TaxTMI Updates e-Newsletter
May 14,2022

Revocation of cancellation of GST registration - remedy under Section 30 of the CGST Act for revocation of cancellation of registration - maintainability of appeal vis-a -vis statutory remedy for revocation - duty to decide on merits where appeal is admitted - condonation of delay and limitation for filing revocation application

Remedy under Section 30 of the CGST Act for revocation of cancellation of registration - maintainability of appeal vis-a -vis statutory remedy for revocation - duty to decide on merits where appeal is admitted - condonation of delay and limitation for filing revocation application - Whether the Appellate Authority was correct in dismissing the appeal solely because the petitioner had not filed an application under Section 30 of the CGST Act and whether the petitioner should be afforded an opportunity to file such an application and have the matter decided on merits. - HELD THAT: - The Appellate Authority dismissed the appeal only on the ground that the petitioner ought to have availed the statutory remedy under Section 30 for revocation of cancellation and therefore did not proceed to consider the merits. The High Court observed that although the Authority condoned the delay in admitting the appeal, it did not decide the appeal on merits and did not afford the petitioner an opportunity to file the Section 30 application if it considered that remedy to be the proper course. The Court noted the limitation framework under Section 30 (an initial 30-day period with specified powers to extend) and that the petitioner filed the appeal within the period extended by the Supreme Court. In the exercise of supervisory jurisdiction the Court directed that the petitioner be permitted to file an application under Section 30 within 15 days from the date of the order, and directed the Authority to consider that application on merits and within limitation, expeditiously. The Court therefore did not uphold the Appellate Authority's dismissal on the sole procedural ground without a merits adjudication, and instead remanded the matter for fresh consideration limited to entertaining and deciding a Section 30 application if filed within the prescribed time directed by the Court. [Paras 7, 8, 9, 10, 11]

Petitioner granted 15 days to file an application under Section 30 before the Authority; Authority directed to consider and decide the application on merits and within limitation expeditiously; writ petition disposed.

Final Conclusion: The High Court set aside the consequence of the Appellate Authority's dismissal for failure to invoke Section 30 without a merits decision and permitted the petitioner to file a Section 30 application within 15 days, directing the Authority to decide the application on merits and within limitation; writ petition disposed with no order as to costs.

Delay in adjudication - quashing of show cause notices - maintainability of adjudication proceedings after long delay - doctrine of laches / administrative delay - show cause notices kept in call book

Delay in adjudication - quashing of show cause notices - maintainability of adjudication proceedings after long delay - doctrine of laches / administrative delay - show cause notices kept in call book - Whether adjudication proceedings pursuant to the show cause notices issued in 2007-2010 are maintainable in view of an inordinate delay of over 13 years and whether the notices should be quashed. - HELD THAT: - The Court found that the petitioner filed timely replies to the impugned show cause notices and that no adjudication steps were taken by the respondents for a prolonged period of about 10 to 13 years. The respondents' explanation that the notices were kept pending for administrative reasons (transfer to the call book) and that departmental reorganisation following the introduction of GST accounted for delay was not sufficient to justify commencement of adjudication after such long inaction. The Division Bench noted precedents of this Court setting aside show cause notices sought to be adjudicated after comparable periods of inaction and rejected the contention that placement in the call book cured the delay. Applying the principle that excessive and unexplained administrative delay (laches) in prosecuting adjudication proceedings renders such proceedings unsustainable, the Court concluded that adjudication after the stated delay was not maintainable and that the notices should be quashed. [Paras 5, 6, 7]

Impugned show cause notices issued between 2007 and 2010 and not adjudicated for almost 13 years are quashed and set aside.

Final Conclusion: Writ petition allowed: show cause notices issued in 2007-2010, not adjudicated for about 13 years despite timely replies by the petitioner, are quashed on account of inordinate administrative delay; no costs.

Order beyond the show cause notice - transition of Cenvat/cess (EC & SHEC) as input tax credit in GST - consideration of binding precedent by appellate authority - remand for fresh adjudication

Order beyond the show cause notice - Impugned appellate order quashed and set aside because the appellate authority did not address whether the order travelled beyond the scope of the show cause notice. - HELD THAT: - The High Court observed that the appellant contended the impugned order exceeded the scope of the show cause notice and that the appellate authority had failed to consider that contention. The Court noted that this aspect and related additional submissions were not dealt with by the appellate authority. Because the appellate authority had not considered whether its order went beyond the show cause notice, the Court found it appropriate to set aside the impugned order and direct fresh consideration of that contention. [Paras 1, 5, 6]

Impugned appellate order quashed and set aside; matter remanded for fresh consideration of whether the order exceeded the show cause notice.

Transition of Cenvat/cess (EC & SHEC) as input tax credit in GST - consideration of binding precedent by appellate authority - Appellate authority directed to consider the petitioner's submissions on admissibility of transition credit for EC and SHEC and to consider the petitioner's reliance on the decision in Godrej & Boyce Mgd. Co. Ltd. - HELD THAT: - The Court recorded that the petitioner relied on this Court's decision in Godrej & Boyce Mgd. Co. Ltd. and had raised arguments concerning the admissibility of credits representing Cenvat/cess (EC & SHEC) in the GST regime and the effect of amendments to transition provisions. The appellate authority had not addressed those submissions or the cited precedent. In view of the omission, the High Court remanded the matter so the appellate authority may decide afresh after expressly considering the submissions and the cited decision. [Paras 3, 5, 6]

Matter remanded to the appellate authority to decide afresh on admissibility of transition credit for EC and SHEC and to consider the petitioner's reliance on the cited precedent.

Remand for fresh adjudication - Directions for fresh hearing and decision by the appellate authority including appearance date. - HELD THAT: - Having quashed the impugned order for failure to consider material submissions and precedent, the Court directed that the petitioner shall appear before the appellate authority on the date indicated and that the appellate authority shall thereafter decide the matter afresh. The remand is for full reconsideration of the contentions raised by the petitioner, not for limited mechanical or clerical action. [Paras 5, 6]

Petition disposed by quashing the impugned order and remanding the matter for fresh adjudication; petitioner to appear before the appellate authority on the directed date.

Final Conclusion: The High Court quashed and set aside the impugned appellate order and remanded the matter to the appellate authority for fresh consideration of the petitioner's contentions-specifically whether the order exceeded the show cause notice and the admissibility of transition credit for EC and SHEC including consideration of the relied precedent-with directions for hearing and a fresh decision.

Refund of integrated goods and services tax (IGST) - drawback serial suffixed with 'A' and 'B' - claim of drawback limited to customs component - uniform drawback rate after amendment effective 01.10.2017 - technical disallowance for erroneous suffix - statutory interest on delayed refund

Refund of integrated goods and services tax (IGST) - drawback serial suffixed with 'A' and 'B' - claim of drawback limited to customs component - uniform drawback rate after amendment effective 01.10.2017 - Entitlement to IGST refund where exporter mistakenly used drawback serial suffix 'A' but claimed only the customs component and the rates in column 'A' and 'B' are the same after the amendment effective 01.10.2017. - HELD THAT: - The court found on the materials that the petitioner exported goods on payment of IGST and claimed refund of the IGST corresponding only to the customs component at the rates specified. With effect from 01.10.2017 the earlier distinction between column 'A' and 'B' rates was removed and a single uniform rate was prescribed; for the products concerned the rates in column 'A' and 'B' were the same. The petitioner inadvertently suffixed the drawback serial with 'A' but did not claim any higher drawback than the custom component. Relying on the precedent where identical facts were upheld, the court held that a technical error in affixing suffix 'A' could not be allowed to defeat the substantive entitlement to refund where there was no substantive claim for a higher drawback. Consequently the refund of IGST paid on export by shipping was to be sanctioned; statutory interest would follow if there were no other impediments.

Writ petition allowed; respondents directed to sanction refund of IGST in respect of the exported goods (supply made by shipping), with statutory interest where applicable.

Final Conclusion: The petition succeeds. The technical use of drawback suffix 'A' did not disentitle the petitioner from IGST refund where only the customs component was claimed and the applicable drawback rates were uniform; respondents to sanction the refund and pay statutory interest if otherwise permissible.

Anti-profiteering measure - Section 171 of the CGST Act - suo moto investigation - Rule 133(4) and (5)(a) & (b) of the CGST Rules, 2017 - power to expand scope of investigation - procedural provision versus substantive amendment - Rule 129 procedure - Rule 126 methodology and procedure - retrospective application of procedural rules - purposive interpretation to advance legislative object

Rule 133(4) and (5)(a) & (b) of the CGST Rules, 2017 - suo moto investigation - retrospective application of procedural rules - power to expand scope of investigation - Section 171 of the CGST Act - purposive interpretation to advance legislative object - Whether the insertion of Rules 133(4) and 133(5)(a)&(b) operates only prospectively or is clarificatory and may be applied to complaints/enquiries initiated before 28.06.2019. - HELD THAT: - The Court held that Rules 133(4) and (5)(a) & (b), though inserted with effect from 28.06.2019, are procedural/clarificatory in nature and must be read so as to further the object of Section 171 to prevent profiteering. The distinction between sub-rule (4) (permitting further investigation of the same subject matter) and sub-rule (5)(a) (empowering enquiry into 'such other goods or services') was recognised, but this expansion of investigatory scope was viewed as arming the Authority to effectuate the anti-profiteering purpose arising with the commencement of GST on 01.07.2017. Reliance on precedents concerning the retrospective application of procedural provisions and on decisions such as Excel Crop Care and its progeny was accepted: where a provision is procedural and its application advances the legislative object, it may be applied to ongoing matters so as not to frustrate the statutory purpose. For these reasons the submission that the Rules must operate only prospectively was rejected and the Authority's invocation of Rule 133(5)(a) in this case was upheld. [Paras 39, 40, 41, 42, 43]

Rules 133(4) and (5)(a)&(b) are clarificatory/procedural and may be applied to complaints/enquiries initiated prior to their insertion; the Authority's exercise of jurisdiction under Rule 133(5)(a) is upheld.

Rule 129 procedure - procedure versus merits - maintainability and alternative remedy - Whether the writ petition is barred for want of alternative remedy and whether the preliminary objection on maintainability should succeed. - HELD THAT: - The Court addressed the respondents' preliminary objection that the petitioner had an efficacious remedy under the Rules to challenge the DGAP report before the Authority. Noting that the issue before the Court was a pure question of law and that the objection did not preclude judicial review of the vires or jurisdictional assumption, the Court rejected the maintainability objection. The Court further observed that the legal issue of retrospective operation required determination and would not be defeated by the availability of statutory remedies. [Paras 12, 43]

Preliminary objection as to maintainability/alternative remedy is rejected; the writ petition is maintainable.

Speaking order - opportunity of hearing - de novo consideration by Authority - Relief and directions to be afforded to the petitioner following the Court's decision on jurisdiction. - HELD THAT: - Having upheld the Authority's jurisdiction and rejected the challenge to its power to expand the scope of enquiry, the Court nevertheless preserved the petitioner's right to contest the merits. The petitioner was directed to furnish a written explanation within three weeks from the date of uploading of the order, to appear before the Authority on a mutually convenient date, and to contest the DGAP's findings. The Authority was directed to hear the petitioner and pass a speaking order in accordance with law as expeditiously as possible. All merits and arguments were left open for fresh determination before the Authority. [Paras 44, 45]

Petitioner to submit explanation within three weeks and to appear before the Authority; Authority to hear and pass a speaking order; parties free to raise all contentions de novo.

Final Conclusion: Writ petition dismissed. The Authority's assumption of jurisdiction under Rules 133(4) and 133(5)(a)&(b) is upheld as clarificatory/procedural and applicable to the period from 01.07.2017 onwards; the petitioner is permitted to submit explanations and contest the DGAP report before the Authority, which shall decide the matter afresh by a speaking order.

Composite supply - mixed supply - principle supply - divisible contract - advance ruling application admissibility - rejection for non-production of documents

Advance ruling application admissibility - The application for advance ruling was admitted for consideration. - HELD THAT: - The Authority recorded that the applicant filed FORM GST ARA-01 with the requisite fee and that the jurisdictional officer raised no objection to admission. On that basis the application was admitted for processing as the queries fell within the ambit of Section 97 of the GST Act. [Paras 3]

Application admitted.

Rejection for non-production of documents - The application was rejected for want of production of key documents necessary to determine the nature of the supply. - HELD THAT: - The Authority sought copies of the purchase orders and erection/installation orders to determine whether the HVAC cleanroom contracts were divisible supplies, composite supplies or mixed supplies and to identify the principal supply. The authorised representatives undertook to provide those documents but failed to produce them. In the absence of those documents the Authority could not discern whether the contracts constituted naturally bundled supplies or separate supplies and therefore rejected the application. [Paras 6, 7]

Application rejected for non-production of the essential documents; no determination on merits.

Composite supply - mixed supply - principle supply - divisible contract - The substantive questions on whether item-wise billing and differential tax rates apply, and whether a higher-rated component would attract the higher rate for the whole system, were not decided. - HELD THAT: - The Authority identified the core legal controversy as whether the contract for supply, installation and commissioning of cleanroom HVAC systems is divisible or constitutes a composite or mixed supply and, if composite, what is the principal supply. Determination required examination of the purchase orders and erection contracts which were not furnished. Consequently the Authority did not adjudicate the substantive tax questions (including any application of the principle that the rate of the principal supply governs a composite supply or whether Section 8 would be invoked) and left those issues undecided. [Paras 7]

Substantive questions on divisibility, composite/mixed supply and applicable tax rate left undecided for lack of documents.

Final Conclusion: The Authority admitted the advance ruling application but, after requesting and not receiving key purchase/erection documents, declined to adjudicate the substantive issues on divisibility/composite or mixed supply and taxability and rejected the application for want of necessary documentation.

Obligation to pass on benefit of reduction in rate of tax by way of commensurate reduction in prices - methodology for computation of profiteering by comparing pre-reduction average base price with post-reduction selling price - determination and deposit of profiteered amount in Consumer Welfare Funds - verification of payment of interest on profiteered amount - non-imposition of penalty where statutory penal provision post-dates the contravention and profiteered amount has been deposited - exclusion of limitation period on account of COVID-19 for purposes of passing orders

Obligation to pass on benefit of reduction in rate of tax by way of commensurate reduction in prices - Section 171(1) of the CGST Act, 2017 - Whether the respondent contravened the obligation to pass on the benefit of GST rate reduction on monitors and TVs (upto 32 inches) to recipients during the period 01.01.2019 to 30.06.2019. - HELD THAT: - The Authority accepted the factual finding that the GST rate on the implicated goods was reduced from 28% to 18% w.e.f. 01.01.2019. The DGAP's investigation compared pre-reduction average base prices with post-reduction invoice-wise selling prices and found instances where the base price was increased after the rate reduction. The Authority held that Section 171(1) prescribes that reduction in rate of tax must be passed on by way of a commensurate reduction in prices expressed in monetary terms and that no alternative modes of passing the benefit are permissible. The mathematical methodology adopted by the DGAP for computing profiteering was held to be correct and was not challenged. The Authority therefore concurred with the DGAP's conclusion that the respondent had not passed on the benefit and had contravened Section 171(1). [Paras 9, 10, 11, 12, 15]

The respondent was found to have contravened the obligations under Section 171(1) of the CGST Act, 2017 in respect of the period 01.01.2019 to 30.06.2019.

Methodology for computation of profiteering by comparing pre-reduction average base price with post-reduction selling price - determination and deposit of profiteered amount in Consumer Welfare Funds - Quantum of profiteering by the respondent for the period 01.01.2019 to 30.06.2019 and its disposition. - HELD THAT: - On the basis of invoice-wise analysis and item-wise comparison (illustrated at Table-B and Annex-12 of the DGAP Report), the DGAP calculated profiteering where post-reduction selling prices exceeded the commensurate selling price derived from pre-reduction average base prices. The Authority accepted this computation as reasonable and determined the total profiteered amount for the period 01.01.2019 to 30.06.2019 to be Rs. 4,699/-. The Authority noted that the respondents had deposited the determined profiteered amount in the Consumer Welfare Funds of the Central and State Governments and that the DGAP verified receipt of the profiteered amount. [Paras 11, 13]

Profiteered amount determined at Rs. 4,699/- for the period 01.01.2019 to 30.06.2019, and the respondent has deposited this amount in the Consumer Welfare Funds.

Verification of payment of interest on profiteered amount - Verification and enforcement in respect of interest payable on the profiteered amount. - HELD THAT: - The respondent voluntarily paid an amount claimed as interest in addition to the profiteered amount and produced demand drafts as evidence. The DGAP's verification confirmed receipt of the profiteered amount but had not verified the interest payment. The Authority directed the DGAP to ensure that interest at the applicable rate is paid by the respondent (if not already verified) and to submit a report confirming payment of interest within three months of the Order. This directs a limited factual verification by the DGAP rather than rehearing the substantive profiteering determination. [Paras 4, 5, 14]

DGAP to verify payment of interest at the applicable rate and report confirmation of payment within three months; interest payment verification remanded for administrative compliance.

Non-imposition of penalty where statutory penal provision post-dates the contravention and profiteered amount has been deposited - Whether penalty under the CGST Act should be imposed for the contravention covering 01.01.2019 to 30.06.2019. - HELD THAT: - The Authority observed that the penal provision under Section 171(3A) came into force w.e.f. 01.01.2020, whereas the contravention related to the period 01.01.2019 to 30.06.2019. Further, the respondent had deposited the determined profiteered amount and (claimed) interest. In view of these facts, the Authority decided not to impose penalty for the contravention. [Paras 15]

No penalty imposed on the respondent for the period 01.01.2019 to 30.06.2019.

Final Conclusion: The Authority upheld the DGAP's finding that the respondent contravened the obligation to pass on the GST rate reduction on monitors and TVs (upto 32 inches) during 01.01.2019 to 30.06.2019; fixed the profiteered amount at Rs. 4,699/-, noted its deposit in Consumer Welfare Funds, directed DGAP to verify payment of interest and report within three months, and declined to impose penalty because the penal provision took effect after the contravention and the amount was deposited.

Reassessment notice while assessment is pending adjudication before the Dispute Resolution Panel

Reassessment notice while assessment is pending adjudication before the Dispute Resolution Panel - Validity of notice under Section 148 when the assessment for the same year is pending adjudication before the Dispute Resolution Panel. - HELD THAT: - The Court recorded that the assessment of the petitioner for Assessment Year 2018-19 had not been concluded and was pending adjudication before the Dispute Resolution Panel (DRP). On that admitted position the Court agreed with the petitioner that a notice for reassessment under Section 148 could not have been validly issued while the original assessment proceedings remained pending before the DRP. The petition was allowed on this short ground without deciding other contentions raised regarding issuance or naming of earlier notices or service upon the successor entity. The Court observed that the revenue remains at liberty to take further steps if permissible in law, and the petitioner may availing remedies if aggrieved by any future action.

Writ petition allowed on the ground that reassessment notice could not be issued while assessment for AY 2018-19 was pending before the DRP; revenue left at liberty to act as permitted by law.

Final Conclusion: The petition was allowed solely because the reassessment notice under Section 148 was issued while the assessment for AY 2018-19 was pending before the Dispute Resolution Panel; other contentions were not adjudicated and the revenue is at liberty to proceed if law permits.

Jurisdiction of assessing officer - notice under Section 148 - order under Section 148A(d) - quashing of notice/order for lack of territorial jurisdiction - INSIGHT portal dissemination and territorial address-based jurisdiction - reopening of assessment

Jurisdiction of assessing officer - order under Section 148A(d) - notice under Section 148 - quashing of notice/order for lack of territorial jurisdiction - INSIGHT portal dissemination and territorial address-based jurisdiction - Impugned proposal notice dated 14 March 2022 and order dated 31 March 2022 under Section 148A(d), and notice under Section 148 initiating reassessment for AY 2018-19, issued by the Jaipur AO, are invalid for want of territorial jurisdiction and are quashed. - HELD THAT: - The Court considered the factual position that information on the INSIGHT portal was initially received without the assessee's PAN and was visible to the Jaipur AO because the territorial address mentioned on the information fell within Jaipur. Although the Jaipur AO drafted and caused issuance of the order under Section 148A(d) and the notice under Section 148 with approval of the specified authority, the Court concluded that the petitioner's jurisdictional Assessing Officer was DCIT, Circle-10(1), New Delhi. On that basis the notices and the order issued by the Jaipur AO were held to be issued by a non-jurisdictional AO and therefore without jurisdiction. The Court quashed the impugned order and notices, while leaving the revenue free, if law permits, to take further steps; any grievance arising thereafter would be open to the petitioner to challenge by appropriate remedies.

Impugned order under Section 148A(d) and notice under Section 148 issued by the Jaipur AO are quashed for lack of territorial jurisdiction; liberty granted to revenue to proceed afresh as permitted by law.

Final Conclusion: Writ petition allowed in part; the order dated 31 March 2022 under Section 148A(d) and the notice dated 14 March 2022/31 March 2022 under Section 148 issued by the Jaipur AO are quashed for want of territorial jurisdiction, with liberty to the revenue to take further steps in accordance with law.

Reason to believe - jurisdictional notice under Section 148 - reopening of assessment and change of opinion - tangible material and live link - reassessment under Section 147

Reason to believe - jurisdictional notice under Section 148 - tangible material and live link - Validity of the notice dated 30.03.2021 issued under Section 148 for Assessment Year 2013-14 - HELD THAT: - The Court found that the Assessing Authority's 'reasons to believe' for issuing the Section 148 notice-based on an entry from the INSIGHT portal alleging sale of immovable property with capital gain-were unfounded and non bonafide. Applying settled precedents, the Court held that a jurisdictional notice under Section 148 must rest on relevant material having a live nexus with the belief that income has escaped assessment and cannot be founded on mere conjecture, vague or extraneous information or a mere change of opinion. The material before the Assessing Authority did not establish such a nexus or constitute tangible material; accordingly the precondition for assuming jurisdiction was lacking and the notice was without jurisdiction. [Paras 8, 18]

The notice under Section 148 dated 30.03.2021 is without jurisdiction and is quashed.

