assessment for absence of seized incriminating material

Search assessment framed under 143(3) r.w.s. 153A - lack of incriminating material seized during search - quashing of assessment for absence of seized incriminating material - Validity of the assessment framed in consequence of a search where no incriminating material was found or seized. - HELD THAT: - The Tribunal affirmed the CIT(A)'s quashing of the impugned assessment on the ground that the assessment was not based on any incriminating material found or seized during the course of the search. The Revenue's contention that a search assessment may be framed on new material was considered and rejected insofar as no incriminating material was discovered at the time of search. The Tribunal distinguished the authority relied upon by the Revenue as applicable only where incriminating material was in fact found during the search, and held that in the absence of such material the assessment could not be sustained. [Paras 3, 4, 5]

Assessment quashed as not based on any incriminating material seized during the search; assessment therefore invalid.

Reliance on new material in search-based assessment - onus to substantiate revenue expenses - Whether additions made in respect of sub-contract expenses and allowance of mining stock written off could be sustained when the search-based assessment lacked seized incriminating material. - HELD THAT: - The Tribunal upheld the CIT(A)'s deletion of the additions and the allowance of the claimed mining stock write-off by reason of the quashing of the assessment. Since the assessment itself was held not to be founded on any incriminating material from the search, the consequential additions founded on purported new material were not sustained. The Revenue's reliance on statements of subcontractors and on a decision permitting use of new material where incriminating material was found was held inapposite in the facts of this case. [Paras 3, 4, 5]

Additions in respect of sub-contract expenses deleted and mining stock write-off allowed because the underlying search-based assessment was unsustainable for want of seized incriminating material.

Final Conclusion: Revenue's appeal dismissed; the assessment for A.Y. 2016-17 quashed for lack of incriminating material seized during the search and the consequential additions were deleted.

Summary order. Interim directions: court observed prima facie that the notice dated 31.03.2021 under Section 148 of the Income Tax Act, 1961 for Assessment Year 2013-14 appeared time barred; learned standing counsel granted one week to obtain instructions and three days to file a counter affidavit; matter listed before an appropriate bench on 28.03.2022.

Revision under section 263 - erroneous order and prejudicial to revenue - Deduction under section 80P(2)(a)(i) and 80P(2)(d) - De novo verification and remand to Assessing Officer - Application of Supreme Court precedent in Mavilayi Service Cooperative Bank Ltd.

Revision under section 263 - erroneous order and prejudicial to revenue - Deduction under section 80P(2)(a)(i) and 80P(2)(d) - De novo verification and remand to Assessing Officer - Application of Supreme Court precedent in Mavilayi Service Cooperative Bank Ltd. - Whether the Pr. CIT was justified in invoking revisionary jurisdiction under section 263 to hold that interest income shown as investment income was not eligible for deduction under section 80P and to direct the Assessing Officer to revise the assessment. - HELD THAT: - The Tribunal observed that a coordinate bench has considered a similar controversy and directed de novo verification by the Assessing Officer with reference to the principle laid down by the Hon'ble Supreme Court in Mavilayi Service Cooperative Bank Ltd. The Pr. CIT's conclusion that the amount shown as interest from investments (notably the interest figure identified in the P&L) was ineligible for deduction under section 80P(2)(a)(i) was not finally adjudicated by this Tribunal. Instead, following the coordinate bench (Kakkabe VSSB Bank Ltd.), the Tribunal held that the proper course is to remit the matter to the Assessing Officer for fresh examination and verification of the issues adverted to by the Pr. CIT, permitting the assessee to file requisite material and requiring the AO to consider the claim in accordance with the law and the Supreme Court's guidance in Mavilayi. The Tribunal therefore did not exercise a final decision on the correctness of the Pr. CIT's application of section 263 to disallow the deduction; rather, it required factually and legally fresh scrutiny by the AO with opportunity of hearing. [Paras 7, 8]

Remitted to the Assessing Officer for de novo verification of the issues considered by the Pr. CIT in the section 263 order, to be examined in the light of Mavilayi Service Cooperative Bank Ltd., with opportunity to the assessee to file documents and be heard.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes and remitted the matter to the Assessing Officer for fresh verification and adjudication of the issues raised in the Pr. CIT's section 263 order (including eligibility of interest income for deduction under section 80P), to be decided in accordance with law and the Supreme Court's decision in Mavilayi Service Cooperative Bank Ltd., after affording the assessee a reasonable opportunity of being heard.

Interpretation of a tax treaty in accordance with its text, context and object and purpose - Article 8(1) of India-USA Double Taxation Avoidance Agreement - profits from operation of aircraft in international traffic taxable only in the State of residence - Article 8(2)(b) - "other activity directly connected with such transportation" - Article 8(4) - profits from participation in a pool, joint business or international operating agency - participation in International Airlines Technical Pool (IATP) and reciprocity of services - penalty under section 271(1)(c) of the Income tax Act, 1961 in respect of additions on a debatable treaty issue - no interest under section 234B where liability is on the payer to deduct tax at source

Article 8(2)(b) - "other activity directly connected with such transportation" - ancillary and incidental activities to operation of aircraft in international traffic - Whether receipts from providing baggage screening and aircraft handling services to other airlines fall within Article 8(1) read with Article 8(2)(b) of the India-USA DTAA - HELD THAT: - Article 8(2) of the India-USA Treaty defines the scope of "profits from the operation of aircraft in international traffic" and expressly includes only specific categories: sale of tickets on behalf of others, activities directly connected with transportation by the enterprise itself, and rentals incidental to such activities. The Tribunal held that the phrase "other activity directly connected with such transportation" must be read with reference to transportation carried on by the enterprise itself. The assessee's services to other airlines in Delhi were neither sales of carriage by the assessee nor activities that aid or are incidental to transportation by the assessee's own aircraft; provision of those services to other carriers was shown to be for optimising use of equipment and manpower and would not affect the assessee's own carriage operations if not rendered. Accordingly, the claim of exemption under Article 8(1) read with Article 8(2)(b) was rejected as not within the ordinary meaning of the treaty text read in its context and in light of its object and purpose. [Paras 9]

Claim for exemption under Article 8(1) read with Article 8(2)(b) rejected.

Article 8(4) - profits from participation in a pool taxable only in the State of residence - International Airlines Technical Pool (IATP); reciprocity and notional pool accounting - scope of treaty provision to extend Article 8 benefit to pool participation - Whether profits from providing baggage screening and aircraft handling services to other airlines are exempt in India under Article 8(1) read with Article 8(4) on account of the assessee's participation in IATP - HELD THAT: - Article 8(4) extends the benefit of Article 8(1) to profits from participation in a pool. The Tribunal examined the evidential material, including IATP membership, IATP manual, standard Form 53/55 agreements and documentary proof of services provided and received, and found that the assessee was a long standing IATP participant and had rendered and availed reciprocal services. There is no textual requirement in Article 8(4) that reciprocity must occur within the same country. Applying the treaty text and relevant precedents (including the jurisdictional High Court's reasoning in KLM Royal Dutch Airlines on pari materia provisions), the Tribunal held that profits derived from participation in IATP are taxable only in the State of residence (USA) and therefore not taxable in India. [Paras 9]

Claim for exemption under Article 8(1) read with Article 8(4) allowed; such profits are not taxable in India.

