TaxTMI Updates e-Newsletter
May 16,2022

Anticipatory bail - custodial interrogation - economic offences affecting the economy / tax evasion - prima facie involvement based on co-accused statement - investigative necessity outweighing bail - parity with co-accused

Anticipatory bail - prima facie involvement based on co-accused statement - custodial interrogation - economic offences affecting the economy / tax evasion - investigative necessity outweighing bail - parity with co-accused - Anticipatory bail application of the applicant was rejected. - HELD THAT: - The Court found on prima facie material, including statements of the arrested co-accused, that the applicant was implicated as a recipient of fake invoices and a facilitator in the manufacture of fraudulent input tax credit aggregating to the amount alleged by the investigating agency. The matter involves large-scale tax evasion and offences of an economic character which are capable of affecting the economy. Given these facts, and the investigative material indicating the applicant's involvement, the possibility that custodial interrogation may be necessary for effective investigation could not be ruled out. The Court held that these considerations outweigh the claim for anticipatory bail. The plea of parity with the main accused was considered but was not found sufficient to grant anticipatory bail in the circumstances of the case where custodial interrogation is prima facie required for a thorough probe.

Anticipatory bail is refused; custodial interrogation cannot be ruled out and the application is rejected.

Final Conclusion: The anticipatory bail application is dismissed on the basis of prima facie involvement shown by co-accused statements and the investigative need for custodial interrogation in a large-scale tax-evasion matter; the applicant may approach the trial court for regular bail, which must be decided expeditiously and in accordance with law.

De-sealing of premises on production of relevant documents - Conditional continuance of seal pending verification - Time bound direction for administrative action - Verification of documents and lawful steps in case of deficiency

De-sealing of premises on production of relevant documents - Verification of documents and lawful steps in case of deficiency - Time bound direction for administrative action - Direction to de-seal the petitioner's business premises upon production of relevant documents, subject to verification and time limits. - HELD THAT: - The Court, exercising its writ jurisdiction, directed that the petitioner's authorised representative shall present himself with relevant documents before the concerned officer by the specified date and time. Pending that presentation, the respondents were ordered to de-seal the premises by the time fixed by the Court. The Court expressly provided that if the documents produced by the petitioner are found deficient, the respondents may take appropriate steps in accordance with law. The order is time bound and prohibits continuation of the sealing beyond the timeframe specified by the Court. The relief granted is procedural and conditional: de-sealing is contingent upon production and verification of documents, and any further action is to follow the statutory and legal process. [Paras 5]

Petition allowed to the extent that the petitioner shall produce relevant documents and the respondents shall de-seal the premises by the stipulated time; if documents are deficient respondents may take lawful steps.

Final Conclusion: Writ petition disposed of by directing time bound production of documents and conditional de-sealing of the business premises; file consigned to record.

Cancellation of registration under Goods and Services Tax - Quashing of show-cause notice and impugned order for vagueness - Restoration of registration - Writ jurisdiction under Article 226 of the Constitution of India - Proceeding strictly in accordance with law having regard to precedent

Cancellation of registration under Goods and Services Tax - Quashing of show-cause notice and impugned order for vagueness - Restoration of registration - Proceeding strictly in accordance with law having regard to precedent - Impugned show-cause notice dated 16.11.2021 and cancellation order dated 30.11.2021 are quashed and the registration is restored. - HELD THAT: - The Court found the show-cause notice and the order cancelling the writ-applicant's GST registration to be vague. The determinative reasoning was that the matter was covered by the Court's earlier decision in Aggarwal Dyeing and Printing Works (Special Civil Application No.18860 of 2021, decided on 24.02.2022), and on that basis the impugned proceedings could not stand. Accordingly, the petition was allowed, the cancellation order and the show-cause notice were quashed and set aside, and the registration was restored. The Court permitted the revenue, if it wished to proceed further, to do so only strictly in accordance with law and mindful of the observations in the cited precedent. [Paras 6, 7]

The writ petition is allowed; the show-cause notice and cancellation order are quashed and the registration is restored, subject to the department proceeding, if at all, in accordance with law and the Court's observations in the cited precedent.

Final Conclusion: Writ allowed: vague show-cause notice and cancellation order set aside; registration restored; department may, if it chooses, re-initiate proceedings only in strict conformity with law and the Court's observations in the earlier decision.

Refund of IGST on zero-rated supplies - resolution of shipping bill mismatches under Facility Circular 09/2018 and Addendum - provisional refund under Section 54(6) of the CGST Act - jurisdiction of Customs Officers to decide refund claims

Resolution of shipping bill mismatches under Facility Circular 09/2018 and Addendum - refund of IGST on zero-rated supplies - The petitioner's claims in respect of shipping bills with alleged mismatches are to be considered by designated Nodal Officers who shall hear the petitioner and decide the mismatches within a fixed time-frame. - HELD THAT: - Having regard to the Facility Circular 09/2018 dated 27.02.2018 and the Addendum dated 14.03.2018, the Court directed that the petitioner's authorised representative be given personal opportunity to explain and furnish clarifications on the mismatches. The Court recorded that the identified categories of errors (account/PFMS reconciliation, SB006M/SB006L gateway errors and incorrect invocation of LUT/payments) are amenable to resolution in terms of the Facility Circular/Addendum and that the competent Nodal Officers should examine the petitioner's explanations and take appropriate decisions. The Court ordered specific dates for appearance before the Nodal Officers and mandated that decisions on the explanations be taken within four weeks from those dates, allowing the Nodal Officers to follow the Facility Circular/Addendum and any subsequent circulars while deciding the claims. [Paras 4, 5, 8, 10]

Petitioner to appear before the named Nodal Officers on the specified dates; Nodal Officers to hear the petitioner, resolve mismatches and pass appropriate decisions within four weeks.

Provisional refund under Section 54(6) of the CGST Act - jurisdiction of Customs Officers to decide refund claims - Nodal Officers, while resolving mismatches, may consider recommendations for provisional refund under Section 54(6) of the CGST Act and the terms and conditions therefor; however the broader question of jurisdiction to decide provisional refund and interest is kept open for determination. - HELD THAT: - The Court noted the petitioner's entitlement claims under the CGST Act and observed that provisional refund of 90% and payment of interest are matters that could facilitate an early resolution but that the ultimate exercise of jurisdiction over provisional refund and interest might raise broader questions. Consequently, the Court authorised the Nodal Officers, in the course of examining explanations and resolving mismatches, to consider recommendations for provisional refund and the terms and conditions therefor as contemplated by Section 54(6). At the same time the Court expressly left open all questions regarding the ultimate jurisdiction of the Customs Officers to decide on provisional refund and payment of interest, permitting those questions to be addressed later if necessary. [Paras 6, 9, 10]

Nodal Officers may consider provisional refund recommendations while resolving mismatches; jurisdictional questions on provisional refund and interest remain open.

Final Conclusion: The petition is disposed of by directing specified Nodal Officers to afford the petitioner an opportunity of personal hearing on the mismatches, to decide the explanations within four weeks and to consider provisional refund recommendations under Section 54(6) of the CGST Act; broader questions as to the jurisdiction of the Customs Officers to grant provisional refund or interest are left open for future adjudication.

Computation of limitation period for filing appeal under Section 107 - electronic filing requirement for appeals under Rule 108 - extension of limitation by Supreme Court on account of COVID-19 - remand for adjudication on merits

Computation of limitation period for filing appeal under Section 107 - electronic filing requirement for appeals under Rule 108 - extension of limitation by Supreme Court on account of COVID-19 - whether the appeal filed on 03.12.2020 was barred by limitation or was within time - HELD THAT: - The Court held that appeals under Section 107 are required to be filed electronically unless another mode is notified, and there was no material to show any alternative mode of filing; accordingly, the filing period ordinarily runs from communication of the order and cannot be postponed until portal upload. However, the Court took into account the Supreme Court's extension of limitation for the COVID-19 period (order dated 10.01.2022), which extended the period from 15.3.2020 to 28.2.2022 for computing limitation. The order under challenge was communicated by e-mail on 25.11.2019 and, applying the extended period, the Court concluded that the appeal filed on 03.12.2020 fell within the extended limitation period and therefore was not time-barred. [Paras 8, 9, 10]

Filing of appeal on 03.12.2020 held within the period of limitation.

Remand for adjudication on merits - whether the Appellate Authority's order rejecting the appeal as time-barred should be set aside and the matter remanded for decision on merits - HELD THAT: - Having found the appeal to be within the extended period of limitation, the Court set aside the Appellate Authority's order dated 30.7.2021 which rejected the appeal on the ground of limitation. The matter was remitted to the Appellate Authority for adjudication on merits in accordance with law, thereby permitting the appeal to be heard and decided on its substantive merits. [Paras 11]

Order dated 30.7.2021 set aside; matter remanded to respondent No.2 for adjudication on merits.

Final Conclusion: The High Court set aside the Appellate Authority's order rejecting the appeal as time barred, held the appeal filed on 03.12.2020 to be within the extended limitation period, and remanded the matter to respondent No.2 for adjudication on merits; no order as to costs.

Transitional input tax credit - correction of TRAN-1 for bona fide/inadvertent errors - claim under Section 140 of the CGST Act, 2017 and Rule 117 of CGST Rules, 2017 - administrative limitation and technical glitches in nascent legislation - equal protection under Article 14 of the Constitution

Transitional input tax credit - correction of TRAN-1 for bona fide/inadvertent errors - administrative limitation and technical glitches in nascent legislation - claim under Section 140 of the CGST Act, 2017 and Rule 117 of CGST Rules, 2017 - equal protection under Article 14 of the Constitution - Petitioner's entitlement to correct an inadvertent error in form GST TRAN-1 after initial filing, so as to enable filing of TRAN-2 and claim transitional input tax credit. - HELD THAT: - The Court found that registered taxpayers were entitled to claim accumulated input tax credit through the transition mechanism and that TRAN-1 is the prescribed form for disclosing closing stock credits. The petitioner had filed TRAN-1 within the statutory window and, on accessing TRAN-2 only after the portal opened, discovered that an inadvertent misplacement of details (Table 7(d) instead of 7(a) of Part 7B) prevented transition. The period 2017-2020 was recognised as a nascent phase of the GST regime during which technical glitches and taxpayer unfamiliarity were widespread. Where the mistake is shown to be a bonafide error arising from inexperience with new formats and was promptly brought to the authorities' notice, insisting on strict application of the temporal correction mechanism would be arbitrary and unreasonable and would defeat legitimate claims to transitional credit. The Court noted relevant precedents affording relief in identical circumstances and held that statutory limitations and administrative convenience cannot be applied so as to deny substantive rights where a genuine inadvertent error is shown and corrective action was promptly sought. In the circumstances the departmental rejection of the representation was set aside and the respondents were directed to facilitate revision of TRAN-1 (or permit manual filing and filing of TRAN-2) expeditiously, subject to operational feasibility. [Paras 11, 12, 13, 14, 15]

Ext.P7 is set aside; respondents directed to permit revision of the petitioner's GST TRAN-1 submitted on 01-09-2017 and enable filing of TRAN-2 (including by manual filing if necessary) within two months of receipt of the judgment.

Final Conclusion: Writ petition allowed; court directed respondents to facilitate correction of the petitioner's TRAN-1 and enable filing of TRAN-2 (including manual filing where portal facilitation is not possible) within two months, having regard to the bona fide inadvertent error and the nascent stage difficulties of the GST regime.

Advance Ruling - classification of goods - obligation to pronounce ruling upon admitted application - reliance on documentary evidence (chemical composition / test report) - remand for fresh consideration

Advance Ruling - obligation to pronounce ruling upon admitted application - reliance on documentary evidence (chemical composition / test report) - Whether the Advance Ruling Authority was justified in refraining from answering the classification question and whether the matter should be remanded for fresh consideration after calling for required documents. - HELD THAT: - The Appellate Authority examined the MAAR order which declined to rule on classification of Tyre Pyrolysis Oil on the ground that details of chemical composition were not furnished. The Appellate Authority considered the Appellant's contention that test reports and process details had in fact been filed before the MAAR and the factual contradiction between the parties. Rather than deciding the classification on the record before it, the Appellate Authority held that the appropriate course is to remit the matter to the Advance Ruling Authority for adjudication on merits. The MAAR is directed to call for all required documents, as it deems fit, and pronounce an advance ruling on the questions specified in the application after affording opportunity of hearing and examining the material, in conformity with the statutory scheme governing advance rulings. This preserves the obligation on the Authority to decide admitted applications on merits where the requisite evidence is available or can be procured for proper classification. [Paras 8, 9, 11]

Advance Ruling set aside and matter remanded to the Authority for Advance Ruling to decide the classification on merits after calling for necessary documents and following the statutory process.

Final Conclusion: The Advance Ruling dated 15.12.2020 is set aside and the case is remanded to the Maharashtra AAR for fresh adjudication on merits after calling for the required documents and affording opportunity as per the advance ruling procedure.

Composite supply - concessional rate under Notification No. 11/2017-C.T. (Rate) - effective date of tax rate / retrospective application - refund under Section 54 of the CGST Act, 2017 - maintainability under Section 97(2) of the CGST Act, 2017

Composite supply - concessional rate under Notification No. 11/2017-C.T. (Rate) - Whether the works executed by the applicant qualify as composite supply and whether specified components are entitled to concessional rate under the notification. - HELD THAT: - The Appellate Authority for Advance Ruling had found that the works entrusted to M/s NBCC (India) Ltd. for IIT Bhubaneswar can be treated as a composite supply. Consequent to that conclusion, the Appellate Authority held that Faculty Quarters, Staff Quarters and Director's Bungalow are entitled to the concessional rate provided at Sl. No. 3(vi) of Notification No. 11/2017-C.T. (Rate) dated 28-06-2017. This Authority sees no merit in re-opening that determination and records that the earlier ruling that the contract is a composite supply and that the specified residential components attract the concessional rate stands affirmed.

Works under the contract qualify as composite supply; Faculty Quarters, Staff Quarters and Director's Bungalow are entitled to concessional rate under Sl. No. 3(vi) of Notification No. 11/2017-C.T. (Rate).

Effective date of tax rate / retrospective application - From which date the concessional rate of 12% (as per Notification No.11/2017) applies for the applicant's supplies. - HELD THAT: - The Authority notes that unless a specific effective date is stated in a notification, the date of issuance governs the applicability of the rate. Notification No. 11/2017-C.T. (Rate) dated 28-06-2017 prescribing the concessional 12% rate came into force with effect from 01-07-2017. Accordingly, the concessional rate of 12% for the applicant's case is effective from the notification and is retrospective to the appointed date of GST, namely 01-07-2017, for supplies made on or after that date.

The 12% concessional rate is effective from the date of the notification and applies with effect from 01-07-2017 (the appointed date under GST).

Maintainability under Section 97(2) of the CGST Act, 2017 - Whether the question of excess tax paid (difference between 18% charged and 12% applicable) falls within the scope of matters admissible under Section 97(2) before the Authority for Advance Ruling. - HELD THAT: - The Authority for Advance Ruling had declined to entertain the applicant's separate application seeking clarity on whether the 6% difference constituted tax paid in excess, holding that the question does not fall under any provision of Section 97(2) of the CGST Act, 2017. This Appellate Authority concurs with that view and finds the AAR's refusal to admit the question under Section 97(2) to be just and proper.

The question whether the 6% difference paid earlier constitutes tax in excess does not fall within Section 97(2) and was rightly rejected by the Authority for Advance Ruling.

Refund under Section 54 of the CGST Act, 2017 - Whether the applicant is entitled to seek refund of any excess tax paid and the proper procedure for claiming such refund. - HELD THAT: - The Authority for Advance Ruling observed that Section 54 of the CGST Act, 2017 governs refund of tax and indicated that the applicant may explore the refund remedy under that provision and follow its procedure. This Appellate Authority finds that direction to be appropriate: questions of entitlement to refund and the procedural route are matters for the refund mechanism under Section 54 rather than for advance ruling determination under Section 97(2).

Entitlement to refund and the procedure for claiming any excess tax must be pursued under Section 54 of the CGST Act, 2017; the AAR's guidance in this regard is upheld.

Final Conclusion: The appeal affirms that the works contract awarded to M/s NBCC (India) Ltd. qualifies as a composite supply and that specified residential components are entitled to the concessional 12% rate under Sl. No. 3(vi) of Notification No. 11/2017-C.T. (Rate); the concessional rate applies from 01-07-2017. The Appellate Authority upholds the AAR's refusal to admit the standalone question on the earlier 6% differential under Section 97(2), and directs that any claim for refund of excess tax be made under Section 54 of the CGST Act, 2017 following the statutory procedure.