Reassessment under Section 147 - reopening of assessment and change of opinion - Validity of the reassessment proceedings and the reassessment order under Section 147 read with Sections 144 and 144B - HELD THAT: - Because the Section 148 notice was held to be jurisdictionally infirm, the consequent reassessment proceedings could not be sustained. The respondent issued a draft and final reassessment order which advanced a different rationale (addition under Section 69 for alleged purchase) inconsistent with the basis of the notice; the Court treated the reassessment as vitiated by the initial lack of jurisdiction. In view of the foundational defect in the reasons to believe, the reassessment order could not stand. [Paras 18, 19, 20]

The reassessment order under Section 147 read with Sections 144 and 144B is quashed.

Final Conclusion: Writ petition allowed; the impugned notice under Section 148 and the consequent reassessment order under Section 147 read with Sections 144 and 144B are quashed.

Validity of notice under Section 148 issued beyond limitation - Judicial discipline and binding precedent on subordinate revenue authorities - Effect of filing of appeal/SLP on operation of High Court order - System-generated email timestamp as admissible record of issuance/service of notice

Validity of notice under Section 148 issued beyond limitation - System-generated email timestamp as admissible record of issuance/service of notice - Notice under Section 148 dated 31.03.2021 but issued on 01.04.2021 was time-barred and therefore without jurisdiction. - HELD THAT: - The Court accepted the factual material supplied by the Income Tax Department (ITBA technical team) showing generation, digital signing and automated triggering/delivery timestamps which demonstrate that although the notice bore the date 31.03.2021, the e-mail triggering occurred on 01.04.2021, after the limitation expired on 31.03.2021. On that basis the notice was held to be time-barred and consequently void for want of jurisdiction. The Court further directed that the portal maintained for assessees must reflect the date and time of triggering of e-mails so that the system-generated timestamps are available as records for future disputes involving electronically issued notices. [Paras 8, 9, 26]

The notice dated 31.03.2021 but issued on 01.04.2021 under Section 148 is quashed as time-barred and without jurisdiction; the portal must reflect email-trigger timestamps.

Quashing of consequential assessment/reassessment orders founded on invalid jurisdictional notice - Consequential orders-the order rejecting objections dated 19.03.2022 and the reassessment/assessment order dated 29.03.2022 for A.Y. 2013-14-cannot stand when founded on a jurisdictionally void notice and are therefore quashed. - HELD THAT: - Having held that the jurisdictional notice under Section 148 was time-barred and void, the Court concluded that all subsequent proceedings founded upon that notice were vitiated. The impugned order rejecting the objections and the reassessment order were set aside on this legal consequence. [Paras 26]

The objection rejection order dated 19.03.2022 and the reassessment order dated 29.03.2022 for A.Y. 2013-14 are quashed as they rest on a void jurisdictional notice.

Judicial discipline and binding precedent on subordinate revenue authorities - Effect of filing of appeal/SLP on operation of High Court order - Revenue authorities must follow binding orders of the High Court unless and until a stay is granted by a competent court; mere filing of an appeal or Special Leave Petition does not entitle authorities to ignore or refuse to give effect to the High Court's directions. - HELD THAT: - Relying on the principle of hierarchical obedience and precedents cited in the judgment, the Court emphasised that subordinate revenue officers are bound to implement High Court and higher appellate orders. Filing of an appeal or SLP without obtaining a stay does not suspend the operation of the High Court's order and cannot justify non-compliance; failure to follow binding precedent results in harassment and denial of justice. The Court noted precedents to reinforce the requirement of judicial discipline and adherence to binding orders. [Paras 10, 11, 24, 25]

Respondents are directed to observe judicial discipline, follow binding precedents, and may not decline compliance with High Court orders merely because an appeal/SLP is filed without stay.

Contempt proceedings and remedial response to misconduct - Although the impugned order contained language and conduct amounting to breach of judicial discipline, unconditional apology by the responsible officer obviated initiation of contempt proceedings; a warning and direction to be careful in future was issued. - HELD THAT: - The Court found the remarks in the impugned order prima facie contemptuous and indicative of non-compliance with earlier directions. However, on receipt of an unconditional apology from the Additional Commissioner of Income Tax and an explanation of the technical position, the Court declined to refer the matter for contempt, while recording censure and directing future compliance with judicial discipline. [Paras 5, 7, 10]

No contempt proceedings initiated in view of unconditional apology; respondents censured and directed to heed judicial discipline in future.

Final Conclusion: Writ petition allowed: the notice under Section 148 (dated 31.03.2021 but issued on 01.04.2021) for A.Y. 2013-14 is quashed as time-barred and without jurisdiction; the objection-rejection order dated 19.03.2022 and the reassessment order dated 29.03.2022 are consequently quashed; respondents directed to ensure system-generated email-trigger timestamps are reflected on the assessees' portal and to observe judicial discipline in future.

Deduction under section 80-IB(10) - condition precedent of minimum land area - reliance on valuation report and sanctioned plan - purchase of easement/right of access and effect on project area - competent sanctioning authority

Deduction under section 80-IB(10) - condition precedent of minimum land area - reliance on valuation report and sanctioned plan - purchase of easement/right of access and effect on project area - Claim for deduction under section 80-IB(10) rejected because the housing project area was found to be less than one acre. - HELD THAT: - The Assessing Officer denied the deduction solely on the ground that the plot area was below the statutory minimum of one acre, relying on the Government Registered Valuer's report and the sanctioning authority's plan. The Tribunal noted that the Departmental Valuer's report recorded actual measurement of approximately 4000 sq. metres (less than one acre) and observed non-production of 7/12 extracts by the assessee. The assessee's contention that additional land was purchased subsequently was treated as purchase of access rights/easement and not as acquisition of land increasing the project area; that assertion remained uncontroverted and was rejected by the valuer. There was no claim that the valuer's report was relied upon without affording opportunity of hearing. On these materials the assessee failed to establish that the area met the threshold condition for availing the deduction, and the finding of the authorities that the project area was less than one acre was upheld. [Paras 4, 8]

The deduction under section 80-IB(10) is not admissible as the project area is less than one acre; the appeal is dismissed.

Final Conclusion: The Tribunal dismissed the appeal and sustained the disallowance of the deduction under section 80-IB(10) for AY 2010-11 on the ground that the project area did not satisfy the statutory minimum of one acre.

Condonation of delay - substantial justice over technical considerations - prospective application of amendment to section 200A - non-levy of fee under section 234E for returns filed prior to 01/06/2015 - restoration to the file of the CIT(A) for adjudication on merits

Condonation of delay - substantial justice over technical considerations - restoration to the file of the CIT(A) for adjudication on merits - Delay in filing appeals before the CIT(A) is condoned and the appeals are restored to the CIT(A) for adjudication on merits. - HELD THAT: - The Tribunal, applying the principle that substantial justice must prevail over technical considerations, accepted the assessee's explanation for belated filing in the context of ambiguity surrounding the levy under section 234E and subsequent judicial developments. Having considered the coordinate-bench decision dealing with similar facts and the explanation given by the assessee, the Tribunal found that the reasons for delay fall within the expression "sufficient cause" and that the CIT(A) erred in rejecting condonation without adequate reasons. In consequence, the Tribunal exercised its discretion to condone the delay and directed restoration to the CIT(A) so that the issues may be decided on merits. [Paras 1, 6, 7]

Delay condoned; appeals restored to the CIT(A) for fresh adjudication on merits.

Prospective application of amendment to section 200A - non-levy of fee under section 234E for returns filed prior to 01/06/2015 - restoration to the file of the CIT(A) for adjudication on merits - Question of levy of late filing fee under section 234E in respect of TDS returns filed prior to 01/06/2015 is remanded to the CIT(A) for fresh consideration on merits. - HELD THAT: - The Tribunal noted that coordinate benches and various courts have taken the view that the amendment to section 200A effective 01/06/2015 is prospective, and that therefore section 234E could not be levied while processing TDS returns filed prior to that date. Unlike deciding the substantive issue itself, the Tribunal relied on the similarity of facts with earlier Tribunal decisions and the need for consistent application of principles of natural justice to remit the matter. Consequently, rather than adjudicating the merits at the appellate stage, the Tribunal restored the cases to the CIT(A) with directions to decide the question of levy of fee under section 234E in accordance with law. [Paras 6, 7]

Substantive issue remanded to the CIT(A) for fresh adjudication on merits regarding levy of section 234E for returns filed prior to 01/06/2015.

Final Conclusion: All three appeals are allowed for statistical purposes: delay in filing the appeals is condoned and the matters are restored to the CIT(A) for fresh adjudication on merits, including consideration of the applicability of section 234E to TDS returns filed before 01/06/2015.

Deduction for provision for bad and doubtful debts under section 36(1)(viia) - Applicability of the first proviso to sub-clause (a) of section 36(1)(viia) and exclusion of cooperative banks - Allowance of deduction pursuant to RBI classification and guidelines - Tax treatment of loss on sale of Government securities classified as Available for Sale (AFS) - Relevance and application of CBDT Instruction No.17/2008 to banks' investment losses - Characterisation of loss as business (trading) loss vis-a -vis capital loss

Deduction for provision for bad and doubtful debts under section 36(1)(viia) - Applicability of the first proviso to sub-clause (a) of section 36(1)(viia) and exclusion of cooperative banks - Validity of disallowance of provision in excess of the limits under section 36(1)(viia) and whether the first proviso permitting RBI-classified deduction applies to the assessee (a co-operative bank). - HELD THAT: - The Tribunal found that sub-clause (a) of section 36(1)(viia) expressly refers to "a scheduled bank" and certain non-scheduled banks whereas the first proviso refers only to a scheduled bank or a non-scheduled bank and does not include "co-operative bank" within its ambit. The option to claim deduction under the first proviso therefore could not be validly exercised by the assessee (a co-operative urban bank) only before the CIT(A) when the proviso was not invoked or considered by the assessing officer. On that basis the assessing officer's computation of allowable deduction under section 36(1)(viia) was upheld and the addition/disallowance made by the AO was sustained. [Paras 11, 12, 19]

Disallowance upheld; first proviso to sub-clause (a) of section 36(1)(viia) is not available to the assessee as a co-operative bank and the AO's computation is sustained.

Tax treatment of loss on sale of Government securities classified as Available for Sale (AFS) - Relevance and application of CBDT Instruction No.17/2008 to banks' investment losses - Characterisation of loss as business (trading) loss vis-a -vis capital loss - Whether the loss on sale of Government securities (held under RBI's AFS category) is allowable as a business/trading loss and deductible in the profit and loss account. - HELD THAT: - The Tribunal accepted that RBI classifies bank investments into HTM, AFS and HFT and that investments in the AFS category are required to be aggregated scrip-wise with net depreciation provided in the accounts. CBDT Instruction No.17/2008 and judicial precedent recognise that the RBI-prescribed classification and treatment determine the accounting and tax treatment. The impugned securities were classified as AFS and the loss, after adjustment of earlier reserves, was debited to the profit and loss account. In view of the RBI classification and applicable CBDT instruction, the loss on sale of Government securities was held to be a trading/business loss allowable in the hands of the bank and not a capital loss. [Paras 13, 14, 15, 18]

Loss on sale of Government securities allowed as business/trading loss; the CIT(A)'s deletion of the addition is affirmed.

Final Conclusion: The Revenue's appeal is partly allowed: the disallowance relating to excess provision under section 36(1)(viia) is upheld while the addition relating to loss on sale of Government securities is disallowed; the assessee's cross-objection is partly allowed for the same reasons. The orders below are affirmed in part and reversed in part.

Levy of penalty under Section 271(1)(c) for furnishing inaccurate particulars of income - Validity of penalty initiation after rectification and withdrawal of appeal - Effect of dropping reassessment proceedings under Section 147 on penalty liability - Vagueness of show cause notice and requirement of application of mind - Use of third party investigation and admission of accommodation entries/bogus donations as evidence

Levy of penalty under Section 271(1)(c) for furnishing inaccurate particulars of income - Use of Investigation Wing report and admissions by donee to establish bogus accommodation entries - Whether penalty under Section 271(1)(c) was rightly levied on the assessee for furnishing inaccurate particulars of income - HELD THAT: - The Tribunal upheld the view recorded by the Assessing Officer and the Commissioner (Appeals) that the assessee's deduction claim was supported by information obtained through survey and investigation which established that the donee institution provided accommodation entries and refunded donations to donors after deducting commission. The assessee failed to rebut those findings, did not produce project progress reports required for deduction under the relevant provision, withdrew the appeal against the addition and did not make substantive submissions to counter the investigation report. The Tribunal accepted the appellate authority's reasoning that the initiation and imposition of penalty was based on the assessment order and evidence on record showing furnishing of inaccurate particulars, and that the assessee's conduct (including withdrawal of appeal and belated rectification after issuance of show cause notice) did not amount to bona fide disclosure but was an attempt to avoid penalty. The Tribunal therefore found no infirmity in sustaining penalty under Section 271(1)(c). [Paras 3, 4]

Penalty under Section 271(1)(c) for furnishing inaccurate particulars of income is sustained.

Validity of penalty initiation after rectification and withdrawal of appeal - Whether initiation or imposition of penalty was improper because the rectification order did not propose penalty and the assessee had sought upward rectification of assessed income - HELD THAT: - The Tribunal agreed with the Commissioner (Appeals) that initiation of penalty was not vitiated by the subsequent rectification, since the assessment order itself had discussed initiation of penalty. The Tribunal noted that the rectification increasing the addition was made only after issuance of the show cause notice and that the assessee's request for rectification and withdrawal of appeal followed the penalty notice; such conduct was held not to be a bona fide prior disclosure but an afterthought aimed at escaping penalty. Reliance was placed on the appellate authority's reasoning that a voluntary agreement to an addition does not preclude initiation of penalty and that the circumstances did not amount to an innocent mistake curing the alleged inaccuracy. [Paras 3, 4]

The rectification and withdrawal of appeal do not invalidate initiation or levy of penalty.

Effect of dropping reassessment proceedings under Section 147 on penalty liability - Whether discontinuance of reassessment proceedings under Section 147 establishes absence of concealment or inaccurate particulars for the purpose of penalty - HELD THAT: - The Tribunal endorsed the Commissioner (Appeals) in holding that proceedings under Section 147 and penalty proceedings under Section 271(1)(c) are separate and independent. Dropping of reassessment does not negate the findings recorded in the completed assessment or preclude levy of penalty where the assessment order contains additions and the assessee is found to have furnished inaccurate particulars. Therefore the discontinuance of Section 147 proceedings was not a ground to quash the penalty. [Paras 3, 4]

Dropping reassessment under Section 147 does not preclude levy of penalty on the assessed issue.

Vagueness of show cause notice and application of mind - Whether the show cause notice in printed form, not specifically distinguishing concealment from furnishing inaccurate particulars, vitiated the penalty proceedings - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s finding that the assessee's own reply to the show cause notice invoked the concept of 'furnishing inaccurate particulars', demonstrating that there was no confusion about the nature of the penalty proposed. The assessment order itself discussed furnishing of inaccurate particulars. The Tribunal therefore held that the printed form of the show cause notice did not indicate non application of mind or vitiate the penalty proceedings in the facts of this case. [Paras 3, 4]

The form of the show cause notice did not vitiate the penalty proceedings; application of mind was demonstrated.

Final Conclusion: The appeal is dismissed and the penalty imposed under Section 271(1)(c) for Assessment Year 2013-14 is upheld.

Deduction under Section 10A - Onus of proof for business purpose of advances / deduction under Section 36(1)(iii) - Ad-hoc disallowance and requirement of reasoned basis by Assessing Officer - Revenue nature of licence fees - Reasonable apportionment of vehicle and travelling expenses - Allowability of bonus, leave encashment and provisions under Section 43B - Consistency in accounting treatment - insurance on payment basis - Mechanical disallowance under Section 40A(2)(b) - Disallowance under Section 14A where no exempt income - Allowability of sundry balances written off under Section 36(2) - Penalty under Section 271(1)(c) - concealment or furnishing of inaccurate particulars

Deduction under Section 10A - Assessee entitled to partial deduction under Section 10A as computed in revised Form No.56F. - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that on re-working the eligible profit of the SEZ unit (as reflected in the corrected/revised Form No.56F and supported by bank realisation certificates verified on test check) the assessee's claim at 50% yielded an allowable deduction of Rs.36,71,673/-. The Assessing Officer's original defects in Form No.56F and initial computation were addressed on remand and the corrected figures were accepted. The Tribunal found no reason to interfere with CIT(A)'s conclusion that the assessee was entitled to deduction to the extent claimed in the revised computation. [Paras 10]

Revenue's ground challenging deletion of part of the Section 10A disallowance is dismissed.

Onus of proof for business purpose of advances / deduction under Section 36(1)(iii) - Deletion of disallowance of interest under Section 36(1)(iii) sustained following earlier judicial decision in assessee's own case. - HELD THAT: - The Tribunal followed the decision of the Hon'ble High Court of Gujarat in the assessee's own case (Tax Appeal No.1025/2017 for A.Y. 2007-08) and held the issue covered in assessee's favour. Accordingly, the CIT(A)'s deletion of the interest disallowance was accepted. [Paras 11, 13]

Revenue's ground on interest disallowance is dismissed.

Ad-hoc disallowance and requirement of reasoned basis by Assessing Officer - Ad-hoc addition for miscellaneous expenses was deleted as the Assessing Officer failed to demonstrate basis for the disallowance and did not reject books of account. - HELD THAT: - The Assessing Officer made an adhoc disallowance without demonstrating the basis in the assessment order or rejecting the books. The Tribunal agreed with CIT(A) that conjecture and surmise do not justify adhoc additions; reliance was placed on settled principle that reasons must be recorded to warrant such disallowance. [Paras 16]

Revenue's ground upholding the misc. expenses addition is dismissed.

Revenue nature of licence fees - Licence fee payments characterized as revenue in nature and allowable; addition deleted. - HELD THAT: - The Tribunal noted that licence fees were paid monthly and were for business purposes; the Assessing Officer ignored these factual aspects which were not controverted by Revenue. CIT(A)'s deletion of the addition was held to be justified. [Paras 20]

Revenue's ground on licence fees addition is dismissed.

Reasonable apportionment of vehicle and travelling expenses - 10% adhoc disallowance in respect of vehicle and travelling expenses was reduced by CIT(A) and the reduction sustained. - HELD THAT: - The Tribunal accepted the CIT(A)'s view that vehicle and travelling expenses were incurred for business exigencies and that the Assessing Officer's ad-hoc treatment was unjustified. The CIT(A)'s limited (10%) addition was upheld as appropriate and the Assessing Officer's larger disallowance was rejected. [Paras 24]

Revenue's challenge to deletion of the additions is dismissed.

Allowability of bonus, leave encashment and provisions under Section 43B - Additions for bonus, leave encashment and provision for excise duty deleted where amounts pertained to earlier year or were not payable in current year. - HELD THAT: - The Tribunal noted that bonus/leave encashment related to A.Y. 2008-09 and were not debited in the current year; excise duty contention that it was paid after return filing was not borne out. The CIT(A)'s deletion of these additions was found to be correct. [Paras 26]

Revenue's ground on these additions is dismissed.

Consistency in accounting treatment - insurance on payment basis - Pre-paid insurance disallowance deleted because assessee consistently claimed insurance on payment basis and earlier years' practice supported allowability. - HELD THAT: - Records showed consistent treatment by the assessee of claiming insurance on payment basis and prior years' allowance. The Tribunal found CIT(A)'s detailed findings acceptable and found no reason to interfere with deletion of the disallowance. [Paras 29]

Revenue's ground on prepaid insurance disallowance is dismissed.

Mechanical disallowance under Section 40A(2)(b) - Disallowance under Section 40A(2)(b) deleted where it was made on mechanical basis and no discrepancy was pointed out. - HELD THAT: - The Tribunal observed the Assessing Officer effected the disallowance mechanically; the assessee produced evidence before the CIT(A) and on remand, and the Assessing Officer did not identify discrepancies. In absence of comparison or reasoned finding, the CIT(A)'s deletion was sustained. [Paras 32]

Revenue's ground on Section 40A(2)(b) disallowance is dismissed.

Disallowance under Section 14A where no exempt income - Section 14A disallowance deleted as there was no exempt income and interest-free funds exceeded investments. - HELD THAT: - The Tribunal accepted the factual position that no exempt income was earned in the year and that interest-free funds were in excess of investments. Applying the principles in cited decisions, the CIT(A)'s deletion of the Section 14A disallowance was upheld. [Paras 36]

Revenue's ground under Section 14A is dismissed.

Ad-hoc disallowance - rent expenses and TDS evidence - Rent disallowance deleted where TDS was deducted and recipient showed income; addition not sustained. - HELD THAT: - The Tribunal noted that TDS was deducted on rent and the receiver reported the income in his return; the assessee demonstrated these facts before CIT(A) and the deletion of the disallowance was warranted. [Paras 39]

Revenue's ground on rent disallowance is dismissed.

Allowability of sundry balances written off under Section 36(2) - Sundry balances written off were allowable as business expenses where advances/credit notes were neither recovered in current nor subsequent year and were properly written off. - HELD THAT: - The Tribunal found the write-offs related to advances to employees and credit notes for inferior quality goods were not recovered in the current or subsequent year and were appropriately written off; evidence including excise duty added to opening stock was on record before CIT(A). The CIT(A)'s deletion of the disallowance was thus sustained. [Paras 42]

Revenue's ground on sundry balance written off is dismissed.

Penalty under Section 271(1)(c) - concealment or furnishing of inaccurate particulars - Penalty under Section 271(1)(c) deleted where claim of 100% Section 10A deduction was inadvertently made and subsequently rectified by filing revised Form No.56F; mistake not treated as deliberate concealment. - HELD THAT: - The Tribunal accepted the assessee's explanation that the 100% deduction claim was inadvertently made and later corrected by filing a revised Form No.56F. Applying the principles in Price Waterhouse Cooper and related authorities, the Tribunal held that the mistake did not amount to deliberate concealment or furnishing of inaccurate particulars and therefore deleted the penalty. [Paras 44, 47]

Assessee's appeal against penalty is allowed and the penalty is deleted.