Penalty under section 271(1)(c) of the Income tax Act, 1961 - inadmissibility of penalty where addition arises from a debatable treaty question - Whether penalties under section 271(1)(c) can be sustained in respect of additions made on the disputed treaty treatment of the receipts - HELD THAT: - Having held that the receipts are not taxable in India under Article 8(1) read with Article 8(4), the Tribunal deleted the penalties levied under section 271(1)(c). The Tribunal further observed that the question whether such receipts fall within Article 8 is a highly debatable legal issue on which more than one view is possible; consequently, additions made on that debatable treaty point do not attract penalty for furnishing inaccurate particulars of income. [Paras 13]

Penalties under section 271(1)(c) deleted for the assessment years in dispute.

No interest under section 234B where liability is on the payer to deduct tax at source - principle from DIT v. Mitsubishi Corporation - Whether interest under section 234B can be levied on the assessee for the disputed receipts - HELD THAT: - Although the Tribunal treated the issue as academic in light of its treaty rulings, it indicated agreement with the assessee's contention-following the Supreme Court's reasoning in DIT Mitsubishi Corporation-that interest under section 234B cannot be levied where the liability to discharge tax is on the payer to deduct tax at source rather than on the assessee to pay advance tax. [Paras 11]

In principle, interest under section 234B cannot be levied where tax liability is on the payer to deduct tax at source; the point is academic given the treaty relief granted.

Final Conclusion: The Tribunal rejected the assessee's reliance on Article 8(2)(b) for exemption of receipts from services to other airlines but allowed exemption under Article 8(1) read with Article 8(4) on the finding that the assessee participated in IATP and rendered/availed reciprocal services; consequential additions were deleted for AYs 1996 97 to 2002 03 and penalties under section 271(1)(c) were deleted; the Tribunal also observed in principle that no interest under section 234B can be levied where the obligation to deduct tax is on the payer.

Interim stay - Denied Entity List (DEL) - admission of writ petition - pre-import condition declared ultra vires - provisional relief pending appellate outcome

Interim stay - Denied Entity List (DEL) - provisional relief pending appellate outcome - Admission of the writ petition and grant of interim relief staying the operation of the order placing the writ applicants in the Denied Entity List (DEL) pending final disposal of the writ petition. - HELD THAT: - The Court admitted the writ petition despite the pendency of Special Leave Petitions before the Supreme Court challenging the decision in M/s. Maxim Tubes Company Pvt. Ltd., noting the relevance of that judgment which had declared the pre-import condition to be ultra vires. Although respondents disputed reliance on Maxim on the ground that its operation is stayed by the Supreme Court, the High Court observed previous Coordinate Bench decisions holding that a stay of a High Court judgment in proceedings before the Supreme Court does not necessarily 'deface' the underlying reasoning. Having considered the parties' submissions and the affidavit filed by respondents, and notwithstanding factual disputes as to whether a personal hearing was granted, the Court exercised its discretion to admit the petition and grant ad interim relief. The Court recorded that any transactions undertaken by the writ applicants pursuant to this interim order would remain subject to the final outcome of the writ proceedings. [Paras 8, 9, 10]

Writ petition admitted; rule issued returnable on 29.06.2022; pending final disposal, the order placing the writ applicants in the DEL is stayed and any transactions by the writ applicants under this interim order are subject to the final outcome of the writ application.

Final Conclusion: The High Court admitted the petition and granted interim relief by staying the operation of the order placing the petitioners in the Denied Entity List (DEL) pending final adjudication; rule is returnable on 29.06.2022.

Recovery of duty drawback - Rule 16A(4) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - Repayment of drawback upon realization of export proceeds - Bank Realization Certificate as evidence of export realization - Remand for fresh consideration - Laches and voluntary payment as a defence to writ relief

Rule 16A(4) of the Customs, Central Excise Duties and Service Tax Drawback Rules, 1995 - Repayment of drawback upon realization of export proceeds - Bank Realization Certificate as evidence of export realization - Remand for fresh consideration - Claim for repayment of drawback recovered to be reconsidered by the Assistant Commissioner under Rule 16A(4) in the light of the Bank Realization Certificate produced on 22.09.2009. - HELD THAT: - The Court examined Rule 16A(4), which provides for repayment of drawback where sale proceeds are realized by the exporter after recovery and evidence of such realization is produced within the statutory period. The petitioner produced a Bank Realization Certificate showing export proceeds realization on 22.09.2009. Although the department effected recovery long after that realization and the petitioner had subsequently made payments pursuant to demand notices, the Court found that the existence of export realization required the authority to consider repayment under Rule 16A(4). In view of these facts the Court did not decide the claim on merits but directed that the 3rd respondent/Assistant Commissioner of Customs should take note of Rule 16A(4) and the Bank Realization Certificate and dispose of the matter on merits and in accordance with law. [Paras 8, 9, 10, 11]

Matter remitted to the Assistant Commissioner of Customs to consider and decide the petitioner's claim for repayment under Rule 16A(4) on merits in the light of the Bank Realization Certificate; writ petition disposed.

Final Conclusion: Writ petition disposed by remitting the claim to the Assistant Commissioner of Customs for fresh decision under Rule 16A(4) of the Drawback Rules in the light of the Bank Realization Certificate produced on 22.09.2009; no costs.

Advance Authorization - non-fulfilment of export obligation - conditional import - refund of duty/IGST paid via TR6 - CENVAT/IGST credit - payment of duty on failure to fulfil Advance Authorization

Advance Authorization - non-fulfilment of export obligation - refund of duty/IGST paid via TR6 - CENVAT/IGST credit - conditional import - Whether the appellant is entitled to refund of duty (including IGST paid by TR6 challan) on inputs not used in manufacture of export goods because of non-fulfilment of Advance Authorization export obligation - HELD THAT: - The appellants imported inputs under Advance Authorization which by its nature are conditional imports to be exclusively used for manufacture of export goods. The inputs were not used for export because the export obligation under the Authorizations remained unfulfilled and the appellants therefore paid duty with interest by challan. The Tribunal has earlier held that where a conditional import under Advance Authorization loses its privileged status on non-fulfilment, the appropriate consequence is payment of duty rather than permitting a refund; treating such cases as ordinary imports and allowing CENVAT/IGST refund would defeat the purpose of the Advance Authorization scheme. The relevant regulatory framework contemplates payment of duty (and execution of bond, where applicable) on bona fide failure to fulfil export obligations; availing CENVAT was an optional mechanism and does not create a right to a cash refund of such credit under GST in these circumstances. Applying that precedent and reasoning, the claimed refund is not allowable since there was no excess duty paid eligible for refund but a duty liability arising from non-fulfilment of the conditional import obligation. [Paras 6, 8]

Refund claim dismissed; no entitlement to refund of the duty/IGST paid on inputs not used due to non-fulfilment of Advance Authorization.

Final Conclusion: Appeals dismissed; the impugned order upholding rejection of the refund claim is affirmed on the basis that duty paid on conditional imports rendered taxable on non-fulfilment of export obligation and does not give rise to a refund entitlement.