Benefit of input tax credit - commensurate reduction in prices - Section 171(1) of the CGST Act, 2017 - investigation under Rule 129 of the CGST Rules, 2017 - methodology for computation of profiteering - interest payable under Rule 127 of the CGST Rules, 2017 - penalty under Section 171(3A) - non-retrospectivity

Benefit of input tax credit - commensurate reduction in prices - Section 171(1) of the CGST Act, 2017 - methodology for computation of profiteering - Whether the respondent received the additional benefit of ITC after introduction of GST and failed to pass it on by way of commensurate reduction in prices to the applicant in violation of Section 171(1). - HELD THAT: - The Authority examined invoices, purchase order and bills of entry and found that the base prices quoted in the pre-GST quotation/purchase order remained unchanged when supplies were made post-GST while IGST paid at import became available as ITC to the respondent. The Additional Duty of Customs (CVD), the incidence of which had been embedded in pre-GST prices and which was not available as ITC earlier, was subsumed into IGST post-GST and the full IGST at import was available as ITC. The DGAP computed the quantum of benefit arising from availability of such ITC on the four specified goods and compared pre-GST base prices with post-GST invoiced base prices to quantify the amount not passed on. The Authority accepted DGAP's factual findings and mathematical computation as appropriate and consistent with the mandate of Section 171(1), holding that the benefit of ITC had to be passed on by way of commensurate reduction in prices and that such reduction must be in monetary terms. The Authority rejected the respondent's contentions that (i) cost escalations or market price movements or trade discounts could be set off against the statutory obligation to pass on ITC, and (ii) that the DGAP ought to have used a different 'market price' base; it held that the discounts were commercial devices and did not discharge the obligation to pass on the ITC benefit. The Authority therefore upheld the DGAP's computation of profiteering as the amount of ITC-related benefit retained by the respondent vis-a -vis the applicant. [Paras 47, 49, 50, 54, 55]

The Authority found that the respondent had received the additional benefit of ITC and had failed to pass it on to the applicant by way of commensurate reduction in prices; the amount profiteered was accepted as Rs. 12,79,304/- for the period 01.07.2017 to 30.09.2019.

Interest payable under Rule 127 of the CGST Rules, 2017 - investigation under Rule 129 of the CGST Rules, 2017 - Whether the applicant is entitled to interest on the profiteered amount and the mechanism for its recovery. - HELD THAT: - Rule 127 prescribes return of the amount not passed on along with interest at 18% from the date of collection of the higher amount until return. The DGAP's role is investigative and does not determine interest; adjudication on interest falls to this Authority. Applying Rule 127, the Authority directed that the profiteered amount (as accepted) shall be refunded to the applicant along with interest at 18% from the date the amount was profiteered until refund, and tasked the jurisdictional Commissioners to monitor compliance under supervision of the DGAP. [Paras 26, 55, 56]

The applicant is entitled to interest @18% on the profiteered amount from the date of collection of the higher amount till the date of refund; the respondent is directed to refund the amount with interest and the Commissioners of CGST/SGST, State of Karnataka are directed to monitor compliance.

Investigation under Rule 129 of the CGST Rules, 2017 - principles of natural justice - Whether the DGAP's notice and investigation were defective or violative of principles of natural justice. - HELD THAT: - The Authority considered the contention that the DGAP's notice was vague (referring initially to 'false ceiling materials') and that particulars were insufficient. The Authority noted the Screening Committee's description and that, during investigation, the DGAP identified the detailed description of the four specific goods from documents filed by the respondent and issued the detailed notice accordingly. The Authority held that the investigation was conducted under the statutory mandate on recommendation of the Standing Committee and that there was no breach of natural justice or procedural infirmity rendering the proceedings invalid. [Paras 3, 4, 9, 46, 52]

The Authority rejected the respondent's plea that the DGAP's notice and investigation were defective or violative of natural justice and held the notice and investigation to be legal and maintainable.

Penalty under Section 171(3A) - non-retrospectivity - Whether penalty under Section 171(3A) can be imposed for profiteering that occurred during 01.07.2017 to 30.09.2019. - HELD THAT: - Section 171(3A) (penalty) was inserted w.e.f. 01.01.2020. The Authority observed that no specific penalty provision under Section 171(3A) existed during the investigation period (01.07.2017 to 30.09.2019). Applying the non-retrospectivity principle, the Authority held that the penalty under Section 171(3A) cannot be imposed for contraventions that occurred prior to its coming into force. [Paras 51]

Penalty under Section 171(3A) cannot be imposed for the period 01.07.2017 to 30.09.2019; therefore no penalty is levied on the respondent for the profiteering found in that period.

Final Conclusion: The Authority accepted the DGAP's findings and methodology and held that the respondent contravened Section 171(1) by not passing on the additional ITC benefit to the applicant; the amount profiteered was accepted as Rs.12,79,304/- for the period 01.07.2017 to 30.09.2019, which the respondent is directed to refund to the applicant along with interest at 18% from the date of collection until refund; the notice and investigation were found to be valid and maintainable; and penalty under Section 171(3A) is not leviable retrospectively for the period in question.

Condonation of delay under Section 119(2)(b) - retrospective operation of CBDT circulars - prescription of limitation by administrative circular - application of Section 54EC exemption - remand for fresh consideration on merits

Condonation of delay under Section 119(2)(b) - retrospective operation of CBDT circulars - prescription of limitation by administrative circular - remand for fresh consideration on merits - Application filed on 24.05.2011 under Section 119(2)(b) could not be rejected solely by applying CBDT Circular dated 09.06.2015 retrospectively and the matter required fresh consideration on merits. - HELD THAT: - The appellant filed the Section 119(2)(b) application on 24.05.2011 at a time when no statutory or regulatory time limit had been prescribed for such applications. The CBDT Circular dated 09.06.2015 subsequently prescribed a six-year limitation for these claims. The Court observed that the Circular came into existence after the assessee had submitted the application and that the application was not disposed of within a reasonable period by the revenue. Relying on the principle that administrative directions which affect vested rights or impose retrospective limitations cannot be applied so as to prejudice applications filed before issuance of the circular, and having regard to the Apex Court's treatment of retrospective operation of CBDT circulars in Gemini Distilleries, the Court held that the application should not be denied on the technical ground of the later-prescribed time-limit. In the interests of justice and to enable decision on merits, the Court set aside the impugned orders and remanded the matter to the first respondent for expeditious reconsideration and appropriate decision according to law. [Paras 7, 8, 9, 10]

Order dated 13.12.2017 and the Single Judge's dismissal set aside; matter remanded to respondent No.1 to re-consider the application dated 24.05.2011 on merits in an expedited manner.

Final Conclusion: Writ appeal allowed in part; impugned orders set aside and the application filed on 24.05.2011 remitted to the first respondent for fresh, expeditious consideration on merits, with all rights and contentions left open.

Reopening of assessment under Section 147 - Deemed cases where income has escaped assessment - Change of opinion versus fresh material - Requirement of a speaking order - Opportunity of being heard in reassessment proceedings

Reopening of assessment under Section 147 - Deemed cases where income has escaped assessment - Requirement of a speaking order - Opportunity of being heard in reassessment proceedings - Whether the notice under Section 148 reopening the assessment for AY 2009-10 was validly issued or required fresh consideration by the Assessing Officer. - HELD THAT: - The High Court set aside the impugned order dismissing the writ petition and remanded the matter to the Assessing Officer to decide the question of reopening under Section 147 afresh. The Court observed that the learned Judge had concluded the case fell under a deemed category of escapement of income, but noted that the appellant had produced material facts and documents and that the original assessment order was cryptic and did not consider many details. Rather than adjudicating the merits of whether escapement had in fact occurred, the Court directed that the Assessing Officer must pass a speaking order after considering all documentary evidence placed by the appellant and after affording an opportunity of being heard. The reassessment exercise is to be completed within eight weeks from receipt of the judgment, and the Assessing Officer must not be influenced by observations in the impugned order. [Paras 10, 11]

Impugned orders set aside; matter remanded to the Assessing Officer to decide reopening under Section 147 by a speaking order after considering evidence and hearing the appellant within eight weeks.

Final Conclusion: Writ appeal allowed in part: the High Court's order in WP No.35924 of 2016 is set aside and the reassessment/reopening is remitted to the Assessing Officer for fresh, speaking consideration after hearing the appellant within eight weeks.

Addition under Section 69 (unexplained investment) - concurrent findings of fact not perverse - veracity of books of account and stock records as a defence to unexplained investment - legitimate commercial explanation for bifurcation of purchases for bank presentation - appellate interference limited in absence of legal question

Addition under Section 69 (unexplained investment) - veracity of books of account and stock records as a defence to unexplained investment - legitimate commercial explanation for bifurcation of purchases for bank presentation - concurrent findings of fact not perverse - Deletion of the addition of Rs.7,82,95,551/- made by the Assessing Officer under Section 69 was sustained. - HELD THAT: - The Assessing Officer made an addition treating certain purchases as unexplained investment. The Commissioner (Appeals) and the Tribunal found on facts that the purchases were recorded in the assessee's regular books of account and supported by stock records, and that the assessee's explanation-that large purchases from a single supplier were shown as bifurcated among several parties only for presentation to the banker to obtain credit limits-was acceptable. The Tribunal specifically noted that the alleged multiple sellers were a bookkeeping presentation for bank purposes while the substantive purchases were from M/s Maximum Synthetics Pvt. Ltd., and that the material entries were reflected in the books and stock records. Those concurrent findings of fact were not shown to be perverse, and therefore did not warrant interference by this Court. As the dispute turned on these factual findings and no substantial question of law arose, the deletion of the addition was upheld.

Appeal dismissed; addition deleted as sustained by lower authorities on findings of fact.

Final Conclusion: The revenue's appeal is dismissed. The Tribunal and Commissioner (Appeals) rightly deleted the addition under Section 69 after accepting the assessee's factual explanation and books/stock records; concurrent factual findings being not perverse, there is no question of law warranting interference.

Recognition under section 80G(5)(vi) - charitable purpose excludes purpose whole or substantially of a religious nature (Explanation 3 to section 80G) - permissible religious expenditure up to 5% (sub section (5B) of section 80G) - classification of expenditures as religious or charitable - condonation of delay in filing appeals pursuant to COVID 19 extensions

Recognition under section 80G(5)(vi) - charitable purpose excludes purpose whole or substantially of a religious nature (Explanation 3 to section 80G) - permissible religious expenditure up to 5% (sub section (5B) of section 80G) - classification of expenditures as religious or charitable - Assessee is entitled to recognition under section 80G(5)(vi). - HELD THAT: - The Tribunal examined the assessee's Income and Expenditure accounts for the financial years 2017-18, 2018-19 and 2019-20, the auditor's declaration clarifying that entries under 'Religious expenses' related to activities for the greater good of society and were not confined to any particular religion or community, affidavits from beneficiaries of diverse religions describing programmes as inclusive, and the objects of the trust which refer to upliftment and services to all sections without specific reference to a particular religion. Explanation 3 to section 80G excludes from 'charitable purpose' only objects the whole or substantially the whole of which are of a religious nature, while sub section (5B) deems an institution eligible where religious expenditure does not exceed 5% of total income. On the break up furnished by the assessee the religious expenditure fell within the permissible percentage and the Revenue did not controvert the tabulation. In that factual and legal setting the activities were not of a kind to displace the trust from the ambit of section 80G(5)(vi), and recognition was therefore warranted.

Recognition under section 80G(5)(vi) is granted and the order refusing recognition is set aside.

Final Conclusion: Delay in filing the appeal was condoned pursuant to COVID 19 time extension directions, and on merits the Tribunal allowed the appeal by granting recognition under section 80G(5)(vi) to the assessee for the period reflected in the considered financial years.

Grant of registration under section 80G(5) - Binding effect of Tribunal's earlier direction - Obligation to give effect to appellate order - Relevance of prior registration under section 12AA

Grant of registration under section 80G(5) - Binding effect of Tribunal's earlier direction - Obligation to give effect to appellate order - Relevance of prior registration under section 12AA - Assessee's application for registration under section 80G(5) was to be granted in obedience to a prior coordinate-bench ITAT direction and the rejection by the Ld. CIT(E) was unsustainable. - HELD THAT: - The Tribunal noted that a coordinate Bench of the ITAT had earlier, by order dated 13.01.2016, specifically directed the Ld. CIT(Exemption) to grant registration under section 80G to the assessee. On hearing, the Departmental Representative could not justify the impugned rejection dated 12.10.2018 or show any basis to depart from the earlier direction. The Tribunal, therefore, applied the binding effect of its prior appellate direction and concluded that the Ld. CIT(Exemption)'s refusal could not stand. The Tribunal also took note of the fact that registration under section 12AA had been granted, which was a relevant circumstance in favour of registration under section 80G. Having found no material to support the rejection, the Tribunal set aside the impugned order and directed the Ld. CIT(Exemption) to grant registration under section 80G(5).

Impugned order dated 12.10.2018 set aside and Ld. CIT(Exemption) directed to grant registration under section 80G(5).

Final Conclusion: Appeal allowed; impugned order of the Ld. CIT(Exemption) refusing registration under section 80G(5) set aside and direction issued to grant registration in accordance with the prior ITAT order.

Corporate guarantee as an international transaction - Arm's length price - Comparable Uncontrolled Price (CUP) method - Transfer Pricing adjustment under section 92CA - Shareholder activity doctrine - Provision for sales incentive - scientific basis for provisioning - Deduction under section 80IC - interest income linked to industrial undertaking

Corporate guarantee as an international transaction - Arm's length price - Comparable Uncontrolled Price (CUP) method - Transfer Pricing adjustment under section 92CA - Shareholder activity doctrine - Whether the corporate guarantees extended by the assessee to Associated Enterprises constitute an international transaction and, if so, the arm's length price and quantification of the transfer pricing adjustment. - HELD THAT: - The Tribunal accepted the proposition that providing explicit corporate guarantees to AEs confers a measurable benefit to those AEs and falls within the scope of an international transaction for transfer pricing analysis. The TPO applied the CUP method relying on rates obtained from State Bank of India and computed a guarantee fee of 1.30% on the amount of guarantees, yielding a TP adjustment. The assessee's contention that the guarantees were mere shareholder activity or commercial expediency and therefore not chargeable was rejected as not relevant to determining an arm's length charge under Chapter X; comparable uncontrolled transactions, not commercial expediency, govern pricing. However, having considered judicial precedents cited by the assessee (Bombay High Court decisions) and the absence of contrary authority before the Tribunal, the Tribunal held that the adjustment should be determined at 0.5% rather than the 1.3% adopted by the TPO and directed that the transfer pricing adjustment in respect of guarantees be computed at 0.5%.

Corporate guarantees are international transactions for transfer pricing; arm's length guarantee fee accepted in principle but TP adjustment reduced and to be determined at 0.5%.

Provision for sales incentive - scientific basis for provisioning - Whether the provision made by the assessee for sales incentive under the 'Shahenshah Scheme' was allowable as a scientific/ascertained liability and deductible for the year under consideration. - HELD THAT: - The Tribunal followed the co-ordinate Bench's earlier decisions in the assessee's own case for earlier assessment years which had held that the provision for the Shahenshah Scheme was made on a scientific basis. The Revenue failed to demonstrate any distinguishing facts for the year under consideration or any binding adverse ruling setting aside the earlier Tribunal decisions. In view of identical facts and absence of contrary material, the Tribunal set aside the disallowance and allowed the provision as deductible and outside the scope of computation under section 115JB.

Disallowance of the provision for the Shahenshah Scheme deleted; provision held to be on a scientific basis and allowed.

Deduction under section 80IC - interest income linked to industrial undertaking - Whether interest income credited to the Baddi and Haridwar units is eligible for deduction under section 80IC of the Act. - HELD THAT: - The Tribunal applied the coordinate-bench reasoning in the assessee's own earlier matters and relied on judicial authority holding that interest income which is inextricably linked to the business of the industrial undertaking (here, interest earned on fixed deposits maintained as per statutory/state requirements) is eligible for deduction under section 80IC. The Revenue did not produce contrary binding decisions distinguishing the facts. Accordingly the denial of deduction by the AO and CIT(A) was reversed and the deduction under section 80IC was directed to be allowed.

Denial of deduction under section 80IC on the interest income set aside; deduction to be allowed.

Final Conclusion: The appeal is allowed: the transfer pricing adjustment in respect of corporate guarantees is upheld in principle but remitted to be quantified at 0.5%; the addition disallowing the Shahenshah Scheme provision is deleted; and the denial of section 80IC deduction on interest income is reversed.