Final Conclusion: The Tribunal dismissed the Revenue's appeal (ITA No.496/Ahd/2014) in respect of all challenged additions and disallowances for A.Y. 2009-10, and allowed the assessee's appeal (ITA No.1431/Ahd/2017) by deleting the penalty under Section 271(1)(c) imposed in relation to the Section 10A claim.

Deduction under section 80IA(4)(iii) - condition precedent of notification of Industrial Park - Validity of additions in an unabated assessment on the date of search under section 153A - Requirement of incriminating material seized during search for making additions in unabated assessment - Allowance of tax deducted at source credit - verification by assessing officer on production of TDS certificates - MAT credit (section 115JAA) - entitlement subject to verification by assessing officer - Disallowance under section 14A read with Rule 8D - no disallowance where no exempt income - Additions on 'on money' / unexplained cash credit - necessity of corroborative incriminating material and not mere extrapolation

Deduction under section 80IA(4)(iii) - condition precedent of notification of Industrial Park - Claim for deduction under section 80IA(4)(iii) in respect of 'Salarpuria Touchstone' disallowed for want of statutory notification by competent authority. - HELD THAT: - The Tribunal found that the assessee had produced notifications for other projects but not for the Industrial Park 'Salarpuria Touchstone'. Notification by the competent authority is a pre-condition for grant of deduction under section 80IA(4). Although the assessee had applied and pursued the competent authority and had pending writ proceedings in the High Court, no notification had been issued till date. Consequently the Tribunal upheld the assessing officer's and CIT(A)'s rejection of the claimed deduction. The Tribunal, however, recorded that if the High Court ultimately directs notification or the competent authority notifies the project in future, the assessee may approach the assessing officer and the AO will be bound to amend the order and grant the deduction.

Claim under section 80IA(4)(iii) for 'Salarpuria Touchstone' disallowed; relief admissible in future if competent authority issues notification pursuant to favourable court decision.

Allowance of tax deducted at source credit - verification by assessing officer on production of TDS certificates - Short credit of TDS claimed by the assessee to be verified and allowed by the assessing officer on production of evidence. - HELD THAT: - The assessee showed higher TDS in the return than credited by the AO. The CIT(A) directed the issue back to the AO to examine and allow the claim on the basis of TDS certificates. The Tribunal directed the AO to allow the balance TDS credit after verifying the TDS certificates and other evidence to be furnished by the assessee.

Short TDS credit of Rs. 1,38,282/- to be verified and allowed by the AO on production of supporting TDS certificates (ground allowed for statistical purposes).

MAT credit (section 115JAA) - entitlement subject to verification by assessing officer - Claim for MAT credit pertaining to earlier assessment years allowed in principle but remitted to the assessing officer for factual verification and decision. - HELD THAT: - The Tribunal accepted that the assessee is entitled to MAT credit as per the Act but noted that the claim was first raised before the Tribunal and requires verification of facts by the AO. Accordingly the Tribunal remitted the matter to the AO with a direction to decide the claim in accordance with law after affording the assessee a reasonable opportunity of being heard.

MAT credit claim remitted to the AO for verification and decision in accordance with law (allowed for statistical purposes).

Validity of additions in an unabated assessment on the date of search under section 153A - Requirement of incriminating material seized during search for making additions in unabated assessment - Additions made in assessments reopened under section 153A in respect of years where assessment was unabated on date of search were unsustainable in absence of any incriminating material seized during the search. - HELD THAT: - For AY 2010-11, 2011-12 and 2012-13 the Tribunal analysed the assessment records and observed that the assessment for the relevant year had attained finality on the date of search. Jurisprudence requires that, to make fresh additions in an unabated assessment under section 153A, there must be incriminating material discovered during the search. The Tribunal found no reference in the assessment orders to any incriminating material seized that related to the additions; many additions were repetitions of earlier adjustments or were made on the basis of AO's assessment stage observations without seized corroborative material. Following the cited authorities and applying that principle, the Tribunal held the additions unsustainable and allowed the legal/jurisdictional grounds raised by the assessee. As the legal issue was decided, the Tribunal left open other appellate grounds on merits.

Legal/jurisdictional grounds allowed: additions in unabated assessments set aside for lack of incriminating material seized during search; revenue appeals in respect of those additions dismissed as infructuous.

Disallowance under section 14A read with Rule 8D - no disallowance where no exempt income - Deletions of additions under section 14A/Rule 8D sustained where the assessee had no exempt income in the relevant year. - HELD THAT: - For AY 2014-15 and 2015-16 the Tribunal examined the audited accounts and accepted that the assessee did not earn exempt income during the year. Applying the reasoning in precedent authorities, the Tribunal found no infirmity in the CIT(A)'s deletion of disallowances under section 14A and Rule 8D and dismissed the revenue's appeals on these grounds.

Revenue's additions under section 14A/Rule 8D deleted; appeals dismissed.

Additions on 'on money' / unexplained cash credit - necessity of corroborative incriminating material and not mere extrapolation - Addition on account of alleged 'on money' in respect of sale of flats deleted for lack of corroborative incriminating material specific to the assessee and reliance on extrapolation/conjecture. - HELD THAT: - In respect of AY 2014-15 (and similarly for subsequent years where argued), the AO made additions based on documents and statements seized during searches that pertained to group companies and on general statements and a sample application form. The Tribunal found that materials relied upon were either accounted for in books, pertained to other group companies, or lacked specific corroboration linking them to the assessee's project. The AO did not summon purchasers or obtain corroborative statements specific to the assessee's project; the addition rested on extrapolation without seized incriminating material specific to the assessee. Applying precedents, the Tribunal upheld the CIT(A)'s deletion of the on money addition and dismissed the revenue's appeal.

Addition on account of alleged on money deleted; revenue appeal dismissed.

Final Conclusion: The Tribunal upheld the disallowance of the 80IA(4)(iii) claim for 'Salarpuria Touchstone' for want of statutory notification but allowed the assessee to seek relief if the competent authority issues notification pursuant to pending High Court proceedings; directed the AO to verify and allow short TDS credit and remitted the MAT credit claim to the AO for verification; held that additions in unabated assessments under section 153A without incriminating material seized during search are unsustainable and allowed the legal/jurisdictional challenge for the relevant years; sustained deletion of disallowances under section 14A/Rule 8D where no exempt income and deleted additions for alleged on money for lack of specific corroborative seized material. All revenue appeals and cross objections were dismissed or rendered infructuous to the extent indicated in the order.

Extinguishment of pre-resolution tax liabilities under approved resolution plan - binding effect of a resolution plan approved under section 31 of the Insolvency and Bankruptcy Code - overriding effect of the Insolvency and Bankruptcy Code over inconsistent provisions of other enactments - termination of pending tax assessments and proceedings relating to periods prior to NCLT approval - restoration to Assessing Officer for consequential action in view of NCLT order

Extinguishment of pre-resolution tax liabilities under approved resolution plan - binding effect of a resolution plan approved under section 31 of the Insolvency and Bankruptcy Code - termination of pending tax assessments and proceedings relating to periods prior to NCLT approval - Whether the NCLT order approving the resolution plan extinguishes tax liabilities and pending income tax proceedings in respect of periods prior to approval, and the consequential administrative action to be taken. - HELD THAT: - The Tribunal noted that the assessee was declared a corporate debtor and that the resolution plan approved by the NCLT on 11.10.2018 expressly treated all dues under the Income tax Act relating to periods prior to acquisition of control as extinguished. Relying on the Resolution Plan, the NCLT order and the reasoning in the co ordinate ITAT decision (Palogix Infrastructure) which applies the Supreme Court precedents (including Swiss Ribbons and Ghanshyam Mishra & Sons and the principle in Monnet Ispat), the Tribunal held that the Code has overriding effect over inconsistent provisions of other enactments and that a resolution plan approved under section 31 is binding on stakeholders. Consequently, liabilities, assessments and proceedings in respect of periods prior to NCLT approval stand terminated and are to be treated as not payable by the corporate debtor. The Tribunal found these developments decisive in the present appeal (which relates to AY 2013 14, a period prior to NCLT approval) and observed that the matter is no longer res integra in view of the cited authorities and the NCLT order. Having reached that legal conclusion, the Tribunal directed restoration of the matter to the Assessing Officer for necessary action in accordance with law. [Paras 7, 8]

The NCLT approved resolution plan extinguishes the company's tax liabilities and pending proceedings relating to periods prior to its approval; matter restored to the Assessing Officer for action in accordance with law.

Final Conclusion: In view of the NCLT order approving the resolution plan and the binding and overriding effect of such approval under the Insolvency & Bankruptcy Code (as applied by higher courts and the co ordinate Tribunal), the appeal relating to AY 2013 14 is allowed for statistical purposes and the file is restored to the Assessing Officer for consequential action in accordance with law.

Allowability of deduction under Section 36(1)(va) read with Section 43B for employee contributions paid before filing of return - prospective operation of the Finance Act, 2021 amendment to Section 36(1)(va) r.w.s. 43B - distinction between employee's contribution (held in fiduciary capacity) and employer's contribution - deeming provision of Section 2(24)(x) read with Section 36(1)(va) - binding effect of decisions of the jurisdictional High Court on appellate authorities

Allowability of deduction under Section 36(1)(va) read with Section 43B for employee contributions paid before filing of return - deeming provision of Section 2(24)(x) read with Section 36(1)(va) - Whether amounts representing employees' contributions to PF and ESI, paid after the statutory due date but before filing the return of income, are deductible and cannot be disallowed under Section 36(1)(va) read with Section 43B for the assessment year in issue. - HELD THAT: - The Tribunal found on the admitted facts that the employees' PF and ESI contributions challenged in the assessment were deposited before the due date for filing the return of income under section 139(1). It followed a line of decisions of the Rajasthan High Court and various Benches of the Tribunal holding that where such contributions are paid before filing the return, they are allowable and cannot be disallowed under section 43B read with section 36(1)(va). The Tribunal noted divergent decisions of other High Courts but observed that the jurisdictional High Court's view is binding on authorities within that jurisdiction. The Tribunal also considered the amendment made by the Finance Act, 2021 (inserting explanatory provisions to Section 36(1)(va) r.w.s. 43B) and the accompanying memorandum which expressly stated that the amendment would take effect from 1 April 2021 and apply from assessment year 2021-22. Applying the principle that legislative amendments are prospective unless a contrary intention is clearly indicated, the Tribunal held that the 2021 amendment is prospective and therefore not applicable to the assessment year before it. Relying on precedent (including Supreme Court dicta on retrospectivity) and consistent Tribunal and High Court precedents, the Tribunal allowed the appeal and directed deletion of the additions made for delayed deposit of employees' contributions that were remitted prior to filing the return.

Additions made for delayed remittance of employees' PF and ESI contributions (though paid after statutory due date but before filing the return) are not sustainable for the assessment year under consideration and are deleted.

Prospective operation of the Finance Act, 2021 amendment to Section 36(1)(va) r.w.s. 43B - prospectivity versus retrospectivity of tax amendments - Whether the amendment by Finance Act, 2021 to Section 36(1)(va) r.w.s. 43B applies to the assessment year before the Tribunal or operates only prospectively from assessment year 2021-22. - HELD THAT: - The Tribunal examined the memorandum explaining the Finance Act, 2021 which unequivocally stated that the amendment takes effect from 1 April 2021 and will apply to assessment year 2021-22 and subsequent years. Applying the principle that legislative amendments are prospective in absence of unequivocal language to the contrary (as reiterated by the Supreme Court), and having regard to the explanatory memorandum, the Tribunal concluded that the 2021 amendment is prospective. Consequently, the amended provisions could not be invoked for the assessment year before the Tribunal, and therefore the prior position-allowing deduction where employee contributions were paid before filing the return-remained applicable to the assessment year in issue.

The Finance Act, 2021 amendment to Section 36(1)(va) r.w.s. 43B is prospective and does not apply to the assessment year before the Tribunal; it applies from AY 2021-22 onward.

Final Conclusion: The Tribunal allowed the appeal: the additions disallowing employees' PF and ESI contributions (paid after statutory due dates but before filing the return) were deleted, and the Finance Act, 2021 amendment to Section 36(1)(va) r.w.s. 43B was held to be prospective, applying from AY 2021-22 and not to the assessment year under consideration.

Unexplained investment under section 69 - unexplained credit entries in bank account - undisclosed investment by cash deposits - remand report under Rule 46A - explanation of genuineness and creditworthiness of creditors - investment held as partner on behalf of firm / fiduciary capacity - deletion of additions by first appellate authority

Unexplained investment under section 69 - unexplained credit entries in bank account - remand report under Rule 46A - Deletion of addition made in respect of unexplained credit entries in HDFC Bank treated as unexplained investment under section 69/69A - HELD THAT: - The Assessing Officer, after verification during remand proceedings and on consideration of documents produced under Rule 46A (including bank statements, confirmations and related records), did not make any adverse finding in his remand report and accepted the explanation regarding routing of payments through partners' account. The Commissioner (Appeals) examined the remand report and the partnership and accounting records showing that payments were made by the firm and the purchases were recorded in the firm's books; on that basis the CIT(A) deleted the addition. The Tribunal, on review of the record, found no contrary material produced by Revenue and held that the deletion founded on the AO's remand findings and documentary evidence did not call for interference. [Paras 4, 12]

Addition in respect of unexplained credit entries in HDFC Bank deleted and deletion upheld.

Undisclosed investment by cash deposits - explanation of genuineness and creditworthiness of creditors - remand report under Rule 46A - Deletion of addition made in respect of cash deposits and transfers in Kalupur Commercial Cooperative Bank treated as unexplained investment under section 69/69C - HELD THAT: - The AO's remand report accepted the genuineness and creditworthiness of parties from whom unsecured loans/credits were received and recorded that most of the amounts were routed through banking channels and reflected in bank statements, except a specified small cash deposit which the assessee explained as from cash on hand. The CIT(A) relied on these remand findings and documentary evidence to delete the addition. The Tribunal found the Revenue unable to place contrary evidence and therefore sustained the deletion. [Paras 4, 5, 12]

Addition in respect of alleged undisclosed cash deposits and transfers in the Kalupur bank deleted and deletion upheld.

Investment held as partner on behalf of firm / fiduciary capacity - stock-in-trade reflected in firm's balance sheet - remand report under Rule 46A - Deletion of addition made in respect of unexplained investment in purchase of three immovable properties where assessee's share was held as partner and payments routed through the firm - HELD THAT: - Documents placed on record during remand proceedings (partnership deed, memorandum of understanding, firm's balance sheet showing land as stock-in-trade, ledger entries and the firm's assessment outcome) supported the assessee's case that the properties were purchased out of the firm's funds and held in the names of farmer partners in a fiduciary capacity. The AO's remand report accepted these contentions. The CIT(A) deleted the addition on this basis and the Tribunal, finding no contrary material from Revenue, upheld the deletion. [Paras 4, 5, 12]

Addition in respect of unexplained investment in the three properties deleted and deletion upheld.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and upheld the Commissioner (Appeals)'s deletions of the additions made by the Assessing Officer for Asst. Year 2014- 15, finding that the AO's remand findings and the documentary evidence produced under Rule 46A satisfactorily explained the investments and credits; the assessee's cross-objection became infructuous.

Disallowance under section 143(1)(a) - disallowance of expenditure indicated in the audit report - incorrect claim apparent from any information in the return - quasi-judicial duty to give reasons - binding precedent of the jurisdictional High Court - tax auditor's opinion not binding on the assessee - prospective effect of amendments to Section 36(1)(va) and Section 43B

Disallowance under section 143(1)(a) - disallowance of expenditure indicated in the audit report - incorrect claim apparent from any information in the return - tax auditor's opinion not binding on the assessee - quasi-judicial duty to give reasons - binding precedent of the jurisdictional High Court - Validity of the disallowance made while processing the return under section 143(1)(a) on account of alleged delay in deposit of employees' contributions as reflected in the tax audit report. - HELD THAT: - The Tribunal held that the present scheme of section 143(1)(a) is wider than the earlier 'prima facie' regime and permits adjustments of specified kinds, but the processing under section 143(1) is an interactive quasi judicial exercise: an intimation must be issued and any response of the assessee considered. The Assessing Officer (CPC), when disposing of objections, must apply mind and record specific reasons; blanket template statements rejecting responses are insufficient. A tax auditor's report is an independent professional's opinion and cannot, by itself, override binding judicial precedent of the jurisdictional High Court. Where the audit report's legal conclusion conflicts with the law declared by the jurisdictional High Court (for example, that payments made after the statutory due date but before filing the return are allowable), the auditor's observation cannot justify a disallowance under section 143(1)(a)(iv). Applying these principles to the facts, the Tribunal found that the CPC's adjustment based on the audit report was vitiated both for want of proper reasons when rejecting objections and because the audit observation could not displace binding High Court decisions; accordingly the impugned disallowance was deleted. The Tribunal limited its conclusion to the scope of adjustments under section 143(1)(a) and did not decide broader questions concerning the retrospective or prospective effect of later legislative amendments. [Paras 6, 7, 8, 9, 10]

Impugned adjustment made while processing the return under section 143(1) is vitiated in law and is deleted.

Final Conclusion: Appeal allowed: the disallowance made in the course of processing the return under section 143(1)(a) on account of alleged delayed payment of employees' contributions (as reflected in the tax audit report) is deleted for want of proper reasoned disposal of objections and because the audit opinion could not override binding jurisdictional High Court precedent.

Disallowance under section 143(1)(a) - Incorrect claim apparent from any information in the return - Disallowance of expenditure indicated in the audit report - Quasi-judicial duty to give reasons - Binding precedents of the jurisdictional High Court - Tax audit report not binding on the assessee - Prospective operation of Explanation to Section 36(1)(va)

Disallowance under section 143(1)(a) - Disallowance of expenditure indicated in the audit report - Incorrect claim apparent from any information in the return - Validity of disallowance made during processing of return under section 143(1) for delayed payment of provident fund/ESIC contributions - HELD THAT: - The Tribunal held that the present scheme of section 143(1) permits a broader range of adjustments than the earlier 'prima facie' scheme, but such adjustments must conform to the statutory descriptions in section 143(1)(a)(i)-(v) and the Explanation to section 143(1). Even where an adjustment falls within clause (iv) as an expenditure 'indicated in the audit report', the processing authority must consider the assessee's response and record cogent reasons for rejecting objections. In the facts before the Tribunal the Assessing Officer-CPC recorded a template response and failed to give specific reasons for rejecting the assessee's submissions that payments made before filing the return were deductible. On that basis the impugned adjustment was found to be vitiated and was deleted. [Paras 5, 9, 10]

Impugned disallowance made in processing under section 143(1) is vitiated in law and is deleted.

Tax audit report not binding on the assessee - Binding precedents of the jurisdictional High Court - Whether observations in the tax audit report can, by themselves, justify disallowance where they conflict with binding jurisdictional High Court decisions - HELD THAT: - The Tribunal emphasised that a tax audit report is the opinion of an independent professional and cannot bind the assessee. Where the audit opinion runs contrary to the law laid down by the jurisdictional High Court, the audit observation cannot, by itself, justify disallowance under section 143(1)(a)(iv). The provision permitting disallowance 'indicated in the audit report' must be read sensibly and, where necessary, read down so as not to permit the audit report to override binding judicial precedent applicable within the jurisdiction of the assessee's assessing officer. [Paras 7, 8, 9]

Audit observations do not, by themselves, justify disallowance where they conflict with binding decisions of the jurisdictional High Court; the disallowance cannot stand on that basis.

Quasi-judicial duty to give reasons - Disallowance under section 143(1)(a) - Duty of the Assessing Officer-CPC to consider the assessee's response and to give specific reasons when rejecting objections to proposed adjustments under section 143(1) - HELD THAT: - The Tribunal held that the process under section 143(1) is interactive: the provisos require intimation to the assessee and consideration of any response. Disposal of objections by the Assessing Officer-CPC is a quasi judicial function and must be accompanied by specific, intelligible reasons. Use of a standard template statement without striking out inapplicable portions and without setting out reasons demonstrates lack of application of mind and is legally insufficient, depriving the appellate authority of a basis to adjudicate meaningfully. [Paras 6, 7]

Assessing Officer-CPC must consider responses and record specific reasons when rejecting objections to adjustments under section 143(1); template or non speaking disposals are unsatisfactory.

Final Conclusion: The Tribunal allowed the appeal, deleting the disallowance made during processing under section 143(1) for AY 2018-19; it held that audit observations do not override binding jurisdictional High Court law and that the Assessing Officer CPC must consider responses and give specific reasons when rejecting objections.

Appointment and transfer of Adjudicating Authority - statutory designation of Adjudicating Authority by operation of law - absence of an indefeasible right to continuance of the officer who heard arguments - no liability for respondents where predecessor did not pronounce reserved judgment before replacement - inapplicability of practice directions on transfers to supplant statutory appointment - judicial review under Article 226 in challenges to administrative posting made in exercise of statutory power

Appointment and transfer of Adjudicating Authority - statutory designation of Adjudicating Authority by operation of law - absence of an indefeasible right to continuance of the officer who heard arguments - no liability for respondents where predecessor did not pronounce reserved judgment before replacement - inapplicability of practice directions on transfers to supplant statutory appointment - judicial review under Article 226 in challenges to administrative posting made in exercise of statutory power - Challenge to the appointment/transfer of a new Adjudicating Authority after matters were heard and judgments reserved, and the petitioner's claim to continue the officer who heard the matter until pronouncement of judgment, is not maintainable. - HELD THAT: - The Court found that amendments to the statutory scheme effected a change in the competent authority and that upon the valid appointment of the new officer he, by operation of law, became the Adjudicating Authority for the purposes of the 1988 Act. The authority who had reserved judgment had not rendered a final verdict prior to the statutory appointment; consequently the administrative consequences of the new appointment could not be interdicted. The petitioners could not assert an indefeasible right enforceable under Article 226 to require continuation of the officer who had heard the matter. Nor could the respondents be faulted for the predecessor officer's failure to pronounce judgment before the statutory change. Reliance on the Court's practice directions governing transfers of judicial officers was rejected as displacing a valid statutory appointment, which was not the subject of challenge. Having regard to these legal and factual foundations, the challenge was held to be misconceived. [Paras 5, 6, 7, 8, 9]

Challenge dismissed; no legal entitlement to continuance of the prior Adjudicating Authority and no fault attaches to respondent for the predecessor's failure to pronounce judgment prior to the statutory appointment.