Retraction of statement - reliance on voluntary statement under Section 108 - burden under Section 123 - non-speaking order - redemption under Section 125 - absolute confiscation - importation of prohibited goods

Retraction of statement - reliance on voluntary statement under Section 108 - burden under Section 123 - non-speaking order - Whether the adjudicating and first appellate authorities properly considered the retraction dated 13.12.2018 and the assessee's discharge of the initial burden under Section 123 when relying on the voluntary statement recorded under Section 108, and whether the orders are speaking. - HELD THAT: - The Tribunal found that the Order-in-Original does not contain any discussion of the retraction dated 13.12.2018 and that the First Appellate Authority likewise failed to consider it. The retraction admitted that the gold belonged to the assessee's customers and thus both the original voluntary statement and the subsequent retraction must be weighed together. Once a retraction is made, the onus on the person from whose possession goods are seized to identify the owners and explain the source of the goods increases; mere denial without identifying customers or placing documentary evidence will not discharge the initial burden under Section 123. In the absence of any attempt by the assessee to bring on record particulars of the customers or documentary evidence establishing the source of the gold, the Adjudicating Authority's mere reliance on the voluntary statement was held unjustified. For these reasons the Tribunal concluded that the impugned orders are non-speaking to the extent they failed to examine the retraction and the required proof of source, and remanded the matter for fresh consideration by the Adjudicating Authority with directions to consider the retraction in light of the legal requirements and to pass an appropriate speaking order on confiscation and/or redemption. [Paras 6, 7, 8, 9]

Order-in-Original and Order-in-Appeal set aside to the extent that the retraction and the assessee's discharge of the initial burden under Section 123 were not considered; matter remanded to the Adjudicating Authority for fresh, speaking consideration of the retraction, source of the gold and consequent confiscation/redemption determination.

Absolute confiscation - importation of prohibited goods - redemption under Section 125 - Whether the gold bar bearing foreign marking (the half cut piece marked 'Cambi, Suisse 100 gm Gold 999.9') is liable to absolute confiscation or is amenable to redemption. - HELD THAT: - The Tribunal recorded that the assessee has offered no explanation or evidence as to the source of the half cut piece of gold bearing foreign marking. Such unexplained foreign-marked gold indicates importation of a prohibited item and, absent discharge of the initial burden under Section 123, is liable for absolute confiscation. The Tribunal observed that redemption under Section 125 may be available in cases where the source is satisfactorily proved and in accordance with the provisos to Section 125; however, because the source of the foreign-marked bar was not explained, that particular item must be treated as liable to absolute confiscation. The Tribunal directed that the Adjudicating Authority, on remand, consider these aspects when passing its speaking order. [Paras 8, 9]

The half cut foreign-marked gold bar is liable to absolute confiscation unless the assessee, on remand, satisfactorily proves its source; questions of redemption for other seized gold depend upon proof of source and the Adjudicating Authority's exercise of discretion under Section 125.

Final Conclusion: The appeals are allowed in part by way of remand: the common impugned Order-in-Appeal is set aside to the extent that the retraction and the assessee's discharge of the initial burden were not considered; the matter is remitted to the Adjudicating Authority to examine the retraction, require identification/evidence of customers as owners of the seized gold, and pass a speaking order on confiscation and/or redemption (subject to the provisos to Section 125). The foreign-marked half cut gold bar, the source of which remains unexplained, is liable for absolute confiscation. Stay petitions filed by the Revenue are disposed of.

Denied Entity List - provisional grant of licence subject to protection of revenue - effect of stay of judgment of High Court by Supreme Court - adjournment pending decision of higher court

Effect of stay of judgment of High Court by Supreme Court - adjournment pending decision of higher court - Proceedings were adjourned pending final disposal of the challenge to the High Court's earlier judgment in the Supreme Court. - HELD THAT: - The Court recorded that the earlier judgment in M/s. Maxim Tubes Company Pvt. Ltd. is the subject matter of a Special Leave Petition before the Supreme Court, and that the Supreme Court had stayed the operation and implementation of that High Court judgment. In view of the impending hearing before the Supreme Court (noted for 13.04.2022), the High Court deferred adjudication of the writ applicants' grievance and fixed the matter for further consideration after the higher forum's decision. The Court also permitted the Union to file any further reply by the next date. This course preserves the parties' positions until the higher court determines the validity and effect of the earlier decision. [Paras 3, 6]

Matter adjourned to 21.04.2022 (on board) for further proceedings after the Supreme Court hearing; Union permitted to file further reply by the next date.

Denied Entity List - provisional grant of licence subject to protection of revenue - The Union was requested to consider issuance of a provisional licence to the writ applicants subject to appropriate terms safeguarding the revenue. - HELD THAT: - While the Court did not adjudicate the substantive challenge to placement of the writ applicants on the Denied Entity List, it invited the Union to take instructions on whether a licence could be issued on a provisional basis with such terms and conditions as would protect the interests of the Revenue. This direction was prudential and interlocutory, aimed at enabling the parties to continue business subject to protective conditions until the higher court decides the pending challenge to the foundational judgment. [Paras 6]

Union asked to consider (and inform) whether provisional licence can be issued subject to terms protecting the revenue.

Final Conclusion: The High Court postponed final adjudication pending the Supreme Court's hearing of the challenge to the earlier High Court judgment and directed the Union to state whether a provisional licence can be granted subject to protective conditions; the matter was listed on board for 21.04.2022 and the Union may file further reply by the next date.

Condonation of delay - extension of time for compliance - non-willful default due to force majeure/COVID-19 pandemic - payment of stamp duty and penalty under Indian Stamp Act - compliance with tribunal order for scheme of amalgamation

Condonation of delay - extension of time for compliance - non-willful default due to force majeure/COVID-19 pandemic - payment of stamp duty and penalty under Indian Stamp Act - Application for condonation of delay of 451 days and for extension of time by 60 days to comply with the Tribunal's orders dated 25.09.2019 and 20.07.2020 - HELD THAT: - The Tribunal examined the applicant's account of events including delayed receipt of the certified copy of the 2019 order, repeated correspondence with the Sub-Registrar and Registrar concerning payment of stamp duty, return of the demand draft, requests for documents and challan, the Registrar's requirement of additional affidavits and documents, interruptions caused by the COVID-19 pandemic including plant shutdown, and subsequent notices regarding levy of penalty under Section 40 of the Indian Stamp Act. The Tribunal found these facts demonstrated that the delay in completing post-merger formalities and in paying stamp duty was not willful but caused by obstacles beyond the applicant's control. On that basis the Tribunal was inclined to and did allow the reliefs sought. [Paras 3, 4]

Delay of 451 days condoned and time extended by 60 days from 21.04.2022 to 19.06.2022 for compliance with the orders dated 25.09.2019 and 20.07.2020.

Final Conclusion: The application is allowed: the delay is condoned and a 60-day extension is granted for compliance with the Tribunal's orders, the decision being founded on the applicant's prevented, non-willful inability to comply due to COVID-19 related and administrative obstacles concerning payment of stamp duty.

Territorial jurisdiction of adjudicating authority - waiver of territorial jurisdiction by appearance and conduct - ex-parte order and setting aside under Rule 49(2) of NCLT Rules, 2016 - sufficient cause for recalling ex parte orders - substituted service by publication - recall of admission order under the Insolvency and Bankruptcy Code - appealability of admission order to the Appellate Tribunal

Territorial jurisdiction of adjudicating authority - waiver of territorial jurisdiction by appearance and conduct - Whether the National Company Law Tribunal, Hyderabad Bench had territorial jurisdiction to entertain and admit CP(IB) No.374/7/HDB/2019. - HELD THAT: - The Tribunal held that at the time the Section 7 application was filed and heard (June-August 2019) the Hyderabad Bench exercised jurisdiction over both Telangana and Andhra Pradesh and the Amaravati Bench was not functionally available until August 2019. The director of the corporate debtor appeared before the Adjudicating Authority on 18.07.2019 and sought time to engage counsel but thereafter failed to prosecute the matter; by so appearing and seeking adjournment the corporate debtor submitted to the Hyderabad Bench and, by its subsequent conduct and inaction, waived any objection to territorial jurisdiction. The Ministry/constituting notifications and the factual position that Amaravati Bench was not then functioning were reasons why Hyderabad Bench retained competence to entertain the petition. [Paras 111, 112, 116]

The Hyderabad Bench had jurisdiction and the plea of lack of territorial jurisdiction was held to be waived by the corporate debtor's appearance and conduct.