Revisionary jurisdiction under Section 263 - Erroneous and prejudicial to the interests of revenue - Failure to make inquiries or verification (Explanation 2(a) to Section 263) - Agricultural income and 7/12 extracts as material - Assessment vitiated by lack of inquiry

Revisionary jurisdiction under Section 263 - Failure to make inquiries or verification (Explanation 2(a) to Section 263) - Agricultural income and 7/12 extracts as material - Whether the Pr. Commissioner of Income Tax rightly invoked revisionary jurisdiction under Section 263 and set aside the assessment on the ground that the assessing officer failed to make inquiries into the source of alleged agricultural receipts shown in the return. - HELD THAT: - The Tribunal examined the assessment record and the 7/12 extracts which were before the assessing officer. The extracts showed no record of cultivation of watermelon, vegetables and chana on the specified land for the year under consideration, whereas the return, and material before the AO, claimed substantial receipts from sale of those crops. The AO made only a limited addition and did not inquire into the apparent discrepancy between the crop-wise receipts and the cultivation entries in the 7/12 extracts. Explanation 2(a) to Section 263 treats an order as erroneous and prejudicial where it is passed without making inquiries or verifications which should have been made. Judicial precedents cited in the order establish that where the AO accepts a return or claim without making necessary inquiries into material discrepancies, the order may be held to be erroneous and amenable to revision under Section 263. Applying that principle, the Tribunal found that the AO failed to conduct the requisite inquiry into the source of the receipts, and that such failure rendered the assessment erroneous and prejudicial to revenue. The Pr. CIT therefore was justified in assuming jurisdiction under Section 263 and directing reconsideration, and the Tribunal upheld the revisionary order. [Paras 13, 14, 15, 16, 17]

The invocation of revisionary jurisdiction by the Pr. CIT under Section 263 was justified and the order under Section 263 is upheld; the appeals are dismissed.

Final Conclusion: The Tribunal upholds the Pr. CIT's exercise of revisionary jurisdiction under Section 263 on the ground that the assessing officer failed to make necessary inquiries into discrepancies between claimed agricultural receipts and 7/12 entries; both appeals are dismissed.

Reopening of assessment and validity of notice under section 148 - receipt of property under section 56(2)(vii)(c) - proportionate rights issue and non-attraction of section 56(2)(vii)(c) - renunciation by relatives and exclusion under proviso to section 56(2)(vii)(c) - renunciation by unrelated third parties leading to disproportionate allotment - computation of fair market value of shares for rights issue where latest balance sheet is not on record

Reopening of assessment and validity of notice under section 148 - Validity of notice issued under section 148 for reopening assessment - HELD THAT: - The Tribunal upheld the Commissioner (Appeals) in holding that the AO had substantive reasons to believe income had escaped assessment on account of disproportionate allocation of shares and followed due process in issuing the notice within four years. The return had only been processed under section 143(1) and no regular scrutiny assessment had been completed; reasons were furnished and objections disposed by a speaking order. There was therefore no change of opinion and the notice was issued after due application of mind. [Paras 8, 19]

Notice under section 148 was validly issued and the Commissioner (Appeals) did not err in upholding it.

Proportionate rights issue and non-attraction of section 56(2)(vii)(c) - receipt of property under section 56(2)(vii)(c) - Whether section 56(2)(vii)(c) applies to 1,03,000 rights shares allotted proportionately to existing shareholding - HELD THAT: - Following Tribunal precedents (including Sudhir Menon and other ITAT decisions) and reasoning that 'receipt' is of wide import but where additional shares are allotted strictly pro rata the gain on fresh shares is offset by diminution in value of existing shares, the Tribunal held that proportionate rights allotment does not result in receipt of 'property' attracting section 56(2)(vii)(c). The Tribunal applied the principle that allotment pro rata merely apportionates the value of the existing shareholding over more shares and thus does not create taxable income under that provision. [Paras 10]

Section 56(2)(vii)(c) does not apply to the 1,03,000 proportionately allotted rights shares; the addition in respect of those shares is deleted.

Renunciation by relatives and exclusion under proviso to section 56(2)(vii)(c) - receipt of property under section 56(2)(vii)(c) - Whether section 56(2)(vii)(c) applies to 82,200 rights shares allotted to the assessee on renunciation by his wife and father - HELD THAT: - The Tribunal applied the settled principle that what cannot be done directly cannot be done indirectly. Transfers (or benefits) arising within the family which would be exempt under the proviso to section 56(2)(vii)(c) cannot be rendered taxable by an indirect route. Had wife and father directly transferred rights, section 56(2)(vii)(c) would not apply since they are 'relatives' excluded by the proviso; therefore their renunciation in favour of the assessee cannot attract the provision. Tribunal relied on relevant decisions holding intra-family transfers/benefits outside the scope of levy under the section. [Paras 11, 21]

Section 56(2)(vii)(c) does not apply to the 82,200 shares received on renunciation by wife and father; the addition confirmed by the AO in respect of those shares was set aside.

Renunciation by unrelated third parties leading to disproportionate allotment - receipt of property under section 56(2)(vii)(c) - Whether section 56(2)(vii)(c) applies to 14,800 rights shares allotted by reason of renunciation by unrelated third-party shareholders - HELD THAT: - The Tribunal examined whether the allotment to the assessee was disproportionate and observed that renunciation by unrelated third parties which results in a higher-than-proportionate allotment (and confers controlling interest) does amount to disproportionate allotment. Where allotment is disproportionate, section 56(2)(vii)(c) operates to tax the incremental value received. The Tribunal distinguished non-exercise by proportionate shareholders from renunciation in favour of the assessee by unrelated parties, and following precedent recognized that disproportionate allotment attracts the provision. [Paras 12, 22]

Section 56(2)(vii)(c) applies to the 14,800 shares allotted due to renunciation by unrelated third parties; the addition relating to these shares was upheld.

Computation of fair market value of shares for rights issue where latest balance sheet is not on record - Whether the Commissioner (Appeals) erred in computing FMV per share at Rs.205.55 by using the previous audited balance sheet approved in the AGM - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s method. Where the balance sheet for the period of allotment is not finalized, the previous audited balance sheet approved in the AGM is to be used to compute book value and thereby FMV, following coordinate Tribunal precedents. Applying that principle, the Commissioner (Appeals) correctly computed FMV per share on the basis of the previous balance sheet and additional consideration received on issuance of shares. [Paras 13, 17]

Valuation at Rs.205.55 per share by the Commissioner (Appeals) was upheld and the AO's higher valuation was not sustained.

Final Conclusion: The Tribunal dismissed the Department's appeals and partly allowed the assessee's appeal: the reopening under section 148 was held valid; proportionate rights allotment of 1,03,000 shares is not taxable under section 56(2)(vii)(c); the 82,200 shares received on renunciation by the assessee's wife and father are not taxable under that provision; the 14,800 shares received by renunciation of unrelated third parties were held to be disproportionate allotment and taxable under section 56(2)(vii)(c); and the FMV computation at Rs.205.55 per share by the Commissioner (Appeals) was sustained.

Speculative transaction - Eligible transaction on recognised stock exchange - Deeming fiction excluding trading in derivatives on recognised stock exchanges from speculative transactions - Set-off of loss from derivative trading against business income

Speculative transaction - Eligible transaction on recognised stock exchange - Deeming fiction excluding trading in derivatives on recognised stock exchanges from speculative transactions - Set-off of loss from derivative trading against business income - Whether loss incurred by the assessee on trading in derivatives of securities on a recognised stock exchange is to be treated as speculative loss or as a non speculative eligible transaction and thereby allowable for set off against normal business income. - HELD THAT: - The Tribunal held that trading in derivatives carried out on a recognised stock exchange falls within the deeming fiction introduced by the amendment to the law (with effect from AY 2006 07) which treats eligible derivative transactions on recognised stock exchanges as not being speculative. The Tribunal relied on the legislative amendment effected by the Finance Act, 2005 and the explanatory note in the CBDT circular, which recorded that screen based, regulated trading in derivatives reduced the scope for artificial losses and that such trading is to be excluded from the ambit of speculative transactions. The Tribunal further considered relevant judicial pronouncements, including the Supreme Court's discussion of the post 2005 legal position, and concluded that derivative transactions on a recognised exchange are to be treated differently from purchase and sale of shares for the purpose of determining speculation. Applying this legal position to the undisputed fact that the assessee's derivative trades were executed on a recognised stock exchange through a registered broker, the Tribunal held that those transactions are eligible non speculative transactions and consequently the loss from such trading is allowable to be set off against the assessee's normal business income. The Tribunal directed reassessment computation accordingly. [Paras 6, 7, 8]

Loss from derivatives traded on a recognised stock exchange is not speculative and is allowable to be set off against normal business income; the Assessing Officer is directed to allow the set off and recompute the assessee's income.

Final Conclusion: Appeal allowed: losses from eligible derivative transactions executed on a recognised stock exchange for AY 2014 15 are to be treated as non speculative and may be set off against normal business income; matter remitted to the Assessing Officer for recomputation in accordance with this direction.

Depreciation on intellectual property rights (IPR) - Proof of purchase and use of software license - Disallowance for lack of supporting evidence - Treatment of unsecured loans as income - Verification by remand report and bank statements - Deletion of additions where ledger evidence is substantially proved - Admissions and grounds not pressed at hearing

Depreciation on intellectual property rights (IPR) - Proof of purchase and use of software license - Allowability of depreciation on IPR for assessment year 2007-08 - HELD THAT: - The Tribunal found on the record a purchase order dated 18.10.2005 from M/s. Satyam Computers evidencing grant of license to use iAllwayTM MIFS Server License for 12 months and an IPR certificate and agreement for consideration, as noted in the Assessing Officer's remand report. Those documents establish acquisition and use of the IPR in the assessee's business during the relevant period. In view of the clear evidence of purchase and use, the earlier disallowance by the authorities below was set aside and depreciation was directed to be allowed for AY 2007-08. [Paras 5]

Depreciation on IPR allowed for AY 2007-08; order of CIT(A) set aside on this issue.

Depreciation on intellectual property rights (IPR) - Disallowance for lack of supporting evidence - Allowability of depreciation on IPR for assessment year 2008-09 - HELD THAT: - The Assessing Officer's remand report recorded that the assessee did not furnish renewal evidence of the iAllwayTM Server License for the subsequent period before the CIT(A) or the Tribunal. As no fresh evidence was produced to show continuance of the licence/use in the relevant year, the Tribunal declined to interfere with the CIT(A)'s confirmation of disallowance for AY 2008-09. [Paras 5]

Claim of depreciation on IPR for AY 2008-09 dismissed; disallowance confirmed.

Treatment of unsecured loans as income - Verification by remand report and bank statements - Deletion of additions where ledger evidence is substantially proved - Addition relating to unsecured loan (portion of Rs.2,48,000) for assessment year 2007-08 - HELD THAT: - The assessee produced ledger accounts and other particulars accounting for approximately 89% of the unsecured loan, while the remand verification of the director's bank accounts failed to locate corroboration for the remaining Rs.2,48,000. The Tribunal accepted the assessee's uncontested ledger entries and the fact that the Department did not dispute the existence of loans generally. Given the substantial evidence for the larger part of the loan and the limited missing proof for the small residual amount, the Tribunal deleted the addition of Rs.2,48,000 which the CIT(A) had sustained. [Paras 6]

Addition of Rs.2,48,000 for AY 2007-08 deleted; ground allowed.

Verification by remand report and bank statements - Deletion of additions where ledger evidence is substantially proved - Addition relating to unexplained credits and claimed loan of Rs.5,00,000 for assessment year 2008-09 - HELD THAT: - The Assessing Officer had added unexplained credited amounts after finding them not offered to tax. The assessee explained that Rs.5,00,000 represented a loan from M/s. Shreya(s)/Shreyas Investment routed through the director's account, with repayment and interest similarly routed and shown in ledger entries. The CIT(A) had accepted the identical explanation in an earlier paras concerning cash deposits and had deleted an addition of Rs.5,00,000. Noting the consistent and accepted ledger evidence and the prior acceptance by the CIT(A) of the same transaction in related findings, the Tribunal found no justification to sustain the addition and deleted the addition confirmed by the CIT(A). [Paras 7]

Addition of Rs.5,00,000 for AY 2008-09 deleted; ground allowed.

Admissions and grounds not pressed at hearing - Disallowance under section 43B (addition of Rs.1,48,764) for assessment year 2008-09 - HELD THAT: - The assessee did not press the ground relating to disallowance under section 43B during hearing. The Tribunal recorded that the ground was not pressed and accordingly dismissed it as not pressed without adjudicating the substantive merit. [Paras 8]

Ground not pressed and dismissed; no decision on substantive merit.

Final Conclusion: The appeal for assessment year 2007-08 is allowed (depreciation on IPR allowed; addition of Rs.2,48,000 deleted). The appeal for assessment year 2008-09 is partly allowed (deletion of addition of Rs.5,00,000; disallowance of depreciation on IPR for AY 2008-09 confirmed; disallowance under section 43B not pressed).

Disallowance under section 14A and application of Rule 8D - Addition as unexplained cash credit under section 68 - Acceptability of cash book and books of account as evidence of source of cash deposits - Genuineness of loans from relatives as corroborative evidence - Ad-hoc disallowance of business expenses for personal element and requirement of reasonable quantification

Disallowance under section 14A and application of Rule 8D - Disallowance under section 14A restricted to interest relatable to exempt income - HELD THAT: - The Tribunal examined the separate accounts maintained by the assessee and found that exempt income did not arise in the business books of M/s Vinayaka Tea Company and that the only expenditure in the personal account linked to exempt income was interest of Rs.29,711/-. As there was no significant interest debited in the business Profit & Loss account and no exempt income credited therein, the larger disallowance computed under Rule 8D could not be sustained. The Tribunal therefore directed the Assessing Officer to limit the disallowance under section 14A to Rs.29,711/-, disallowing the rest of the amount which had been computed under Rule 8D but lacked correlation with the business expenditure. [Paras 3]

Disallowance under section 14A restricted to Rs.29,711/-; ground partly allowed.

Addition as unexplained cash credit under section 68 - Acceptability of cash book and books of account as evidence of source of cash deposits - Genuineness of loans from relatives as corroborative evidence - Addition under section 68 deleted on acceptance of assessee's explanation and supporting entries - HELD THAT: - The Tribunal accepted that M/s Vinayaka Tea Company recorded sales of Rs.34.26 Lacs with a resultant profit, which could not be characterised as fabricated. It further noted that loans from the assessee's wife aggregating to Rs.28.10 Lacs (partly in cash and partly through banking channels) were received and fully repaid within the year; the wife filed a return declaring income, supporting the genuineness of those transactions. The assessee's cash book reflected the cash deposits, the books were not rejected, and no defect in the cash book was shown. In view of these contemporaneous records and corroborative evidence, the Tribunal held that the AO's addition as unexplained cash credit lacked merit and deleted the impugned addition. [Paras 4]

Addition under section 68 deleted; ground allowed.

Ad-hoc disallowance of business expenses for personal element and requirement of reasonable quantification - Travelling expenses disallowance reduced by quantifying reasonable personal element at 10% - HELD THAT: - The Tribunal observed that the Assessing Officer made an ad-hoc 30% disallowance for personal element while the CIT(A) sustained an even higher figure without prior notice of enhancement. Considering the claimed travelling expenditure figure of Rs.2,99,960/-, the Tribunal found it appropriate to quantify a reasonable personal element at 10% and directed the AO to disallow 10% (i.e., Rs.30,000/-), deleting the balance addition. The approach replaces arbitrary higher ad-hoc disallowances with a proportionate and quantified adjustment. [Paras 5]

Travelling expenses disallowance restricted to Rs.30,000/-; ground partly allowed.

Final Conclusion: The appeal is partly allowed: disallowance under section 14A restricted to Rs.29,711/-, addition under section 68 deleted, and travelling expenses disallowance reduced to Rs.30,000/-. Order in terms of the Tribunal's directions.

Penalty for concealment or inaccurate particulars of income under section 271(1)(c) - treatment of unexplained cash credit as income under section 68 - remand for verification and remit report - requirement of authoritative findings before upholding penalty - Explanation 1 to section 271(1)(c)

Penalty for concealment or inaccurate particulars of income under section 271(1)(c) - remand for verification and remit report - requirement of authoritative findings before upholding penalty - Whether the penalty under section 271(1)(c) could be sustained where the Assessing Officer's remand report found the documents furnished by the assessee to be incorrect but the appellate order did not narrate or apply those remand findings. - HELD THAT: - The Tribunal noted that the Assessing Officer had remanded the matter for verification of the ledger entries and, after remand proceedings, concluded that the evidence produced by the assessee was not correct. The Commissioner (Appeals) confirmed the penalty but did not set out or deal with the findings recorded in the Assessing Officer's remand report; the appellate order contains no narration of what was found incorrect in the documents produced during remand. The departmental representative was also unable to explain the Assessing Officer's observations. In these circumstances the Tribunal held that the penalty could not be sustained because the appellate authority failed to consider and apply the remand findings in support of upholding the penalty; authoritative findings on the correctness of the material relied upon were therefore not reflected in the appellate decision. Having regard to the absence of such consideration and explanation, the Tribunal found it appropriate to delete the penalty levied under section 271(1)(c). [Paras 5]

Penalty under section 271(1)(c) deleted for failure to consider and apply the Assessing Officer's remand findings.

