TaxTMI Updates e-Newsletter
May 17,2022

Goods in transit - Non-obstante clause - Overriding effect of a specific provision - Section 129 of the Central Goods and Services Tax Act and goods in transit - Section 130 of the Central Goods and Services Tax Act and detention/seizure - Jurisdiction to levy penalty - Interim release of goods on deposit and personal bond

Interim release of goods on deposit and personal bond - Stay of proceedings - Grant of interim relief by staying further proceedings under the impugned show cause notice and directing release of goods and conveyance on specified conditions - HELD THAT: - The High Court issued notice and, having heard counsel, stayed further proceedings pursuant to the show cause notice dated 16.04.2022. As an interim measure the Court directed release of the detained goods and conveyance subject to the petitioner depositing one-fourth of the amount proposed in the show cause notice and furnishing a personal bond for the balance. The order is interlocutory and contingent upon the specified deposit and execution of the bond, thereby preserving the rights of the parties pending further adjudication.

Proceedings under the impugned show cause notice stayed; goods and conveyance released on deposit of one-fourth of the claimed amount and execution of a personal bond for the remainder.

Section 129 of the Central Goods and Services Tax Act and goods in transit - Section 130 of the Central Goods and Services Tax Act and detention/seizure - Non-obstante clause - Overriding effect of a specific provision - Jurisdiction to levy penalty - Question whether the deletion of the non-obstante clause from Section 130 and retention in Section 129 gives Section 129 overriding effect over Section 130 (and the consequent applicability of Sections 129 or 130 to goods in transit) is to be re-examined after respondents file their counter - HELD THAT: - The High Court recorded rival contentions: the petitioner contended that post-amendment (Finance Act, 2021) Section 129 is the specific provision governing goods in transit and, by virtue of its non-obstante clause, excludes application of other provisions including Section 130; the respondents contended that deletion of the non-obstante clause from Section 130 does not oust the authorities' power to invoke Section 130 and that both provisions operate independently. The Court noted precedent and interim orders from the Gujarat High Court but did not resolve the legal controversy on merits. Instead, the Court directed that the issues raised require re-examination after filing of the counter by the respondents, thereby leaving the substantive question open for adjudication on merits.

Substantive dispute regarding the interplay between Sections 129 and 130 and the effect of the amendment remitted for fresh consideration after filing of the respondents' counter; not decided on merits.

Final Conclusion: Notice issued; further proceedings under the show cause notice dated 16.04.2022 are stayed and the detained goods and conveyance are ordered released on deposit of one-fourth of the amount demanded and execution of a personal bond for the balance; the legal question on the interplay of Sections 129 and 130 (and the effect of the amendment removing the non-obstante clause from Section 130) is left open and remanded for fresh consideration after the respondents file a counter.

Seizure of goods for non compliance with e way bill requirement - requirement of central e way bill unenforceable during specified period - validity of transit documentation under the IGST regime - refund of amounts deposited pursuant to invalid tax orders

Seizure of goods for non compliance with e way bill requirement - requirement of central e way bill unenforceable during specified period - validity of transit documentation under the IGST regime - Seizure of goods and consequential demand/penalty sustained on the ground that a U.P. e way bill was not accompanying the goods at the time of detention. - HELD THAT: - The Court examined the records and noted that the goods were in transit from Aurangabad (Maharashtra) to Kanpur Dehat and that documents prescribed under section 7 of the IGST Act were accompanying the consignment without discrepancy. The impugned orders justified seizure solely on the ground that a central e way bill was not produced. The Court relied on earlier Division Bench precedent holding that the requirement of an e way bill under the U.P. GST Act was unenforceable during the period 01.02.2018 to 31.03.2018 and observed that, as implemented in the State, the central e way bill requirement was not applicable at the relevant time. In those circumstances, seizure, detention and the imposition of tax/penalty on the ground of non possession of a central e way bill could not be sustained.

Impugned orders of seizure, detention and consequential demand/penalty quashed.

Refund of amounts deposited pursuant to invalid tax orders - Entitlement to refund of amounts deposited pursuant to the quashed orders. - HELD THAT: - Having quashed the impugned orders, the Court directed that any amount deposited by the petitioner pursuant to those orders shall be refunded in accordance with law. The refund was to be effected within a specified period from the date of the order.

Amount deposited, if any, to be refunded in accordance with law within three months.

Final Conclusion: Writ petition allowed: impugned orders confirming seizure and demands quashed for want of enforceability of the e way bill requirement at the relevant time; deposits made pursuant to those orders to be refunded in accordance with law within three months.

Advance Ruling - Scope of Section 97(2) - Maintainability of application for advance ruling - Classification and applicability of rate notifications - Refund under Section 54

Scope of Section 97(2) - Maintainability of application for advance ruling - Classification and applicability of rate notifications - Whether the applicant's questions seeking (a) confirmation that an appellate authority's classification and rate determination apply to the entire works contract and (b) clarification on the retrospective applicability of the specific rate are admitable under Section 97(2) and therefore entertainable by the Authority for Advance Ruling. - HELD THAT: - Section 97(2) prescribes an exhaustive list of subjects on which an advance ruling may be sought, including classification, applicability of notifications, time and value of supply, admissibility of input tax credit, liability to pay tax, registration and whether a transaction amounts to a supply. The questions posed by the applicant effectively seek (i) endorsement or commentary on the order of the Appellate Authority for Advance Ruling and (ii) a determination as to the temporal application of that appellate order to supplies made earlier during the contract. Such requests do not fall within the matters which the Authority for Advance Ruling is empowered to decide under the statutory list in Section 97(2). The Authority is not vested with jurisdiction to answer queries that amount to reviewing, endorsing or extending the effect of an order passed by the Appellate Authority. Consequently the application cannot be admitted for consideration on merits and the AAR will not determine the classification/applicability issues raised in that manner. [Paras 4, 5]

Application not maintainable and not admitted because the questions fall outside the scope of Section 97(2); therefore the Authority declines to rule on the classification/applicability issues raised.