Ex-parte order and setting aside under Rule 49(2) of NCLT Rules, 2016 - sufficient cause for recalling ex parte orders - Whether IA Nos. 900 and 901 of 2019 (seeking to set aside the ex parte order dated 27.09.2019 and to stay further proceedings) were maintainable. - HELD THAT: - The Tribunal found that the corporate debtor had not acted with due diligence: after appearing on 18.07.2019 and requesting time it failed to appear subsequently, orders were reserved and the petition admitted on 27.09.2019. The applications under Rule 49(2) were filed after admission and long after the opportunity to raise jurisdictional or other objections; no sufficient cause or good reason was shown to set aside the ex parte proceedings. In these circumstances Rule 49(2) could not be pressed into service to reopen the final order and the interlocutory applications were held not maintainable. [Paras 116]

IA Nos. 900 and 901 of 2019 were not maintainable and were rightly dismissed by the Adjudicating Authority.

Recall of admission order under the Insolvency and Bankruptcy Code - appealability of admission order to the Appellate Tribunal - Whether the Adjudicating Authority has power to recall or set aside its order of admission once passed under the Code. - HELD THAT: - The Tribunal endorsed the principle that an order of admission passed under the Code is an appealable order and cannot be recalled or set aside by the Adjudicating Authority itself in exercise of some inherent or review power. The appropriate remedy for challenging an admission is to prefer an appeal to the National Company Law Appellate Tribunal within the statutory regime; the Adjudicating Authority has no power to circumvent the appellate process by recalling its own admission order. [Paras 110, 116]

The Adjudicating Authority has no power to recall or set aside its order of admission; the remedy is by appeal under the Code.

Final Conclusion: The appeal is dismissed: the Hyderabad Bench validly exercised jurisdiction (the corporate debtor waived any objection by its appearance and conduct), the applications to set aside the ex parte admission were not maintainable for want of sufficient cause, and an Adjudicating Authority cannot recall its admission order - the statutory appellate remedy remains. No costs.

Voluntary liquidation under the Insolvency and Bankruptcy Code - declaration of solvency - appointment of liquidator - public announcement and claims procedure - compliance with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - final report and closure of liquidation account - dissolution of corporate person - intimation to Income Tax Authority

Declaration of solvency - appointment of liquidator - public announcement and claims procedure - compliance with Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - intimation to Income Tax Authority - Whether the corporate person complied with the statutory and regulatory procedural requirements for commencing voluntary liquidation. - HELD THAT: - The Tribunal recorded and accepted the documentary record showing that the Board resolved to liquidate, the majority directors made a declaration of solvency, members passed the special resolution and appointed an IP as liquidator, and the liquidator made the statutory public announcement and filed the requisite returns with the Registrar of Companies and IBBI. The liquidator also intimated the Income Tax Authority and sought a No Objection Certificate; no demand or notification of tax liability was communicated by the Assessing Officer. Taken together, the filings and steps conform to the procedural framework prescribed for voluntary liquidation under the Code and the IBBI Regulations and satisfy the Tribunal that statutory pre-conditions have been met. [Paras 9, 10, 12, 15, 16]

Procedural and regulatory requirements for commencement of voluntary liquidation have been satisfied.

Final report and closure of liquidation account - no outstanding liabilities / all assets dealt with - final report and closure of liquidation account - dissolution of corporate person - Whether the affairs of the corporate person have been wound up, assets liquidated or distributed, liabilities satisfied, and whether the company should be dissolved. - HELD THAT: - The liquidator's final report and supporting documents show that the company's assets (investments in private companies) were transferred to the sole shareholder after stakeholder consultations, creditors and liquidation costs were paid, and remaining funds were distributed; the liquidation account was closed and the final report filed with the RoC and IBBI. The Tribunal, upon perusal of these materials, found that the affairs have been completely wound up, assets fully dealt with, and no liabilities remain unsatisfied. The Tribunal was also satisfied that the voluntary liquidation was not with intent to defraud any person and therefore concluded that dissolution is appropriate. [Paras 13, 14, 15, 16, 17]

The corporate person's affairs have been wound up and it is ordered to be dissolved.

Dissolution of corporate person - Registrar of Companies - Post-dissolution formalities to be carried out following the Tribunal's order. - HELD THAT: - The Tribunal directed the liquidator to serve a copy of the dissolution order on the Registrar of Companies, West Bengal within fourteen days so that the RoC may take further necessary action. The order disposes of the company petition and directs the registry to communicate the order to parties and counsels and to issue certified copies on compliance with formalities. [Paras 17, 18, 19, 20, 21]

Liquidator to serve the order on the RoC and statutory post-dissolution formalities to be completed; petition disposed of.

Final Conclusion: The Tribunal, having found that the statutory pre-conditions for voluntary liquidation were complied with, that the assets were realized or distributed, liabilities satisfied, and no fraud was intended, ordered the dissolution of the corporate person and directed the liquidator to serve the order on the Registrar of Companies and complete requisite post-dissolution formalities.

Constitutionality of Sections 95 to 100 of the Insolvency and Bankruptcy Code, 2016 - Violation of Article 14 (equality before law) - Principles of natural justice in insolvency proceedings - Role and impartiality of resolution professional - Adjudicating Authority's discretion on recommendations - Time bound insolvency process for personal guarantors

Constitutionality of Sections 95 to 100 of the Insolvency and Bankruptcy Code, 2016 - Violation of Article 14 (equality before law) - Principles of natural justice in insolvency proceedings - Validity of Sections 95, 99 and 100 of the Code under Article 14 and principles of natural justice. - HELD THAT: - The Court examined the procedure under Sections 95 to 100 for initiating insolvency proceedings against personal guarantors and found it to be a time bound scheme which requires filing under Section 95, appointment of a resolution professional, submission of a reasoned report under Section 99 and final admission or rejection by the Adjudicating Authority. The resolution professional's role is recommendatory and must give reasons; the Adjudicating Authority is not bound by that recommendation and retains the final decision making power. The resolution professional is governed by eligibility criteria and a code of conduct under the relevant regulations and has no personal interest in the application. Applying these features, the Court held that the procedure is fair, rational and reasonable and does not offend Article 14 or principles of natural justice. [Paras 4]

Sections 95 to 100 of the Code do not suffer from illegality or unconstitutionality and are not violative of Article 14 or natural justice.