Final Conclusion: The appeal is allowed and the penalty imposed under section 271(1)(c) is deleted for assessment year 2010-11; the appellate order failed to narrate or adopt the Assessing Officer's remand findings necessary to sustain the penalty.

Reopening of assessment beyond four years - formation of reasonable belief for reassessment - prima facie material for reopening - reliance on third party oath/statements for reopening - genuineness of purchases and burden of proof - additions cannot be based on mere presumptions, conjectures or surmises

Reopening of assessment beyond four years - formation of reasonable belief for reassessment - prima facie material for reopening - reliance on third party oath/statements for reopening - Validity of reopening assessment under section 147/148 in view of information received after scrutiny assessment. - HELD THAT: - The Tribunal held that reopening beyond four years was justified because subsequent tangible information arising from search operations in the group (which showed that the supplier was an accommodation entry provider) came to the AO's notice after completion of original scrutiny assessment. At the stage of forming belief for reassessment only prima facie material is required and the sufficiency or correctness of that material is not to be examined; Explanation 1 to section 147 does not preclude reopening where relevant information is a subsequent event not available at the time of original assessment. Distinguishing authorities relied upon by the assessee, the Tribunal found a live link between the search findings and the assessee's purchases from the suspect entity, and concluded the AO had material to form a reasonable belief of escapement of income. The Tribunal therefore upheld the validity of reassessment proceedings. [Paras 6]

Validity of reassessment under section 147/148 confirmed.

Genuineness of purchases and burden of proof - additions cannot be based on mere presumptions, conjectures or surmises - reliance on third party oath/statements for reopening - Whether the purchases from M/s Sun Diam were to be disallowed as bogus on merits. - HELD THAT: - On the merits the Tribunal found that the assessee produced purchase orders, invoices, bank payments, ledger extracts, ERP inventory entries and an affidavit from the clearing agent confirming receipt and delivery. The AO's sole basis for addition was statements recorded in the group search; no independent verification by the AO (such as issuing notice to the supplier) was shown. As additions cannot rest on mere presumptions or unverified third party statements where the assessee has furnished contemporaneous documents evidencing the transactions, the Tribunal held that the assessee discharged the onus of establishing genuineness of the purchases and the addition was unsustainable. [Paras 7]

Addition treated as bogus purchase deleted and grounds on merits allowed.

Final Conclusion: Reassessment proceedings under section 147/148 upheld as valid on the basis of subsequent information from search operations, but the addition on account of alleged bogus purchases is deleted on merits; appeal partly allowed.

Validity of reassessment under Section 147 - requirement of fresh/tangible material - Change of opinion versus reassessment - impermissibility of reopening on same material - Commencement of business - acts constituting commencement (purchase of land, advances, registration, laying roads, construction) - Pre-commencement expenses v. revenue expenditure - capitalization only if business not commenced - Adjustment of income from other sources and carry forward/set off of business losses

Validity of reassessment under Section 147 - requirement of fresh/tangible material - Change of opinion versus reassessment - impermissibility of reopening on same material - Reopening of assessment was without jurisdiction as the belief to reopen was formed on the same set of material available at the time of the original assessment and not on any fresh/tangible information. - HELD THAT: - The Tribunal held that the reassessment notice issued within four years could not be sustained because the Assessing Officer did not rely on any new material after conclusion of the regular assessment. The law requires that reasons to believe that income has escaped assessment must be founded on fresh/tangible information and have a live link with formation of belief; formation of belief on the same material amounts to impermissible review. The judgment relied on the principles extracted from preceding authorities, reproduced in the impugned order as controlling law, holding that where the Assessing Officer had considered the same enquiries and accepted the assessee's replies in the original scrutiny assessment, reopening on a different view is barred. Reference to Kelvinator of India Ltd. and to Marico Ltd. was treated as instructive on the requirement of fresh material and on preventing review masquerading as reassessment. Applying these principles to the record - wherein the AO had raised queries in the regular assessment, received responses, and thereafter reopened on identical material - the Tribunal concluded that the reassessment amounted to change of opinion and set aside the reopening as without jurisdiction. [Paras 9, 10]

Reassessment set aside for lack of jurisdiction; assessee's cross-objection allowed.

Commencement of business - acts constituting commencement (purchase of land, advances, registration, laying roads, construction) - Pre-commencement expenses v. revenue expenditure - capitalization only if business not commenced - Adjustment of income from other sources and carry forward/set off of business losses - On merits, the assessee had commenced business activities and therefore the expenditures in controversy were allowable as business expenses; the CIT(A)'s conclusion on commencement was affirmed and the revenue appeal dismissed. - HELD THAT: - The Tribunal concurred with the CIT(A)'s factual finding that the assessee, after altering its objects, had initiated core activities of real estate development - purchase and registration of land, advances, laying of roads and construction works - in furtherance of a large township/SEZ project. The Tribunal noted that in large projects revenue generation may be delayed, but delay in earning receipts does not mean business has not commenced. Relying on the factual matrix and the reasoning of the High Court in Daimler India Commercial Vehicles Pvt. Ltd. that commencement may be established by composite preparatory activities (including construction and R&D) even if commercial receipts have not yet arisen, the Tribunal held the conclusion of commencement was not perverse. Consequently, the impugned disallowance and treating of receipts as income from other sources were not sustained; the AO was directed to allow the expenditures as business expenses and permit carry forward/set off of business losses as directed by the CIT(A). [Paras 11]

Revenue's appeal on merits dismissed; CIT(A)'s finding that business had commenced and that expenses are allowable as business expenditure affirmed.

Final Conclusion: The reassessment under Section 147 was set aside as founded on change of opinion without fresh/tangible material and the assessee's cross-objection is allowed; on merits, the Tribunal affirmed that the assessee had commenced business activities and dismissed the revenue's appeal, directing that the contested expenses be treated as business expenditure with consequential carry forward/set off as per the CIT(A)'s order.

Deduction under section 80IAB - Income from house property versus business income - profits and gains derived from the business of developing a Special Economic Zone - overriding effect of the SEZ Act

Income from house property versus business income - profits and gains derived from the business of developing a Special Economic Zone - Classification of lease rental income from SEZ premises as 'Income from house property' or as 'Profits and gains from business or profession'. - HELD THAT: - The Tribunal held that lease rentals received by the assessee for commercial space in notified SEZs are to be treated as income from house property unless there is demonstrable systematic organized activity converting the receipts into business income. The assessee was an approved co-developer whose activities (conversion of bare shell to warm shell, provision of infrastructure and leasing to approved units) were authorized under the SEZ Act; earlier tribunal findings for AY 2012-13, and subsequent assessment years, classified identical receipts as income from house property. Applying established precedents, the Tribunal found no material change in facts or law that would warrant reclassification to business income and accepted that the head of income remains 'income from house property' for the years under appeal. [Paras 11, 15, 20]

Lease rental income from the assessee's SEZ properties is taxable under the head 'Income from house property' and not as business income.

Deduction under section 80IAB - overriding effect of the SEZ Act - Whether deduction under section 80IAB is admissible notwithstanding the head of income under which receipts are assessed. - HELD THAT: - The Tribunal interpreted section 80IAB as granting deduction for profits and gains derived from the business of developing a SEZ and held that the entitlement to deduction depends on whether income is derived from the approved SEZ activities and not on the particular head under which such income is assessed. The SEZ Act has an overriding effect, and where the activity is an authorised SEZ operation and the income is derived from that activity, the claim for deduction under section 80IAB is maintainable. Reliance was placed on Supreme Court authority limiting subsection (5) of a related provision to computation steps and not to restrict the reach of subsection (1) to business-head income only. Given the assessee's approved status and identical treatment in prior years, the Tribunal allowed the deduction. [Paras 12, 13, 16, 17, 20]

Deduction under section 80IAB is allowable for income derived from approved SEZ development activities regardless of whether that income is assessed under the head 'Income from house property' or as business income.

Final Conclusion: Revenue's appeals for AY 2013-14, AY 2014-15 and AY 2015-16 are dismissed; the CIT(A)'s orders upholding classification of the lease rental receipts as 'Income from house property' and allowing deduction under section 80IAB are confirmed.

Quashing of complaint under the Prohibition of Benami Property Transactions Act - stay of attachment/confiscation by appellate Tribunal - non-disclosure of material facts in a criminal complaint - interim stay of proceedings pending adjudication before a Tribunal - direction to file counter affidavit

Stay of attachment/confiscation by appellate Tribunal - non-disclosure of material facts in a criminal complaint - interim stay of proceedings pending adjudication before a Tribunal - Impugned complaint proceedings were ordered to be kept in abeyance pending further consideration because the Appellate Tribunal had earlier stayed the attachment/confiscation and that stay was not disclosed in the complaint. - HELD THAT: - The Court recorded that the Appellate Tribunal in FPA-PBPT-432/LKW/2019 had stayed attachment/confiscation by order dated 04.12.2019. The complaint filed on 02.07.2021 did not disclose that the attachment/confiscation proceedings had been stayed by the Tribunal and instead stated that the property had been adjudicated and confiscated. In view of the non-disclosure of the Tribunal's stay order and because the issue of attachment/confiscation is pending before the Tribunal, the Court considered it necessary to keep the criminal proceedings in abeyance and directed an interim stay of the impugned proceedings until the next date of listing so that the matter can be examined with those facts on record.

Impugned proceedings stayed until the next date of listing.

Direction to file counter affidavit - duty of prosecuting authority to disclose material facts - The respondent was directed to file a counter affidavit and the applicant permitted to file a rejoinder, to enable the Court to consider the effect of the Tribunal's stay and the non-disclosure in the complaint. - HELD THAT: - Having noted the Tribunal's prior stay and the omission in the complaint, the Court ordered the respondent to file a counter affidavit within four weeks addressing the matter. A rejoinder, if any, was permitted within one week thereafter. This procedural direction was given to place relevant pleadings and documents before the Court for further consideration when the matter is listed.

Respondent to file counter affidavit within four weeks; rejoinder within one week thereafter.

Final Conclusion: The High Court recorded that the Tribunal had stayed attachment/confiscation and that this was not disclosed in the complaint; it therefore ordered the impugned proceedings to remain stayed till the next listing, directed the respondent to file a counter affidavit (with leave for rejoinder), and suggested the parties may seek expedition before the Tribunal.

Interim release of detained goods - demurrage and detention charges - contractual lien of shipping line - admission of writ and issuance of rule

Admission of writ and issuance of rule - Writ petition admitted and Rule issued returnable on a specified date. - HELD THAT: - The Court admitted the writ application and directed that the Rule shall be returnable on 23.08.2022. Service of the Rule was waived for respondents 1 to 4 and for respondent No.5 by their respective counsel. The affidavit-in-reply filed by respondent No.5 was ordered to be taken on record and direct service was permitted. This admission keeps the larger legal questions open for adjudication on the returnable date. [Paras 5, 6]

Writ admitted and Rule issued returnable on 23.08.2022; service arrangements recorded.

Interim release of detained goods - demurrage and detention charges - Interim direction to release the detained consignment subject to final outcome of the writ. - HELD THAT: - Having noted earlier directions in a co-ordinate bench's order for release and the communication from Customs directing release after completion of clearance formalities, the Court exercised its discretion to direct interim release of the goods. The release was ordered to be effected on or before 11.05.2022, expressly made subject to the final result of the writ proceedings, thereby preserving the substantive adjudication for the returnable date while ensuring immediate relief to the writ-applicant. [Paras 1, 4, 7]

Goods directed to be released by 11.05.2022 as an interim measure, subject to final adjudication.

Contractual lien of shipping line - demurrage and detention charges - Respondent No.5 permitted to raise and contest all legal contentions, including claim of contractual lien for container detention charges. - HELD THAT: - While granting interim release of the consignment, the Court explicitly reserved liberty to respondent No.5 to press all legal contentions available, including the plea of contractual lien for detention/demurrage charges. The Court noted precedent relied upon by respondent No.5 but did not decide the merits of the lien or liability for demurrage at the interim stage, leaving those questions to be addressed on the returnable date. [Paras 3, 5, 7, 8]

Liberty reserved for respondent No.5 to raise defence of contractual lien and other legal contentions; merits to be decided on returnable date.

Final Conclusion: The High Court admitted the writ, issued a Rule returnable on 23.08.2022, directed interim release of the detained consignment by 11.05.2022 while expressly preserving respondent No.5's right to contest liability for demurrage/detention charges and to advance its contractual lien and other legal contentions for determination on the returnable date.

Natural justice - prejudice and bias in adjudicatory orders - remand for fresh adjudication - reconsideration on merits after giving opportunity - remedy before the revisional authority under customs law

Natural justice - prejudice and bias in adjudicatory orders - Whether the impugned Order in Appeal dated 24.02.2022 required quashing on account of prejudicial observations and perfunctory disposal that reflected denial of fair consideration. - HELD THAT: - The High Court found that the second respondent's order contained adverse and disparaging observations characterising the petitioners' defence as melodramatic and suggesting orchestrated litigation, and that the appeal had been dismissed without a dispassionate consideration of the merits. Those observations, coupled with a perfunctory rejection of the petitioners' explanations, demonstrated that the proceedings were not decided strictly on the merits as required by principles of natural justice. In these circumstances the Court concluded that the impugned order could not stand and warranted quashing to secure an unbiased adjudication.

Impugned order quashed on grounds of prejudice and failure to afford fair consideration; appellants entitled to fresh, unbiased adjudication.

Remand for fresh adjudication - reconsideration on merits after giving opportunity - remedy before the revisional authority under customs law - Procedure to be followed after quashing - whether the matters should be restored for reconsideration and the manner of such reconsideration. - HELD THAT: - Having quashed the impugned order, the Court restored the appeals to the file of the second respondent for fresh adjudication strictly on merits and after giving the petitioners sufficient opportunity to be heard. The Court directed prompt reconsideration, noting prior references to the availability of a remedy before the revisional authority under the customs law but emphasizing that the present adjudicatory exercise must proceed dispassionately in accordance with law. The order includes a specific direction that the petitioners appear before the second respondent on the appointed date to facilitate expeditious disposal.

Proceedings restored to the second respondent for fresh consideration on merits after due opportunity; petitioners directed to appear on the specified date.

Final Conclusion: The petition is allowed in part: the Order in Appeal dated 24.02.2022 is quashed for manifest prejudice and lack of dispassionate consideration; the appeals are restored to the second respondent for fresh adjudication on merits after giving the petitioners an opportunity to be heard, with directions for prompt disposal.

Dispensation of the meetings under Section 230 of the Companies Act, 2013 - sanction of the Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013 - public notice and newspaper publication - service of notice on objectors and filing timeline for objections - service of petition on regulatory and statutory authorities - affidavit of service and registry report

Dispensation of the meetings under Section 230 of the Companies Act, 2013 - Directions made earlier dispensing with meetings of Equity Shareholders and Unsecured Creditors and related consequential directions are recorded and to be acted upon. - HELD THAT: - The Tribunal records that upon the First Motion Application (CA(CAA) No. 42/BB/2021) the meetings of the Equity Shareholders and Unsecured Creditors of the Applicant Company were dispensed with and certain directions were issued. Those directions, as recited, remain operative and are to be complied with by the Applicant/Transferee Company in connection with the pending petition for sanction of the Scheme of Amalgamation. [Paras 2]

The earlier order dispensing with meetings and the attendant directions are affirmed and incorporated into the present procedural timetable.

Sanction of the Scheme of Amalgamation under Sections 230-232 of the Companies Act, 2013 - public notice and newspaper publication - The Petition for sanction of the Scheme is fixed for hearing and requirements for public notice in specified newspapers are directed. - HELD THAT: - The petition under Sections 230 to 232 of the Companies Act, 2013 for sanction of the Scheme of Amalgamation is listed for final hearing on the date directed by the Tribunal. The Petitioner is ordered to publish notice of the hearing in one English and one vernacular daily (named newspapers) not less than ten days before the hearing date, thereby ensuring public notice and opportunity for interested parties to take note. [Paras 3]

Petition listed for hearing on the fixed date and the Petitioner shall cause the specified newspaper publications at least ten days prior to the hearing.

Service of notice on objectors and filing timeline for objections - Procedure for serving notice on objectors and timeline for filing objections by authorities or objectors is prescribed. - HELD THAT: - The Tribunal directs that notices be served upon objectors or their representatives at least fifteen days before the hearing together with the petition and annexures. It further prescribes that authorities to whom notice is given may file objections on or before the hearing date or within thirty days from receipt of notice, failing which it will be taken that they have no objection to the Scheme, subject to other statutory conditions being satisfied. [Paras 4]

Notices to objectors to be served with specified timelines; objections must be filed within the prescribed period or will be deemed absent.