Final Conclusion: Writ petitions dismissed as misconceived; costs awarded to respondents.

Interim relief for re-export of imported goods - Prima facie satisfaction of customs authorities - Balance of convenience in grant of interim relief - Investigation pending - restraint on interim orders - Confiscation for false declaration and contravention of import provisions - Validity and scope of amendment to Customs Tariff by executive notification

Interim relief for re-export of imported goods - Prima facie satisfaction of customs authorities - Balance of convenience in grant of interim relief - Investigation pending - restraint on interim orders - Prayer for interim permission to re-export the seized/ detained consignments - HELD THAT: - The Court considered only the petitioner's interim request for re-export while leaving the substantive challenge to the impugned notification for later adjudication. The authorities had recorded prima facie findings that the containers and their contents were of Pakistan origin and set out reasons for that belief; at this interlocutory stage the writ court would not sit in appeal over those prima facie observations. The Circular permitting re-export applies where goods are destined elsewhere but inadvertently imported at a particular customs station; here, on the material before the Court, it did not prima facie appear that the goods were imported under a bona fide mistake. Given the ongoing investigation and the absence of a clear case of inadvertent importation, the balance of convenience did not favour allowing re-export; demurrage and detention concerns could be mitigated by shifting goods to warehouse. Accordingly, the interim relief was declined and any prayer for re-export was reserved for consideration after conclusion of the investigation. [Paras 8, 9, 10, 11]

Interim prayer for re-export refused; re-export and other interim reliefs to be considered only after investigation is completed and authorities shall expedite the same.

Validity and scope of amendment to Customs Tariff by executive notification - Confiscation for false declaration and contravention of import provisions - Challenge to the constitutional and legislative competence to issue Notification No.5/2019-Cus and related allegations of unlawful amendment to the Customs Tariff - HELD THAT: - The Court noted the petitioner's contentions challenging the notification as ultra vires and submissions regarding the limits of executive power to amend the tariff schedule, and recorded that such challenge will be examined while deciding the writ petition on merits. The present order does not decide the validity of the notification or the related allegations of false documentation and confiscation liability; those matters remain for adjudication after the investigation is complete. [Paras 7, 10]

Substantive challenge to the notification and related issues reserved for adjudication on merits after completion of investigation.

Final Conclusion: The petitioner's interim request to re-export the goods is declined on the present record; the Court will consider the substantive challenge to the impugned notification and related allegations only after the investigation is expedited and concluded, and the matter is listed for further hearing on 11th July 2022.

Jurisdiction of Customs/DRI in relation to units in a Special Economic Zone - overriding effect of the Special Economic Zones Act over other statutes - Special Economic Zone deemed to be outside customs territory - investigation and enforcement powers under the SEZ Act - removal of goods from SEZ to bonded warehouse for export under SEZ Rules/Rule 46

Jurisdiction of Customs/DRI in relation to units in a Special Economic Zone - investigation and enforcement powers under the SEZ Act - overriding effect of the Special Economic Zones Act over other statutes - DRI/Customs officials had no jurisdiction to issue the show cause notice or seize goods in respect of the petitioner unit in VSEZ for the alleged violations prior to the 2016 notification authorizing Customs enforcement in SEZs. - HELD THAT: - The court held that the SEZ Act provides special provisions with an explicit non-obstante clause so as to have overriding effect over other laws; a Special Economic Zone is, by statutory deeming, to be treated as outside the customs territory for authorised operations and officers for investigation of offences in SEZs are to be those empowered under the SEZ Act. The Central Government, by notification dated 14.03.2006, excepted Chapter XA of the Customs Act from application to SEZs and only by a later notification dated 05.08.2016 were Additional Director General, DRI, authorised to investigate customs offences in SEZs. That 2016 notification is inapplicable to alleged violations occurring prior to 2016. Accordingly, DRI/Customs officers lacked jurisdiction to initiate proceedings against the SEZ unit for the period in question. [Paras 21, 22, 23, 24]

Show cause notice dated 11.12.2014 and the consequential adjudication dated 30.06.2020 quashed for want of jurisdiction.

Removal of goods from SEZ to bonded warehouse for export under SEZ Rules/Rule 46 - jurisdiction of Customs/DRI in relation to units in a Special Economic Zone - Storage or transit of goods imported by a licensed SEZ unit in a bonded warehouse outside the SEZ for export did not, by itself, confer jurisdiction on DRI/Customs to proceed against the SEZ unit for the period in issue. - HELD THAT: - The court noted that the petitioner held licences authorising trading and export operations, that movement of goods from SEZ to port or bonded warehouse for export is contemplated by Rule 46 and by departmental Instruction No.63 (10.08.2010) which prescribes procedure for removal to bonded warehouses and re-warehousing formalities. The admitted facts showed goods were moved on the strength of shipping documents and relevant endorsements; limited storage outside SEZ pending export (including where SEZ has insufficient storage) cannot convert such movement into an occasion for DRI to assume jurisdiction where the SEZ Act and its notifications then in force restricted Customs powers. Thus storage/temporary removal for export did not vest DRI with jurisdiction to issue the impugned show cause notice. [Paras 29, 30, 31, 32, 33]

Removal and storage of the goods in a bonded warehouse for export do not validate the DRI action; the impugned proceedings are without jurisdiction and are quashed.

Final Conclusion: The writ petition is allowed: the show cause notice dated 11.12.2014 and the consequential Order in Original dated 30.06.2020 are quashed on the ground that DRI/Customs lacked jurisdiction to proceed against the SEZ unit for the period in question; no order as to costs.

Refund of IGST on zero rated supplies - eligibility to claim refund after payment of integrated tax - refund procedure under Rule 96 of the CGST Rules - duty drawback election versus IGST refund - applicability where drawback rates are identical - interest on delayed refund of tax

Refund of IGST on zero rated supplies - refund procedure under Rule 96 of the CGST Rules - duty drawback election versus IGST refund - applicability where drawback rates are identical - Petitioner entitled to refund of IGST paid on the exports covered by the two shipping bills despite initial claim of duty drawback by reference to an incorrect code which was subsequently corrected. - HELD THAT: - The court found as a matter of law and fact that the petitioner had paid IGST and was thus entitled to refund under the statutory scheme for zero rated supplies read with Rule 96 and Section 16 of the IGST Act. The respondent's reliance on the CBIC circular (para 3) to deny IGST refund because the exporter had availed higher drawback was factually inapplicable: the Schedule to the notification shows that the drawback rates in Column A and Column B for tariff entry 853699 were identical (2%), so there was no higher drawback election to bar refund. The petitioner was permitted to correct the drawback code upon payment of prescribed fee and penalty, and that correction (permitted on 25.10.2018) removed any factual bar. Reliance on earlier High Court decisions (Amit Cotton Industries; Shyam Textile) supported the legal entitlement to refund in comparable circumstances. For these reasons the court directed the respondent to grant the IGST refund in respect of the two shipping bills. [Paras 5, 6, 7, 8, 9]

Refund of IGST ordered in respect of the two shipping bills.

Interest on delayed refund of tax - rate and commencement of interest for delayed refund - Petitioner entitled to interest on the withheld refund and the rate and commencement date for such interest were fixed by the court. - HELD THAT: - The court directed payment of interest on the refund because the refund had been unreasonably withheld after the respondent permitted correction of the drawback code. Having regard to the date when the correction was effected (25.10.2018) and consistent with precedents relied upon by the court, interest was awarded at the rate of 7% per annum (simple) from 25.10.2018 until payment. The court thereby quantified the interest entitlement and fixed its commencement tied to the date of correction. [Paras 9]

Interest at 7% per annum (simple) awarded from 25.10.2018 on the refund amount.

Final Conclusion: Writ petition allowed: respondent directed to refund IGST in respect of the two specified shipping bills and to pay simple interest at 7% per annum from 25.10.2018; parties to act on the digitally signed copy of the judgment.

Provisional release of imported goods on security - Customs (Provisional Duty Assessment) Regulations, 1963 - Provisional assessment of duty where origin of goods is in doubt - Security by bank guarantee and bond for provisional release - Duty differential payable if origin established as liable to higher rate - Direction to conclude departmental inquiry within fixed time

Provisional release of imported goods on security - Security by bank guarantee and bond for provisional release - Customs (Provisional Duty Assessment) Regulations, 1963 - Provisionally release of the impounded magnesium lump consignment subject to specified security, bond and undertaking. - HELD THAT: - The Court, applying the scheme of the Regulations of 1963 and Section 18 of the Customs Act concerning provisional assessment, directed provisional release of the goods pending completion of the departmental inquiry into the origin. Recognising the Revenue's apprehension that the consignment may have originated from Pakistan (which would attract a higher duty), the Court imposed terms short of seizure: a time-limited bank guarantee, an undertaking by the Managing Director regarding assets and liability to pay any differential duty if origin is found to attract higher duty, and a bond for the differential duty as per law. The Court noted prior authorities criticizing excessively onerous conditions for release but tailored conditions here to balance the interests of the parties and to ensure recovery if higher duty is finally adjudicated. The goods were ordered to be released on furnishing the prescribed bank guarantee, undertaking and bond.

Goods to be provisionally released on furnishing bank guarantee, bond and undertaking as directed.

Direction to conclude departmental inquiry within fixed time - Provisional assessment of duty where origin of goods is in doubt - Continuation and timeline of the departmental inquiry into the origin of the consignment. - HELD THAT: - The Court found the inquiry by the Department (DRI/Customs) was prolonged and directed that the inquiry be completed within twelve weeks from the date of the order. The Court permitted the Revenue to apply for extension for cogent reasons, in which event the court-ordered timeline and any bank guarantee furnished may be extended accordingly. The Court emphasised that the inquiry should not be allowed to continue indefinitely and reserved liberty to the petitioner to seek further relief if necessary.

Inquiry to be concluded within twelve weeks; extension permissible only on application showing good reason and subject to court approval.

Final Conclusion: Writ petition disposed by directing provisional release of the consignment on specified security (bank guarantee, bond and undertaking) and by directing the Revenue to conclude its inquiry into the origin of the goods within twelve weeks, with liberty to seek extension on sufficient cause and liberty to the petitioners to seek further relief if warranted.

Writ jurisdiction under Article 226 - availability of alternate statutory remedy - rule of self-restraint in invoking writ jurisdiction - exceptions to alternate remedy: breach of fundamental rights, violation of natural justice, excess of jurisdiction, challenge to vires - jurisdictional excess and procedural non-compliance - condonation of delay / acceptance of appeals filed within limitation

Writ jurisdiction under Article 226 - availability of alternate statutory remedy - rule of self-restraint in invoking writ jurisdiction - Maintainability of the writ petitions in view of the availability of alternative appellate remedies. - HELD THAT: - The Court accepted that the existence of an alternative statutory appeal is not an absolute bar to exercise of writ jurisdiction but is a rule of self-restraint. Exceptional circumstances permitting exercise of Article 226 were identified as (i) breach of fundamental rights, (ii) violation of principles of natural justice, (iii) excess of jurisdiction, or (iv) challenge to the vires of statute or delegated legislation. Applying these principles to the facts, the Court found no such exceptional circumstance warranting exercise of writ jurisdiction because opportunity of hearing had been afforded, the petition did not impugn the vires of any statute, and there was no demonstration that the authorities acted without jurisdiction. Disputed questions of fact on valuation and methodology were matters fit for adjudication on appeal. Having regard to the availability of further appellate remedies and that the petitioner had already availed one tier of appeal, the Court declined to entertain the writ petitions and relegated the petitioner to the appellate forum. [Paras 12, 14, 15, 16]

Writ petitions dismissed; petitioner directed to pursue the available appellate remedies.

Natural justice - excess of jurisdiction - binding nature of Board Circulars and procedural compliance - Whether the impugned assessment orders were without jurisdiction or violative of principles of natural justice because of non compliance with Board Circulars and SVB IR No.62/2018. - HELD THAT: - The petitioner contended that the authorities acted contrary to the procedure in the Board Circular and SVB IR No.62/2018, that SVB had accepted the pricing methodology in an IR and that the assessing authorities nevertheless rejected declared values and made additions without following prescribed procedure. The Court examined these contentions and observed that opportunity of hearing had been given and that the petitioner did not establish a case of excess of jurisdiction or denial of natural justice. The Court held that mere procedural infraction alleged by the petitioner, or erroneous evaluation of valuation issues, did not convert the orders into actions without jurisdiction; such controversies on valuation are to be tested on merits before the appellate authorities. [Paras 6, 7, 8, 14]

Alleged non compliance with circulars and IR did not render the impugned orders without jurisdiction or violative of natural justice; grievances to be agitated before the appellate authorities.

Condonation of delay / consideration within limitation - consolidation of appeals - Relief as to filing of appeals and treatment of limitation where multiple appeals would otherwise be required. - HELD THAT: - The petitioner sought leave to file consolidated appeals instead of filing numerous individual appeals and sought protection against limitation objections. Having regard to the multiplicity of appeals that would otherwise arise, the Court permitted the petitioner to file one consolidated appeal in each writ petition, while directing that applicable court fees be paid as if individual appeals were filed. The Court further directed that if such consolidated appeals are filed within 15 days from the date of the order, the Appellate Authority shall consider the appeals as filed within limitation. [Paras 17]

Petitioner allowed to file one consolidated appeal in each matter; appellate authority directed to treat appeals filed within 15 days as within limitation, subject to payment of requisite court fees.

Final Conclusion: The writ petitions were dismissed on the ground that alternative statutory remedies exist and no exceptional circumstance for exercise of Article 226 was shown; the petitioner was relegated to the appellate fora but permitted to file one consolidated appeal in each writ petition and the Appellate Authority was directed to treat such appeals filed within 15 days as within limitation, with court fees payable as if individual appeals were instituted.

Classification by reference to BIS specifications (IS 1459 / IS 1460) - Representative sampling and sample storage under IS 1447-Part I - Reliability and admissibility of chemical test reports - Burden of proof on the Revenue in classification cases - Confiscation under Section 111(d) and 111(m) of the Customs Act - Re-determination of assessable value and rejection of transaction value - Principles of natural justice including right to cross-examination - Preponderance of probability not applicable where statutory specifications govern classification

Classification by reference to BIS specifications (IS 1459 / IS 1460) - Burden of proof on the Revenue in classification cases - Whether the imported consignments could be re classified by Revenue as Superior Kerosene Oil (SKO) and High Speed Diesel (HSD) contrary to the declarations made by the importer. - HELD THAT: - The Tribunal held that classification for SKO and HSD must be established by showing conformity with the respective BIS specifications in Supplementary Notes to Chapter 27 (IS 1459 for SKO and IS 1460 for HSD). Revenue bears the burden of proof to show non-conformity with the declared description and to demonstrate satisfaction of all essential parameters mandated by those standards. The record showed that several mandatory parameters for SKO (notably burning quality and colour) and for HSD (numerous parameters under IS 1460) were not tested or established by the Revenue. Reliance on supplier test reports was insufficient in the absence of independent evidence showing satisfaction of the full specification. In these circumstances Revenue failed to discharge its burden and re classification could not be sustained. [Paras 32, 33, 34, 35, 38]

The re-classification of the goods as SKO and HSD by Revenue is unsustainable and the consignments are to be classified as declared by the appellants.

Representative sampling and sample storage under IS 1447-Part I - Reliability and admissibility of chemical test reports - Whether the test reports relied upon by Revenue were reliable and admissible when sampling and sample storage/test methodology did not conform to prescribed IS requirements. - HELD THAT: - The Tribunal found that representative samples were not drawn in accordance with IS 1447 Part I (samples were often taken from a single container though consignments comprised multiple containers) and that samples were in some instances stored in plastic bottles contrary to the prescriptions. Further, several test reports did not record the method of testing or did not test all mandatory parameters required by the relevant IS for conclusive identification. These defects rendered the test reports inconclusive and not a reliable basis for adverse classification or confiscation. Where statutory specifications prescribe particular sampling and testing procedures, departure from those procedures undermines the evidentiary value of the results. [Paras 22, 30, 31, 33, 39]

The sampling and test reports are vitiated and unreliable; Revenue's reliance upon them is misplaced.

Principles of natural justice including right to cross-examination - Whether denial of the appellants' requests for re testing and for cross examination of witnesses violated principles of natural justice and statutory mandate. - HELD THAT: - The Tribunal observed that requests for re testing were denied without adequate justification and that the appellants' applications for cross examination of persons whose statements were relied upon were arbitrarily refused. Such denial constituted a miscarriage of justice and contravened the principles of natural justice as well as the statutory scheme (including sec. 138B context). Given that the evidentiary foundation for classification was already deficient, denial of opportunities to test or challenge the evidence further vitiated the adjudicatory process. [Paras 3, 36, 39]

Denial of re testing and of cross examination amounted to a breach of natural justice and materially tainted the proceedings.

Re-determination of assessable value and rejection of transaction value - Confiscation under Section 111(d) and 111(m) of the Customs Act - Whether the rejection of the declared transaction value, consequential re determination of value, confiscation, redemption fine and penalties imposed on the appellants were sustainable. - HELD THAT: - Because the Tribunal held that Revenue failed to prove that the imported goods conformed to the alternative classifications (SKO/HSD), the basis for rejection of transaction value and re determination collapsed. The confiscation, redemption fine and penalties flowed from the impugned classification and the unreliable test evidence; having set aside the classification and found procedural unfairness, the Tribunal held that the re determination, confiscation, redemption fine and penalties could not be sustained. Consequently the declared value must be accepted and the punitive measures set aside. [Paras 9, 38, 40]

Rejection of declared value, confiscation, redemption fine and penalties are set aside and the declared transaction value is accepted.

Preponderance of probability not applicable where statutory specifications govern classification - Whether Revenue could rely on preponderance of probability to classify the goods despite explicit statutory/BIS specification requirements. - HELD THAT: - The Tribunal held that where explicit statutory or standards based specifications govern classification, the Revenue cannot substitute a mere preponderance of probability approach in place of the requirement to establish conformity with the specified parameters. The presence of detailed testable requirements under IS 1459/1460 precludes deciding classification on inferential probability when those parameters have not been demonstrated. [Paras 39]

Application of preponderance of probability was inappropriate; statutory specifications had to be satisfied and were not.

Final Conclusion: Appeals allowed. The Tribunal set aside the orders of re classification, re determination of value, confiscation, redemption fine and penalties; accepted the declared classification and transaction value, directed release/delivery of goods to appellants and waived detention/demurrage, with consequential reliefs ordered.

Refund of excess duty paid by mistake - time bar for refund claims - provisionally assessed bills and final assessment - effect of discovery rule on limitation - constitutional prohibition on collection beyond law (Article 265)

Refund of excess duty paid by mistake - inalienability of excess tax collected - Whether the appellant is entitled to refund of the double duty paid on the same Bills of Entry. - HELD THAT: - The Tribunal found as an admitted fact that duty on the same Bills of Entry was paid twice on 24.11.2014 and again on 25.11.2014 because the first payment was not reflected in the ICES portal. Applying the principle that duty cannot be collected beyond what is permissible under law (Article 265) and the settled doctrine that amounts paid in excess of statutory liability by mistake are not lawfully collectible, the Bench held that one of the duplicate payments is not a valid duty and must be refunded. Reliance was placed on precedents and the reasoning in Mafatlal and subsequent authorities which recognise a taxpayer's right to restitution where payments exceed statutory liability; the Authority cannot retain amounts collected without legal authority. The Tribunal therefore allowed the refund claim on merits and set aside the order rejecting the refund. [Paras 6, 7]

Refund of the excess (double) duty paid was allowed and the order rejecting the refund was set aside.

Time bar for refund claims - effect of discovery rule on limitation - Whether the refund claim is barred by limitation because payment was made earlier and the claim was filed after the statutory period. - HELD THAT: - The Tribunal held that the adjudicating authority erred in applying the statutory time-bar to the refund claim. The refund sought was not for the first payment per se but for the excess payment made on account of duplicate payment; the limitation period for seeking relief in respect of a mistake does not begin to run until the mistake is discovered or could with reasonable diligence have been discovered. Applying the discovery rule (as reflected in the Limitation Act principles), the Bench concluded that the refund application filed after discovery of the double payment was not time barred. The Commissioner (Appeals) wrongly treated the earlier reflected payment as creating an absolute bar to refund. [Paras 5, 7]

The time bar was held inapplicable and the refund claim was not barred by limitation.

Provisionally assessed bills and final assessment - remand for reconsideration - Whether remand to re-examine provisionally assessed Bills of Entry was necessary or justified. - HELD THAT: - The Tribunal observed that although some Bills of Entry remained provisionally assessed, the factual position was that the duty payable on those BEs had been paid twice. The adjudicatory requirement to remand for reconsideration of provisionally assessed BEs was held to be unnecessary because the question before the Authority was restitution of an excess payment already made; one of the duplicate payments could not be characterized as a valid duty merely because the BE remained provisionally assessed. In these circumstances remanding the matter for re examination amounted to an irrational application of facts and law, and was set aside. [Paras 7]

Remand for reconsideration of provisionally assessed Bills was unjustified and was set aside.

Final Conclusion: The appeals were allowed: the order rejecting the refund and remanding the matter was set aside, and the appellant's claim for refund of the excess (double) duty payment was allowed on the grounds that the excess payment was not a lawful duty, the limitation bar did not apply in view of the discovery rule, and remand was unnecessary.