Role and impartiality of resolution professional - Adjudicating Authority's discretion on recommendations - Whether appointment of a resolution professional by a creditor, and subsequent appointment of the same professional, renders the process arbitrary or makes the professional a judge in his own cause. - HELD THAT: - The Court accepted that the resolution professional is appointed and makes a recommendation, but emphasized there is no adjudicatory function vested in the professional; the Adjudicating Authority independently decides admission or rejection. The resolution professional is regulated by statutory definitions and regulations which prescribe eligibility and a code of conduct. The absence of personal interest on the part of the professional and the supervisory role of the Adjudicating Authority negate the contention that the arrangement permits a person to be judge in his own cause or is arbitrary. [Paras 4]

Appointment of, and recommendations by, the resolution professional do not render the process arbitrary nor amount to a violation of the rule against being a judge in one's own cause.

Final Conclusion: Challenge to the constitutional validity of Sections 95 to 100 of the Insolvency and Bankruptcy Code, 2016, and related contentions regarding the role and appointment of the resolution professional, are repelled; the writ petition is dismissed.

Jurisdiction of Adjudicating Authority under Section 60(5) of the IBC vis-a -vis proceedings under the Prevention of Money Laundering Act - maintainability of applications before NCLT/NCLAT challenging provisional attachment under PMLA - binding effect of Three Member Bench precedent and principle of stare decisis

Jurisdiction of Adjudicating Authority under Section 60(5) of the IBC vis-a -vis proceedings under the Prevention of Money Laundering Act - maintainability of applications before NCLT/NCLAT challenging provisional attachment under PMLA - binding effect of Three Member Bench precedent and principle of stare decisis - Maintainability of the application filed under the Insolvency and Bankruptcy Code seeking reliefs against a provisional attachment order passed under the Prevention of Money Laundering Act. - HELD THAT: - The Tribunal held that the Adjudicating Authority (NCLT) is not empowered to adjudicate matters which fall within the exclusive purview of the PMLA courts. The Three Member Bench decision in Kiran Shah, which followed and relied upon Varrsana Ispat Limited and applied the principle of stare decisis, expressly concluded that applications under Section 60(5) of the IBC do not confer an all pervasive jurisdiction on the Adjudicating Authority to decide PMLA attachment disputes. Applying that binding precedent, the Adjudicating Authority correctly held the application challenging the provisional attachment order issued under the PMLA to be not maintainable and rejected it. The Tribunal found no error in that conclusion and declined to re examine the matter in light of the Three Member Bench rulings. [Paras 50, 52, 109, 110]

Application under the IBC challenging a provisional attachment order passed under the PMLA is not maintainable before the Adjudicating Authority; the IA was rightly dismissed.

Final Conclusion: The appeal is dismissed; the Adjudicating Authority correctly rejected the application as not maintainable in view of the Three Member Bench precedent that NCLT/NCLAT lack jurisdiction to decide matters falling under the PMLA.

Insolvency Resolution Process against Personal Guarantor - Initiation under section 95(1) of the IBC, 2016 - Demand notice under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 - Interim Moratorium - Appointment of Resolution Professional - Role and duties of Resolution Professional under section 99 of the IBC, 2016

Insolvency Resolution Process against Personal Guarantor - Initiation under section 95(1) of the IBC, 2016 - Demand notice under Rule 7(1) of the Insolvency and Bankruptcy (Application to Adjudicating Authority for Insolvency Resolution Process for Personal Guarantors to Corporate Debtor) Rules, 2019 - Application under section 95(1) IBC read with rule 7(2) of the IB Rules, 2019 and regulation 4(2) of the IB Regulations, 2019 for initiation of insolvency resolution process against the personal guarantor was entertained and proceeded with. - HELD THAT: - The Tribunal recorded that the applicant (financial creditor) issued a demand notice in Form B dated 06/07/2021 under rule 7(1) of the IB Rules, 2019 and that the personal guarantor failed to make payment as recalled. In view of the material placed, the Adjudicating Authority proceeded to admit the application for initiation of the insolvency resolution process against the personal guarantor under section 95(1) of the IBC, 2016. The order records the statutory consequence that interim moratorium commences on filing of the application in terms of section 96(1)(a). [Paras 6, 8]

Application for initiation of insolvency resolution process against the personal guarantor admitted and interim moratorium declared to have commenced.

Appointment of Resolution Professional - Role and duties of Resolution Professional under section 99 of the IBC, 2016 - Appointment of the proposed Insolvency Professional as Resolution Professional and directions regarding his duties, declaration and reporting under section 99 of the IBC, 2016 were made. - HELD THAT: - The Tribunal appointed Mr. Neeraj Kumar Sureka as Resolution Professional on the applicant's proposal and on production of his consent in Form A and authorisation for assignment. The RP was directed to file the statutory declaration within seven days confirming his eligibility, to exercise powers enumerated under section 99 read with rules, and to make recommendations for acceptance or rejection of the application within the time stipulated by section 99(1). The RP was further directed to furnish a copy of the report under section 99(7) to the applicant when the report is filed before the Adjudicating Authority. [Paras 9, 10]

Mr. Neeraj Kumar Sureka appointed as Resolution Professional with directions to comply with statutory declarations and to perform duties and reporting obligations under section 99.

Service of orders and documents on Resolution Professional - Case management directions and listing - Directions as to service of the order and application documents on the Resolution Professional, and administrative directions for listing and communication were issued. - HELD THAT: - The counsel for the applicant was directed to serve a copy of the order, application and documents on the Resolution Professional by all available modes and to file proof of such service. The Registry was directed to send e-mail copies of the order to all parties and their counsel forthwith. The matter was listed for further hearing on 06/06/2022 and certified copies were made available on compliance with formalities. [Paras 11, 12, 13, 14]

Directions issued for service of documents on the Resolution Professional, registry communication to parties, and listing on the specified date.

Final Conclusion: The application for initiation of the insolvency resolution process against the personal guarantor was admitted, interim moratorium declared, Mr. Neeraj Kumar Sureka was appointed as Resolution Professional with directions to comply with statutory requirements and to make the report under section 99, and ancillary directions were given for service, communication and further listing.

Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - limitation - right to sue accrues on default - acknowledgement of liability under Section 18 of the Limitation Act, 1963 - Code not intended for money recovery proceedings - appellate interference where tribunal's view is plausible

Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 - limitation - right to sue accrues on default - acknowledgement of liability under Section 18 of the Limitation Act, 1963 - Whether the insolvency application filed under Section 7 of the Code was barred by limitation. - HELD THAT: - The Court upheld the view of the Tribunal and the Appellate Tribunal that the right to sue accrued on the date of default alleged (28.02.2002) and that the material on record did not disclose any acknowledgement of liability in terms of Section 18 of the Limitation Act, 1963 sufficient to revive or extend the limitation period. Documents relied upon by the appellant concerning loan restructuring and an alleged revival letter were examined and held incapable of sustaining the Section 7 application against the bar of limitation. The Court emphasised that the provisions of the Code are directed to corporate insolvency resolution and are not a substitute for ordinary money recovery proceedings, noting that the appellant's intent was essentially to enforce recovery. Given that the Tribunal's and Appellate Tribunal's conclusions on limitation were a plausible view on the facts, the Court declined to interfere.

The appeal was dismissed as the Section 7 application was barred by limitation and no valid acknowledgement of liability was shown.

Code not intended for money recovery proceedings - appellate interference where tribunal's view is plausible - Whether the appellant could invoke the Code as a mechanism for money recovery and whether interference with the tribunals' factual assessment was warranted. - HELD THAT: - The Court reiterated that the Code's object is corporate insolvency resolution and not mere debt recovery; the appellant's attempt to use the Code for enforcing recovery was therefore inconsistent with that object. The Court further observed that the tribunals had taken a plausible view on the facts before them, and in absence of any demonstrable error in law or principle, appellate interference was not justified.