Refund under Section 54 - Whether the Authority will adjudicate on the applicant's claim that excess tax paid (if any) is refundable and the procedure to claim such refund. - HELD THAT: - While the applicant inquired whether excess tax paid may be refunded and sought guidance on the refund procedure, the Authority observed that Section 54 deals with refund of tax and directed the applicant to refer to that provision and the prescribed procedure. The Authority did not, however, entertain or decide the factual or legal merits of any refund claim in the present advance ruling because the application itself was held not admitable under Section 97(2). No adjudication on entitlement to refund or on procedural relief under Section 54 was undertaken. [Paras 4, 5]

No adjudication on refund entitlement or procedure; applicant is advised to follow Section 54 and the prescribed refund procedure before appropriate authorities.

Final Conclusion: The application for advance ruling is not maintainable and is rejected because the questions fall outside the exhaustive scope of matters enumerated in Section 97(2) of the CGST/OGST Act; the Authority therefore declines to rule on the classification, retrospective applicability of the appellate order, or the applicant's claim to a refund, and notes that Section 54 governs refund claims which must be pursued through the appropriate procedure.

Benefit of input tax credit - commensurate reduction in price - profiteering - Section 171 of the CGST Act, 2017 - quantification of profiteering - interest on profiteered amount - imposition of penalty under Section 171(3A) - compliance and monitoring by jurisdictional CGST/SGST Commissioner

Benefit of input tax credit - commensurate reduction in price - Section 171 of the CGST Act, 2017 - profiteering - Whether the respondent contravened Section 171 by not passing on the additional benefit of ITC to recipients in the project "Heritage Max" during the period 01.07.2017 to 30.06.2019. - HELD THAT: - The Authority accepted the DGAP's analysis that the ratio of input tax credit to turnover rose from 3.42% (pre-GST) to 8.23% (post-GST), yielding an additional ITC benefit of 4.81% of turnover. The DGAP's comparative computation, applied to receipts from homebuyers for the project during the investigation period, showed that the additional ITC accrued to the respondent was not passed on by way of commensurate reduction in the base price and cum-tax price. The respondent's contention that any benefit would be passed only on possession was rejected for the period under investigation because profiteering is required to be determined for the specified period and the respondent had retained the post-GST benefit. Having reviewed the DGAP report, the supporting documents and the respondent's admissions, the Authority concluded that the respondent had resorted to profiteering and thereby contravened Section 171(1) of the CGST Act, 2017. [Paras 33, 34]

The Authority held that the respondent contravened Section 171(1) by not passing on the additional ITC benefit to recipients for the period 01.07.2017 to 30.06.2019.

Quantification of profiteering - distribution to identifiable recipients - commensurate reduction in price - The quantum of profiteering and the persons to whom the benefit must be returned for the period under investigation. - HELD THAT: - Relying on the DGAP's computations and reconciliation of credits, turnover and sold area, the Authority accepted the quantification that the total profiteered amount for the investigation period was Rs. 4,74,54,151/-, which included GST collected on the excess base price. The DGAP further identified 390 recipients (including the applicant) who had paid consideration during the investigation period and to whom the additional benefit pertained. The respondent had already passed on a portion of the benefit (as claimed and supported by documents) and the remaining additional amount as computed was required to be returned to the eligible recipients. The Authority recorded the list and directed that the benefit be passed on to the identified recipients in accordance with the tabulation supplied by the DGAP. [Paras 16, 18, 21, 36]

The Authority fixed the profiteered amount at Rs. 4,74,54,151/- for 01.07.2017 to 30.06.2019 and directed the respondent to pass the benefit to the identified recipients as tabulated.

Interest on profiteered amount - compliance and monitoring by jurisdictional CGST/SGST Commissioner - Remedial measures to be directed for compliance, including interest, publication and monitoring. - HELD THAT: - The Authority directed that, within three months of receipt of the order, the respondent must pass on the ITC benefit to each homebuyer as determined for the investigation period along with interest at 18% from the date when the amount was profiteered until payment. The Authority ordered publication of an advertisement in local newspapers specifying the builder, project and the profiteered amount, and directed the jurisdictional CGST/SGST Commissioner to ensure compliance and report under Rule 136. The DGAP was tasked to monitor compliance. These directions flow from the Authority's power to secure restitution of benefit to recipients and to supervise enforcement. [Paras 36, 38, 39, 40]

The respondent was directed to return the computed benefit to recipients with interest @18%, publish notice of the order locally, and the jurisdictional CGST/SGST Commissioner and DGAP were directed to ensure and monitor compliance and report accordingly.