Service of petition on regulatory and statutory authorities - The Petitioner is directed to serve the petition and annexures on specified statutory and regulatory authorities and any sectoral regulator concerned. - HELD THAT: - In addition to public notice, the Petitioner must serve the petition by speed post on the Regional Director (South East Region), Registrar of Companies (Karnataka), Designated Nodal Officer of the Principal Chief Commissioner of Income Tax (Karnataka and Goa), the Official Liquidator (Bengaluru) and the Reserve Bank of India (Bengaluru), and any sectoral regulator governing the companies involved. This ensures statutory and regulatory stakeholders receive notice and can raise objections or take necessary steps. [Paras 5]

Service on the listed statutory and sectoral authorities is mandated immediately and as part of the compliance for hearing.

Affidavit of service and registry report - The Petitioner must file an affidavit of service before the hearing and the Registry must report whether any objections have been received. - HELD THAT: - The Tribunal requires that at least seven days before the hearing the Petitioner file an affidavit proving publication and service upon the statutory authorities and objectors. The Registrar is directed to report before the hearing date whether any objections have been received, facilitating the Tribunal's consideration at the hearing. [Paras 6]

Affidavit of service to be filed seven days prior to the hearing and Registry to report receipt of any objections.

Final Conclusion: The Tribunal has recorded and directed compliance with the earlier dispensation of meetings, fixed the petition for hearing, and prescribed detailed notice, service, objection timelines and proof-of-service requirements to facilitate the adjudication on the Scheme of Amalgamation.

Related party transaction and shareholder approval - abstention from voting by related parties under Section 188 of the Companies Act, 2013 - rescission of special resolution and voting by related parties - SEBI adjudication and penalty under Regulation 23 of the Listing Obligations and Disclosure Requirements

Abstention from voting by related parties under Section 188 of the Companies Act, 2013 - rescission of special resolution and voting by related parties - related party transaction and shareholder approval - SEBI adjudication and penalty under Regulation 23 of the Listing Obligations and Disclosure Requirements - Validity of voting by related parties at an Extra-Ordinary General Meeting convened to rescind an earlier special resolution approving a related party transaction, and the consequent validity of SEBI's penalty under Regulation 23. - HELD THAT: - The Court accepted the view of the Securities Appellate Tribunal that the statutory prohibition on related parties voting under Section 188 operates at the time of entering into the contract or arrangement when the special resolution is passed. In the present facts, the related parties had abstained from voting when the special resolution approving the transaction was adopted on 15.07.2014. A later meeting convened on 16.12.2016 to rescind that resolution involved the related parties voting in the rescission; the Appellate Tribunal found no illegality in such voting. The Supreme Court observed that this interpretation is a plausible view in the circumstances of the case, that no mala fide or ill-intent by the respondents was established, and that a hyper-technical approach by the regulator was rightly disapproved. Having regard to these findings, the adjudication order imposing a penalty was not sustained.

Appeal dismissed; SEBI's challenge to the Appellate Tribunal's allowance of the respondents' appeal and the consequent set-aside of the Adjudicating Officer's penalty is declined.

Final Conclusion: The challenge to the Securities Appellate Tribunal's decision was dismissed. The Tribunal's view-that the prohibition on related parties voting under Section 188 applies at the time of entering into the arrangement and that voting at a subsequent meeting to rescind the resolution did not attract penalty under Regulation 23 in these facts-was endorsed as a plausible conclusion and SEBI's appeal fails.

Maintainability of Section 9 petition despite contractual pledge - right of pawnee to sue and retain or sell pledged goods - admission of debt by email and dishonour of cheques as default - pre-existing dispute under Section 9 - arbitrability of rights in rem

Maintainability of Section 9 petition despite contractual pledge - right of pawnee to sue and retain or sell pledged goods - Petition under Section 9 of the IBC is maintainable notwithstanding contractual clauses providing for sale of pledged goods. - HELD THAT: - The Tribunal held that clauses in the Supplementary Back to Back Trade Facility Agreement reiterate the pawnee's rights under the Contract Act and do not curtail the Operational Creditor's statutory right to proceed under Section 9. Sections 176 and 177 of the Indian Contract Act confer on the pawnee a discretion to either sue for recovery while retaining pledged goods as collateral or to sell the pledged goods after reasonable notice; contractual provisions mirroring those rights do not operate to bar initiation of proceedings under the IBC unless the contract expressly and validly ousts statutory remedies. The issuance of a notice of sale without completing disposal does not deprive the Operational Creditor of its right to file a Section 9 petition. Applying these principles, the Tribunal concluded that the presence of a contractual pledge and notice thereof did not render the Section 9 petition non maintainable and answered this point in favour of the Operational Creditor. [Paras 6, 7]

Maintainable; Petition under Section 9 may be filed despite existence of contractual pledge and notice of sale.

Admission of debt by email and dishonour of cheques as default - pre-existing dispute under Section 9 - arbitrability of rights in rem - There was a debt due and default by the Corporate Debtor; no pre-existing dispute barred admission. - HELD THAT: - The Tribunal found an undisputed email from the Corporate Debtor acknowledging the principal debt, and observed that dishonour of cheques constitutes default rather than a bona fide dispute over liability. Correspondence asserting discrepancies in calculations and requests for reconciliation did not establish a pre existing dispute sufficient to defeat admission. The Tribunal further noted that disputes concerning rights in rem are not arbitrable and that the existence of an arbitration clause did not oust the Tribunal's jurisdiction to decide initiation of CIRP under Section 9. Relying on settled principles that an admitted debt above the statutory threshold and default require admission at the threshold stage, and that exact quantification is for the Resolution Professional post admission, the Tribunal held that the criteria for admission were satisfied. [Paras 6, 7]

Debt and default established; no pre existing dispute preventing admission; petition to be admitted.

Final Conclusion: Company Petition admitted; CIRP initiated, Interim Resolution Professional appointed and moratorium imposed.

Admission into Corporate Insolvency Resolution Process - moratorium - scope of moratorium prohibitions - interim resolution professional appointment - duties of IRP to manage the corporate debtor as a going concern - obligation to cooperate with the IRP - public announcement and submission of claims - protection of ongoing supply of goods/services during moratorium - interim funding by the operational creditor for CIRP

Admission into Corporate Insolvency Resolution Process - Application under Section 9 of the Code admitted and the Corporate Debtor placed under CIRP. - HELD THAT: - Pursuant to the direction of the appellate authority and upon consideration of the application filed by the Operational Creditor, the Adjudicating Authority admitted Male Square Retails Pvt. Ltd. into the Corporate Insolvency Resolution Process under Section 9 of the Insolvency and Bankruptcy Code, 2016. The order formally institutes CIRP against the Corporate Debtor and directs continuation of proceedings as per the Code.

CP(IB) No. 39/9/NCLT/AHM/2020 is allowed and the Corporate Debtor is admitted into CIRP.

Moratorium - scope of moratorium prohibitions - Moratorium under Section 14 declared and its operative scope and duration fixed. - HELD THAT: - The Adjudicating Authority declared the moratorium in terms of Section 14(1) of the Code, specifying that during the moratorium the institution or continuation of suits or proceedings against the Corporate Debtor, transfer/encumbrance/disposal of assets by the Corporate Debtor, actions to enforce security interests (including under SARFAESI Act) and recovery of property by owners/lessors in possession of the Corporate Debtor are prohibited. The moratorium is directed to operate from the date of the order until completion of CIRP, approval of a resolution plan under Section 31(1), or an order for liquidation under Section 33, as applicable.

Moratorium declared with specified prohibitions and duration linked to the CIRP lifecycle.

Interim resolution professional appointment - duties of IRP to manage the corporate debtor as a going concern - obligation to cooperate with the IRP - IRP appointed; duties, powers and obligation on management and connected persons to cooperate were specified. - HELD THAT: - The tribunal appointed the named professional as Interim Resolution Professional under Section 13(1)(c) to conduct CIRP in accordance with the Code and Regulations. The IRP is directed to perform functions under Sections 17, 18, 20 and 21, including protecting and preserving the value of the Corporate Debtor's assets and managing its operations as a going concern. Personnel connected with the Corporate Debtor, its promoter or persons associated with management are under the legal obligation to extend assistance and cooperation under Section 19; failure to assist permits the IRP to seek appropriate orders from the Adjudicating Authority.

Mr. Rahul Nareshbhai Shah is appointed as IRP with specified duties and a binding obligation on management and connected persons to cooperate.

Public announcement and submission of claims - protection of ongoing supply of goods/services during moratorium - interim funding by the operational creditor - IRP directed to make public announcement and invite claims; supply to the Corporate Debtor to continue during moratorium; interim funding directed from the Operational Creditor. - HELD THAT: - The Adjudicating Authority directed the IRP to make the statutory public announcement of CIRP initiation and call for claims under Section 15 as required by Section 13(1)(b). It further directed that ongoing supply of goods or services to the Corporate Debtor shall not be terminated, suspended or interrupted during the moratorium, and that the IRP must preserve the Corporate Debtor's value and manage operations. For facilitation of CIRP, the Operational Creditor was directed to pay an interim advance of Rs. 1,00,000 to the IRP within two weeks and the IRP must file proof of receipt with the Authority along with the First Progress Report; the IRP may later seek further interim funds as per rules.

IRP to make public announcement and invite claims; suppliers' contracts to be protected during moratorium; Operational Creditor to provide interim funding as directed.

Registry communication and filing of progress report - Registry to communicate the order to concerned parties and IRP/Resolution Professional to file progress report through IA. - HELD THAT: - The Registry was directed to transmit copies of the order to the Operational Creditor, Corporate Debtor, the appointed IRP and the Registrar of Companies within seven working days and to upload the order on the website immediately after pronouncement. The Insolvency Resolution Professional/Resolution Professional was further directed to file progress report(s) through an IA so that they could be taken on record by the Adjudicating Authority.

Order to be communicated by Registry; IRP/RP to file progress report by application for record.

Final Conclusion: The Adjudicating Authority admitted Male Square Retails Pvt. Ltd. into CIRP under Section 9, declared a moratorium with specified prohibitions and duration, appointed the named IRP with defined duties and a statutory obligation on management to cooperate, directed the IRP to make public announcement and invite claims, protected continuing supplies during the moratorium, required interim funding from the Operational Creditor, and ordered communication of the decision and filing of progress reports.

Admission of application under Section 9 of the Insolvency & Bankruptcy Code, 2016 - existence of debt and default - service of notice and compliance with Section 9(3)(b) and Section 9(3)(c) - limitation for filing under the Limitation Act, 1963 - appointment of Interim Resolution Professional (IRP) - moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016 - public announcement and initiation of CIRP

Admission of application under Section 9 of the Insolvency & Bankruptcy Code, 2016 - existence of debt and default - service of notice and compliance with Section 9(3)(b) and Section 9(3)(c) - limitation for filing under the Limitation Act, 1963 - Whether the application filed by the Operational Creditor under Section 9 of the IBC was complete, within limitation and disclosed debt and default warranting admission. - HELD THAT: - The Tribunal found that the notice of default under Section 8 had been delivered and affidavits required under Section 9(3)(b) were on record. Documentary material - invoices, ledger entries, bank statements and emails - established supplies, last payment on 15.10.2018 and continuing unpaid balance. The application filed on 23.07.2019 was held to be within the period of limitation in terms of the Limitation Act, 1963. The corporate debtor's contentions of dispute were not supported by documents, and an admission of indebtedness in balance confirmation/email correspondence further strengthened the claim. In view of these findings the Bench concluded that the Section 9 application was complete and made out for admission. [Paras 7, 8, 9, 10, 12]

The Section 9 application was admitted and CIRP initiated against the corporate debtor.

Appointment of Interim Resolution Professional (IRP) - functions and vesting of management in IRP - Whether an Interim Resolution Professional should be appointed and the management of the corporate debtor vested in the IRP. - HELD THAT: - The Operational Creditor had not proposed an IRP. Exercising the authority under the Code, the Bench directed appointment from the IBBI panel and specifically appointed Mr. Rajeev Kumar as IRP subject to submission of a valid authorisation of assignment under the relevant Regulations. The order records that the IRP shall carry out functions under the specified sections of the Code and that the management of the corporate debtor shall vest in the IRP for the CIRP period; officers and managers are directed to provide documents and information to the IRP within one week. [Paras 11, 12]

An IRP was appointed from the IBBI panel (Mr. Rajeev Kumar) and management of the corporate debtor vested in the IRP for the CIRP.

Moratorium under Section 14 of the Insolvency & Bankruptcy Code, 2016 - public announcement and initiation of CIRP - What interim measures and procedural directions should follow admission of the Section 9 application. - HELD THAT: - Upon admission, the Tribunal directed invocation of the moratorium under Section 14 of the Code effective from the date of the order until completion of CIRP or until approval of a resolution plan or liquidation. The Bench ordered immediate public announcement as required by the Code and Regulations, directed the Operational Creditor to deposit an amount to meet initial public notice expenses, instructed the IRP/RP to submit periodic reports, and mandated service of the order on the IRP and Registrar of Companies for updating records. Compliance timelines and consequences for default in furnishing documents to IRP were also specified. [Paras 12]

Moratorium imposed, public announcement directed, security for initial CIRP expenses ordered and ancillary procedural directions issued.

Final Conclusion: The Tribunal admitted the Section 9 application, initiated the CIRP against the corporate debtor, imposed the moratorium, appointed an IRP from the IBBI panel (Mr. Rajeev Kumar) and issued related procedural directions including public announcement, deposit for initial expenses and obligations on the corporate debtor's officers to cooperate with the IRP.

Corporate Insolvency Resolution Process - default and debt within the meaning of Section 7 of the Insolvency and Bankruptcy Code, 2016 - moratorium under the Code - appointment of Interim Resolution Professional - management vesting in the IRP during CIRP - public announcement and invitation of claims - obligation to cooperate and produce documents to the IRP - intervention dismissed as devoid of merit

Intervention dismissed as devoid of merit - Application for intervention seeking to stay Section 7 proceedings on account of an earlier High Court order was dismissed. - HELD THAT: - The proposed intervenor relied on an order of the Hon'ble Allahabad High Court of 30.10.2014 which, it was contended, placed farmers' interests above secured creditors and thereby operated to restrain initiation of proceedings under the Code. The Tribunal observed that the challenged High Court order only gives precedence to farmers' interests over secured creditors and does not operate as an interdiction of proceedings under Section 7 of the Code. The Bench further noted that the Code's objective is insolvency resolution and not mere recovery, and that any effect of the High Court order would be most relevant in fora concerned with recovery rather than in insolvency proceedings. The intervenor, despite the pendency of the Section 7 petition since March 2020, had not obtained any clear direction from constitutional courts to stay the Section 7 proceedings. In these circumstances the intervention petition did not inhibit the Tribunal from proceeding and was dismissed as lacking merit. [Paras 2, 3, 4, 5]

IA No. 25/ALD/2021 dismissed.

Default and debt within the meaning of Section 7 of the Insolvency and Bankruptcy Code, 2016 - Existence of a debt due and payable and occurrence of default for purposes of admission under Section 7. - HELD THAT: - On the material on record, including the loan agreements, notices sent by the financial creditor under the Sarfaesi regime and the corporate debtor's own OTS proposal for restructuring the loan, the Tribunal found that the corporate debtor had admitted the debt and that payment was outstanding. The account was declared NPA and the financial creditor established that default had occurred in accordance with the loan documentation. Having considered the submissions and documentary evidence, the Tribunal concluded that there was a debt due and payable and a default within the meaning of Section 7 of the Code. [Paras 7, 8, 11]

Section 7 petition is maintainable on the ground of debt and default; the petition is admitted.

Appointment of Interim Resolution Professional - eligibility of the proposed IRP - Whether the proposed Interim Resolution Professional is eligible and fit to be appointed. - HELD THAT: - The financial creditor proposed the name of Shravan Kumar Vishnoi as Interim Resolution Professional. The Tribunal examined the material and found no record of disciplinary proceedings or any other disqualifying circumstances against the proposed IRP. The application complied with the procedural requirements and there was no material to show ineligibility of the proposed professional. [Paras 12, 13]

The proposed IRP is appointed as Interim Resolution Professional.