The tribunals' refusal to admit the Section 7 application for being time-barred and their conclusion declining relief under the Code were affirmed; no interference was made.

Final Conclusion: The Supreme Court dismissed the appeal, affirming that the Section 7 insolvency petition was time-barred with no effective acknowledgement of liability, and declined to disturb the plausible factual and legal conclusions reached by the Tribunal and the Appellate Tribunal; other proceedings, if any, may proceed on their own merits.

Manual processing of payment under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Instruction No.1/2021-CX dated 17.03.2021 - discharge certificate under section 127(8) of the Scheme - attempted electronic remittance and de minimis discrepancy - stay of related tax proceedings pending disposal of SVLDRS application - personal hearing / virtual hearing for manual processing

Manual processing of payment under Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Instruction No.1/2021-CX dated 17.03.2021 - attempted electronic remittance and de minimis discrepancy - discharge certificate under section 127(8) of the Scheme - Direction to the Designated Committee/Appropriate Authority to manually process the petitioner's SVLDRS application and proceed towards issuance of discharge certificate if the application is in order. - HELD THAT: - The Court found that the petitioner attempted electronic remittance of the amount declared under the Scheme prior to the cut-off date and that the remittance failed due to only a minimal rounding discrepancy between the Icegate challan and the amount transmitted. The respondents did not file a counter-affidavit disputing these facts and accepted applicability of Instruction No.1/2021-CX. On these facts, and having regard to the instruction authorising manual processing in appropriate cases and the proximity of the attempted payment to the deadline, the Court directed manual processing of the application by the Designated Committee and/or any Appropriate Authority and recorded that if the application is found in order the issuance of the discharge certificate (as contemplated by the Scheme) shall follow immediately. [Paras 3, 4, 5, 6]

The petition is allowed insofar as the Designated Committee/Appropriate Authority is directed to manually process the petitioner's application under the SVLDRS and, if found in order, to proceed to issue the discharge certificate.

Stay of related tax proceedings pending disposal of SVLDRS application - personal hearing / virtual hearing for manual processing - Interim restraint on continuation of pending service tax litigation and directions regarding the manner and timing of the petitioner's representation before the Designated Committee/Appropriate Authority. - HELD THAT: - In order to afford effective relief and to facilitate manual processing, the Court directed that the authorised representative of the petitioner be heard by the Designated Committee/Appropriate Authority on the specified date and time, with provision for an alternative date or a video-conferencing link if physical hearing is not feasible. Pending decision on the SVLDRS application, the respondents were restrained from proceeding with the pending service tax appeal and showcause proceedings indicated in the petition. These measures were ordered as ancillary and necessary to preserve the petitioner's entitlement to relief under the Scheme while the manual processing takes place. [Paras 7]

The respondents are restrained from proceeding with the specified service tax litigation and showcause proceedings while the Designated Committee/Appropriate Authority processes the petitioner's application; the petitioner's authorised representative shall be heard as directed, with provision for alternative dates or virtual hearing.

Final Conclusion: Writ petition disposed by directing manual processing of the petitioner's SVLDRS application in view of an attempted timely electronic remittance affected by a minimal rounding discrepancy; the Designated Committee/Appropriate Authority to hear the authorised representative (in person or virtually) and, pending its decision, the specified service tax proceedings are stayed, with further steps, including issuance of a discharge certificate if the application is in order.

Delay in adjudication - violation of principles of natural justice - CENVAT credit reversal on removal as such - Rule 3(5) of CENVAT Credit Rules, 2004 - extended period of limitation - suppression of facts - proviso to section 11A(1) of the Central Excise Act, 1944

Delay in adjudication - violation of principles of natural justice - extended period of limitation - suppression of facts - Whether the demand confirmed after adjudication delayed by ten years is time-barred and whether the proviso to section 11A(1) invoking extended limitation period is invocable in absence of allegation of suppression. - HELD THAT: - The Show Cause Notice dated 23.11.2011 was adjudicated by order dated 21.9.2021, producing an inordinate delay of ten years between reply (31.5.2012) and adjudication. The appellant had, in its reply and ER-1 returns, stated that CENVAT credit had been reversed and that amounts paid exceeded credit required under Rule 3(5) of the CENVAT Credit Rules, 2004. The Show Cause Notice did not specifically allege willful suppression or misrepresentation of facts with intent to evade duty; it merely stated that the non-reversal would not have come to notice but for audit verification and therefore suggested the extended period might be invocable. In the absence of a specific allegation or evidence of suppression, the proviso to section 11A(1) could not be invoked to extend limitation. The Tribunal relied on the principle that an assessee must be made aware of the specific ground alleged against it and that invocation of an extended period requires proof of suppression; consequently, the demand confirmed after the prolonged delay was held to be time-barred. [Paras 9, 11, 12, 13]

The appellant succeeds on the ground of limitation; the demand is time-barred and the impugned order is set aside.

Final Conclusion: Appeal allowed: adjudication after ten-year delay held violative of principles of natural justice and, in absence of any specific allegation or proof of suppression, the extended period under the proviso to section 11A(1) cannot be invoked; the demand is time-barred and the impugned order is set aside.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - attempted payment and challan mismatch - processing of payment manually - interim relief

Interim relief - Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - Interim application (CM APPL.42490/2021) seeking relief in relation to attempted payment under the Sabka Vishwas Scheme was allowed, subject to just exceptions. - HELD THAT: - The Court allowed the interlocutory application filed by the petitioner while recording the principal grievance that the petitioner had attempted to deposit the requisite tax under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 before the cut-off date but the transaction failed due to a mismatch between the remitted amount and the amount recorded in the challan. The petitioner relied on a banker s communication and on Instruction No.1/2021-CX dated 17.03.2021 which authorises manual processing of payments. On the materials before it, the Court granted the interim relief sought by the petitioner, subject to such exceptions as may be justified. [Paras 1, 2]

Interim application allowed, subject to just exceptions.

Service of notice - processing of payment manually - Notice in the writ petition was issued to the respondents and directions given for filing instructions/counter-affidavit; matter was listed for further hearing. - HELD THAT: - The Court issued notice in the writ petition and recorded that counsel for the respondents accepted notice and would obtain instructions. The respondents were permitted to file a counter-affidavit if they chose to resist the petition. The petition was listed for further hearing on the specified date. [Paras 3, 4]

Notice issued; respondents to revert with instructions and, if resisting, file counter-affidavit; matter listed for further hearing.

Final Conclusion: The interlocutory application relating to attempted payment under the Sabka Vishwas Scheme was allowed subject to exceptions; notice issued in the writ petition and the matter listed for further consideration.