Imposition of penalty under Section 171(3A) - temporal applicability of penal provision - Whether penalty under Section 171(3A) could be imposed on the respondent for the contravention committed during 01.07.2017 to 30.06.2019. - HELD THAT: - Although the Authority found that the respondent had committed profiteering during the investigation period, it noted that Section 171(3A) - which provides for imposition of penalty for such contraventions - was inserted w.e.f. 01.01.2020 and therefore was not in force during the period when the contravention occurred (01.07.2017 to 30.06.2019). Consequently, the penal provision could not be applied retrospectively to the respondent for the period in question. The Authority accordingly declined to issue a notice for penalty. [Paras 37]

Penalty under Section 171(3A) was not imposed because the provision was not in force during the period of contravention.

Final Conclusion: The Authority accepted the DGAP's findings and held that the respondent contravened Section 171(1) of the CGST Act, 2017 by not passing on additional ITC benefit for the period 01.07.2017 to 30.06.2019; fixed the profiteered amount at Rs.4,74,54,151/-, directed restitution of the benefit to identified recipients with interest @18%, required publication of the order and entrusted monitoring and compliance reporting to the jurisdictional CGST/SGST Commissioner and the DGAP; penalty under Section 171(3A) was not imposed as it was not in force during the period of contravention.

Passage of benefit of reduction in rate of tax by way of commensurate reduction in prices - anti-profiteering under Section 171 of the CGST Act, 2017 - determination of profiteered amount by comparison of pre- and post-rate reduction base prices - deposit of profiteered amount in Consumer Welfare Funds where recipients are not identifiable - penalty under Section 171(3A) linked to deposit of profiteered amount - investigation of upstream supplier chain under Rule 133(5) of the CGST Rules, 2017

Passage of benefit of reduction in rate of tax by way of commensurate reduction in prices - anti-profiteering under Section 171 of the CGST Act, 2017 - Whether the Respondent was required to pass on and has passed on the commensurate benefit of reduction in the rate of tax to his customers and whether there was a contravention of Section 171(1) of the CGST Act, 2017. - HELD THAT: - The Authority found that the GST rate on the subject goods was reduced from 28% to 18% w.e.f. 15.11.2017 and that Section 171(1) mandates that such reduction must be passed to recipients by way of a commensurate reduction in prices. Comparison of the Respondent's average pre-reduction base prices (01.11.2017 to 14.11.2017) with his actual post-reduction base prices (15.11.2017 to 30.09.2019) showed that the Respondent increased base prices after the rate reduction so that the cum-tax prices paid by consumers did not fall commensurately. The DGAP's computations, reflected in Annexure-12 and summarized in the Report, established net higher sales realization on account of increased base prices despite the tax-rate reduction. On these findings the Authority concluded that the Respondent failed to pass on the benefit of the tax-rate reduction and thereby contravened Section 171(1). [Paras 5, 6, 7, 19, 20]

The Respondent did not pass on the benefit of the GST rate reduction to his customers and thereby contravened Section 171(1) of the CGST Act, 2017.

Determination of profiteered amount by comparison of pre- and post-rate reduction base prices - deposit of profiteered amount in Consumer Welfare Funds where recipients are not identifiable - Quantum of profiteering and the mode of its restitution/deposit. - HELD THAT: - The Authority accepted the DGAP's methodology of deriving average base prices for the pre-reduction period and comparing those with invoice-wise post-reduction selling prices to compute the excess realised amount. Using this approach for the impacted goods sold during 15.11.2017 to 30.09.2019, the net profiteered amount was determined as Rs. 1,54,138/-, which included Rs. 1,000/- collected from the Applicant. As other recipients were not identifiable, the Authority directed the Respondent to deposit the profiteered amount (less the portion already restituted to the Applicant) into the Central and Maharashtra State Consumer Welfare Funds in a 50:50 ratio, and to pay interest at 18% from the dates when the amounts were collected until deposit, in line with Rule 133(3)(b) and (c) of the CGST Rules, 2017. The DGAP verified that the Respondent had deposited the basic amount and interest into the respective CWFs and had made restitution to the Applicant. [Paras 9, 19, 21, 22, 23]

Profiteered amount fixed at Rs. 1,54,138/- for period 15.11.2017 to 30.09.2019; Respondent directed to deposit the amount (and interest @18%) into the Central and Maharashtra State Consumer Welfare Funds in equal shares where recipients are not identifiable; DGAP's verification of deposits and Applicant's receipt accepted.

Penalty under Section 171(3A) linked to deposit of profiteered amount - Whether penalty under Section 171(3A) should be imposed on the Respondent. - HELD THAT: - Section 171(3A) prescribes levy of penalty equal to 10% of the profiteered amount, subject to waiver if the amount is deposited within thirty days of the Authority's order. The Authority noted that the penal provision came into force w.e.f. 01.01.2020 while the infringement related to the period 01.01.2019 to 30.09.2019. Further, the Respondent had deposited the profiteered amount along with interest. Having regard to the temporal operation of Section 171(3A) and the restitution made, the Authority refrained from imposing the penalty. [Paras 24]

No penalty under Section 171(3A) is imposed on the Respondent.