Moratorium under the Code - management vesting in the IRP during CIRP - public announcement and invitation of claims - obligation to cooperate and produce documents to the IRP - Reliefs and directions consequent to admission of the Section 7 petition including moratorium, public announcement, vesting of management, cooperation by corporate debtor, reporting and interim funding to meet CIRP notice expenses. - HELD THAT: - Upon admission, the Tribunal directed that a moratorium under the Code shall operate from the date of the order until completion of CIRP or until approval of a resolution plan or order for liquidation. The Tribunal directed immediate public announcement of CIRP and invocation of the claim invitation process as prescribed by the relevant regulations. Management of the corporate debtor was ordered to vest in the IRP for the CIRP period; officers and managers of the corporate debtor were directed to provide all documents and information to the IRP within one week, failing which coercive steps may follow. The IRP/RP was directed to submit quarterly progress reports to the Adjudicating Authority. The financial creditor was directed to deposit funds to meet the expenses of issuing public notice and inviting claims, subject to Committee of Creditors' approval of such expenses. [Paras 14]

Moratorium imposed; public announcement, management vesting, cooperation, reporting and interim funding directions issued as part of admission order.

Final Conclusion: The Tribunal dismissed the intervention application and admitted the Section 7 petition filed by the financial creditor against the corporate debtor, directed constitutionally mandated insolvency processes including moratorium and public announcement, appointed the proposed IRP after finding no disqualification, and issued ancillary directions for management vesting, cooperation, reporting and interim funding to facilitate the CIRP.

Initiation of Corporate Insolvency Resolution Process - Operational Creditor - Corporate Debtor - default and debt - dispute within the meaning of Section 8 & 9 of IBC, 2016 - admission under Section 9 - limitation - moratorium under Section 14 - appointment of Interim Resolution Professional

Operational Creditor - default and debt - admission under Section 9 - The Section 9 application filed by the Operational Creditor for initiation of CIRP was admissible and liable to be admitted. - HELD THAT: - The Tribunal examined the documents placed on record including unpaid invoices, the demand notice and affidavit filed under Section 9(3)(b). It found that the claim of outstanding debt was supported by the corporate debtor's own balance sheet as at 31.03.2017 and by a compromise agreement dated 21.02.2017 which indicated liability. The application complied with the procedural requirements of IBC, 2016 read with rules and regulations and the claimed outstanding amount exceeded the statutory threshold. On the basis of these materials the Tribunal concluded that the application was complete and admit-able under Section 9. [Paras 10, 12, 13, 15]

Application under Section 9 is admitted.

Dispute within the meaning of Section 8 & 9 of IBC, 2016 - Operational Creditor - Corporate Debtor - The plea that a pre existing dispute or set off existed such as to oust admissibility of the Section 9 application was rejected. - HELD THAT: - The corporate debtor asserted that payments were made to two related entities of the Operational Creditor and that ledgers and communications showed set off or excess payment. The Tribunal required documentary proof of actual payments or transfers to substantiate that claim. No proof of such payments was produced in the reply or thereafter. The existence of the outstanding balance in the corporate debtor's balance sheet further undermined the corporate debtor's contention. Accordingly, the Tribunal held that no dispute within the meaning of Sections 8 and 9 was demonstrated on the record and the defence was unsubstantiated. [Paras 6, 11, 12, 15]

The defence of pre existing dispute / set off is not established; therefore it does not bar admission.

Limitation - admission under Section 9 - The Section 9 application was filed within the limitation period and hence maintainable on limitation grounds. - HELD THAT: - The Tribunal recorded that the notice of default under Section 8 was delivered and the affidavit under Section 9(3)(b) was filed; the debt fell due on 08.09.2017 and the application was filed on 12.10.2018. On this timeline the Tribunal concluded the application was within the prescribed limitation period and therefore not time barred. [Paras 14]

Application is within limitation and maintainable.

Moratorium under Section 14 - appointment of Interim Resolution Professional - Initiation of Corporate Insolvency Resolution Process - On admission the Tribunal declared moratorium, directed public announcement, appointed an Interim Resolution Professional and issued consequential directions. - HELD THAT: - Upon admission the Tribunal exercised its powers to declare the moratorium and specified its effects in terms of prohibitions on suits, transfer of assets, enforcement of security and recovery actions. The Tribunal directed immediate public announcement and called for submission of claims, appointed the named IRP to perform functions under the Code, required the Operational Creditor to deposit a specified amount with the IRP for preliminary expenses, and listed the matter for a progress report. These measures follow from admission and routine obligations under the IBC framework. [Paras 16]

Moratorium declared, public announcement directed, IRP appointed and related directions issued.

Final Conclusion: The Tribunal admitted the Section 9 application filed by the Operational Creditor, holding that the debt was in default, the corporate debtor's dispute/set off claim was unsubstantiated, and the application was within limitation; consequentially the Tribunal declared moratorium, directed public announcement, appointed the Interim Resolution Professional and issued ancillary directions including a deposit for preliminary expenses.

Corporate insolvency resolution process - default under the Insolvency and Bankruptcy Code - admission under Section 7(5) of the IBC - moratorium under Section 14 of the IBC - appointment of Interim Resolution Professional - limitation for filing insolvency application - Form C / information utility report of default

Form C / information utility report of default - default under the Insolvency and Bankruptcy Code - Existence of default by the Corporate Debtor as evidenced in the petition - HELD THAT: - The Petitioners produced records of financial information in the form of Form-C issued by the information utility (NESL) in respect of the debt of the Corporate Debtor. The Tribunal treated these records as evidencing occurrence of default and relied on them in admitting the petition. The finding that default has occurred is recorded on the basis of the NESL reports filed as annexures to the petition. [Paras 13]

Default is established by the Form-C / information utility records and is accepted for the purposes of admission under the Code.

Limitation for filing insolvency application - Whether the Section 7 application was filed within the period of limitation - HELD THAT: - The Tribunal noted the relevant transaction establishing the default dated 03.03.2019 (as shown in Annexure B-31) and observed that the petition was filed on 28.09.2021. On that basis the Tribunal concluded that the application was filed within the period of limitation and proceeded to adjudicate the petition on merits. [Paras 14]

The petition is within limitation.

Admission under Section 7(5) of the IBC - default under the Insolvency and Bankruptcy Code - Whether the Section 7 petition is complete and liable to be admitted - HELD THAT: - The Tribunal examined completeness of the application in Form No.1 and the evidence of default. The Corporate Debtor in its reply admitted the debt and default. Finding the petition complete and that the default in payment of financial debt exceeding the statutory threshold was established, the Tribunal held that the requirements of Section 7(5) are satisfied and therefore admitted the petition. [Paras 15, 16, 17]

The Section 7 petition is admitted under Section 7(5) of the IBC.

Moratorium under Section 14 of the IBC - Imposition and scope of moratorium consequent to admission - HELD THAT: - Upon admission of the petition the Tribunal declared moratorium in respect of the 'LGCL ONE STREET' project of the Corporate Debtor. The order sets out the prohibitions flowing from Section 14, including stay on institution or continuation of suits or proceedings, transfer or disposal of assets, enforcement of security interests, recovery of occupied property, and non-termination of essential supplies, and specifies the moratorium period as operative from the date of the order until completion of CIRP or approval of a resolution plan or liquidation. [Paras 17]

Moratorium under Section 14 is declared and the statutory prohibitions specified in the order shall operate.

Appointment of Interim Resolution Professional - corporate insolvency resolution process - Appointment of Interim Resolution Professional and directions as to credentials, filing of registration certificate and initial duties - HELD THAT: - The Tribunal appointed Mr. Ratnakar Shetty as the Interim Resolution Professional (IRP) noting that Form No.2 had been filed. Since the certificate of registration was not produced, the IRP was directed to file the certificate within one week. The Tribunal recorded that a credentials check disclosed nothing adverse. The IRP was directed to perform statutory duties under the Code, collate claims, determine the financial position, constitute the Committee of Creditors and file a report certifying its constitution within thirty days of appointment, convene its first meeting within seven days thereafter, and to send fortnightly progress reports to the Tribunal. [Paras 18, 19]

Mr. Ratnakar Shetty is appointed as IRP subject to filing his registration certificate within one week; he must perform the statutory duties and comply with the timelines directed.

Final Conclusion: The Section 7 petition filed by the financial creditors against Lalith Gangadhar Constructions Pvt. Ltd. is admitted: default evidenced by NESL records is accepted, the petition is within limitation and complete, moratorium under Section 14 is declared in respect of the 'LGCL ONE STREET' project, and Mr. Ratnakar Shetty is appointed as Interim Resolution Professional with directions to file his registration certificate and to take statutory steps including constitution of the Committee of Creditors within the prescribed timelines.

Cancellation of auction sale for failure to pay - liquidator's power to cancel sale and conduct fresh e-auction - time period for completion of sale under Schedule I directory v. mandatory - exclusion of lapsed period for computation of fresh sale timeline

Cancellation of auction sale for failure to pay - liquidator's power to cancel sale and conduct fresh e-auction - time period for completion of sale under Schedule I directory v. mandatory - exclusion of lapsed period for computation of fresh sale timeline - Whether the liquidator was entitled to cancel the sale of the corporate debtor in favour of the auction purchaser for failure to pay the balance sale consideration and to conduct a fresh e-auction. - HELD THAT: - The Tribunal found that the auction purchaser failed to make the balance payment within the timelines stipulated in the sale process despite repeated reminders and substantial time (more than seven months) having elapsed since the last date for completion of sale. While a prior NCLAT decision regarding the directory character of the ninety-day period under Schedule I was placed before the Tribunal, the Adjudicating Authority concluded that non-payment by the successful bidder engaged the 2nd proviso to Clause 1(12) of Schedule I of the Liquidation Process Regulations, 2016 and justified cancellation. The Liquidator had conducted the sale process in accordance with law and was not at fault; stakeholders (SCC) had in later meetings declined extension. The Tribunal therefore permitted the Liquidator to cancel the earlier sale and to proceed afresh with sale of the corporate debtor as a going concern. It also held that the period which had lapsed in the failed e-auction will be excluded for purposes of computing timelines for the fresh sale process. Consequential applications by the auction purchaser seeking reliefs and extensions were disposed of in terms of this order. [Paras 4, 5, 6]

Application of the Liquidator to cancel the sale is allowed; the Liquidator is permitted to proceed with a fresh e-auction and IAs filed by the auction purchaser are disposed of accordingly.

Final Conclusion: The Tribunal allowed the liquidator's application to cancel the sale for non-payment by the successful bidder, permitted the liquidator to conduct a fresh e-auction as a going concern (excluding the period lapsed in the failed sale for computation), and disposed of the auction purchaser's pending applications in terms of the order.

Refund under transitional provisions - Section 142(9)(b) of the CGST Act - revision of return under existing law - transfer of unutilised cenvat credit via Form TRAN-1 - time limit for refund claims - unjust enrichment - interest under Section 11BB of the Central Excise Act

Section 142(9)(b) of the CGST Act - refund under transitional provisions - time limit for refund claims - Entitlement to refund under Section 142(9)(b) of the CGST Act for cenvat credit admitted by revision of pre-GST return filed after the appointed day and whether any time limit applies to such refund claim. - HELD THAT: - The Tribunal found that where a taxable person filed Form TRAN-1 and thereafter revised a return under the existing law within the time permitted under that law resulting in additional admissible cenvat credit, Section 142(9)(b) contemplates refund of the amount in cash under the existing law. The Tribunal held that the transitional provision does not prescribe any separate limitation period for claiming such refund arising after the appointed day; thus the refund claim filed under Section 142(9)(b) is not liable to be rejected on the ground of time bar. The reasoning rests on a plain reading of Section 142(9)(b) and the absence in that provision of any prescribed time limit for making the refund claim. [Paras 9, 10]

No time limit is prescribed under Section 142(9)(b) of the CGST Act for claiming the refund arising after the appointed day; appeal allowed on this ground and refund directed to be disbursed.

Revision of return under existing law - transfer of unutilised cenvat credit via Form TRAN-1 - unjust enrichment - Whether the refund claim was liable to be rejected on account of transferability of liability or on the ground of unjust enrichment. - HELD THAT: - The Tribunal observed there was no allegation or finding by the lower authority regarding unjust enrichment. Given that the additional cenvat credit was taken by filing a revised return after the appointed day and after filing Form TRAN-1, there was no scope to transfer service-tax liability to any other person. In absence of any finding or evidence of unjust enrichment, the ground for rejection on that basis did not survive. Accordingly the appellant was entitled to the refund subject to disbursement by the Adjudicating Authority. [Paras 9, 10]

No finding of unjust enrichment and no scope to transfer liability; refund claim cannot be rejected on these grounds.

Final Conclusion: Appeal allowed; impugned order set aside. The appellant is entitled to refund of the admitted cenvat credit for the period ended 30.06.2017 and the Adjudicating Authority is directed to disburse the refund within sixty days together with interest under Section 11BB of the Central Excise Act.

Applicability of section 11B to refund of amounts paid without liability - refund of erroneous/unauthorised levy - colour of liability test for limitation - right to claim refund by civil remedy or writ where levy is outside the Act

Applicability of section 11B to refund of amounts paid without liability - refund of erroneous/unauthorised levy - colour of liability test for limitation - Whether the time-bar under section 11B of the Central Excise Act applies to a claim for refund of service tax paid by the appellant when the payment was made under a mistake despite no liability due to an exemption. - HELD THAT: - The Tribunal recorded that the adjudicating authority itself had found the impugned services to be exempt during the relevant period and that the tax paid by the appellant was therefore an erroneous payment without any liability. Section 11B, on its plain language, refers to refund of duty of excise and contemplates claims in respect of amounts which have the colour of duty when paid. Where an amount was paid under a mistake and had no colour of liability at the time of payment, the statutory limitation under section 11B does not operate to bar recovery. The judgment of the Supreme Court in Mafatlal Industries (as analysed in the impugned order) classifies such claims and recognises that refunds of illegal or unauthorised levies, or payments made without jurisdiction or colour of law, are not necessarily confined to the statutory refund mechanism and may be sought by civil remedy or writ; consequently the limitation under the specific provision cannot be mechanically applied to such payments. The Tribunal further relied on and followed decisions of various High Courts and Benches of the Tribunal holding that amounts paid mistakenly where there was no liability are not governed by section 11B and are refundable. Applying these principles to the facts, the payment made under reverse charge for exempt services had no colour of liability and therefore could not be held to be time barred under section 11B. [Paras 7, 10, 11, 13, 14]

Section 11B is not attracted to refund claims in respect of amounts paid under mistake where there was no liability; the impugned order rejecting the refund as time barred is set aside and the appeal is allowed.

Final Conclusion: The appeal is allowed; the Commissioner(A)'s order rejecting the refund on limitation grounds is set aside as section 11B does not apply to amounts paid without any liability (payments made under mistake) and the appellant is entitled to refund.

Inapplicability of Rule 6 of the Cenvat Credit Rules where common inputs invariably produce a dutiable final product - by product versus joint product distinction in excise law - attribution of inputs where final product cannot be manufactured using a lesser quantity of inputs - entitlement to refund of Cenvat credit reversed under Rule 6(3A) where Rule 6 is not attracted

Inapplicability of Rule 6 of the Cenvat Credit Rules where common inputs invariably produce a dutiable final product - entitlement to refund of Cenvat credit reversed under Rule 6(3A) - Whether the respondent was required to reverse Cenvat credit under Rule 6(3) of the Cenvat Credit Rules, 2004 in respect of inputs and input services used in the manufacture of LPG cleared under the Domestic LPG Subsidy Scheme, or instead was entitled to refund of the Cenvat credit reversed/paid under Rule 6(3A). - HELD THAT: - The Court accepted the Tribunal's and earlier authorities' reasoning that Rule 6(1)-(3) is directed to situations where a manufacturer uses common inputs to produce two distinct final products-one dutiable and another exempt-and where it is possible to attribute or segregate input consumption between them. Applying the ratio in Sterling Gelatin and the line of authority cited, the Court noted that where the manufacturing technology makes the emergence of the other product inevitable and it is not possible to manufacture the dutiable product using a lesser quantity of inputs or input services, the obligation to reverse credit under Rule 6 does not arise. On the facts found by the Tribunal, LPG arose inevitably in the refining process and no incremental inputs or input services were used to produce LPG separate from those used for the dutiable value added products; therefore the conditions for invoking Rule 6 were not satisfied and the respondent was not required to reverse Cenvat credit under Rule 6(3). Consequently the respondent was entitled to refund of the Cenvat credit reversed/paid under Rule 6(3A).

Rule 6(1)-(3) not attracted on the facts; respondent not required to reverse Cenvat credit under Rule 6(3) and entitled to refund of amounts reversed/paid under Rule 6(3A).

By product versus joint product distinction in excise law - attribution of inputs where final product cannot be manufactured using a lesser quantity of inputs - Whether LPG is a by product (and therefore outside the ambit of Rule 6) or a joint final product for which Rule 6 would apply. - HELD THAT: - The Tribunal held that LPG inevitably arises in the refining process (crude distillation, coker, FCCU, platformer units, etc.) and is tapped without any deliberate attempt to manufacture it; the quantity of inputs and input services used for the dutiable products does not reduce because LPG arises. The High Court observed that, in any event, where the dutiable product cannot be produced using a lesser quantum of inputs, the attribution rule underlying Rule 6 does not apply; applying that established principle (as in Sterling Gelatin and Supreme Court authorities), the question whether LPG is technically a by product became academic. The Court therefore upheld the Tribunal's factual finding that LPG arose inevitably and agreed that the Rule 6 mechanism for reversal was not applicable in the circumstances.