Refund of Special Additional Duty (SAD) on re-export / re-sale - Condition of re-sale and payment of appropriate VAT/Sales Tax - Interpretation of the word "appropriate" in conditional exemptions - Equitable levy in lieu of sales tax

Refund of Special Additional Duty (SAD) on re-export / re-sale - Condition of re-sale and payment of appropriate VAT/Sales Tax - Interpretation of the word "appropriate" in conditional exemptions - Whether refund of balance SAD paid at import is admissible where the goods were re-sold but the rate of VAT/Sales Tax on such re-sale was nil - HELD THAT: - The Tribunal upheld the Commissioner (Appeals) and followed the precedent of Gazal Overseas , relying on para 5.3 of CBE&C Circular No.6/2008 which clarifies that the notification envisages filing a refund claim for the additional duty paid on import and payment of "appropriate Sales Tax or VAT as the case may be" on sale; the circular expressly does not condition refund on the rate of VAT/Sales Tax being equal to or higher than the additional duty and consequently the entire additional duty shall be refunded if otherwise eligible. The Tribunal noted that SAD operates as an equitable levy in lieu of sales tax to protect domestic industry and that the Customs Tariff Act and notification no.102/2007 Cus provide the mechanism for refund when goods are re sold and VAT/Sales Tax has been paid. Though Revenue relied on authority of CCE, Vadodara and Nikhil Kumar to contend that "appropriate" excludes nil rates, the Tribunal found no merit in this contention in the context of the notification and circular relied upon, and held that refund is admissible even if the VAT/Sales Tax rate on re sale is nil.

The impugned order allowing refund of the balance SAD is confirmed and the Revenue appeal is dismissed.

Final Conclusion: The appeal by Revenue is dismissed; refund of the balance SAD paid on import was correctly allowed despite the rate of VAT/Sales Tax on re sale being nil, in view of the notification scheme and the clarifying circular.

Cancellation of share allotment - Removal from Register of Members - Compliance with statutory procedure for allotment in a private limited company - Inference from non-production of share allotment documents - Availability of alternative remedies for recovery of loans

Cancellation of share allotment - Removal from Register of Members - Compliance with statutory procedure for allotment in a private limited company - The Court directed deletion of the appellant's name from the Register of Members and cancellation of the allotment of shares shown in his name, on the basis that respondents failed to produce documents evidencing a valid allotment. - HELD THAT: - The Tribunal found that the respondents did not produce any written instrument, letter of request or other documents evidencing the appellant's consent to or compliance with the statutory requirements for allotment of shares in a private limited company. The bench observed that, had the respondents been able to controvert the appellant's claim, they could have produced share certificates, minutes or other records showing lawful issue and allotment. In light of the non-production of such material and the respondents' absence from proceedings, the Tribunal concluded that the appellant's name should be removed from the Register of Members and the company directed to file requisite documents with the Registrar of Companies. The direction to delete the name and comply with statutory filing was made to be effected within two weeks and for the RoC to take the documents on record in accordance with law. [Paras 4, 5, 6]

The respondent No.1 company is directed to delete the appellant's name from the Register of Members within two weeks and file requisite documents with the Registrar of Companies.

Availability of alternative remedies for recovery of loans - The Tribunal declined to adjudicate the appellant's claim for repayment of the loan in this petition and held that appropriate remedies under law must be invoked for recovery. - HELD THAT: - The Tribunal observed that the prayer for repayment of the loan could not be granted in the present petition and that the appellant must pursue the statutory or civil remedies available for recovery of loans. The court therefore did not decide the substantive claim for repayment or interest, leaving that controversy to be raised and decided in the appropriate forum and procedure prescribed by law. [Paras 6]

The claim for repayment of the loan was not adjudicated in this proceeding and the appellant must invoke appropriate remedies available under law for recovery.

Final Conclusion: The appeal is allowed insofar as the Tribunal directed deletion of the appellant's name from the Register of Members and consequent filing with the Registrar of Companies; the request for repayment of the loan was not decided and the appellant is directed to pursue appropriate legal remedies for recovery.

Scheme of Arrangement - Demerger - sanction under Sections 230 to 232 of the Companies Act, 2013 - treatment of difference as Capital Reserve - accounting treatment in accordance with the Accounting Standards prescribed under Section 133 - special resolution under section 180(1)(c) for enhancement of borrowing limits - compounding under section 441 of the Companies Act, 2013

Scheme of Arrangement - sanction under Sections 230 to 232 of the Companies Act, 2013 - Sanction of the proposed Scheme of Arrangement effecting demerger of the Demerged Undertaking of Dhampur Sugar Mills Limited into Dhampur Bio Organics Limited. - HELD THAT: - The Tribunal examined statutory compliance, approvals by the respective Boards, valuation report, auditor certification on accounting treatment, convened meetings and their results, publication and service of notices and the representations filed by the Regional Director, Registrar of Companies and Income-Tax Department. Having considered the reports and representations, and finding no objection in public policy or public interest, and that statutory requirements under Sections 230-232 have been satisfied, the Tribunal concluded that the Scheme may be sanctioned. The sanction operates with effect from the Appointed Date specified in the Scheme. [Paras 16, 17, 18, 24]

The Scheme of Arrangement is approved and sanctioned and shall be binding on the companies, their shareholders and creditors with effect from the Appointed Date, 1st April, 2021.

Compounding under section 441 of the Companies Act, 2013 - Consequence of the prosecution pending against the Demerged Company noted by the Regional Director. - HELD THAT: - The Tribunal observed that the offence referred to in the Regional Director's report is compoundable under section 441 of the Companies Act, 2013 and that the Demerged Company has filed a compounding application. The Tribunal further noted that since both transferor and transferee companies continue to exist after the Scheme becomes effective, any proceedings by or against either company can continue as per law. [Paras 14]

No bar to sanctioning the Scheme on account of the pending prosecution; matter of compounding and continuation of proceedings to be dealt with in accordance with law.

Special resolution under section 180(1)(c) for enhancement of borrowing limits - Whether the Scheme could effect enhancement of the Resulting Company's borrowing limits without separate compliance under section 180(1)(c). - HELD THAT: - The Regional Director observed that the Scheme's provision purporting to enhance the Resulting Company's borrowing limits by operation of the Scheme would not obviate the requirement to pass a special resolution under section 180(1)(c) and file e-form MGT-14. The Petitioners replied that the Resulting Company had in fact already passed the requisite resolution and filed e-form MGT-14. On verification, the Tribunal found that the necessary resolution was passed and filed and therefore no further direction was required. [Paras 14]

Compliance with section 180(1)(c) having been effected by filing the required resolution and e-form MGT-14, no additional direction was necessary.

Treatment of difference as Capital Reserve - accounting treatment in accordance with the Accounting Standards prescribed under Section 133 - Accounting treatment of the excess or shortfall arising on transfer of assets and liabilities pursuant to the Scheme. - HELD THAT: - Although the Scheme provided that the difference between the value of assets and liabilities transferred and the face value of shares issued would be credited or debited to reserves, the Regional Director queried whether such difference should be treated as Capital Reserve. The Petitioners relied on auditor certification and conformity with applicable Accounting Standards. For clarity and compliance, the Tribunal directed that the difference shall be credited or debited to the Capital Reserve in the books of the Resulting Company in accordance with the applicable Accounting Standards. [Paras 14]

The Resulting Company shall record the excess or shortfall as Capital Reserve in its books in accordance with the applicable Accounting Standards.

Final Conclusion: The Tribunal sanctioned the Scheme of Arrangement effecting the demerger with effect from the appointed date of 1 April 2021, subject to the clarifications and directions recorded (including treatment of the accounting differential as Capital Reserve); statutory compliances were found satisfied and the petition is allowed and disposed of.

Restoration of name of company - Section 252(3) of the Companies Act, 2013 - Striking off under Section 248 - Reasonable cause to believe not carrying on business - Disqualification of directors for non filing/DIR 3 KYC - Just and equitable revival - Conditions for restoration including filing pending statutory documents

Restoration of name of company - Section 252(3) of the Companies Act, 2013 - Limitation and maintainability - Petition under section 252(3) for restoration is maintainable and filed within limitation. - HELD THAT: - The Tribunal found that the petitioner, as shareholder and director, is eligible to file the petition for restoration and that the petition was filed within the prescribed period having regard to exemption attributable to the Covid pandemic. The Tribunal therefore proceeded to decide the petition on merits rather than rejecting it on grounds of maintainability or limitation. [Paras 5, 6]

Petition is maintainable and within limitation; Tribunal entertained the petition under section 252(3).

Striking off under Section 248 - Reasonable cause to believe not carrying on business - Just and equitable revival - Conditions for restoration including filing pending statutory documents - Disqualification of directors for non filing/DIR 3 KYC - Name of the company is to be restored on a just and equitable basis subject to specified conditions; restoration does not automatically revive DINs of disqualified directors and does not preclude action for other violations. - HELD THAT: - The Tribunal recorded that the company had been struck off under Section 248 on account of non filing of statutory returns since FY 2014-2015 but accepted the petitioner's explanation that non filing was unintentional and that the company remained active. Applying the discretionary power under Section 252(3), the Tribunal held it would be just and equitable to revive the company's name. Revival was made conditional: the company must file all pending statutory documents (including annual accounts and returns from Financial Year 2015-16 onward) and make statutory compliances with prescribed/additional fees, deliver a certified copy of the order to the ROC, and comply with directions for publication in the Official Gazette; payment of costs for revival was also imposed. The Tribunal expressly noted that restoration of the company's name would not entitle activation of DINs of directors disqualified for non filing and would not prevent the ROC from taking lawful action for any other violations committed before or during the struck off period. [Paras 8, 9, 10, 11]

Petition partly and conditionally allowed: ROC directed to restore the company to active status subject to compliance with conditions including filing pending statutory returns, statutory compliances, delivery of certified copy of order and publication; restoration does not revive disqualified DINs and does not bar other proceedings.

Final Conclusion: The Tribunal allowed the petition under Section 252(3) and directed restoration of Well Will Infrastructures Private Limited to active status on just and equitable grounds subject to specified conditions (filing pending returns and compliances, delivery and publication of the order, payment of costs), while leaving open the ROC's power to take action for any other violations and without restoring DINs of disqualified directors.

Auction purchaser's obligation to deposit balance sale consideration within ninety days - sale cancellation for non-receipt of payment within ninety days - mandatory nature of a statutory proviso - interest on delayed payment after thirty days at 12% per annum - liquidator's power to cancel sale under Schedule I Clause 1(12) of the Liquidation Process Regulations, 2016

Auction purchaser's obligation to deposit balance sale consideration within ninety days - sale cancellation for non-receipt of payment within ninety days - mandatory nature of a statutory proviso - Validity of the Adjudicating Authority's order cancelling the sale on account of the auction purchaser's failure to pay the balance sale consideration within ninety days. - HELD THAT: - The Court examined Item 12 of Schedule I of the Liquidation Process Regulations, 2016 and its provisos which require the highest bidder to provide the balance sale consideration within ninety days, prescribe interest at 12% for payments made after thirty days, and expressly provide that the sale shall be cancelled if payment is not received within ninety days. The proviso therefore prescribes the ninety-day period as the maximum timeline and attaches the consequence of cancellation for non-compliance. Where a statute prescribes the consequence of non-compliance, that provision is to be treated as mandatory. The Adjudicating Authority had allowed the liquidator's application to cancel the sale after the auction purchaser failed to make payment within the ninety-day period, and the Tribunal found that, given the statutory consequence, the Adjudicating Authority had no option but to allow cancellation. The appellant's pending application seeking alternative modes of payment did not negate the statutory timeline or the consequence for failure to pay within ninety days, and the Adjudicating Authority's action in closing the appellant's applications and permitting cancellation was in accordance with the statutory provision. [Paras 4, 7, 8, 9]

The Adjudicating Authority rightly allowed the liquidator's application to cancel the sale for non-payment within ninety days; the cancellation was in accordance with the statutory proviso and the appeal fails.

Final Conclusion: Appeal dismissed. The Adjudicating Authority correctly applied the mandatory provision in Schedule I, Clause 1(12) of the Liquidation Process Regulations, 2016 and was justified in cancelling the sale when the auction purchaser failed to pay the balance consideration within the prescribed ninety-day period.

Admission of CIRP - existence of debt and default - limitation applicable to IBC proceedings - overriding effect of the Insolvency and Bankruptcy Code - pendency of SARFAESI/DRT/PBPT proceedings vis-a -vis initiation under IBC - forum shopping

Overriding effect of the Insolvency and Bankruptcy Code - pendency of SARFAESI/DRT/PBPT proceedings vis-a -vis initiation under IBC - forum shopping - Pendency of proceedings under SARFAESI, DRT and PBPT does not prohibit a financial creditor from initiating proceedings under the IBC. - HELD THAT: - The Tribunal held that the IBC is a special enactment whose provisions override other laws. Section 238 gives the Code overriding effect, permitting a financial creditor to file an application under the Code notwithstanding parallel proceedings under other statutes. Consequently, the mere pendency of SARFAESI, DRT or PBPT proceedings and the bank's prior actions did not render the Section 7 application unsustainable as amounting to impermissible forum shopping; the Adjudicating Authority was entitled to proceed with the IBC application. This reasoning disposes of the contention that the CIRP could not be initiated while other remedies were pending. [Paras 8, 9]

The point is answered against the appellant and the Section 7 application was maintainable despite pendency of other proceedings.

Existence of debt and default - admission of CIRP - Existence of financial debt and default by the corporate debtor was proved. - HELD THAT: - The Form-1 particulars filed by the financial creditor specified the financial debt, and the appellant admitted obtaining three credit facilities to the stated amount by mortgaging the property. The Adjudicating Authority found that the existence of debt and default was established beyond reasonable doubt on the material on record, supporting admission of the Section 7 petition. [Paras 10]

The point is answered against the appellant; debt and default are proved and support admission of CIRP.

Limitation applicable to IBC proceedings - The Section 7 application was filed within the period of limitation. - HELD THAT: - The date of default was stated as 31.05.2018 and the Section 7 application was filed on 18.03.2021. Applying the Limitation Act, the Tribunal held the application was within three years from the date of default as applicable to IBC proceedings, and therefore not barred by limitation. [Paras 11]

The point is answered against the appellant; the application is within limitation.

Admission of CIRP - The impugned order of the Adjudicating Authority admitting the Section 7 petition is a reasoned order and does not suffer legal or factual infirmity. - HELD THAT: - On review of the Adjudicating Authority's findings, the Tribunal found the order to be reasoned and that it dealt adequately with the relevant contentions. No grounds for interference with the admission order were found. [Paras 12]

The point is answered against the appellant; no interference with the admission order is warranted.

Final Conclusion: The appeal is dismissed as devoid of merit; the admission order in CP 75 of 2021 under Section 7 of the IBC is upheld and no costs are awarded.

Restoration of withdrawn petition - Corporate Insolvency Resolution Process revival on default of settlement - Effect of Memorandum of Understanding on pending insolvency proceedings - Liberty to revive CIRP upon default - Reporting default of settlement to the Adjudicating Authority - Power under Rule 11 of the NCLT Rules, 2016

Restoration of withdrawn petition - Power under Rule 11 of the NCLT Rules, 2016 - Liberty to revive CIRP upon default - Application under Section 60(5) to restore a petition withdrawn with liberty to revive was maintainable and the withdrawn company petition was restored. - HELD THAT: - The Tribunal accepted that where a petition under the Insolvency and Bankruptcy Code was permitted to be withdrawn with liberty to return in case of default, the adjudicatory forum can exercise its powers to restore the petition when the settlement terms are not complied with. Reliance was placed on precedents recognising that recording of settlement terms and the grant of liberty to the creditor to return necessarily contemplates revival of CIRP on default. The objection that a fresh petition must be filed was rejected and Rule 11 power was held available in the circumstances to effect restoration when parties agreed or where default is reported to the Adjudicating Authority. [Paras 3, 4, 5]

Application allowed and the main petition restored.

Effect of Memorandum of Understanding on pending insolvency proceedings - Corporate Insolvency Resolution Process revival on default of settlement - Reporting default of settlement to the Adjudicating Authority - Failure to comply with the terms of a Memorandum of Understanding revived the pre MOU position and did not bar restoration of the original petition. - HELD THAT: - The Tribunal held that the MoU, entered into to settle the dispute and permit withdrawal of the petition, was intended to put an end to proceedings only so long as its terms were complied with. On default, the situation as it existed prior to the MoU is revived in toto and the creditor is not confined to enforcing only the contractual remedies under the MoU; reporting of default permits the adjudicatory authority to act for revival of the CIRP. The contention that restoration would frustrate the MoU was rejected because the MoU's efficacy depends on performance and its breach restores the earlier rights. [Paras 5]

Restoration permitted because of default in complying with the MoU; pre MOU position revived.

Final Conclusion: The application under Section 60(5) is allowed; the petition withdrawn earlier with liberty to return is restored because the respondents defaulted on the MoU, thereby reviving the position prior to the settlement.

Withdrawal of application admitted under Section 7, 9 or 10 (Section 12A of IBC) - Requirement of 90% voting share of the Committee of Creditors for withdrawal under Section 12A - Settlement and consensus as prerequisite for withdrawal - Locus to move application for withdrawal - Operational or Financial Creditor - Inherent powers of the Tribunal under Rule 11 of NCLT Rules - Role of Interim Resolution Professional, Form-FA and Regulation 30A procedure - Limits of Tribunal's jurisdiction to remedy alleged inducement/cheating in settlement negotiations

Withdrawal of application admitted under Section 7, 9 or 10 (Section 12A of IBC) - Requirement of 90% voting share of the Committee of Creditors for withdrawal under Section 12A - Locus to move application for withdrawal - Operational or Financial Creditor - Whether a Corporate Debtor (or a third party) can invoke Section 12A to procure withdrawal of a petition admitted under Section 9 of the IBC. - HELD THAT: - The Tribunal held that Section 12A contemplates withdrawal of an application admitted under Section 7, 9 or 10 only on an application made by the applicant who filed the petition and with 90% voting share approval of the Committee of Creditors. The statutory scheme and language imply that the 'applicant' in Section 12A is the Operational Creditor or Financial Creditor who initiated the application. Consequently, a Corporate Debtor or a third party does not have locus to file an application under Section 12A to compel withdrawal. The court examined the scope of Swiss Ribbons and related authorities and noted that those decisions are limited to situations where withdrawal is sought prior to constitution of the CoC and where inherent powers were invoked; they do not alter the basic construction that Section 12A requires the creditor (applicant) to move for withdrawal once CoC approval is obtained.

A Corporate Debtor/third party cannot be entertained as the applicant under Section 12A; locus to seek withdrawal lies with the Operational or Financial Creditor who filed the petition and the statutory requirement of 90% CoC approval applies.

Inherent powers of the Tribunal under Rule 11 of NCLT Rules - Settlement and consensus as prerequisite for withdrawal - Role of Interim Resolution Professional, Form-FA and Regulation 30A procedure - Whether the Tribunal may exercise inherent powers under Rule 11 to entertain or direct withdrawal where parties claim a settlement, and the extent of such power. - HELD THAT: - The Tribunal accepted that Rule 11 confers inherent powers to meet ends of justice or prevent abuse of process, and that such powers have been exercised in limited circumstances (for example, to permit withdrawal based on a pre-CoC settlement as recognised by the Supreme Court). However, inherent jurisdiction cannot be used to circumvent the procedures or the party-specific prescription of Section 12A once the petition is admitted and IRP is in place. A settlement presupposes a genuine consensus; if the settlement is not duly executed or is vitiated by lack of agreement, the Tribunal cannot, by invoking inherent powers, direct the Operational Creditor to file the Section 12A application or to forgo rights (such as claims to interest). The Tribunal also noted the role of the IRP and Form-FA/Regulation 30A as part of the prescribed mechanism when an agreed settlement is to be formalised and filed.

The Tribunal's inherent powers under Rule 11 may be exercised in narrow circumstances, but they do not authorise directing the Operational Creditor to file an application under Section 12A or to ignore the procedural requirements and creditor rights where no bona fide, executed settlement exists.

Settlement and consensus as prerequisite for withdrawal - Limits of Tribunal's jurisdiction to remedy alleged inducement/cheating in settlement negotiations - Whether the correspondence and part payment shown by the Applicant constituted a binding settlement entitling the Tribunal to direct withdrawal, or whether other relief should follow. - HELD THAT: - On the material before it the Tribunal found absence of a signed, final settlement agreement and that the Operational Creditor contended the payment received was only partial and did not extinguish all dues (including interest). Mere change of mind by a creditor or unexecuted assurances does not amount to abuse of process warranting a direction to file Section 12A. Allegations of inducement or cheating may give rise to separate proceedings, but the Tribunal is constrained by the statutory framework and cannot itself convert the correspondence and part payment into a binding settlement that compels filing under Section 12A. In the interest of fairness and having regard to precedents where parties were permitted to implement bona fide settlements, the Tribunal disposed of the application by permitting the Applicant to approach the Operational Creditor to pursue further negotiations, including discussions on interest, and declined to keep the interim order in force.

The correspondence and payments did not constitute an executed settlement that would entitle the Applicant to a direction to withdraw; the Tribunal declined to direct filing under Section 12A but permitted the Applicant to pursue negotiations with the Operational Creditor and disposed of the application accordingly.

Final Conclusion: The application by the Corporate Debtor/third party to direct the Operational Creditor to withdraw the Section 9 petition under Section 12A is not maintainable because Section 12A contemplates the petitioning creditor as the applicant and requires 90% CoC approval; the Tribunal's inherent powers cannot be used to compel the creditor to file for withdrawal in absence of a bona fide, executed settlement. The matter is disposed by permitting the Applicant to pursue negotiations with the Operational Creditor; the interim order is vacated.