Investigation of upstream supplier chain under Rule 133(5) of the CGST Rules, 2017 - Remand to examine whether the Respondent's supplier(s) had passed on the rate-reduction benefit upstream. - HELD THAT: - The Respondent contended that he did not receive the rate-reduction benefit from his supplier(s) in respect of the product 'Eclat Serum'. The Authority observed that to complete the investigation under Section 171 and the Rules, it is necessary to examine the supplier side of the supply chain. Accordingly, the Authority directed the DGAP to obtain supplier information from the Respondent and to investigate the entire supply chain under Rule 133(5) of the CGST Rules, 2017, and to submit a report within three months from the date of this order. The direction constitutes an order to investigate further and is not a final adjudication on any supplier's liability. [Paras 25]

DGAP directed to investigate the Respondent's supplier(s) under Rule 133(5) and submit a report within three months; issue remanded for further inquiry into upstream passing of benefits.

Final Conclusion: The Authority held that the Respondent contravened Section 171(1) by not passing on the benefit of the GST rate reduction for the period 15.11.2017 to 30.09.2019, fixed the profiteered amount at Rs. 1,54,138/- and directed deposit of the amount (and interest @18%) into the Central and Maharashtra State Consumer Welfare Funds; no penalty under Section 171(3A) was imposed, and the matter was remanded to the DGAP to investigate the supplier chain under Rule 133(5) within three months.

Benefit of reduction in rate of tax - commensurate reduction in prices - Section 171(1) of the Central Goods and Services Tax Act, 2017 - determination of profiteered amount - deposit in Consumer Welfare Fund - interest at 18% on profiteered amount - determination and recovery under Rule 133 of the CGST Rules, 2017 - penalty under Section 171(3A) of the CGST Act, 2017

Benefit of reduction in rate of tax - commensurate reduction in prices - Section 171(1) of the Central Goods and Services Tax Act, 2017 - The Respondent contravened the obligation to pass on the benefit of GST rate reduction by not effecting a commensurate reduction in prices of movie admission tickets. - HELD THAT: - The DGAP's investigation compared pre- and post-rate-reduction selling prices and computed the base prices that would have been commensurate with the reduced GST rates. The Authority accepted the DGAP's finding that, although certain cum-tax prices were changed on specified dates, the Respondent increased base prices such that the recipients did not receive the benefit of the GST rate reductions w.e.f. 01.01.2019. The Authority, applying the legal mandate under Section 171(1) CGST Act, 2017, held that the Respondent failed to pass on the requisite benefit to customers and thereby contravened Section 171(1). [Paras 3, 4, 7, 9, 11]

Contravention of Section 171(1) established; Respondent failed to pass on commensurate benefit of GST rate reduction for the periods under adjudication.

Determination of profiteered amount - Rule 133 of the CGST Rules, 2017 - deposit in Consumer Welfare Fund - interest at 18% on profiteered amount - The amount of profiteering was determined and the manner of its restitution and recovery was directed. - HELD THAT: - Relying on the DGAP's computations comparing actual base prices charged with commensurate base prices post-rate-reduction, the Authority accepted the calculated profiteered sums for the two sub-periods and aggregated them. Pursuant to Rule 133(1) and (3) of the CGST Rules, 2017, the Authority directed the Respondent to reduce prices commensurately and to deposit the determined amount into the Consumer Welfare Funds of the Central and the concerned State/UT Governments in a 50:50 ratio. The Authority also directed payment of interest at 18% from the dates the excess amounts were realised until deposit, and fixed a three-month period for deposit, failing which recovery procedures were to be initiated through the Commissioners of CGST/SGST under supervisory oversight of the DGAP. [Paras 11, 12]

Total profiteered amount fixed at Rs.12,06,750/- for 01.01.2019 to 31.01.2020; directed deposit into CWFs (50:50) with 18% interest within three months and directions to reduce prices commensurately.

Penalty under Section 171(3A) of the CGST Act, 2017 - effective date 01.01.2020 - waiver upon deposit within thirty days - Liability for penalty under Section 171(3A) was addressed and limited by the statutory commencement date and conditional waiver. - HELD THAT: - The Authority observed that Section 171(3A) (which came into effect from 01.01.2020) renders the Respondent apparently liable to a penalty equivalent to ten per cent of the profiteered amount for sums collected after 01.01.2020. The Authority recorded that no penalty would be leviable if the profiteered amount is deposited within thirty days of the date of the order. The factual determination of the profiteered quantum for periods straddling the commencement of Section 171(3A) was already made; the Authority accordingly indicated the prospective penalty position and the conditional waiver where prompt deposit is made. [Paras 13]

Penalty under Section 171(3A) will be leviable at 10% on amounts collected after 01.01.2020, but will not be imposed if the profiteered amount is deposited within thirty days of this order.

Final Conclusion: The Authority accepted the DGAP's investigation and determined that the Respondent failed to pass on the benefit of GST rate reductions for the period 01.01.2019 to 31.01.2020, fixed the profiteered amount at Rs.12,06,750/-, directed commensurate reduction of prices, ordered deposit of the amount into Central and State Consumer Welfare Funds (50:50) with 18% interest within three months, and recorded the penalty liability under Section 171(3A) for amounts collected after 01.01.2020 subject to waiver on deposit within thirty days.