The characterization of LPG as arising inevitably in the refining process supports the conclusion that Rule 6 does not apply; the by product/joint product controversy is rendered academic by the finding that the dutiable products could not be made with lesser inputs.

Entitlement to rely on established precedent where factual matrix shows impossibility of segregating input consumption - Whether the Revenue could successfully challenge the Tribunal's reliance on precedents (Sterling Gelatin, DCW, and Supreme Court authorities) that permit denial of Rule 6 reversal where segregation of inputs is impossible. - HELD THAT: - The Court examined the line of authorities relied upon by the respondent and the Tribunal and observed that those precedents establish that Rule 6 does not apply where manufacturing technology makes the emergence of the other product inevitable and the dutiable product cannot be produced using a lesser quantum of inputs. The High Court found no factual error in the Tribunal's application of those principles to the present case and noted that the question of LPG being a by product need not be decided separately once the impossibility of input segregation is established. Accordingly, the Revenue's challenge to the Tribunal's application of precedent failed.

Tribunal's reliance on precedent was sustainable on the facts; Revenue's challenge rejected.

Final Conclusion: The appeal by the Revenue fails. The Tribunal's conclusion that Rule 6 of the Cenvat Credit Rules did not apply on the facts (and that the respondent was not required to reverse credit under Rule 6(3)) is upheld; consequently the respondent's entitlement to refund of the Cenvat credit reversed/paid under Rule 6(3A) stands and the Revenue's appeal is dismissed.

Clandestine removal - reliance on third-party documents without corroboration - mechanical adjudication - penalty under Rule 26 of Central Excise Rules - failure to examine Revenue witness in adjudication proceedings

Clandestine removal - reliance on third-party documents without corroboration - mechanical adjudication - penalty under Rule 26 of Central Excise Rules - Sustainability of demand and penalty for alleged clandestine removal based primarily on third party records and related adjudicatory deficiencies. - HELD THAT: - The Tribunal found that the demand for duty and the penalties imposed were founded principally on documents and ledger entries recovered from a third party (Pankaj Ispat) and that there was a lack of sufficient and corroborative evidence linking the appellants to clandestine clearances. The adjudication was characterised as mechanical, with the Revenue having neither produced independent evidence from the appellants' records nor called witnesses to substantiate the third party material. In these circumstances, and following the Tribunal's earlier decision in Ramniwas Ispat (referred to in the order), the confirmation of duty, interest and imposition of equal penalty as well as the penalty on the director under Rule 26 could not be sustained. The Tribunal therefore set aside the impugned orders and allowed the appeals, granting consequential benefits to the appellants.

Demand, interest and penalties confirmed by the lower authorities are set aside; appeals allowed.

Final Conclusion: Both appeals are allowed; the orders confirming the duty demand, interest and penalties (including the penalty under Rule 26) are set aside and the appellants are granted consequential benefits.

Clandestine removal - third party records as evidence - relevancy of statements under Section 9D/Section 138B - right to cross-examination in quasi-judicial proceedings - transaction value principle for valuation - confiscation of cash under customs/central excise provisions

Clandestine removal - third party records as evidence - The allegation of clandestine removal cannot be sustained solely on entries in transporters' and brokers' records without corroborative evidence. - HELD THAT: - The Tribunal found that the revenue's case was premised chiefly on entries in booking registers and documents seized from third parties. Such third party records, without corroboration (for example, evidence of corresponding consumption/shortage of raw materials, physical loading documents, consignment notes, receipt by buyers, flow of funds or other tangible indicia of clandestine manufacture and removal), only raise suspicion and are insufficient to prove clandestine removal on the preponderance of probabilities required in quasi judicial proceedings. The investigation did not produce loading advices or consignment notes, identify or examine alleged buyers, or establish procurement of raw material corresponding to the alleged clandestine clearances; on search no stock discrepancies were found. In absence of such corroboration, the benefit of doubt was held to lie with the appellants and the duty demands could not be sustained. [Paras 4]

Demand of duty and related penalties based solely on transporters' and brokers' records is not sustainable and must be set aside.

Relevancy of statements under Section 9D/Section 138B - right to cross-examination in quasi-judicial proceedings - Statements of third parties relied upon by the Department could not be validly used against the appellants as evidence in the adjudication without permitting cross examination, in absence of circumstances contemplated by Section 9D/138B. - HELD THAT: - The Tribunal observed that statements recorded under Section 14 (and relied upon) attain evidentiary value in proceedings only in accordance with Section 9D (and its Customs counterpart Section 138B), which permit admission without examination in narrowly defined situations (e.g., witness dead, cannot be found, etc.). Where those exceptional circumstances do not exist, the noticee is entitled to cross examine the declarants. The appellants had sought cross examination of the third parties whose records and statements formed the basis of the demand, but were not allowed the opportunity; that failure vitiated reliance on those statements and undermined the Department's case. [Paras 4]

Reliance on third party statements without allowing cross examination was held to be a legal infirmity, rendering the impugned demands unsustainable.

Transaction value principle for valuation - Differential duty demand on the ground of undervaluation could not be sustained where revenue relied on published price lists alone instead of demonstrating additional consideration over the invoice (transaction) value. - HELD THAT: - The Tribunal noted that after amendments to the valuation provision the value of excisable goods is their transaction value and there is no provision for adopting a deemed or normal price merely on the basis of an external publication. The revenue compared invoice values with rates published by a market publication and raised demands on that basis, but produced no evidence of any extra consideration being received by the appellants or of other facts displacing transaction value. In absence of proof that buyers paid consideration over and above invoiced amounts, the undervaluation charge was without legal foundation. [Paras 4]

Differential duty demand on the basis of published rates alone is unsustainable and set aside.

Confiscation of cash under customs/central excise provisions - The confiscation of cash in the case of M/s Vijay Kumar & Co. was not sustainable where the appellants established the lawful source and accounting of the seized cash. - HELD THAT: - The Tribunal examined the seizure/confiscation and found the investigation failed to establish that the seized cash represented sale proceeds of alleged clandestine removals. The appellant produced cash books and identified buyers from whom amounts were received; the amounts were reflected in accounting records and explanations were not displaced by the Department. Consequently confiscation ordered under the cited provisions was held to be improper and was vacated. [Paras 2, 4]

Confiscation of the cash was vacated and the order of confiscation set aside.

Final Conclusion: For the reasons stated, the Tribunal held that revenue failed to prove clandestine removal, wrongly relied on uncorroborated third party records and statements which were not subject to cross examination, and erroneously based undervaluation on published rates; confiscation in the specified case was also not justified. All appeals were allowed and the demands, interest, penalties and the confiscation set aside with consequential reliefs as per law.

Exemption to components for initial setting up of a solar power generation project or facility - liability to pay duty on project developer and not on the manufacturer under the notification - limitation and extended period requires proof of suppression, fraud or collusion - admissibility of technical literature to determine whether goods are components - strict interpretation of exemption notifications (burden on claimant)

Exemption to components for initial setting up of a solar power generation project or facility - admissibility of technical literature to determine whether goods are components - Module Mounting Structure (galvanised solar structure) cleared by the appellant are components required for initial setting up of a solar power generation project or facility and hence eligible for exemption under Notification No.15/2010-C.E. as amended. - HELD THAT: - The notification exempts "all items of machinery ... and components, required for initial setting up of a solar power generation project or facility" subject to certification by the Ministry of New and Renewable Energy (paras.15, 14). The Tribunal found the department did not dispute production of the requisite certificate and accepted the appellant's technical literature (MNRE/GERM publications) showing Module Mounting Structure is described and used as a component of PV systems (paras.16-18). Distinctions relied upon by Revenue (cases concerning different factual matrices such as fabricated structures for other purposes or credit claims) were held inapposite; technical nomenclature and expert/Ministry understanding that mounting structures are integral to the functioning and initial installation of solar panels supported their characterization as components (paras.16-19). Authorities cited by appellant and prior Tribunal and appellate decisions construing "component" broadly (Jindal Strips, Hindustan Sanitaryware, Lotus Power Gear, Phenix Construction, Rakhoh, and others) were applied to conclude that the structures fall within the notification's scope (paras.19-20, 29-31). The Tribunal held that where the competent authority certifies necessity for initial setting up, exemption cannot be denied merely because items are not specifically named in a table (para.19). [Paras 18, 19, 20, 29, 31]

Module Mounting Structures are components eligible for exemption under Notification No.15/2010-C.E. as amended.

Liability to pay duty on project developer and not on the manufacturer under the notification - strict interpretation of exemption notifications (burden on claimant) - In the event of non-compliance with conditions of the notification, the statutory liability to pay duty lies on the project developer (customer) and not on the manufacturer who cleared goods on the basis of the certificate; therefore Revenue cannot recover duty from the appellant absent cancellation of those certificates. - HELD THAT: - The substituted conditions of Notification No.26/2012 place the undertaking and primary post-clearance liability on the Project Developer, who must pay duty in event of non-compliance (paras.14-15). The Tribunal noted it was not the department's case that the appellant or its customers did not possess the requisite certificate and found clearances were effected on the strength of that certificate and requisite intimations (paras.15, 21-24). On the plain wording of the notification and consistent judicial treatment, duty foregone, if any, is to be recovered from the project developer; consequently Revenue cannot demand duty from the manufacturer while the certificates remain valid (paras.23-25). [Paras 15, 21, 23, 24, 25]

Any duty in case of non-compliance is recoverable from the project developer and not from the appellant-manufacturer; no demand can be sustained against the appellant without cancellation of the certificates.

Limitation and extended period requires proof of suppression, fraud or collusion - strict interpretation of exemption notifications (burden on claimant) - The demand in respect of clearances prior to 31.1.2016 is time-barred; extended period cannot be invoked as there is no allegation or evidence of suppression, fraud or collusion where clearances were made on the basis of certificates produced to the department. - HELD THAT: - The show-cause notice related to clearances made between December 2015 and September 2016 (para.9). The Tribunal accepted the appellant's case that clearances were intimated and effected on the basis of certificates issued by the competent authority and that there was no suppression, fraud or collusion warranting invocation of the extended period (paras.21-22). Consistent authorities require concrete proof of fraud, suppression or collusion before permitting time extension; absent such proof and given production of the certificate to the jurisdictional authorities, the demand prior to 31.1.2016 was held to be beyond the normal period of limitation (paras.21-22, 25). [Paras 9, 21, 22, 25]

Demand relating to periods up to 31.1.2016 is barred by limitation; extended period not invokable in absence of suppression, fraud or collusion.

Final Conclusion: The impugned order is set aside: the appellant's clearances of Module Mounting Structures are held to be exempt as components for initial setting up of solar power projects (Notification No.15/2010-C.E. as amended); any duty in case of non-compliance is liable to be recovered from the project developer and not the manufacturer; and demands prior to 31.1.2016 are time-barred. The appeal is allowed with consequential relief, if any.

Admissibility of statements recorded during investigation under Section 9D(1)(b) - clandestine removal and evidentiary corroboration - reliance on third party transport records - non joinder of third party co noticees and evidentiary consequence - requirement of corroborative material (raw material receipt, electricity consumption, transportation proof, receipt of sale proceeds)

Admissibility of statements recorded during investigation under Section 9D(1)(b) - Whether statements recorded during investigation of two company officers could be admitted and relied upon as evidence of clandestine removal. - HELD THAT: - The Tribunal accepted the High Court's finding that the statutory pre condition in Section 9D was not satisfied in respect of the statements of the two AGMs and that those officers had retracted their earlier statements and did not support them on cross examination. The Adjudicating Authority had not recorded the requisite satisfaction under the statute that the statements should be admitted in the interest of justice. Consequently those statements cannot be treated as admissible evidence of clandestine removal and the Tribunal examined other investigative statements only for completeness. [Paras 10, 40, 41, 42]

Statements of the two AGMs recorded during investigation were inadmissible and could not be relied upon to prove clandestine removal.

Clandestine removal and evidentiary corroboration - reliance on third party transport records - non joinder of third party co noticees and evidentiary consequence - requirement of corroborative material (raw material receipt, electricity consumption, transportation proof, receipt of sale proceeds) - Whether the proposed demand based on 'bilty nakal register' and other third party material sufficed to prove clandestine manufacture and clearance of the quantified goods. - HELD THAT: - The Tribunal held that clandestine removal is a serious charge which must be established by cogent and corroborative evidence. The 'bilty nakal register' and related third party documents, in the absence of verification of consignments, interception of trucks, evidence of receipt of raw materials, excess electricity consumption, discovery of goods outside the factory, receipt of sale proceeds or prosecution/joinder of the transporters as co noticees, could not sustain the allegation. The Tribunal noted significant investigative gaps - failure to scrutinise seized floppies, to verify entries with consignees, to intercept trucks, and to follow up on transporter records - which undermined the probative value of the third party registers. It also emphasised that documents seized from third parties lose substantial evidentiary value where those third parties were not made co noticees. Applying settled principles, mere suspicion or inferential reliance on uncorroborated third party records was insufficient to confirm the demand. [Paras 44, 45, 46, 47, 48]

The proposed demand based on the 'bilty nakal register' and other third party material was not established; the part of the show cause notice demanding Rs.9,94,65,997/ was rightly dropped.

Final Conclusion: Revenue's appeal against the dropping of the proposed demand of Rs.9,94,65,997/ is dismissed; the Adjudicating Authority's order dropping that part of the demand is upheld and the assessee is entitled to consequential relief in accordance with law.

Entitlement to interest on wrongly retained revenue deposit - rate of interest fixed at 12% for delayed refunds/deposits - refund of deposit made under protest/exaction during investigation - inapplicability of statutory three-month refund bar to revenue deposits - time bar/limitation for claim linked to date of filing appeal

Entitlement to interest on wrongly retained revenue deposit - rate of interest fixed at 12% for delayed refunds/deposits - Appellant entitled to interest at 12% on the entire amount of refund which was wrongly retained by the department. - HELD THAT: - The Tribunal held that where a sum deposited by the assessee during investigation is ultimately found not to have been payable, the revenue must refund the amount with interest. Having regard to the decisions of higher and co-ordinate fora treating such deposits as made under protest or as exactions under ostensible authority, the proper measure of interest in the circumstances is 12% per annum. The Tribunal relied on established precedent treating deposits during investigation as refundable with interest and on the Supreme Court and High Court decisions confining interest to 12% where no statutory rate is prescribed, and applied that principle to direct payment of interest on the entire refunded amount from the date of payment/deposit thereafter. [Paras 8, 9]

Interest at 12% per annum is payable on the full refund amount and the Commissioner (Appeals) erred in limiting interest to the pre-deposit portion only.

Refund of deposit made under protest/exaction during investigation - inapplicability of statutory three-month refund bar to revenue deposits - Statutory provision prescribing a three month period for refund (as under section 11B in analogous contexts) does not apply to revenue deposits paid during investigation which are not duty liability. - HELD THAT: - The Tribunal found that the amount deposited by the appellant was deposited during investigation and antecedent to any admitted duty liability; the demands were subsequently set aside. Consequently the sum does not constitute 'duty' within the statutory refund provision invoked by the Revenue, and the three month limitation prescribed for refunds of duty (referred to by the Department) is not applicable. The reasoning follows authorities distinguishing refunds of duty from refunds of revenue deposits/exactions collected without lawful liability, and holds that the department had no authority to retain such deposits once the liability was negated. [Paras 7]

The three month refund bar relied upon by the Department is not applicable to the refund of the revenue deposit in this case.

Time bar/limitation for claim linked to date of filing appeal - The claim for interest is not time barred; the relevant date for limitation is to be viewed in the light of the departmental proceedings and the date of filing the appeal which led to the final order in favour of the appellant. - HELD THAT: - The Tribunal observed that the findings that the claim was barred by time were incorrect. On the facts, the proper reference point for reckoning limitation for the recovery/claim was the date of filing the appeal (as recorded), and the final order entitling the appellant was passed on 30.6.2017. Viewed in that light, the Commissioner (Appeals)'s conclusion that the claim for interest was time barred was unsustainable. The Tribunal therefore set aside that aspect of the order and allowed the claim subject to its directions on interest. [Paras 9]

The claim for interest is not barred by limitation on the facts of the case and the Commissioner (Appeals) erred in so holding.

Final Conclusion: The appeal is allowed: the order under challenge is set aside insofar as it refused interest on the balance of the refunded amount; the appellant is entitled to interest at 12% per annum on the entire refund, to be calculated from the date of payment/deposit as directed by the Tribunal; the Department's reliance on the three month statutory refund bar and on limitation was rejected.