Insolvency Resolution Process against Personal Guarantor - Initiation under section 95(1) of the Insolvency and Bankruptcy Code, 2016 read with rule 7(2) of the IB Rules, 2019 and regulation 4(2) of the IB Regulations, 2019 - Demand Notice in Form B under rule 7(1) of the IB Rules, 2019 - Interim moratorium under section 96(1)(a) of the Insolvency and Bankruptcy Code, 2016 - Appointment of Resolution Professional and duties under section 99 of the Insolvency and Bankruptcy Code, 2016

Insolvency Resolution Process against Personal Guarantor - Initiation under section 95(1) of the Insolvency and Bankruptcy Code, 2016 read with rule 7(2) of the IB Rules, 2019 and regulation 4(2) of the IB Regulations, 2019 - Demand Notice in Form B under rule 7(1) of the IB Rules, 2019 - Application for initiation of Insolvency Resolution Process against the personal guarantor was admitted. - HELD THAT: - The Adjudicating Authority considered the application filed under section 95(1) of the IBC, 2016 read with the relevant rules and regulations for initiating the IR Process against the personal guarantor of the corporate debtor. The record shows execution of deeds of guarantee by the respondent, issuance of a Demand Notice in Form B dated 06/07/2021 under rule 7(1) of the IB Rules, 2019, and non-payment by the guarantor. In the factual matrix before the Tribunal the corporate debtor had been earlier admitted to CIRP and subsequently ordered into liquidation, and the guarantor had executed guarantees lastly on 31/03/2013. On these materials the Tribunal allowed the Application and proceeded with initiation of the IR Process against the personal guarantor. [Paras 2, 6]

Application under section 95(1) read with the IB Rules and Regulations admitted and IR Process initiated against the personal guarantor.

Interim moratorium under section 96(1)(a) of the Insolvency and Bankruptcy Code, 2016 - Interim moratorium consequent to filing of the application was declared to commence. - HELD THAT: - Upon filing of the admitted application the Tribunal recorded that the interim moratorium under section 96(1)(a) of the IBC, 2016 comes into effect. This operates as a statutory consequence of the application having been filed and admitted for initiation of the IR Process against the personal guarantor. [Paras 8]

Interim moratorium under section 96(1)(a) IBC, 2016 commences on the filing of the admitted application.

Appointment of Resolution Professional and duties under section 99 of the Insolvency and Bankruptcy Code, 2016 - A Resolution Professional was appointed and directed to perform the functions and filing obligations under section 99 of the IBC, 2016. - HELD THAT: - The Tribunal appointed the proposed insolvency professional, who had filed consent in Form A and authorisation for assignment, as the Resolution Professional. The appointee was directed to file the required declaration within seven days confirming eligibility and to exercise the powers conferred under section 99 of the IBC, 2016. The RP was further directed to make recommendations for acceptance or rejection of the application within the statutory timeframe and to provide a copy of the report under sub section (7) of section 99 to the Applicant when filed before the Adjudicating Authority. The Applicant's counsel was directed to serve the Order, application and documents on the RP and to file proof of service. [Paras 9, 10, 11]

Mr. Neeraj Kumar Sureka appointed as Resolution Professional with directions to file declaration, exercise powers under section 99, submit the report and for the Applicant to serve relevant documents on him.

Final Conclusion: The Tribunal admitted the application to initiate the Insolvency Resolution Process against the personal guarantor, declared the interim moratorium under section 96(1)(a) IBC, appointed the nominated Resolution Professional with directives regarding his declaration, powers and reporting obligations under section 99, and directed service of the order and records on the Resolution Professional.

Admission of application under Section 7 of IBC - existence of debt and default - limitation and forum shopping as defence to Section 7 application - dismissal of interlocutory applications to implead and to keep application in abeyance - appointment of Interim Resolution Professional - moratorium under Section 14 of IBC

Dismissal of interlocutory applications to implead and to keep application in abeyance - IA/839/2021 and IA/844/2021 filed by the respondents stand dismissed. - HELD THAT: - The Tribunal found both interlocutory applications - one to implead the Deputy Commissioner of Income Tax (Benami Prohibition) and the other to keep the Section 7 application in abeyance pending proceedings under the Prohibition of Benami Property Transaction Act - to be without merit. The adjudicatory role under Section 7 is to determine existence of debt and default and not to entertain collateral applications that would delay initiation of CIRP; accordingly both IAs were dismissed. [Paras 21]

IA/839/2021 and IA/844/2021 are dismissed.

Existence of debt and default - admission of application under Section 7 of IBC - The Section 7 application is admitted on the ground that financial debt and default were proved. - HELD THAT: - On review of the application and pleadings the Tribunal concluded that the Financial Creditor had established the financial debt and that default had occurred. The Corporate Debtor had itself admitted outstanding liability in the counter affidavit. Applying the limited scope of scrutiny under Section 7 - namely to ascertain from records whether a default has occurred - the Tribunal was satisfied and admitted the application under Section 7(5). [Paras 22, 24, 25, 33]

Application under Section 7 is admitted and CIRP is initiated.

Limitation and forum shopping as defence to Section 7 application - The contentions of delay (limitation) and parallel proceedings before DRT (forum shopping) do not bar admission of the Section 7 application. - HELD THAT: - The Tribunal noted the date of NPA/default and observed that the Section 7 application was filed within the period of limitation as the application dated 18.03.2021 related to defaults occurring in 2018. With respect to the alleged pendency of proceedings before DRT, the Tribunal applied the statutory primacy of the IBC and precedents holding that pendency before DRT does not preclude initiation of CIRP, and therefore rejected these defences. [Paras 23, 24]

Limitation and forum shopping objections are rejected; they do not prevent admission.

Appointment of Interim Resolution Professional - moratorium under Section 14 of IBC - An Interim Resolution Professional is appointed and moratorium is declared with directions to the IRP. - HELD THAT: - The Financial Creditor proposed a named IRP whose consent and IBBI authorisation were on record and valid. The Tribunal directed immediate takeover of management by the IRP, public announcement and claim calling as prescribed, superseded the board's powers, and set out the statutory moratorium and its scope and duration. The IRP was directed to comply with relevant provisions of the Code and to file the first progress report within the statutory timeframe. [Paras 29, 30, 31, 32, 34]

Mr. Gopalsamy Ganesh Babu is appointed as IRP; moratorium under Section 14 is imposed and statutory directions to the IRP are issued.

Final Conclusion: The Tribunal admitted the Section 7 application, holding that financial debt and default were established; dismissed interlocutory applications to implead the Benami authority and to keep the matter in abeyance; rejected limitation and forum shopping defences; appointed the proposed Interim Resolution Professional and declared the moratorium, directing statutory steps for initiation of CIRP.

Framing of charge - discharge at stage of framing - prima facie case - grave suspicion - acceptance of prosecution material at charge stage - defence not to be considered at charge stage - offences under the Prevention of Money Laundering Act, 2002 - modus operandi as basis for charge

Framing of charge - discharge at stage of framing - prima facie case - acceptance of prosecution material at charge stage - defence not to be considered at charge stage - offences under the Prevention of Money Laundering Act, 2002 - modus operandi as basis for charge - Validity of the trial court's order refusing discharge and framing charges under the Prevention of Money Laundering Act, 2002 against the petitioner. - HELD THAT: - The High Court applied the settled legal test for the stage of framing of charges: the court must be satisfied that a prima facie case exists and may accept prosecution material as true for that limited purpose, while not permitting the accused to rely on defence material to secure discharge. Having reviewed the record and the material placed before the trial court, including six prosecution witnesses (five of whom supported the prosecution) and specific allegations of laundering totalling the stated amount by three identified modus operandi (acquisitions in relatives' names, manipulation of a trust's receipts, and use of two alleged front companies), the High Court found no illegality in the trial court's exercise of judicial mind in framing charges. The Court distinguished authorities invoked for the petitioner where facts differed or where defence evidence was improperly considered at the framing stage, reiterating that defence pleas cannot be used to persuade discharge at this stage. On these grounds the High Court held that sufficient material existed to proceed to trial under sections 3 and 4 of the PMLA and there was no basis to interfere with the impugned orders. [Paras 11, 12]

Criminal revision and interlocutory application dismissed; impugned orders refusing discharge and framing charges under the PMLA upheld.

Final Conclusion: The High Court dismissed the criminal revision and interlocutory application, upholding the trial court's refusal to discharge the petitioner and its framing of charges under the Prevention of Money Laundering Act, 2002, finding sufficient prima facie material to proceed to trial.

Quantification of duty for SVLDRS eligibility - admission of liability during investigation as quantification - interpretation of scheme circulars clarifying written communication - opportunity of hearing / audi alteram partem

Quantification of duty for SVLDRS eligibility - admission of liability during investigation as quantification - interpretation of scheme circulars clarifying written communication - Whether the Petitioners' declaration under the SVLDRS scheme was rejected correctly on the ground that the duty was not quantified before the cut-off date, and whether the statements made by the Petitioners before 30.06.2019 amount to quantification entitling them to the benefit of the scheme. - HELD THAT: - The Court examined the scheme and the clarificatory circulars which treat duty admitted during enquiry, investigation or audit, and written communications including letters and statements, as constituting quantification for the scheme's purposes. The departmental record and the show cause notice itself record statements of the Petitioners (dated 16.05.2018 and 17.05.2019 and reference to a reconciliation dated 01.02.2019) admitting and confirming service tax liability for the relevant periods. Earlier decisions of this Court were noted to the effect that a director's statement recorded during investigation admitting liability and its confirmation render the assessee eligible for the scheme. On the material before it, the Court found that the Petitioners had made out a prima facie case that quantification, within the meaning of the scheme and its circulars, had occurred on or before the cut-off date and thus deserved consideration under the scheme. [Paras 8, 9, 10, 11]

Impugned rejection set aside; matter remitted to respondents to decide the declaration afresh after affording the Petitioners an opportunity of hearing.

Opportunity of hearing / audi alteram partem - Whether the Petitioners were entitled to be heard before rejection of their SVLDRS-1 declaration. - HELD THAT: - The Court held that the declaration was rejected without giving the Petitioners an opportunity to be heard despite the existence in the record of statements and communications relevant to eligibility. Given the Petitioners' asserted entitlement under the scheme and circulars, the absence of a hearing rendered the rejection procedurally unsustainable. Accordingly the respondents were directed to afford hearing and decide afresh. [Paras 9, 10, 11]

Declaration set aside and respondents directed to hear the Petitioners and decide the SVLDRS-1 declaration afresh.

Final Conclusion: The order rejecting the SVLDRS-1 declaration is set aside; respondents must hear the Petitioners and determine the declaration afresh in accordance with the scheme and circulars, with the Petitioners to appear on the date directed by the Court.

Sabka Vishwas (Legacy Dispute Resolution) Scheme 2019 - declaration under the Scheme - eligibility of persons with appeals before the Supreme Court to file declarations under the Scheme - clarificatory circular binding on the department - reconsideration of rejected declarations in accordance with Scheme conditions

Declaration under the Scheme - eligibility of persons with appeals before the Supreme Court to file declarations under the Scheme - Petitioner, though having an appeal pending before the Supreme Court not arising from a show-cause notice, is eligible to file a declaration under the Scheme in view of the clarificatory circular. - HELD THAT: - The Court examined Circular No.1073/06/2019.CX which states that where lessees have instituted appeals before the Supreme Court challenging applicability of service tax and have complied with deposit conditions, such persons are allowed to file a declaration under the Scheme and avail its benefits, subject to remaining Scheme conditions. The circular was held to be clarificatory of the Scheme and applicable to the representation made by the Retailers Association of India regarding proceedings in respect of service tax on rent. Applying the circular, the Court concluded that the petitioner (a lessor) falls within the class of persons permitted to file a declaration despite the appeal not being pursuant to a show-cause notice, and that rejection of the declaration solely on that ground was unsustainable. [Paras 5, 6, 7]

Petitioner is permitted to file a declaration under the Scheme and to avail benefits in terms of the circular, subject to compliance with all other conditions of the Scheme.

Clarificatory circular binding on the department - reconsideration of rejected declarations in accordance with Scheme conditions - Impugned order rejecting the declaration solely because the appeal before the Apex Court was not pursuant to a show-cause notice must be set aside and the respondents must reconsider the declaration in light of the circular and Scheme conditions. - HELD THAT: - The Court found the circular to be clarificatory and binding on the respondents. Consequently, the rejection of the petitioner's declaration on the stated ground was set aside. The respondents were directed to reconsider the declaration and not to reject it for the reason relied upon in the impugned order, while ensuring that the petitioner complies with all remaining conditions prescribed under the Scheme for availing its benefits. [Paras 7, 8]

Impugned rejection is set aside; respondents to reconsider the declaration and not to reject it on the same ground, subject to the petitioner fulfilling all Scheme conditions.

Final Conclusion: Writ petition allowed in part: the circular permitting persons with Supreme Court appeals (subject to deposit conditions) to file declarations under the Sabka Vishwas Scheme is held applicable; the order rejecting the petitioner's declaration on the ground that the appeal was not pursuant to a show-cause notice is set aside and respondents directed to reconsider the declaration in accordance with the circular and all Scheme conditions.

Classification under Sabka Vishwas (Legacy Dispute Resolution) Scheme - Litigation versus Arrears - concession by counsel and estoppel against statute - effect of expiry of Sabka Vishwas (Legacy Dispute Resolution) Rules, 2019 on post scheme relief - bona fides and delay in seeking relief under a statutory settlement scheme - pre deposit made before appellate tribunal and its relevance to scheme benefits

Classification under Sabka Vishwas (Legacy Dispute Resolution) Scheme - Litigation versus Arrears - concession by counsel and estoppel against statute - pre deposit made before appellate tribunal and its relevance to scheme benefits - Whether the petitioner's case should be treated under the Litigation category instead of the Arrears category under the SVLDR scheme and whether the petitioner is precluded by his counsel's earlier concession. - HELD THAT: - The record shows the petitioner filed Form SVLDR 1 and the authority, upon the petitioner's counsel's admission at the hearing, classified the matter in the Arrears category and communicated an estimated amount payable. Though an advocate's concession cannot operate as an estoppel against a statutory provision, the Court noted that the petitioner had accepted the Arrears classification before the authority and did not challenge that estimate at the relevant time. The petitioner had also made a pre deposit before the Tribunal. In the circumstances, and given the petitioner's failure to promptly challenge the classification or pay the assessed amount, the Court found no sufficient ground to reclassify the case or to treat the counsel's earlier statement as a bar to the authority's action in the institutional context of the scheme. [Paras 2, 9]

The petitioner's matter remains properly placed in the Arrears category as recorded before the authority, and the earlier concession by counsel did not require reclassification in the circumstances of inaction and delay by the petitioner.

Effect of expiry of Sabka Vishwas (Legacy Dispute Resolution) Rules, 2019 on post scheme relief - bona fides and delay in seeking relief under a statutory settlement scheme - Whether the Court should grant relief or permit consideration of the petitioner's claim after the SVLDR scheme had expired, in view of the petitioner's delay and alleged bona fides. - HELD THAT: - The Court observed that the SVLDR scheme expired on 31 October 2020 and that the Form SVLDRS 3 (estimating amount payable) was issued on 27 January 2020. The petitioner did not challenge the estimated determination or make the required payment within the scheme period, and approached the Court only in August 2021. Relying on the principle that a scheme which has closed cannot be reopened for the petitioner's belated request, and having regard to authority cited by the respondents upholding refusal of post scheme extension, the Court found that the petitioner's unexplained delay and absence of bona fides disentitled him to relief. In these circumstances the petition could not be entertained. [Paras 9, 10, 11, 12]

Relief is refused: because the scheme has expired and the petitioner delayed and lacked bona fides in seeking post scheme relief, the writ petition is not entertained.

Final Conclusion: The petition is dismissed: the petitioner's case stood classified under the Arrears category as recorded before the authority, and having failed to act within the scheme period and having approached the Court after substantial delay without bona fides, the Court refused to grant relief after the SVLDR scheme had expired.

Show cause notice - protection against double jeopardy under Article 20(2) - writ jurisdiction under Article 226 - res judicata / same cause of action - remand for consideration of reply by Competent Authority - limitation as a bar to proceedings

Protection against double jeopardy under Article 20(2) - res judicata / same cause of action - show cause notice - Challenge to the impugned show cause notice on the ground that it is based on the same cause of action as an earlier adjudicated notice and therefore barred. - HELD THAT: - The Court examined the periods and subject-matter of the earlier adjudicated proceedings and the present show cause notice and found that the earlier proceedings related to alleged variation of taxable value for 2012-13 and 2013-14, whereas the present show cause notice relates to the period 2014-2015. On the material before it, the periods prima facie do not overlap and the two notices do not appear to pertain to the identical period or same cause of action. The petitioner's plea that it cannot be vexed twice on the same cause of action under Article 20(2) therefore cannot be sustained on the record placed before the Court. The Court also noted that the exceptions where writ relief may be exercised at the stage of challenge to a show cause notice include absence of jurisdiction or barring by limitation, but those circumstances are not established here. [Paras 6, 7]

Writ jurisdiction declined; the challenge to the show cause notice on the ground of same cause of action / Article 20(2) is not accepted on the prima facie material before the Court.

Writ jurisdiction under Article 226 - remand for consideration of reply by Competent Authority - show cause notice - Relief and future course: whether the Court should quash proceedings or leave the matter to the Competent Authority for adjudication after permitting the petitioner to reply. - HELD THAT: - The Court observed that it is slow to interfere with show cause notices by writ and that the assesseeparty has the opportunity to file a reply and contest the notice on merits. The petition was disposed of by permitting the petitioner to file a reply preferably within fifteen days, and by directing the Competent Authority to consider the reply and proceed further in accordance with law if a reply is filed; if no reply is filed within the time stipulated, the Competent Authority may initiate proceedings and proceed in accordance with law. The Court made clear that it has not expressed any conclusive view on the merits and left all contentions open for decision by the Competent Authority. [Paras 5, 8, 9]

Writ petition disposed with liberty to the petitioner to file reply and with directions to the Competent Authority to consider the reply and proceed in accordance with law; no interference with the impugned notice at this stage.

Final Conclusion: The writ petition is disposed of: the Court declined to quash the show cause notice on the record before it, granted liberty to the petitioner to file a reply (preferably within fifteen days), and directed the Competent Authority to consider the reply and proceed in accordance with law; no conclusive opinion was expressed on the merits and all contentions remain open.

CENVAT credit on inputs, input services and capital goods used for construction of buildings - renting of immovable property service - immovable property not being 'goods' or 'services' - effect on CENVAT eligibility - binding precedent of the jurisdictional High Court - prospective amendment excluding construction-related services from 'input service' - penalty under Rule 15 read with Section 78 and under Section 77

CENVAT credit on inputs, input services and capital goods used for construction of buildings - renting of immovable property service - immovable property not being 'goods' or 'services' - effect on CENVAT eligibility - binding precedent of the jurisdictional High Court - Entitlement to CENVAT credit of duty/tax paid on inputs, input services and capital goods used in construction of buildings which are thereafter used to provide taxable 'renting of immovable property' service - HELD THAT: - The Tribunal examined whether goods, capital goods and input services utilised in constructing buildings that are subsequently used to provide taxable renting services qualify as inputs, capital goods or input services eligible for CENVAT credit. The appellants undisputedly provided renting of immovable property services and had paid service tax on that taxable output; the disputed inputs, capital goods and input services were used in creating the structures through which the taxable service is rendered. The Revenue's contention that the emergence of an immovable structure (which is neither a 'good' nor a 'service') severs the nexus and disqualifies credit was considered in light of authorities and the binding decision of the jurisdictional High Court in Vodafone. There being no stay on that High Court decision and it being binding on this Bench, the Tribunal held that the fact that the structure is immovable does not defeat the claim where the inputs and input services are directly relatable to the provision of the taxable service; the structure came into existence only by using those inputs/services and they are functionally connected to delivery of the taxable service. Having accepted the appellants' entitlement on merits and in view of the binding High Court precedent, the impugned orders denying and recovering CENVAT credit (and imposing penalties) could not be sustained. [Paras 16, 17, 18, 19]

Allowed; disputed CENVAT credit granted and impugned orders denying recovery and imposing penalties set aside with consequential relief.

Final Conclusion: Both appeals allowed: CENVAT credit on inputs, input services and capital goods used in construction of buildings rented out for providing taxable 'renting of immovable property' service is admissible for the periods in dispute; impugned orders of denial, recovery, interest and penalties are set aside in consequence.

Management, maintenance or repair service - self service (services rendered to oneself) - vivisection of composite contract - contract for supply of potable water - cum tax value

Management, maintenance or repair service - contract for supply of potable water - self service (services rendered to oneself) - vivisection of composite contract - Whether the activities carried out by the appellant attract service tax as management, maintenance or repair services - HELD THAT: - The Tribunal examined the agreement and the statutory definition of "maintenance or repair" pre and post 16.06.2005 and found that the contract expressly provided for supply of potable water on a per kilo litre tariff, with the contractor retaining ownership of assets during the seven year period and being paid water capacity, variable and energy charges. The agreement's references to rejuvenation, replacement of membranes and related works were held to be incidental to the primary obligation to supply potable water and not constitutive of a standalone maintenance contract. There was no separate maintenance contract; the activities of maintaining and operating the plant were either incidental to supply or amounted to services rendered to the contractor himself (self service). Applying the ratio of the Tribunal/Supreme Court authorities on operation/maintenance contracts (notably CMS (I) Operations & Maintenance), the contract could not be vivisected to create a taxable maintenance service, and the demands for service tax were therefore unsustainable. [Paras 5]

Demand of service tax on the activities carried out by the appellant is set aside; the services do not attract management/maintenance/repair service tax.

Cum tax value - Whether Revenue's appeal against the adjudicating authority's grant of benefit of cum tax value is sustainable - HELD THAT: - Revenue's appeal challenged the adjudicating authority's extension of cum tax value benefit to the appellant. The Tribunal observed that, having decided the primary issue in favour of the appellant on merits (that no service tax is leviable), the revenue appeal seeking reversal of the cum tax valuation benefit became moot and was not sustainable. [Paras 5]

Revenue's appeal is dismissed as not sustainable in view of the appellant's favourable decision on the main demand.

Penalties and interest - Whether penalties and interest sustaining the service tax demand survive after setting aside the demand - HELD THAT: - The Tribunal held that penalties and interest which flowed from the service tax demand could not survive once the substantive demand was set aside. Consequent relief follows from the setting aside of the tax demand. [Paras 5]

Penalties and interest consequential to the set aside demands are also not sustainable and are deleted.

Final Conclusion: The appeals by the appellant are allowed: the service tax demands (for the periods specified), with consequential interest and penalties, are set aside. The revenue's appeal is dismissed.