Classification of goods as chemical or building material - taxability under Entry 29 part A of Schedule II as chemical - chemical characterisation and evidentiary weight of analysis report - failure to consider material evidence by a fact-finding tribunal - remand for fresh consideration in light of precedent

Classification of goods as chemical or building material - taxability under Entry 29 part A of Schedule II as chemical - chemical characterisation and evidentiary weight of analysis report - Whether the product 'AT-PLAST' is to be classified as a chemical (liable at the rate specified for chemicals under Entry 29 part A of Schedule II) or as building material (liable at the higher rate), and whether the Tribunal properly considered the chemical composition and analysis relied upon by the revisionist. - HELD THAT: - The Court found that the Tribunal and the Commissioner concluded that the goods were used as building material and taxed accordingly, but the Tribunal failed to refer to or consider the raw materials and chemical analysis reports placed on record by the revisionist supporting classification as a chemical. The Tribunal, as the last fact-finding authority, ought to have examined the material evidence and addressed the specific contention that 'AT-PLAST' is a water-reducing chemical admixture used in concrete. The Court also noted the relevance of the Court's earlier decision in 'Cico Technology Ltd.' concerning classification of certain construction-related items as chemicals. Because the determinative factual and evidentiary questions were not addressed, the Court could not adjudicate the classification on merits and directed re-examination by the Tribunal in the light of the materials and the cited precedent. [Paras 8, 10, 11]

Impugned order of the Tribunal set aside; matter remanded to the Tribunal to decide classification afresh after considering the chemical analysis, raw materials and the decision in Cico Technology Ltd., within three months.

Final Conclusion: Revision allowed; Tribunal's order set aside and matter remanded for fresh decision on classification and taxability of 'AT-PLAST' after considering the chemical evidence and relevant precedent, to be concluded within three months.

Nemo judex in causa sua - bias/likelihood of bias in quasi-judicial proceedings - doctrine of necessity - recusal - disqualification for interest - right to fair hearing

Nemo judex in causa sua - bias/likelihood of bias in quasi-judicial proceedings - recusal - Whether the second appeal proceedings were vitiated by the participation of an Accounts Member who had earlier passed an interlocutory order in the same case when he was Additional Commissioner of Sales Tax. - HELD THAT: - The Court applied the established principle that no person should act as a judge in a cause in which he has been previously involved, observing that the question is one of likelihood of bias rather than proof of actual bias. The Court relied on the doctrine articulated in A.K. Kraipak v. Union of India and the exposition in J. Mohapatra & Company v. State of Odisha , emphasizing that justice must not only be done but must manifestly be seen to be done. The Accounts Member, having earlier disposed of an interlocutory application in the same matter while serving as Additional Commissioner of Sales Tax, sat as a member of the three-judge Bench which ultimately decided the second appeal; the Court held that he could and ought to have recused himself, and that his participation vitiated the proceedings. The Court noted that the exception of the "doctrine of necessity" did not apply on the facts. For these reasons the Court set aside the impugned Tribunal order and directed that the appeal be restored for fresh adjudication in accordance with law. [Paras 8, 9]

The proceedings in the second appeal were vitiated by the Accounts Member's participation; the Tribunal's order dated 17th December, 1996 is set aside and the appeal is restored to the Tribunal for fresh hearing.

Final Conclusion: The revision petition is allowed: the Tribunal's order is set aside on grounds of apparent bias, and the second appeal is remitted to the Tribunal for fresh disposal in accordance with law.

Rectification under Section 84 of the TNVAT Act - abeyance of demand notice pending rectification - disposal on merits after opportunity of hearing

Rectification under Section 84 of the TNVAT Act - abeyance of demand notice pending rectification - opportunity of hearing - disposal on merits - Pending rectification application filed by the petitioner dated 21.12.2020 in respect of the assessment order dated 21.02.2020 for Assessment Year 2012-13 must be considered and disposed of on merits and in accordance with law, and the impugned demand notice dated 03.03.2022 shall be kept in abeyance until such disposal. - HELD THAT: - The petitioner, a dealer under the TNVAT Act, filed an application for rectification under Section 84 on 21.12.2020 against the assessment order dated 21.02.2020 for AY 2012-13. The Revenue issued the impugned demand notice on 03.03.2022 while the rectification application remained pending. The Court recorded the respondents' undertaking to consider the rectification application and, in exercise of supervisory jurisdiction, directed that the pending rectification application be considered and disposed of on merits and in accordance with law after affording the petitioner an opportunity of being heard. The Court imposed a timeline of four weeks from receipt of the order for disposal and ordered that the demand notice be kept in abeyance until the rectification application is decided. The Court further clarified that, depending on the outcome of the rectification, the Revenue may take further action as legally permissible. [Paras 4]

Respondent directed to consider and dispose of the rectification application dated 21.12.2020 on merits after hearing within four weeks; impugned demand notice kept in abeyance until such disposal; further action by Revenue to follow the outcome.

Final Conclusion: Writ petition disposed by directing the respondent to consider and decide the petitioner's rectification application dated 21.12.2020 on merits after hearing within four weeks; the impugned demand notice is kept in abeyance pending disposal; further steps by the Revenue to depend on that outcome.

Garnishee proceedings as a special mode of recovery - notice of demand under Section-42 as condition precedent to recovery - provisional attachment during pendency of assessment or reassessment - restraint on operation of bank account during pendency of appellate proceedings - tribunal's power to entertain second appeal and to prescribe pre-deposit - recovery as arrears of land revenue

Restraint on operation of bank account during pendency of appellate proceedings - garnishee proceedings as a special mode of recovery - notice of demand under Section-42 as condition precedent to recovery - provisional attachment during pendency of assessment or reassessment - Whether the State Tax Officer was entitled to direct the bank to prohibit the petitioner from operating its current account by invoking the special recovery provisions while the petitioner's second appeal before the Tribunal was pending. - HELD THAT: - The Court found that the impugned instruction to the bank was issued after the assessment proceedings and while the petitioner's Second Appeal before the Tribunal remained pending. The statutory scheme requires issuance of a notice of demand as a condition precedent to recovery; the special mode of recovery by garnishee operates within that framework and Section-45 permits provisional attachment only during pending assessment or reassessment proceedings. In the present case there was no fresh notice of demand in respect of the modified liability arising from the appellate order, and the proceedings had moved beyond assessment into appellate adjudication. Having regard to these aspects and the pendency of the Second Appeal (where the Tribunal may impose conditions such as pre-deposit), the State Tax Officer was not entitled to direct restraint on the petitioner's bank account by invoking the special recovery provision. Consequently the order issued to the bank was unsustainable and was quashed so that the petitioner may pursue the Second Appeal before the Tribunal, which alone is competent to decide whether any pre-deposit or similar conditions are required. [Paras 11, 13, 16, 17, 18]

Impugned order dated 04.01.2022 directing the bank to stop operation of the petitioner's current account is quashed and set aside; petitioner to pursue the Second Appeal before the Tribunal which may decide on pre-deposit or other conditions.

Final Conclusion: Writ petitions allowed; the order restraining operation of the petitioner's bank account purportedly under the special recovery provision is quashed and the Second Appeal is directed to be taken up and decided by the Tribunal in accordance with law.