Validity of notice under section 148 issued to a deceased person - jurisdictional notice as a condition precedent for reassessment under section 147 - liability and proceedings against legal representative under section 159(2)(b) - curative effect of provisions akin to section 292B / section 292BB on defective notices - void ab initio - necessity to issue fresh notice to legal representative where notice was issued to deceased

Validity of notice under section 148 issued to a deceased person - jurisdictional notice as a condition precedent for reassessment under section 147 - void ab initio - Notice under section 148 issued to the deceased assessee is invalid and the consequential reassessment proceedings under section 147 are without jurisdiction. - HELD THAT: - The court held that a notice under section 148 is a jurisdictional notice and a condition precedent for exercise of jurisdiction under section 147. Issuance of the impugned notice on the deceased assessee (not falling within section 159(2)(a) as no proceeding existed prior to death) amounts to issuance of an invalid notice. Absence of a valid notice affects the Assessing Officer's jurisdiction and renders any proceedings or orders pursuant thereto null and void. Applying the reasoning in the cited authorities and the court's review of statutory scheme, the notice dated 31.03.2021 issued to the deceased cannot sustain the reassessment initiated thereunder. [Paras 4, 10, 18]

Impugned section 148 notice issued to the deceased and the consequential proceedings under section 147 are quashed as void ab initio.

Liability and proceedings against legal representative under section 159(2)(b) - necessity to issue fresh notice to legal representative where notice was issued to deceased - Proceedings initiated by a notice issued to a dead person cannot be continued against the legal representative; a fresh valid notice must be issued to the legal representative if proceedings are to be taken. - HELD THAT: - Section 159(2)(b) permits proceedings which could have been taken against the deceased if alive to be taken against the legal representative; however, a proceeding under section 147 is initiated by issuance of notice under section 148. Where the impugned notice was issued to the deceased (and the case does not fall under section 159(2)(a)), the Assessing Officer cannot continue proceedings against the legal representative on the basis of that invalid notice. The correct course is to issue a fresh notice to the legal representative, subject to limitation, rather than proceed on the defective notice. [Paras 15, 16, 18]

Assessing Officer may issue a fresh notice to the legal representative (subject to limitation) but cannot continue proceedings on the basis of the invalid notice issued to the deceased.

Curative effect of provisions akin to section 292B / section 292BB on defective notices - Statutory provisions that cure defects in service or formal infirmities do not validate complete absence of a valid section 148 notice issued to a deceased person who has not waived the defect by participating in the proceedings. - HELD THAT: - The court distinguished cases where the legal representative, by filing returns or otherwise participating, waived objections and where curative provisions were held applicable. Section 292BB (and section 292B) cures certain defects in service or mode but does not validate the complete absence of a notice emanating properly from the department that confers jurisdiction. Where the legal representative objected to the notice and did not submit to jurisdiction (did not waive defect by participation), the curative provisions cannot be invoked to sustain proceedings initiated by a notice issued to the deceased. [Paras 9, 16, 17]

Section 292B / 292BB cannot cure the nullity of proceedings when a jurisdictional notice under section 148 was issued to a deceased person and the legal representative did not waive the defect by participating.

Final Conclusion: The impugned notice dated 31.03.2021 issued under section 148 to the deceased assessee for AY 2017-18 and the consequential reassessment proceedings under section 147 are quashed as void ab initio; the Assessing Officer may, if permissible within limitation, issue a fresh notice to the legal representative but cannot proceed on the defective notice and cannot rely on curative provisions where the legal representative objected and did not submit to jurisdiction.

Deduction under section 80IB(10) - Proportionate deduction for partially completed housing project - Separate housing projects versus single unified project - Precedent reliance

Deduction under section 80IB(10) - Proportionate deduction for partially completed housing project - Separate housing projects versus single unified project - Precedent reliance - Entitlement of the assessee to deduction under section 80IB(10) in respect of the Sector 7 project on a proportionate basis, and whether Sector 1 and Sector 7 constitute separate projects. - HELD THAT: - The Assessing Officer had disallowed the entire deduction claimed for the year on the ground that development charges were paid as a single unified project and that completion certificate was not obtained by the stipulated date. The Commissioner (Appeals) allowed proportionate deduction for the Sector 7 project, following the Tribunal's earlier decision in the assessee's own appeals for earlier assessment years in which the Tribunal held that Sector 1 and Sector 7 were distinct projects, Sector 1 was completed before the due date and Sector 7 entitled the assessee to proportionate deduction. There is no change in the material facts or circumstances for the years under consideration. Applying the prior Tribunal precedent and the principle of following earlier binding conclusion on identical facts, the Tribunal held that the Commissioner (Appeals) was justified in allowing deduction under section 80IB(10) in respect of the Sector 7 project on a proportionate basis and that the projects are to be treated as separate for this purpose.

The impugned finding that Sector 1 and Sector 7 are separate and that proportionate deduction under section 80IB(10) is allowable in respect of the Sector 7 project is upheld.

Final Conclusion: Following the Tribunal's earlier concurrent conclusion on identical facts, the impugned order upholding proportionate deduction under section 80IB(10) for the Sector 7 project is affirmed; all appeals of the assessee and the Revenue are dismissed.

Deductibility of employees' contribution to Provident Fund/ESI - application of section 36(1)(va) read with section 2(24)(x) - distinction between section 36(1)(va) and section 43B - prospective versus retrospective operation of Finance Act, 2021 amendments - binding effect of jurisdictional High Court precedent - inapplicability of CBDT Circular No. 22/2015 to employee contributions

Deductibility of employees' contribution to Provident Fund/ESI - application of section 36(1)(va) read with section 2(24)(x) - Employees' contribution to PF/ESI deposited after the statutory due date but before filing the return under section 139(1) is allowable as deduction for the assessees in the present appeals. - HELD THAT: - The Tribunal found that in all the captioned appeals the employees' contribution had been deposited before the due date for filing return under section 139(1) and that this fact was not in dispute. Having regard to consistent decisions of coordinate Benches of the Tribunal and the binding decisions of the jurisdictional High Court (Punjab & Haryana High Court), the Tribunal held that the claim of deduction must be allowed. The Tribunal noted that numerous Benches have uniformly allowed deduction where payment was made before filing the return and relied upon those precedents. The Tribunal applied the law as laid down by the jurisdictional High Court and the coordinate Benches and concluded that the additions disallowing such contributions could not be sustained. [Paras 6, 7]

Claims of deduction for employees' contributions deposited before filing of return under section 139(1) are allowed; appeals by assessees allowed and departmental appeals dismissed where applicable.