Period of limitation for institution of appeal from date of receipt of order - service of notice versus issuance of notice as proof of receipt - condonation for sufficient cause under the proviso to the limitation provision - reverse charge mechanism for Goods Transport Agency services - remand for fresh adjudication on merits

Period of limitation for institution of appeal from date of receipt of order - service of notice versus issuance of notice as proof of receipt - condonation for sufficient cause under the proviso to the limitation provision - Appeal before the Commissioner (Appeals) was within the period of limitation prescribed under Section 85(3) of the Finance Act, 1994. - HELD THAT: - The Tribunal analysed Section 85(3) and held that the two month limitation period runs from the date of receipt of the adjudicating authority's order. The appellant stated that knowledge of the Order in Original dated 26.04.2019 arose on 03.06.2020 when a departmental communication was received; the Department failed to produce evidence of earlier service of the show cause notice or the order and the original order was passed ex parte. The only service record on file showed service of the order on 24.07.2020; however, even taking the appellant's earlier stated date of knowledge (03.06.2020), the appeal filed on 31.08.2020 was within two months of receipt/knowledge. The Tribunal relied on the established principle that actual service (proof of receipt) is material and, absent proof of earlier service, the date on which the appellant came to know of the order governs computation of limitation. On these findings the Tribunal concluded that the Commissioner (Appeals) erred in rejecting the appeal as time barred. [Paras 6, 8, 9]

Findings in the order in appeal holding the appeal time barred are not sustainable; the appeal was filed within the prescribed period.

Remand for fresh adjudication on merits - reverse charge mechanism for Goods Transport Agency services - The matter is remanded to the Commissioner (Appeals) for adjudication on merits. - HELD THAT: - The Tribunal observed that the Commissioner (Appeals) decided the matter solely on the technical ground of limitation without examining merits. The appellant had advanced a substantive defence - that Goods Transport Agency services provided to corporate entities were taxable under reverse charge and therefore the appellant was not liable to pay service tax in the circumstances - which remains unadjudicated. In the absence of a merits decision, and having set aside the time bar finding, the Tribunal remitted the case to the Commissioner (Appeals) to decide the issues on merit afresh. [Paras 9, 10]

Order under challenge set aside and the matter remanded to Commissioner (Appeals) for fresh adjudication on merits.

Final Conclusion: The Tribunal allowed the appeal by setting aside the Commissioner (Appeals)'s order which dismissed the appeal as time barred, held that the appeal was filed within the prescribed period, and remanded the matter to the Commissioner (Appeals) for fresh adjudication on merits (claiming applicability of reverse charge notification to Goods Transport Agency services for FY 2012 13).

Entitlement to CENVAT credit on inputs received by stock transfer - Requirement of 'purchase' or 'procurement' for claiming CENVAT credit - Requirement of maintenance of inventory/records to avail CENVAT credit - Precedential application of Ballarpur Industries Ltd. and Exide Industries - Interpretation of Rule 7(4) of the Cenvat Credit Rules and the substitution of 'procured' for 'purchase'

Entitlement to CENVAT credit on inputs received by stock transfer - Precedential application of Ballarpur Industries Ltd. and Exide Industries - Whether CENVAT credit is admissible on inputs received by a manufacturing unit from its sister/unit by stock transfer for the period April, 2000 to March, 2002 as adjudicated by the Tribunal. - HELD THAT: - The High Court examined the Tribunal's allowance of credit which followed the Tribunal's earlier decision in Exide Industries and the ratio of the Supreme Court in Ballarpur Industries Ltd. The Court found no distinguishing circumstances in the present case and noted that the Tribunal consistently applied those precedents. In particular, the Court accepted the Tribunal's view that the relevant rules and their interpretation in the cited decisions govern the question whether inputs received by stock transfer were entitled to CENVAT credit, and that the adjudicating authority had not demonstrated a legal basis to deny the benefit in the facts before it. Having regard to the established precedents applied by the Tribunal and the absence of any persuasive ground from the revenue to displace them, the Court upheld the Tribunal's conclusion allowing the credit.

Tribunal's allowance of CENVAT credit on inputs received by stock transfer is upheld; no interference with the Tribunal's order.

Requirement of 'purchase' or 'procurement' for claiming CENVAT credit - Requirement of maintenance of inventory/records to avail CENVAT credit - Interpretation of Rule 7(4) of the Cenvat Credit Rules and the substitution of 'procured' for 'purchase' - Whether 'purchase' and maintenance of inventory/records were mandatory pre-28-02-2003 conditions for availing CENVAT credit and whether the assessee failed to discharge the burden of proof regarding inventory records. - HELD THAT: - The Court accepted the Tribunal's application of Exide Industries which held that the term 'input' and the conditions for grant of CENVAT credit do not make 'purchase' a sine qua non, and that the subsequent substitution of the word 'procured' for 'purchase' in Rule 7(4) (by Notification No.13/03) elucidates legislative intent. The Court observed that the adjudication did not show that inputs were not used in manufacture or that appropriate duty had not been paid before transfer. The revenue did not put forward any distinguishing legal or factual ground to show that the requirement of purchase or of specific inventory records barred the claim for the period under challenge. Accordingly the Court found no merit in the contention that the assessee had failed to discharge the burden of proof on record-keeping.

The contentions that 'purchase' and inventory maintenance were mandatory prerequisites and that the assessee failed to prove compliance are rejected; such requirements do not defeat the assessee's claim for the period under challenge.

Final Conclusion: The appeal is dismissed. The Tribunal's order allowing CENVAT credit is upheld; the substantial questions of law are answered against the revenue in accordance with the precedents relied upon by the Tribunal.

Manufacture - manufacturing process - blend versus manufacture - transformation into new goods - marketability test - substantial expansion of plant and machinery - exemption under notification No. 50/2003-CE, dated 10.6.2003 - limitation / time-bar

Manufacture - manufacturing process - blend versus manufacture - transformation into new goods - marketability test - Whether the appellant's activity of blending two oils to produce 'industrial fuel oil' amounts to manufacture - HELD THAT: - The Court examined the process and found that (a) two oils are used as raw materials, (b) they are mixed in a blending vessel by means of an electric motor, (c) the process reduces the viscosity of the final product and (d) the final product is marketed under a different name and brand. Applying the legal categories explained by the Supreme Court, where goods are transformed into goods which are different and/or new and are marketable as such, manufacture is established. The reduction in viscosity together with branding and changed use satisfied the test of transformation into a new, marketable product rather than mere cleaning or incidental change; accordingly the activity was held to be manufacture. [Paras 12, 13, 16]

The blending activity carried out by the appellant constitutes manufacture.

Substantial expansion of plant and machinery - exemption under notification No. 50/2003-CE, dated 10.6.2003 - Whether the appellant is entitled to exemption under notification No. 50/2003-CE by reason of expansion of plant and machinery - HELD THAT: - The Court found on the record that the appellant had made substantial expansion of plant and machinery to the extent of 25% or more, which is a basic requirement for the claimed exemption under the notification. Having held that manufacturing activities were carried out in the plant, the Court concluded that the conditions for claiming the exemption were not met in a manner that would negate liability, and therefore the appellant was engaged in manufacture for purposes of excise liability. [Paras 14]

The appellant's expansion met the stipulated threshold and the appellant was engaged in manufacturing activity for purposes of the notification; exemption did not absolve liability as claimed.

Limitation / time-bar - Whether the demand raised by the respondent was time-barred - HELD THAT: - The Court considered the contention that the demand notice was barred by limitation and rejected it. It held that the demand was raised within time and that the authorities had acted within the applicable limitation period; earlier authorities relied upon by the appellant were found to be inapposite on facts and law. [Paras 15]

The demand is not time-barred and the appellant cannot deny payment on limitation grounds.

Final Conclusion: The appeals are dismissed; the order of the CESTAT upholding the orders below is maintained and requires no interference. Parties shall bear their own costs.

CENVAT Credit eligibility - user test - integral part of capital goods - retrospective effect of amendment to CENVAT Credit Rules - reliance on contrary Tribunal Larger Bench decision

CENVAT Credit eligibility - retrospective effect of amendment to CENVAT Credit Rules - reliance on contrary Tribunal Larger Bench decision - Entitlement to CENVAT credit of Rs.25,63,542 on steel items used in erection and commissioning of plant - HELD THAT: - The Tribunal held that the Commissioner (Appeals) erred in disallowing the credit solely on the basis of the Tribunal's Larger Bench decision in Vandana Global. Subsequent High Court decisions have set aside the Larger Bench view and held that the 07.07.2009 amendment to restrict credit on structural items could not be treated as clarificatory and therefore is not retrospective. Having regard to those authoritative High Court rulings and the fact that the assessee produced Chartered Engineer certificates and verification of use of the steel items in erection and commissioning, the Tribunal applied those legal positions to conclude that the disallowance could not be sustained. The Tribunal thus allowed the credit claim on the said steel items. [Paras 4]

Credit of Rs.25,63,542 on steel items is allowable; assessee's appeal allowed.

User test - integral part of capital goods - CENVAT Credit eligibility - Whether steel and related items used in foundations, supports and erection qualify as inputs/capital goods for CENVAT credit under the user test - HELD THAT: - The Tribunal applied the 'user test' as articulated by the Supreme Court and followed by High Courts, observing that items such as iron, steel and cement used to erect foundations and support structures qualify as inputs or capital goods if they are shown to be integral to the plant and machinery. The assessee had produced Chartered Engineer certification and the lower authorities had verified use. On application of the user test and the principle that components/accessories integral to capital goods qualify for credit, the Tribunal concluded that the items in question fall within the scope of 'input'/'capital goods' and are eligible for CENVAT credit. [Paras 5]

Items used for erection, foundations and supports satisfy the user test and are eligible for CENVAT credit; Revenue's appeal in respect of allowed credit rejected.

Final Conclusion: The Tribunal allowed the assessee's appeal and permitted CENVAT credit on the disputed steel items for the specified periods, applying the user test and subsequent High Court rulings that the 07.07.2009 amendment is not retrospective; the Revenue's appeal against credits allowed by the Commissioner (Appeals) was rejected.

Exemption for inputs captively consumed within the factory - obligation under Rule 6 of the Cenvat Credit Rules - effect of final product being fully exempt or nil rated on input exemption - job work exemption and liability of the manufacturer/job worker

Exemption for inputs captively consumed within the factory - obligation under Rule 6 of the Cenvat Credit Rules - effect of final product being fully exempt or nil rated on input exemption - Entitlement to exemption under Notification No. 67/95 CE for Brass Casted Rods manufactured and captively consumed in manufacture of exempted final products. - HELD THAT: - The Tribunal examined the proviso to Notification No. 67/95 which excludes inputs used in the manufacture of final products that are wholly exempt or chargeable to nil rate, subject to an exception where the manufacturer discharges the obligation prescribed in Rule 6 of the Cenvat Credit Rules. The appellant was not registered with Central Excise during the period in dispute and did not avail Cenvat credit. That non availment satisfies the condition in sub rule (1) of Rule 6 since Cenvat credit was not taken on inputs used in manufacture of exempted goods. The adjudicating authority's denial of exemption on this ground was held to be incorrect; having complied with Rule 6(1), the appellant is legally entitled to the exemption under Notification No. 67/95 in respect of Brass Casted Rods captively consumed. [Paras 5]

Exemption under Notification No. 67/95 CE allowed for Brass Casted Rods manufactured and captively consumed, since the appellant complied with Rule 6(1) of the Cenvat Credit Rules.

Job work exemption and liability of the manufacturer/job worker - exemption for inputs captively consumed within the factory - Validity of demand of duty on Brass Casted Rods manufactured by job worker and levied upon the appellant, and entitlement under Notifications Nos. 83/94 CE and 84/94 CE. - HELD THAT: - The Tribunal noted that Notification No. 84/94 grants exemption to specified goods manufactured as job work subject to the supplier giving an undertaking to the proper officer; the adjudicating authority itself recorded that the appellant had given such undertaking. Accordingly, denial of job work benefit solely on grounds of alleged non compliance with procedural formalities was not sustainable. Further, even if the job work exemption were held inapplicable, the duty liability in respect of goods that come into existence in the job worker's factory rests on the job worker (the manufacturer), not on the appellant principal; where the revenue treats the process as manufacture by the job worker, demand must be confirmed against the job worker and cannot be sustained against a non manufacturer principal. Applying these principles, the Tribunal held the show cause demand against the appellant quashed. Consequentially, penalties and interest founded on that demand were also set aside. [Paras 5]

Demand of excise duty (and consequential penalties and interest) on Brass Casted Rods raised against the appellant is quashed; job work exemption could not be denied where the requisite undertaking was given, and in any event duty liability would lie on the job worker/manufacturer and not on the appellant.

Final Conclusion: The impugned order confirming duty, interest and penalties against the appellant in respect of intermediate Brass Casted Rods is set aside: the appellant is entitled to exemption under Notification No. 67/95 CE having complied with Rule 6(1) of the Cenvat Credit Rules, and the demand in relation to job work manufactured rods cannot be sustained against the appellant (alternatively, liability lies on the job worker); consequential penalties and interest are also quashed and the appeals are allowed.

Refund of duty on returned excisable goods - entitlement to CENVAT credit on receipt of returned goods under Rule 16 of the Central Excise Rules, 2002 - refund of amounts paid under existing law under Section 142 of the CGST Act, 2017 - requirement of return within six months from the appointed day - treatment of return by a registered person as deemed supply - procedural irregularity not defeating substantive refund entitlement - interest under Section 11BB of the Central Excise Act

Refund of duty on returned excisable goods - requirement of return within six months from the appointed day - refund of amounts paid under existing law under Section 142 of the CGST Act, 2017 - Whether the appellant is entitled to refund of Central Excise duty paid on goods cleared in June, 2017 which were returned in January, 2018 under Section 142 of the CGST Act, 2017. - HELD THAT: - The Tribunal examined eligibility under Section 142(1) read with Rule 16 of the Central Excise Rules, 2002 and the conditions listed in the CGST framework for refund of amounts paid under the existing law. The goods were admittedly cleared in June, 2017 (within six months prior to the appointed day) and were returned to the place of business after the appointed day; identity of the goods on return was not disputed and entries in the RG-1 register were recorded. Although there was an ambiguity as to whether the buyer was a registered person for the purposes of existing Central Excise law (the buyer was not registered under Central Excise but was registered under GST), the Tribunal held that this factual status did not deprive the appellant of the statutory entitlement. The Tribunal further held that the appellant satisfied the conditions for refund under Section 142(1) read with Rule 16, and that procedural lapses relating to invoicing or delays, where the goods were identifiable and returned, could not defeat the substantive right to refund. The appellate authority below erred in treating the buyer as a registered dealer under Central Excise provisions and in denying refund on that basis. [Paras 10, 11, 12]

The appellant is entitled to refund of the duty paid on goods cleared in June, 2017 and returned in January, 2018 under Section 142 read with Rule 16; the impugned order is set aside and refund directed.

Entitlement to CENVAT credit on receipt of returned goods under Rule 16 of the Central Excise Rules, 2002 - procedural irregularity not defeating substantive refund entitlement - Whether procedural non-compliance (absence of a proper return invoice and delay by a few days) precludes grant of refund or CENVAT credit for the returned goods. - HELD THAT: - The Tribunal found that the appellant had recorded the return in statutory records and that identity and receipt of goods were established. While noting disagreement on procedural formalities (invoice for return and marginal delay beyond the six months period), the Tribunal held that such procedural defects, in the circumstances where the goods were identifiable and actually returned, could not operate to deny the substantive remedy of refund or the benefit of CENVAT credit. The Tribunal therefore directed grant of refund and held that the manufacturer/seller is entitled to CENVAT credit on the basis of return documentation and statutory records, despite procedural lapses. [Paras 12]

Procedural omissions (absence of return invoice, brief delay) do not bar refund or CENVAT credit where returns are established and conditions under Section 142 and Rule 16 are satisfied.

Interest under Section 11BB of the Central Excise Act - Whether interest is payable on the refund directed. - HELD THAT: - Having allowed the refund claim, the Tribunal directed that the Adjudicating Authority grant refund along with interest in accordance with the statutory provision governing interest on refunds under the Central Excise regime, as specified in the impugned order. [Paras 13]

Refund to be granted with interest under Section 11BB of the Central Excise Act within 45 days of receipt of the Tribunal's order.

Final Conclusion: Appeal allowed; impugned order rejecting refund set aside. Matter remitted to the Adjudicating Authority to grant the refund of Central Excise duty paid on goods cleared in June, 2017 and returned in January, 2018, with interest under the Central Excise law, within 45 days of receipt of this order.

Non-applicability of time-bar under Section 11B to pre-deposit refunds - pre-deposit / deposit under protest - refund under section 35F and interest under section 35FF - retention without authority and unjust enrichment

Non-applicability of time-bar under Section 11B to pre-deposit refunds - pre-deposit / deposit under protest - Whether the refund claim was barred by limitation under Section 11B of the Central Excise Act. - HELD THAT: - The Tribunal found as a fact that the amount deposited (two bank guarantees issued in 2003 and 2004) was never a payment of duty but a pre-deposit made during the course of proceedings and was later treated by this Tribunal as pre-deposit (order on stay dated 09.01.2006) and the confirmed duty was set aside by the Tribunal's final order dated 10.10.2013 without any appeal by the Department. Section 11B, being a provision applicable to refund of duty, cannot be invoked where the amount sought to be refunded is not duty but a pre-deposit. Reliance was placed on earlier authoritative decisions (including Union of India v. Suvidhe Ltd. and CCE Hyderabad v. ITC Ltd. as discussed in the order) and on the silence of the provisions governing pre-deposit refunds about any time-limit for the assessee to claim refund. The Tribunal therefore held that the Commissioner (Appeals) erred in applying the one-year limitation of Section 11B to the present refund claim. [Paras 5, 6, 8]

The refund claim is not barred by Section 11B and the time-bar was wrongly invoked; the amount being a pre-deposit is not governed by Section 11B.

Refund under section 35F and interest under section 35FF - retention without authority and unjust enrichment - Whether the appellant is entitled to refund of the pre-deposit and consequential interest. - HELD THAT: - Having held that the deposited amount was a pre-deposit and not duty, the Tribunal applied the provisions dealing with pre-deposits and delayed refund (section 35F/35FF as identified in the order) and the settled principle that the Revenue cannot retain amounts which it had no authority to collect. The Tribunal referred to precedents which direct refund of pre-deposits and observe that retention without authority would amount to unjust enrichment. On these grounds the Tribunal concluded that the Department cannot retain the amount and refund must be sanctioned. The Tribunal further directed grant of consequential benefit in the form of interest at the rate specified in the order, computed from the date of deposit until sanction. [Paras 6, 7, 8]

The appellant is entitled to refund of the pre-deposit together with interest; retention by the Department is without authority and amounts to unjust enrichment.

Final Conclusion: The appeal is allowed: the Commissioner (Appeals) erred in applying the one-year limitation under Section 11B to a pre-deposit; the deposited amount is refundable as a pre-deposit and must be returned to the appellant with consequential interest at the rate directed by the Tribunal from the date of deposit until sanction.

Relevancy of statements recorded under Section 9D - Mandatory compliance with Section 9D in adjudication proceedings - Admissibility of statements recorded during investigation - Right to cross-examine witnesses in quasi criminal adjudication - Reliance on irrelevant material vitiates adjudication

Relevancy of statements recorded under Section 9D - Mandatory compliance with Section 9D in adjudication proceedings - Admissibility of statements recorded during investigation - Statements recorded before a gazetted Central Excise officer during inquiry/investigation are not admissible in adjudication to prove the truth of their contents unless Section 9D(1)(a) or Section 9D(1)(b) is complied with. - HELD THAT: - The Tribunal held that Section 9D(1) prescribes the exclusive circumstances and procedure by which a statement recorded by a gazetted Central Excise officer becomes relevant evidence for proving the truth of its contents. Clause (a) lists specific handicaps (death, inability to be found, incapacity to give evidence, kept out of the way by adverse party, or unreasonable delay/expense), and clause (b) mandates that the maker of the statement must first be examined as a witness before the adjudicating authority and that the authority must record an opinion that admission of the statement is in the interests of justice. The statutory word "shall" renders these requirements mandatory in adjudication proceedings as well. Absent invocation of clause (a) or compliance with the clause (b) procedure (including examination of the witness before the adjudicating authority and recorded reasons), reliance on such investigation statements amounts to reliance on irrelevant material and is legally impermissible. The Tribunal also noted the rationale that statements recorded during investigation may be the result of coercion and therefore must be tested by examination before the authority; general principles of evidence require evidence in chief to precede cross examination and re examination. [Paras 18, 20, 22, 23, 28]

Section 9D(1) must be scrupulously followed in adjudication proceedings; statements recorded during investigation cannot be treated as relevant evidence to prove their contents unless the statutory conditions/procedure are satisfied.

Right to cross-examine witnesses in quasi criminal adjudication - Admissibility of statements recorded during investigation - Reliance on irrelevant material vitiates adjudication - Appellant was entitled to cross examine its General Manager and specified panchas and surveyor; matter remanded for cross examination and de novo adjudication by the original authority within four months. - HELD THAT: - Applying Section 9D and the established principle that investigative statements must be tested before the adjudicating authority, the Tribunal found that the General Manager's statement both contained denials and acknowledgements which required testing by cross examination. Given the centrality of those statements (and the panchas' and surveyor's testimony) to the adjudication, the interest of justice required permitting cross examination. The Tribunal therefore directed that the original adjudicating authority summon and cross examine Mr. Narendra Mishra (General Manager), Mr. Mohd. Rizwan, Mr. Rakesh and Mr. Jitendra Singh (panchas), and Mr. S.K. Khare (Senior Survey Officer), and thereafter conduct a de novo adjudication of the show cause notice. The Tribunal observed that permitting such cross examination would not prejudice the Department and that reliance on departmental witnesses had been limited in the impugned order. [Paras 30, 31, 32, 33, 34]

Cross examination of the named witnesses is allowed; original authority to cross examine and then proceed to de novo adjudication within four months; appeal allowed by way of remand.