Reason to believe - reassessment/extended limitation under proviso to Section 21(2) - validity of notice under Section 21(1) - material from search/survey and seized electronic data as basis for reassessment - nexus between material and escaped assessment - change of opinion versus discovery of new material - principle in Aryaverth Chawal Udyog

Reassessment/extended limitation under proviso to Section 21(2) - validity of notice under Section 21(1) - material from search/survey and seized electronic data as basis for reassessment - nexus between material and escaped assessment - Lawfulness of the Additional Commissioner's grant of permission under the proviso to Section 21(2) and of the consequent notices issued under Section 21(1) for the assessment years in question. - HELD THAT: - The Court considered whether the material relied upon by the assessing authority-copies of records recovered in the search/survey, including hard-disk and CD data and extracted ledger particulars-was relevant and formed a rational basis to conclude that turnover had escaped assessment. Applying settled principles (including those in Aryaverth Chawal Udyog and Bhagwan Industries), the Court held that initiation of proceedings under Section 21 requires material that is not arbitrary, irrational, vague, distant or irrelevant and that there must be a nexus between the material and the formation of belief regarding escaped assessment. The impugned orders record that the electronic and documentary material showed substantial undisclosed sales and purchases (including specific quantities of M.S. ingots and purchases from identified sellers), and that the authorities followed procedure by seeking replies and granting opportunities. The Court found that the material in possession of the department constituted relevant information giving rise to a prima facie inference of escaped turnover and therefore constituted a lawful basis for granting permission under the proviso to Section 21(2) and for issuing notices under Section 21(1). The Court rejected the writ petitions on the ground that the assessing authority had lawful jurisdiction to proceed and that any sufficiency of the grounds for assessment would be tested in the assessment proceedings themselves. [Paras 13, 15, 17, 18, 19]

Permission under the proviso to Section 21(2) and the notices under Section 21(1) for the assessment years specified were lawfully granted and issued; the writ petitions are dismissed.

Final Conclusion: The High Court, applying the standard articulated in Aryaverth Chawal Udyog and related authorities, held that the documentary and electronic material obtained in search/survey furnished a rational nexus to a belief of escaped turnover; the grants of permission to invoke reassessment and the consequent notices were lawful, and the writ petitions were dismissed.

Enhanced age of superannuation of 65 years - entitlement to consequential and monetary benefits including arrears - no work no pay principle - equal treatment of similarly situated teachers - condonation of delay and exclusion of interest on arrears

Enhanced age of superannuation of 65 years - equal treatment of similarly situated teachers - Appellant, a teacher in a 100% government aided private educational institution, is entitled to the benefit of enhanced age of superannuation of 65 years. - HELD THAT: - The Division Bench of the High Court had dismissed the appellant's writ appeal relying upon its Full Bench decision in Dr. S.C. Jain. That Full Bench decision was subsequently set aside by this Court in Dr. R.S. Sohane, holding that teachers in facts similar to the appellant are entitled to continued service up to 65 years. Having regard to the consistent post-Sohane decisions of the High Court restoring and granting similar reliefs to similarly situated teachers, and noting that the appellant cannot be singularly denied a benefit held to be due to his cohort, the impugned judgment was quashed and set aside and it was held that the appellant is entitled to be treated as if he had been continued in service up to the age of 65 years. [Paras 4, 5]

Appeal allowed; impugned High Court order set aside and appellant declared entitled to benefit of enhanced superannuation age of 65 years.

Entitlement to consequential and monetary benefits including arrears - no work no pay principle - condonation of delay and exclusion of interest on arrears - Appellant is entitled to consequential monetary benefits, including arrears of salaries and allowances for the intervening period between 62 and 65 years, but shall not receive interest on arrears for the period from 09.05.2017 until filing of the present appeal due to condoned delay. - HELD THAT: - Although the State relied on the 'no work no pay' principle because the appellant did not actually work during the intervening period, the Court declined to accept that defence where similarly situated teachers were prevented from serving despite being entitled to continue up to 65 years. The High Court's detailed reasoning in allied matters rejecting the 'no work no pay' plea and the State's subsequent implementation of those orders supported awarding arrears and other consequential benefits to the appellant as if continued to 65 years. However, because there was a substantial delay in preferring the present appeal which this Court condoned, the Court directed payment of arrears within six weeks but denied any interest on the arrears for the period between 09.05.2017 and the filing of the appeal. [Paras 4, 5]

Appellant to receive arrears and other monetary consequential benefits as if continued to 65 years; arrears to be paid within six weeks; no interest payable for the period from 09.05.2017 until filing of the appeal.

Final Conclusion: The appeal is allowed; the High Court's order is set aside, the appellant is entitled to be treated as having continued in service up to 65 years with consequential monetary benefits and arrears to be paid within six weeks, subject to denial of interest on arrears for the period specified; no order as to costs.

Extension of period of limitation due to COVID-19 (Suo Motu orders) - exclusion of period in computing limitation under proviso (b) and (c) of Section 138 of the Negotiable Instruments Act - object and purpose of Section 138 of the Negotiable Instruments Act - prematurity of complaint under Section 138 - power of High Court under Section 482 Cr.P.C. to quash criminal proceedings - validity period of negotiable instruments vis-a -vis Reserve Bank of India prescriptions

Extension of period of limitation due to COVID-19 (Suo Motu orders) - exclusion of period in computing limitation under proviso (b) and (c) of Section 138 of the Negotiable Instruments Act - prematurity of complaint under Section 138 - Whether the Supreme Court Suo Motu orders extending/excluding the period of limitation during the pandemic operated to bar institution of complaints under Section 138 or were intended only to benefit complainants by enlarging time to institute proceedings. - HELD THAT: - The Court held that the Suo Motu orders extending limitation w.e.f. 15.03.2020 were directed to remove difficulties faced by litigants in instituting proceedings during the pandemic and conferred an option upon complainants to postpone institution; they did not impose an embargo on filing complaints nor enlarge any time for accused to make payment. The orders particularly used the terminology of "instituting proceedings" and, as construed by this Court, granted benefit to complainants by excluding the pandemic period while computing limitation but did not operate to protect accused persons from prosecution for that period. The orders declining to extend the validity period of cheques (left to RBI) further meant holders had to present cheques within their prescribed validity. The Court therefore rejected the submission that the subsequent Suo Motu orders rendered the complaint or the summoning order premature or illegal. [Paras 8, 11, 12, 16, 17]

The Suo Motu orders are for the benefit of complainants (extending/excluding limitation to institute proceedings) and do not bar or protect accused persons from prosecution during the excluded period.

Prematurity of complaint under Section 138 - object and purpose of Section 138 of the Negotiable Instruments Act - power of High Court under Section 482 Cr.P.C. to quash criminal proceedings - validity period of negotiable instruments vis-a -vis Reserve Bank of India prescriptions - Whether the complaint filed on 21.10.2020 and the summoning order dated 21.01.2021 required quashing on the ground of prematurity or illegality in view of the pandemic related orders. - HELD THAT: - Having examined the chronology, the Court found that the cheque was issued on 16.09.2020, was dishonoured on 17.09.2020, statutory notice was served on 29.09.2020 and the complaint was filed after the statutory 15 day notice period. The complaint prima facie disclosed ingredients of Section 138 and was filed within the cheque's validity; the Supreme Court orders then in force did not refer to proviso (c) or bar filing. The Court noted authorities explaining the object of Section 138 to secure credibility of negotiable instruments and to punish dishonest drawers, and observed that permitting the present challenge would defeat that purpose. The petitioner had not offered to honour the cheque even after lapse of the excluded period and the petition under Section 482 was filed after substantial delay and after non bailable warrants issued. For these reasons the Court concluded that quashing was not warranted. [Paras 1, 11, 19, 20]

The petition to quash the complaint and the summoning order is dismissed; the complaint dated 21.10.2020 and summoning order dated 21.01.2021 are upheld.

Final Conclusion: The High Court dismissed the petition under Section 482 Cr.P.C.; it held that the Supreme Court's pandemic-related extension/exclusion of limitation benefited complainants and did not bar institution of complaints or protect accused persons, and that the complaint under Section 138 and the summoning order were not premature and therefore stand upheld.