Prospective versus retrospective operation of Finance Act, 2021 amendments - curative/clarificatory character of statutory amendments - The Tribunal held that the amendments effected by the Finance Act, 2021 to Sections 36(1)(va) and 43B cannot be invoked to deny deduction in the cases before it and that coordinate Benches have treated the amendments as prospective for the relevant assessment years. - HELD THAT: - The Tribunal examined the departmental contention that the 2021 amendments were clarificatory and retrospective. It observed that coordinate Benches and the jurisdictional High Court decisions have rejected the departmental stand and construed the amendments as applicable prospectively (to assessment year 2021-22 and subsequent years) as per the legislative notes. Relying on that consistent tribunal jurisprudence and the binding High Court precedent, the Tribunal declined to apply the 2021 amendments retrospectively to deny deduction in these appeals. [Paras 6]

The Finance Act, 2021 amendments are not applied to deny relief in these appeals; the departmental contention of retrospective/clarificatory effect is not accepted for the assessment years in question.

Distinction between section 36(1)(va) and section 43B - inapplicability of CBDT Circular No. 22/2015 to employee contributions - The Tribunal affirmed that section 36(1)(va) (employee contributions) operates in a different field from section 43B (employer contributions) and that Circular No.22/2015 does not apply to claims relating to employee contributions. - HELD THAT: - The Tribunal recorded the Revenue's argument emphasising statutory distinction between employer and employee contributions and noted Circular No.22/2015 clarifies non-application only to employers' share. The Tribunal, however, applied binding precedent and tribunal decisions which treat employee contributions under section 36(1)(va) on their own terms and held that the CBDT circular cannot be used to disallow employee contributions paid before filing of return. The legal separation of the two provisions and the inapplicability of the circular to employee contributions were affirmed in context of allowing the assessees' claims. [Paras 4, 6]

Section 36(1)(va) must be applied independently of section 43B for employee contributions; CBDT Circular No.22/2015 does not justify disallowance of employee contributions paid before filing of return.

Final Conclusion: Following the binding decisions of the jurisdictional High Court and consistent tribunal precedents, the Tribunal allowed the assessees' appeals in respect of employees' PF/ESI contributions paid after the statutory due date but before filing of return under section 139(1), declined to apply the Finance Act, 2021 amendments retrospectively for the assessment years in question, and held that the CBDT circular does not apply to employee contributions; departmental appeals were dismissed where they sought disallowance on the same ground.

Attachment and sale of immovable property under the Second Schedule - procedure for drawing up proclamation of sale and notice to the defaulter - reserve price / upset price and its protective purpose for the defaulter - validity of auction and confirmation of sale - adjustment of sale proceeds towards statutory and other liabilities

Procedure for drawing up proclamation of sale and notice to the defaulter - reserve price / upset price and its protective purpose for the defaulter - validity of auction and confirmation of sale - Whether the auction and consequential sale conducted by the Income Tax Department contravened the procedural safeguards in the Second Schedule (Rules 52, 53 and 54) and was therefore liable to be quashed. - HELD THAT: - The Court examined the contents of the impugned auction proclamation and the sequence of prior attempts to sell the property, and concluded that the auction process did not suffer from the procedural infirmities alleged by the petitioner. The auction notice pointed to detailed terms and conditions available from the Tax Recovery Officer's office and on the Department's website, satisfying the requirement that terms be made available. The Court found no breach of the requirement to give notice to the defaulter as to the time and place for sale and to specify, as fairly and accurately as possible, any reserve price or revenue assessed upon the property where applicable. The existence of prior litigation and the occupation by a third party were relevant background facts explaining earlier failed auction attempts and did not render the later proceedings invalid. On the materials, the Court was not persuaded that failure to publicly declare a particular reserve price in the advertised notice produced such arbitrariness as to vitiate the sale, and accordingly declined to set aside the auction or sale in favour of the successful bidder. [Paras 13, 14, 15]

The auction and consequential sale were valid; no interference was warranted with the proclamation or sale.

Adjustment of sale proceeds towards statutory and other liabilities - rights and liabilities of purchaser post-auction - Whether the purchaser who acquired the property at the auction is bound to discharge the liabilities of the petitioner to time-share holders, bank and other statutory dues out of the purchase consideration. - HELD THAT: - The Court noted the respondents' clear statement that the auction amount would be adjusted towards the tax liability and interest, and that any balance would be applied to other claimants including time-share holders, Repco Bank and the Commercial Tax Department. The successful bidder had undertaken to discharge those amounts. In view of the statutory recovery framework and the express undertaking/adjustment mechanism, the Court held that the purchaser was bound to meet those liabilities and there was no irregularity in directing adjustment of the auction proceeds towards such dues. [Paras 14, 15]

The successful purchaser is bound to pay/adjust the outstanding liabilities; this does not vitiate the sale.