Provisional assessment - finalization of provisional assessment - Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 - Rule 11 read with Rule 4 - Rule 7 and Rule 8 of the Valuation Rules - recovery of differential duty - set-off of excess duty already paid - Sabka Vishwas Legacy Dispute Redressal Scheme (SVLDRS) and absence of automatic stay - communication of decision under Circular No. 1053/2/2017 (para 14.10) - one month period - technical grounds for setting aside adjudication

Set-off of excess duty already paid - recovery of differential duty - Adjustment of excess duty already paid against the confirmed differential duty demand in Appeal No. 50866 of 2021 and correctness of the computation in Appeal No. 50867 of 2021. - HELD THAT: - The Tribunal found on the record that the appellant had already paid duty in excess (an amount accepted by both parties) for the year 2013-14. Commissioner (Appeals) failed to adjust that admitted excess payment while confirming the recovery of the full differential demand in Appeal No. 50866 of 2021. The Department did not object to allowing the set-off. Consequently the confirmed demand in Appeal No. 50866 of 2021 was reduced by the excess amount already paid, leaving only the net liability. By contrast, in Appeal No. 50867 of 2021 the excess payment had already been set off by Commissioner (Appeals) and no computation error was found. [Paras 7, 8, 11]

Appeal No. 50866 of 2021: confirmed demand set aside to the extent of admitted excess payment; net recovery fixed accordingly. Appeal No. 50867 of 2021: no error in computation and the order is sustainable.

Sabka Vishwas Legacy Dispute Redressal Scheme (SVLDRS) and absence of automatic stay - technical grounds for setting aside adjudication - Whether pendency of an application under SVLDRS prevents the Commissioner (Appeals) from adjudicating the appeals. - HELD THAT: - The Tribunal examined the SVLDRS scheme as enacted and found no provision that requires suspension or stay of departmental or appellate proceedings during consideration of an SVLDRS application. In the absence of any statutory requirement for stay, the mere pendency of an SVLDRS application did not render the Commissioner (Appeals) incompetent to decide the appeals. The technical contention to the contrary was therefore rejected. [Paras 9]

Pendency of an SVLDRS application does not bar the Commissioner (Appeals) from adjudicating the appeals; the ground is not sustainable.

Communication of decision under Circular No. 1053/2/2017 (para 14.10) - one month period - technical grounds for setting aside adjudication - Whether Circular No. 1053/2/2017 (para 14.10) creates a mandatory one month time limit from conclusion of personal hearing to communicate the adjudicating order such that delay would vitiate the order under challenge. - HELD THAT: - The Tribunal construed para 14.10 of the circular and concluded that it mandates communication of the decision expeditiously and ordinarily within one month of the decision, but does not prescribe that the adjudicating order must be passed within one month of the personal hearing's conclusion. The circular is ambiguous on using the date of conclusion of personal hearing as the trigger for the one month period, and there is no provision in the excise law imposing a one month limit measured from conclusion of personal hearing to communicate an adjudicating order. Accordingly, the delay relied upon by the appellant could not be treated as a valid ground to set aside the order. [Paras 10]

The circular does not furnish a mandatory time bar measured from conclusion of personal hearing to invalidate the adjudicating order; the technical objection is not sustainable.

Final Conclusion: Appeal No. 50866 of 2021 is allowed to the limited extent of reducing the confirmed demand by the admitted excess duty already paid, leaving a net recoverable amount as directed. Appeal No. 50867 of 2021 is dismissed and the impugned order is sustained; the other technical challenges (pendency of SVLDRS application and alleged one month communication time bar) are rejected.

Statutory timelines for disposal of objections under Section 74(7) and (8) of the Delhi Value Added Tax Act, 2004 - deemed allowance of objections under Section 74(9) of the Delhi Value Added Tax Act, 2004 - requirement of notice in prescribed Form DVAT-41 and personal service under Rule 56 of the Delhi Value Added Tax Rules, 2005 - judicial direction to create an online portal/mechanism for intimation of notices under Section 74(8)

Statutory timelines for disposal of objections under Section 74(7) and (8) of the Delhi Value Added Tax Act, 2004 - deemed allowance of objections under Section 74(9) of the Delhi Value Added Tax Act, 2004 - Objections filed by the petitioner under Section 74 were not disposed of within statutory timelines and required adjudication forthwith. - HELD THAT: - The Court found that notice under Section 32 had been issued in respect of the fourth quarter of FY 2013-14 and that objections under Section 74 were filed on 20.06.2014 but remained undecided for an excessive period. The statutory scheme mandates disposal of objections within three months of receipt (sub section (7)), entitlement to serve a written notice requiring decision within the next fifteen days if not disposed within three months (sub section (8)), and that objections shall be deemed allowed if no decision is taken at the end of those fifteen days (sub section (9)). Notwithstanding contentions about the procedural mechanics of service, the Court emphasised the respondents' prolonged inaction (noting an eight year delay) and declined to defer relief in order to investigate whether the Commissioner had actual knowledge of communications. Exercising supervisory jurisdiction, the Court directed immediate adjudication and specified that the Commissioner shall pass a speaking order after hearing the authorised representative, to be completed within fifteen days of receipt of the judgment copy. [Paras 4, 5, 7, 9]

Respondents directed to adjudicate the petitioner's objections and pass a speaking order after hearing the authorised representative within 15 days of receipt of the judgment.

Requirement of notice in prescribed Form DVAT-41 and personal service under Rule 56 of the Delhi Value Added Tax Rules, 2005 - The contention that the notice under sub section (8) must be in Form DVAT 41 and personally served under Rule 56 was noted but did not prevent the Court from directing disposal of the objections. - HELD THAT: - The respondents contended that the warning notice under sub section (8) must be issued in the prescribed Form DVAT 41 and personally served on the Commissioner as per Rule 56, and that the petitioner's notice was not so served nor signed by an authorised signatory. The Court acknowledged this procedural point as a 'talking point' regarding the mechanics of service but observed that investigating actual service would cause further delay. Given the prolonged inaction, the Court preferred immediate disposal of the objections over requiring proof of strict compliance with the prescribed form and service mechanics before ordering adjudication. [Paras 6, 7, 8]

Procedural objections about form and personal service were recorded but did not stay the direction for immediate adjudication; the Court proceeded to order disposal.

Judicial direction to create an online portal/mechanism for intimation of notices under Section 74(8) - Respondents were directed to create an online mechanism/portal for intimation of notices issued under Section 74(8) read with Rule 56. - HELD THAT: - The Court observed that physical personal interaction with the Commissioner is often not possible and that respondents must adapt to contemporary methods of communication. To avoid delays arising from procedural service issues, the Court directed the revenue to establish a portal or online mechanism to enable intimation of notices under sub section (8) of Section 74, read with Rule 56, so that such communications reach the Commissioner without undue delay. [Paras 8]

Respondents directed to create a portal/online mechanism for intimation of notices under Section 74(8) read with Rule 56.

Costs for procrastination - Costs were imposed on the respondents for unreasonable delay in disposal of objections. - HELD THAT: - Having found prolonged and unexplained inaction by the respondents in adjudicating objections, the Court imposed costs to mark disapproval of the delay. The respondents were ordered to deposit the costs with the Juvenile Justice Fund within two weeks and to file proof of payment. [Paras 7, 10]

Respondents ordered to pay costs of Rs. 7,500/- to the Juvenile Justice Fund within two weeks and to file proof of payment.

Final Conclusion: Writ petition disposed: respondents directed to adjudicate the petitioner's objections relating to the fourth quarter of FY 2013-14 and pass a speaking order after hearing the authorised representative within 15 days of receipt of the judgment; respondents to create an online portal for intimation of notices under Section 74(8) read with Rule 56; costs of Rs. 7,500 imposed on the respondents payable to the Juvenile Justice Fund.

Stock transfer vs inter-State sale - pre-existing contract / prior order test for inter-State sale - onus on revenue to prove movement pursuant to orders - application of Reserve Bank of India policy to nationalised bank transactions

Stock transfer vs inter-State sale - pre-existing contract / prior order test for inter-State sale - onus on revenue to prove movement pursuant to orders - application of Reserve Bank of India policy to nationalised bank transactions - Whether the transfer of T.T. gold bars by the revisionist bank to its Jaipur branch was a stock transfer (not taxable as inter-State sale) or an inter-State sale effected pursuant to a prior order/contract - HELD THAT: - The Court found that the revisionist, a nationalised bank operating under Reserve Bank of India policy, received T.T. gold bars which, if unsold within ten days, were to be intimated to Head Office and forwarded to another branch on instructions. The transfer of the balance goods to the Jaipur branch followed that procedure. The assessing authority treated the transfer as an inter-State sale on the basis that the stock register at the Jaipur branch showed subsequent sale to a single buyer and that the sale occurred soon after arrival. The Court held that mere sale soon after transfer and sale in the same quantity to a particular buyer is not sufficient to infer a prior order or contract making the movement pursuant to that contract. Absent any material produced by the department to show existence of orders placed prior to or inducing the movement, the statutory requirement for characterising the movement as an inter-State sale was not satisfied. The Court relied on precedent to the effect that there must be evidence that movement was in pursuance of orders received, and not mere temporal or quantitative coincidence. Applying these principles, the Court concluded that the transfer was a stock transfer and not an inter-State sale. [Paras 7, 8, 9, 10, 11]

The transfer was a stock transfer and not an inter-State sale; the Tribunal's order upholding tax on the transaction is set aside.

Final Conclusion: Revision allowed; impugned Tribunal order set aside and questions of law answered in favour of the revisionist (transfer treated as stock transfer, not inter State sale).

Service of statutory notice - natural justice - strict compliance - quashing and remand for fresh consideration - attachment of bank account - interim relief by assessing authority - preliminary consideration

Service of statutory notice - natural justice - strict compliance - quashing and remand for fresh consideration - Validity of the notice alleged to have been sent by ordinary post before passing the assessment order and consequences of non-service. - HELD THAT: - The Court examined the factual claim that a notice dated 10.01.2020 was sent by the Revenue by ordinary post before the impugned assessment order. Though postal authorities are ordinarily agents for service, the petitioner specifically denied receipt. Where a statutory notice is a precondition to an order that has financial and civil consequences, strict compliance with service requirements is expected and cannot be presumed from dispatch by ordinary post in the face of a specific denial. For these reasons the impugned assessment order was set aside and the matter remitted to the respondent for reconsideration after giving the petitioner an opportunity to file a reply and be heard. The petitioner is permitted to treat the impugned order as notice and to file his reply within two weeks from receipt of this order; on receipt the Revenue must consider the reply, afford a hearing and pass final orders. [Paras 10, 11]

Impugned order set aside and matter remitted for reconsideration after fresh opportunity to the petitioner to reply and be heard; strict service compliance required where statutory notice has financial consequences.

Attachment of bank account - interim relief by assessing authority - preliminary consideration - Relief regarding the petitioner's bank account attachment and the forum for its consideration. - HELD THAT: - The Court did not grant substantive interim relief itself but directed that the petitioner may immediately apply to the Assessing Authority for relief against the attachment of bank accounts. The Assessing Authority is required to consider such application objectively and decide it at the earliest as a preliminary matter, in view of the remand and the directions given in the order.

Petitioner may apply to the Assessing Authority; the Authority shall consider and decide the application promptly as a preliminary order.

Final Conclusion: The assessment order impugned for lack of effective service is set aside and remitted to the respondent for fresh consideration after granting the petitioner an opportunity to reply and be heard; the petitioner may separately seek prompt preliminary relief from the Assessing Authority regarding the bank attachment.

Maintainability of writ petition in presence of alternative statutory remedy - Tribunal as court of first instance and exclusive forum for adjudication - Exceptional circumstances permitting exercise of Article 226 jurisdiction - Availability of speedy and efficacious alternative remedy before the West Bengal Taxation Tribunal - Erroneous interpretation of law or method of computation not amounting to jurisdictional excess - Doctrine in L. Chandrakumar regarding supervisory review by Division Bench and transfer of jurisdiction to Tribunal

Maintainability of writ petition in presence of alternative statutory remedy - Availability of speedy and efficacious alternative remedy before the West Bengal Taxation Tribunal - Exceptional circumstances permitting exercise of Article 226 jurisdiction - Whether the writ petitions seeking to challenge orders of the first Appellate authority are maintainable before the High Court instead of pursuing appeal to the West Bengal Taxation Tribunal. - HELD THAT: - The Court held that the writ petitions are not maintainable because the petitioner has an adequate, speedy and efficacious statutory alternative remedy of further appeal to the West Bengal Taxation Tribunal under the West Bengal Taxation Tribunal Act, 1987 read with the Bengal Agricultural Income Tax Act, 1944. The exceptional categories permitting invocation of Article 226 despite an alternative remedy (such as breach of fundamental rights, violation of principles of natural justice, excess of jurisdiction or challenge to vires of the parent enactment) were examined and found not to be present on the facts. The petitioner had already availed the first appellate remedy and, in the absence of any pleaded jurisdictional excess, denial of natural justice or challenge to the constitutional validity of the Tribunal's parent statute, the Court declined to entertain the writ petitions and directed the petitioner to pursue statutory remedies before the Tribunal, which is competent to grant interim relief if appropriate.

Writ petitions dismissed as not maintainable; petitioner may approach the West Bengal Taxation Tribunal in accordance with law.

Erroneous interpretation of law or method of computation not amounting to jurisdictional excess - Tribunal as court of first instance and exclusive forum for adjudication - Doctrine in L. Chandrakumar regarding supervisory review by Division Bench and transfer of jurisdiction to Tribunal - Whether the impugned orders of the first Appellate authority suffer from lack of jurisdiction, breach of natural justice or procedural illegality such as would justify bypassing the Tribunal. - HELD THAT: - The Court found no pleading or material demonstrating that the impugned appellate orders were rendered without jurisdiction, in violation of principles of natural justice, or tainted by procedural illegality. Allegations that the assessing officer misinterpreted statutory provisions or erred in the method of computation were treated as substantive or legal errors capable of adjudication by the Tribunal and not as jurisdictional defects. Relying on the scheme of the West Bengal Taxation Tribunal Act and the principles in L. Chandrakumar, the Court observed that the Tribunal is the appropriate forum to decide questions of law and fact raised from the assessment and appellate orders, and that such matters do not, on the present record, constitute the exceptional circumstances for exercise of writ jurisdiction by a Single Bench.

No jurisdictional or procedural infirmity found in the impugned appellate orders; those issues are to be agitated before the Tribunal.

Final Conclusion: Both writ petitions are dismissed for lack of maintainability in view of the availability of the appellate remedy before the West Bengal Taxation Tribunal; dismissal is without prejudice to the petitioner's right to challenge the impugned appellate orders before the Tribunal in accordance with law.

Compounding of offence - Effect of reconciliation and compromise on criminal proceedings - Acquittal consequent to compromise - Setting aside conviction and sentence on compromise - Restitution of deposits made subject to judicial direction - Presumption under Negotiable Instruments Act in cheque bounce cases

Compounding of offence - Acquittal consequent to compromise - Setting aside conviction and sentence on compromise - Validity and effect of the parties' compromise on the criminal proceedings and whether the conviction and sentence should be set aside. - HELD THAT: - The parties reconciled their dispute and filed a Joint Memo of Compromise which the Court found to reflect a settlement between the petitioner/accused and the respondent/complainant. In view of that compromise and the respondent's acceptance of payments (including acknowledgement of receipt of a demand draft and prior deposits made by the petitioner pursuant to earlier suspension conditions), the Court held that the offence stands compounded. On that basis the Court allowed the criminal revision, set aside the conviction and sentence recorded by the Sessions Court, and held that the accused is acquitted of all charges. The Joint Memo of Compromise was directed to form part of the order and any bail bond stands discharged. [Paras 6, 7]

Criminal revision allowed; conviction and sentence set aside and accused acquitted on account of the compromise between the parties; Joint Memo of Compromise to form part of the order and bail bond discharged.

Restitution of deposits made subject to judicial direction - Procedure for return of amounts earlier deposited to the credit of the criminal case as a condition for suspension of sentence. - HELD THAT: - The Court directed the respondent to file an appropriate petition before the trial Court seeking return of the amounts (deposits made by the petitioner pursuant to earlier orders). Upon filing of that petition by the respondent, the trial Court is ordered to return the amounts to the respondent on the same day, without notice to the petitioner/accused. This is a judicial direction for administrative compliance consequent to the compromise and acquittal. [Paras 8]

Respondent to file petition for return of deposited amounts; trial Court to refund the money to the respondent on the same day of filing, without notice to the petitioner.

Final Conclusion: The revision is allowed: on the parties' compromise the offence is compounded and the conviction and sentence are set aside with acquittal; the Joint Memo of Compromise is made part of the order; directions are given for return of amounts deposited pursuant to earlier court orders.