Final Conclusion: Appeal allowed by way of remand: in view of mandatory requirements of Section 9D, the appellant is permitted to cross examine the named witnesses and the original adjudicating authority shall conduct the cross examination and a de novo adjudication of the show cause notice within four months from receipt of this order.

Provisional attachment to protect revenue - formation of opinion - tangible material - doctrine of proportionality - post-attachment objection and opportunity of being heard under Rule 159(5) - requirement of a reasoned order on objections - attachment during the pendency of proceedings

Provisional attachment to protect revenue - formation of opinion - tangible material - requirement of a reasoned order on objections - post-attachment objection and opportunity of being heard under Rule 159(5) - Validity of the provisional attachment orders insofar as they do not record reasons or the formation of opinion based on tangible material as required by Section 83 of the Act and Rule 159(5). - HELD THAT: - Section 83 authorises provisional attachment during the pendency of specified proceedings only where the Commissioner forms an opinion that attachment is necessary to protect government revenue; that formation of opinion must be based on tangible material and bear a proximate link to the necessity for attachment. Rule 159(5) grants the attached person a right to file an objection within seven days and to be afforded an opportunity of being heard; the Commissioner must pass a reasoned order accepting or rejecting objections. The impugned orders merely state that attachment was made to protect revenue and do not set out the reasons or the tangible material on which the opinion was formed. Reliance on reasons recorded only in the Note File, without broadly recording them in the provisional order, defeats the ability of the assessee to meaningfully invoke the post-attachment safeguards in Rule 159(5). The Supreme Court authority emphasises the draconian nature of the power, the need for a proximate live link to revenue protection, and strict adherence to procedural safeguards including a reasoned order on objections. Applying these principles, the Court found the mandatory requirement of formation of opinion and recording of reasons not complied with in the impugned orders, thereby establishing a prima facie case in favour of the petitioner.

Provisional attachment orders quashed insofar as they fail to record the formation of opinion and the reasons based on tangible material; interim suspension of the provisional attachment orders granted until 15.07.2022.

Attachment during the pendency of proceedings - Whether proceedings under Section 67 of the Act were pending (and thus whether attachment fell within the statutory temporal ambit) as on the date of the provisional attachment orders. - HELD THAT: - The parties dispute whether the proceedings under Section 67 were pending at the time of the provisional attachments: petitioner relies on seizure and recorded statements and a Form GST INS-02 to contend that Section 67 proceedings were concluded; respondents assert the proceedings remain incomplete. The High Court recorded the conflict of factual contentions and, on the material before it, did not resolve the factual question finally; instead, the Court treated the dispute as part of the prima facie case in favour of interim relief. The issue of actual pendency and its effect on the validity of attachment requires further factual and formal determination in the course of adjudication.

Factual dispute noted; not finally adjudicated in this order and left for determination on further hearing.

Final Conclusion: The Court found a prima facie case that the provisional attachment orders did not comply with the statutory requirement of forming and recording an opinion based on tangible material and with the procedural safeguards under Rule 159(5); accordingly the provisional attachments dated 01.04.2022 and 06.04.2022 are stayed interim until 15.07.2022 and the matter is posted for further hearing.

Power of search and seizure by authorities appointed under section 3 - jurisdiction of officers appointed under section 3(1) - registration and liability of transporters under section 46A - admissibility of materials recovered pursuant to search - statutory appellate and revisionary remedies under the Act

Power of search and seizure by authorities appointed under section 3 - jurisdiction of officers appointed under section 3(1) - admissibility of materials recovered pursuant to search - Validity of the search and seizure conducted by respondent no. 5 and the use of materials recovered thereby. - HELD THAT: - The court held that officers appointed under section 3(1) of the Act are empowered to carry out searches and seizures under the provisions of section 44, and that respondent no. 5, being a Superintendent of Taxes and an officer to assist the Commissioner, was vested with authority to conduct the search and seizure. The petitioners' sole contention - that respondent no. 5 misrepresented himself as a member of a vigilance wing which, they claimed, had not been constituted - did not amount to a challenge that respondent no. 5 lacked powers under section 3. The court observed that a mere reference by an officer to membership of a vigilance group does not render the search illegal if the officer is otherwise empowered under the Act. Separately, the court applied the settled principle that materials recovered in a search may be admissible and usable for assessment even if the search is later found to have been unauthorized; reliance was placed on precedent that relevant material seized in an irregular search need not be excluded from proceedings under the statute. Consequently, even assuming arguendo that the vigilance wing was not properly constituted on the date of the search, the seizure and the materials obtained therefrom could lawfully be relied upon in the assessment and recovery proceedings, provided they are otherwise admissible under law. [Paras 17, 18, 19, 20, 24]

The challenge to the search and seizure on the ground that respondent no. 5 was not a member of the vigilance wing is not a ground to invalidate the search or to exclude the materials where the officer is otherwise empowered under section 3; materials recovered can be used for assessment.

Statutory appellate and revisionary remedies under the Act - Availability and non-availing of statutory remedies by the petitioners in respect of assessments and penalties. - HELD THAT: - The court noted that the Act contains an elaborate scheme of appeals and revisions (sections 33-35) which the petitioners had not availed themselves of to challenge the assessments and penalties. The writ petition primarily raised the jurisdictional challenge to departmental officers; however, no challenge was made to the statutory authority under section 3 itself. The court emphasised that statutory remedies existed and the petitioners had not pursued them before approaching the High Court by way of writ seeking to quash the departmental action on the limited ground advanced. [Paras 10, 21]

Petitioners' failure to invoke available statutory appellate/revisionary remedies was noted; the writ petition founded on the limited jurisdictional objection did not warrant interference.

Final Conclusion: Writ petition dismissed; the High Court found respondent no. 5 to be an officer empowered under section 3 to conduct search and seizure and held that materials recovered in the search could be relied upon for assessment; petitioners were observed to have statutory remedies available which they had not availed.

Liability of Multi-System Operator for advertisement tax - tax on advertisement exhibited at a place of entertainment - definition of "place of entertainment" - definition of Multi System Operator under Cable Television Rules and Entertainment Duty Act - taxing statute to be strictly construed - Article 265 - no tax except under authority of law

Liability of Multi-System Operator for advertisement tax - tax on advertisement exhibited at a place of entertainment - MSOs that merely receive and re-transmit broadcasters' programming to LCOs are not liable to pay advertisement tax under the Advertisement Tax Act for advertisements contained in those channels where the advertisements are not exhibited at the MSO's place. - HELD THAT: - The Advertisement Tax Act levies tax on advertisements "exhibited for payment at any place of entertainment" and requires the tax to be paid by the proprietor in respect of advertisements exhibited at his place of entertainment. The MSO in this case only receives programming from broadcasters and re-transmits the same to local cable operators (LCOs), who in turn retransmit to end subscribers. Where the MSO does not itself exhibit the advertisement at its place nor independently receive the advertisement for consideration, the advertisement is not 'exhibited at' the MSO's place within the meaning of the Act. Consequently, an MSO acting merely as conduit of broadcasters' channels cannot be made liable to pay advertisement tax under the Advertisement Tax Act on the basis of mere transmission of third party content. [Paras 11, 12, 14]

Demand and penalties imposed on the Petitioners as MSOs under the Advertisement Tax Act for advertisements contained in transmitted channels were quashed.

Article 265 - no tax except under authority of law - taxing statute to be strictly construed - definition of Multi System Operator under Cable Television Rules and Entertainment Duty Act - The Department must demonstrate statutory authority to levy and collect advertisement tax from the MSOs; absent such authority the levy is without jurisdiction. - HELD THAT: - A taxing statute must be strictly construed and Article 265 mandates that no tax can be levied except under authority of law. The Respondents were required to show that the advertisement was exhibited at the Petitioners' place so as to attract liability under Section 3 and Section 4 of the Advertisement Tax Act. The Court found no material demonstrating that the Petitioners exhibited advertisements at their place or independently received advertisement consideration; therefore the Department's action in levying tax and imposing penalties lacked statutory basis. The Court nevertheless clarified that if the Department finds non compliance with statutory provisions and rules on fresh inquiry, it may take action according to law. [Paras 8, 11, 12, 13, 15]

The impugned notices and penalties were set aside for want of demonstrated statutory authority; the Department may proceed afresh within law if it establishes jurisdictional facts.

Final Conclusion: Writ petition allowed; impugned demands, penalties and fines levied on the Petitioners (MSOs) for alleged advertisement tax for Financial year 2014-2015 and Financial year 2015-2016 quashed for lack of statutory foundation, with liberty to the Department to act in accordance with law if jurisdictional facts are established.

Penalty under Section 15-A(1)(o) - intention to evade payment of tax - production of Form-31 - contravention of Section 28-A - entry of goods and entry tax applicability

Production of Form-31 - penalty under Section 15-A(1)(o) - intention to evade payment of tax - Whether levy of penalty under Section 15-A(1)(o) is justified where Form-31 was not produced at the time of interception but was subsequently furnished before seizure and there was no intention to evade tax. - HELD THAT: - The Court held that the penalty provision attracts only where the assessing authority is satisfied that goods were imported or transported in contravention of Section 28-A with an attempt to evade tax. Where Form-31 was not initially produced but was voluntarily submitted along with the reply to the show cause notice before the seizure order, the absence of the form at interception does not demonstrate an intention to evade tax. Relying on earlier decisions including M/s Sarvashri Ramesh Chand Santosh Kumar and M/s Colgate Palmolive India Limited , the Court observed that mere non-availability of the declaration form or incomplete columns in it cannot by itself justify an inference of tax evasion or sustain levy of penalty under Section 15-A(1)(o). Applying these principles to the facts, and noting that all dispatch entries were recorded in the books of account and no other discrepancy was shown, the Tribunal's restoration of the penalty was unsustainable.

Penalty under Section 15-A(1)(o) quashed because Form-31 was produced before seizure and there was no intention to evade tax.

Contravention of Section 28-A - entry of goods and entry tax applicability - Whether absence of Form-31 alone can be treated as contravention of Section 28-A or as establishing liability to penalty where dealer's records otherwise show proper entries. - HELD THAT: - The Court found that contravention of Section 28-A and imposition of penalty require a demonstrable attempt to evade tax. The record showed bills, bilti, Form-35 and that all dispatches were recorded in the dealer's books; thus the mere initial non-production of Form-31 did not constitute contravention sufficient to attract penalty. The Court rejected the revenue's contention that absence of Form-31, without more, establishes intention to evade tax, and reiterated precedents holding that intention to evade cannot be inferred solely from non-production or incomplete particulars in the declaration form.

Absence of Form-31 alone, when the form is produced before seizure and records show proper entries, does not constitute contravention warranting penalty.

Final Conclusion: The revision is allowed and the penalty order restored by the Tribunal is quashed: non-production of Form-31 at interception, when the form was later produced before seizure and the dealer's records show no attempt to evade tax, does not justify imposition of penalty under Section 15-A(1)(o).

Re-opening of assessment under Section 27(1)(a) of TNVAT Act, 2006 - limitation - continuation of assessment proceedings - deemed assessment - determine as proceeding to assess

Continuation of assessment proceedings - re-opening of assessment under Section 27(1)(a) of TNVAT Act, 2006 - limitation - Validity of reassessment notices issued in 2019 for Assessment Years 2006-07, 2007-08, 2008-09 and 2009-10 - HELD THAT: - The Court held that the impugned notices for the assessment years 2006-07, 2007-08 and 2008-09 issued in 2019 are a continuation of prior notices issued within time after the original assessments and therefore cannot be treated as barred by limitation. For 2009-10, after the original assessment of 18.03.2011 a notice for reopening was issued on 31.03.2011 and subsequent action in 2019 was held to be continuation of proceedings initiated within the period prescribed; accordingly the notices are not time barred. The Court directed the respondent to complete reassessments for 2006-07 to 2009-10 within three months, ensuring the petitioner is heard and leaving all substantive issues open for adjudication on merits. [Paras 35, 36, 41]

Impugned notices for 2006-07 to 2009-10 are not time barred; W.P.Nos.10118, 10122, 10125 and 10129 of 2019 dismissed and respondent directed to complete reassessments within three months after hearing the petitioner.

Deemed assessment - re-opening of assessment under Section 27(1)(a) of TNVAT Act, 2006 - limitation - Validity of reassessment notice issued on 28.02.2019 for Assessment Year 2010-11 - HELD THAT: - The Court found that assessment for 2010-11 stood completed by deemed assessment on 30.06.2012 by operation of law and no prior notice for reopening had been issued within the limitation period. Consequently, the notice dated 28.02.2019 seeking to reopen that deemed assessment is time barred and without jurisdiction. The ratio in Tvl. Victus Dyeings (W.P. dated 29.07.2019) was held applicable to this year, supporting the conclusion of limitation. [Paras 37, 38]

Impugned notice dated 28.02.2019 for 2010-11 is time barred; W.P.No.10132 of 2019 allowed.

Final Conclusion: Writ petitions challenging reassessment notices succeed only for Assessment Year 2010-11 (notice quashed as time barred). Challenges to reassessment notices for 2006-07, 2007-08, 2008-09 and 2009-10 are dismissed; respondent directed to complete reassessments for those years within three months after hearing the petitioner, with all substantive issues left open.

Input tax credit reversal - Interstate sale - Application of Section 19(2)(v) and 19(5)(c) of the TNVAT Act, 2006 - Principles of natural justice - Reconsideration with personal hearing

Input tax credit reversal - Interstate sale - Application of Section 19(2)(v) and 19(5)(c) of the TNVAT Act, 2006 - Validity of the assessment order dated 29.10.2021 reversing input tax credit on the ground of alleged interstate sales for assessment year 2014-15 - HELD THAT: - The Revenue reversed the input tax credit treating certain supplies as interstate sales and invoked the said provisions after issuing a show cause notice. The petitioner, however, had earlier responded to an earlier show cause notice by a reply dated 08.11.2017 asserting that the transactions concerned were interstate purchases/supplies of a specific branded commodity and thus did not attract reversal under the cited provisions. The impugned order records that a later notice dated 31.08.2021 was not replied to, but does not indicate whether the earlier written reply of 08.11.2017 was considered. Because the order does not disclose consideration of the earlier reply which directly addressed the factual and legal basis for reversing ITC, the Court found that the assessment cannot stand without fresh consideration of the material put forward by the assessee. The Court did not finally adjudicate the correctness of the factual classification as interstate sale or the applicability of the statutory provisions on merits; instead, it directed fresh consideration so that the respondent may afford an opportunity to the petitioner to be heard and then pass a reasoned final order in accordance with law.

Impugned assessment order set aside and matter remitted for reconsideration with direction to afford the petitioner a personal hearing and to pass a final order in accordance with law.

Final Conclusion: The order dated 29.10.2021 reversing input tax credit is set aside and the matter is remitted to the respondent for fresh consideration; the petitioner shall be granted a personal hearing and allowed to place all relevant material, after which a reasoned final order shall be passed in accordance with law.

Reassessment under Section 21(3) of the Value Added Tax Act, 2005 - notice under Section 21(7) of the Value Added Tax Act, 2005 - limitation as a jurisdictional bar - preliminary objection on limitation - maintainability of proceedings - void ab initio notice - remand for reconsideration on merits

Limitation as a jurisdictional bar - preliminary objection on limitation - void ab initio notice - Preliminary objection that the reassessment notice was time barred and void ab initio is a jurisdictional plea which may be raised before the assessing authority and in writ proceedings and goes to the root of the matter. - HELD THAT: - The Supreme Court held that the appellants had specifically raised before the assessing officer the objection that the proposed reassessment action was time barred and that the notice issued under the VAT Act was therefore illegal and void ab initio. Such a plea pertains to jurisdiction and authority of the officer and, accordingly, could be taken as a preliminary objection which the competent authority was obliged to decide. The Single Judge rightly entertained and answered that grievance in favour of the appellants. The Division Bench's view that the objection should have been raised only by way of statutory appeal and not considered at the threshold was rejected, because limitation affecting jurisdiction does not become impermissible to raise by way of writ.

The Court affirmed that limitation, when it goes to jurisdiction, can be raised as a preliminary objection before the assessing authority and in writ proceedings, and that the Single Judge correctly addressed that contention in favour of the appellants.

Maintainability of proceedings - reassessment under Section 21(3) of the Value Added Tax Act, 2005 - notice under Section 21(7) of the Value Added Tax Act, 2005 - remand for reconsideration on merits - Division Bench's failure to examine the merits of the limitation objection rendered its conclusion unsustainable and the matter is remanded for fresh consideration on merits. - HELD THAT: - The Supreme Court disagreed with the Division Bench's conclusion that the maintainability objection should have been confined to the appellate remedy and that the Single Judge should not have proceeded further. Because the limitation plea struck at jurisdiction, the Division Bench ought to have examined the correctness of the Single Judge's view on merits rather than terminating the challenge on procedural grounds. Consequently, the impugned judgment of the Division Bench was set aside and the writ appeals were remitted to the Division Bench for reconsideration on their own merits and in accordance with law. All contentions available to the parties were left open for adjudication by the High Court.

Impugned Division Bench order set aside and the writ appeals remanded to the Division Bench for fresh consideration on merits; parties' contentions left open.

Final Conclusion: Impugned judgment and order of the Division Bench set aside; writ appeals remitted to the Division Bench of the High Court for fresh consideration on merits and in accordance with law (parties to appear on 18.04.2022 or such other date as the High Court may assign); all contentions preserved and no opinion expressed on merits by this Court.

Power to direct interim compensation under the Negotiable Instruments Act - Dishonour of cheque - Recovery of interim compensation as a fine under Section 421 of the Code of Criminal Procedure - Realisation as arrears of land revenue - Public demand under the Bihar & Orissa Public Demands Recovery Act, 1914 - Enforcement of court-ordered interim compensation by certificate proceedings

Power to direct interim compensation under the Negotiable Instruments Act - Recovery of interim compensation as a fine under Section 421 of the Code of Criminal Procedure - Public demand under the Bihar & Orissa Public Demands Recovery Act, 1914 - Realisation as arrears of land revenue - Enforcement of court-ordered interim compensation by certificate proceedings - Interim compensation ordered under Section 143A of the Negotiable Instruments Act is enforceable under the Bihar & Orissa Public Demands Recovery Act, 1914 as a public demand. - HELD THAT: - Section 143A(5) of the Negotiable Instruments Act expressly provides that interim compensation is recoverable as if it were a fine under Section 421 of the Code of Criminal Procedure. Section 421(1)(b) empowers the court to issue a warrant to the Collector authorising realisation of such amount as arrears of land revenue from the defaulter's movable and immovable property, and Section 421(3) directs the Collector to realise the amount in accordance with the law relating to recovery of arrears of land revenue. Article 3 of Schedule I to the Bihar & Orissa Public Demands Recovery Act, 1914 includes within the definition of "public demand" any money realizable as an arrear of land revenue by the processes authorised for that purpose. Reading these provisions together, interim compensation ordered under Section 143A, being recoverable as a fine by warrant to the Collector and thus realisable as an arrear of land revenue, falls within Schedule I and therefore constitutes a "public demand" under the Recovery Act. Accordingly, enforcement of the interim compensation by certificate proceedings under the Recovery Act was correctly held to be permissible. [Paras 18, 19, 20]

The interim compensation ordered under Section 143A of the Negotiable Instruments Act is within the ambit of Schedule I of the Bihar & Orissa Public Demands Recovery Act, 1914 and may be realised as a public demand by the Collector under the Recovery Act.

Final Conclusion: Writ petition disposed of by upholding the enforceability of interim compensation under the Recovery Act; petitioner granted liberty to pursue alternative remedies and encouraged to consider mediation or conciliation.

Compounding of offence under Section 147 of the Negotiable Instruments Act - offence under Section 138 of the Negotiable Instruments Act (dishonour of cheque) - compromise as a ground for setting aside conviction and acquittal - precedence of compensatory mechanism over punitive mechanism in cheque dishonour cases - waiver of costs in compromise settlements

Compounding of offence under Section 147 of the Negotiable Instruments Act - compromise as a ground for setting aside conviction and acquittal - offence under Section 138 of the Negotiable Instruments Act (dishonour of cheque) - Validity and effect of the compromise between the parties and whether the conviction and sentence under Section 138 NI Act ought to be set aside by compounding the offence under Section 147 NI Act. - HELD THAT: - The Court found that the parties had entered into a genuine, voluntary compromise which had been duly complied with. The compromise comprehensively resolved disputes arising from multiple complaints for cheque dishonour and involved payment/transfer of the agreed settlement amount in court. The Court accepted that the offence under Section 138 has a compensatory character and, in view of the valid settlement and the public interest in promoting reconciliation where appropriate, exercised its power to allow compounding under Section 147 and set aside the convictions and sentences recorded by the courts below. The Court considered relevant authorities on settlement and the imposition of costs, observed the special facts of the case (including the petitioner's adverse financial position exacerbated by the COVID-19 pandemic and the complainant's agreement to settle) and concluded that compounding was appropriate here. Having regard to the nature of the compromise, its bona fides and compliance, the Court permitted setting aside the convictions and disposing of the proceedings in accordance with the compromise.

The criminal revision is allowed; the judgments of conviction and sentence dated 21.4.2017 and 17.3.2022 are set aside and the complaints are disposed of in terms of the compromise.

Waiver of costs in compromise settlements - precedence of compensatory mechanism over punitive mechanism in cheque dishonour cases - Whether costs should be imposed despite the compromise and setting aside of conviction. - HELD THAT: - Having regard to the circumstances - the petitioner's poor financial condition, impact of the COVID-19 pandemic, the complainant's acceptance of a global settlement for all matters, and the authorities discussed - the Court exercised its discretion not to impose costs. The Court noted precedent permitting deviation from usual costs orders in appropriate cases and found that the special facts justified waiver of costs here.

Costs are not imposed and the petitioner is not required to pay the costs that might otherwise have been payable.

Final Conclusion: The Court, finding the compromise genuine and fully complied with, allowed the criminal revision, set aside the convictions and sentences under Section 138 NI Act, declined to impose costs, and disposed of all pending applications in accordance with the compromise.