Final Conclusion: Writ petition dismissed; the impugned auction and sale were upheld as valid and the purchaser's obligations to discharge outstanding liabilities stood affirmed. No costs.

Validity of penalty notice under section 274 read with section 271(1)(c) - distinction between concealment of particulars of income and furnishing of inaccurate particulars of income - requirement to strike out inapplicable limb in penalty notice - power of Commissioner (Appeals) under section 251(1)(b) to confirm, cancel or vary (including enhance) penalty - consequence of a vitiated penalty order on appellate enhancement

Validity of penalty notice under section 274 read with section 271(1)(c) - requirement to strike out inapplicable limb in penalty notice - distinction between concealment of particulars of income and furnishing of inaccurate particulars of income - Whether the penalty levied by the Assessing Officer was vitiated because the notice under section 274 retained both limbs of section 271(1)(c) without striking out the inapplicable limb, when the additions pertained only to furnishing of inaccurate particulars of income. - HELD THAT: - The Tribunal examined the AO's notice under section 274 and found that it alleged both 'concealment of particulars of income' and 'furnishing of inaccurate particulars of income' without striking out the inapplicable limb, while the additions forming the basis of penalty related only to furnishing of inaccurate particulars (introduction of cash in one proprietorship and treatment of on-money in land purchases). Relying on the authoritative view of the jurisdictional High Court (Full Bench) and subsequent affirmance by the Supreme Court's dismissal of SLP, the Tribunal held that failure to strike out the irrelevant limb in the penalty notice vitiates the penalty order even if the AO had recorded satisfaction in the assessment order. Applying that principle to the facts, the Tribunal concluded that the AO's penalty was rendered invalid and, consequently, must be deleted. [Paras 6, 7, 8]

The penalty imposed by the AO under section 271(1)(c) is vitiated for failure to strike out the inapplicable limb in the notice and is deleted.

Power of Commissioner (Appeals) under section 251(1)(b) to confirm, cancel or vary (including enhance) penalty - consequence of a vitiated penalty order on appellate enhancement - Whether the Commissioner (Appeals) was justified in enhancing the penalty where he directed enhancement to cover additional income returned under section 153A vis-a -vis the original return. - HELD THAT: - The Tribunal recognised that section 251(1)(b) vests the CIT(A) with power to confirm, cancel or vary (including enhance) a penalty imposed by the AO. That power can operate either where the quantum is enhanced in the appellate proceedings or where the CIT(A) varies a subsisting penalty order. However, enhancement presupposes the existence of a valid penalty order capable of being varied. Since the Tribunal has held the AO's penalty order to be vitiated for the defective notice, there was no valid penalty order subsisting which could be varied or enhanced by the CIT(A). On this factual and legal matrix, the Tribunal held that the CIT(A) was not justified in confirming and directing enhancement of a penalty that had ceased to exist. [Paras 11, 12]

Although CIT(A) has statutory power under section 251(1)(b) to enhance penalty, enhancement cannot stand where the original penalty order of the AO is vitiated; the direction to enhance the penalty is therefore not justified.

Final Conclusion: The appeal is allowed: the penalty imposed by the Assessing Officer under section 271(1)(c) is deleted for want of a valid notice, and the Commissioner (Appeals)'s direction to enhance that penalty is set aside as there was no subsisting penalty order capable of enhancement.

Unexplained investment u/s 69 - Telescoping of earlier cash withdrawals against subsequent bank deposits - Onus on assessing officer to demonstrate diversion or expenditure of withdrawn cash - Acceptance of explanation where total withdrawals exceed total deposits

Unexplained investment u/s 69 - Telescoping of earlier cash withdrawals against subsequent bank deposits - Onus on assessing officer to demonstrate diversion or expenditure of withdrawn cash - Acceptance of explanation where total withdrawals exceed total deposits - Deletion of addition of Rs.70,27,500/- treated as unexplained investment u/s.69 in respect of cash deposits into City Union Bank account - HELD THAT: - The Tribunal found as an undisputed fact that during the relevant year the assessee withdrew cash totalling more than the cash deposited into the same bank account and that the Assessing Officer had accepted a number of deposits as being sourced from prior withdrawals where the gap between withdrawal and deposit was short. The Assessing Officer nonetheless treated certain deposits as unexplained solely because they were made after a gap of more than a few days and because only part of an earlier withdrawal was redeposited, without any finding or evidence that the cash withdrawn on earlier occasions had been spent or used for some other purpose. Relying on the principle that an addition under s.69 cannot be sustained merely on the existence of a time gap unless the AO demonstrates diversion/expenditure of withdrawn cash, the Tribunal held that in absence of any contrary finding the assessee's explanation that deposits were out of earlier withdrawals could not be rejected. The Tribunal therefore reversed the CIT(A)'s confirmation of the addition and directed deletion of the unexplained investment assessed u/s.69. [Paras 6, 8, 9, 10]

Addition of Rs.70,27,500/- as unexplained investment under s.69 deleted and assessment directed to be revised accordingly.

Final Conclusion: The appeal is allowed: the addition under s.69 in respect of cash deposits is deleted. The separate challenge to the Assessing Officer's jurisdiction was not adjudicated as it became academic in view of deletion and is dismissed as infructuous.

Condonation of delay under Section 5 of the Limitation Act, 1963 - revision under Section 263 of the Income Tax Act, 1961 - intimation under Section 143(1) of the Income Tax Act, 1961 - ex parte decision - time barred appeal / maintainability of appeal

Condonation of delay under Section 5 of the Limitation Act, 1963 - time barred appeal / maintainability of appeal - intimation under Section 143(1) of the Income Tax Act, 1961 - revision under Section 263 of the Income Tax Act, 1961 - Application for condonation of 95 days' delay in filing the appeal against the revision order was refused and the appeal dismissed as barred by limitation. - HELD THAT: - The Tribunal examined the affidavit filed by the assessee in support of the application for condonation and noted that the reasons stated therein related exclusively to an intimation issued under Section 143(1) for the assessment year 2010-11 and the assessee's belief that rectification under Section 154 would be appropriate. The Tribunal found that the affidavit did not explain the delay in filing the appeal against the revision order passed by the Principal Commissioner of Income Tax on 28.03.2019. In the absence of any explanation connecting the stated grounds to the delay in instituting the present appeal, the Tribunal held that no sufficient cause for condonation under Section 5 of the Limitation Act was made out. As a result, the appeal could not be entertained being time barred. [Paras 5]

Delay not condoned; appeal dismissed as barred by limitation.

Final Conclusion: The application for condonation of delay was rejected because the affidavit's reasons pertained to an intimation under Section 143(1) and did not explain delay in filing the appeal against the revision order; accordingly the appeal was dismissed as time barred.

Admission of additional evidence - contemporary evidence - ex parte / best judgment assessment - validity of assessment framed for failure to issue jurisdictional notice under section 143(2) - explanation of unexplained credits and onus of the assessee - treatment of audited books and verification on remand - estimation of gross profit in best judgment assessment - requirement of specific basis for disallowance or estimation

Admission of additional evidence - contemporary evidence - validity of assessment framed for failure to issue jurisdictional notice under section 143(2) - Admissibility of additional evidence filed before the CIT(A) and consequent authority of the CIT(A) to decide merits. - HELD THAT: - The Tribunal examined the material placed before the CIT(A) and the remand report of the A.O. and accepted the CIT(A)'s reasoning that the documents were contemporary in nature, related to entries in the books of account and were tendered because the assessee bona fide believed no proceedings were pending for the relevant assessment year in the absence of a notice under section 143(2). The A.O. had been given opportunity to verify the material and had commented after test check verification. In those circumstances the CIT(A) was justified in admitting the evidence and adjudicating the merits notwithstanding that the assessment had been framed ex parte under a best judgment provision. [Paras 7, 9, 10]

The admission of additional evidence by the CIT(A) was upheld and the CIT(A) was entitled to adjudicate the merits on the basis of that evidence.

Explanation of unexplained credits and onus of the assessee - treatment of unsecured loans - Deletion of addition under the head of unsecured loans treated as unexplained credit. - HELD THAT: - The A.O. had treated certain loans as unexplained credits. On appeal the CIT(A) found that the loans largely comprised older loans from the company's directors, that confirmations and supporting material were produced and that the A.O. in remand proceedings had issued notices (including under section 133(6)) and verified confirmations on test check basis. The Tribunal accepted the factual finding that the A.O.'s own enquiries confirmed genuineness and that the assessee discharged its onus in respect of the loans. [Paras 11, 13]

The deletion of the addition relating to unsecured loans was sustained.

Treatment of audited books and verification on remand - requirement of specific basis for disallowance - Deletion of disallowance of depreciation claimed on newly acquired assets. - HELD THAT: - The A.O. disallowed depreciation for lack of details. The assessee produced purchase bills and the asset entries in audited books of account; those documents were forwarded to the A.O. for verification and the remand report contained no adverse comment. Given that the evidence was contemporary, reflected in audited accounts and verified on test check, the CIT(A)'s deletion of the disallowance was found justified. [Paras 14, 15, 17]

The deletion of the depreciation disallowance was upheld.

Explanation of unexplained credits and onus of the assessee - section 69 unexplained investment - Deletion of addition made as unexplained investment (bank balances and fixed deposits). - HELD THAT: - The A.O. added bank and deposit balances as unexplained investment for want of reconciliation. The CIT(A) found that the amounts were shown in the books, predominantly carried forward from earlier years, and that the A.O. made no adverse comment in remand. The Tribunal accepted that the assets were reflected in audited books and corroborated by contemporaneous records, and that the A.O.'s addition was arbitrary. [Paras 18, 20, 21]

The deletion of the addition under section 69 was sustained.

Explanation of unexplained credits and onus of the assessee - estimation by A.O. on basis of approximation - Deletion of addition treated as unexplained credit in respect of sundry creditors. - HELD THAT: - The A.O. estimated that only a portion of sundry creditors were genuine and added the balance. The CIT(A) noted that the balance sheet schedule showed current liabilities and outstanding L/Cs, that the entries were reflected in audited books, and that remand verification on sample check revealed no adverse findings. The Tribunal agreed that the A.O.'s estimate lacked a basis and that the assessee's books demonstrated genuineness. [Paras 22, 23, 24, 26]

The addition made by estimating sundry creditors was deleted and that deletion was upheld.

Requirement of specific basis for disallowance - comparison with earlier years and normalcy of expenses - Deletion of disallowance of 15% of certain expenses made on estimate basis. - HELD THAT: - The A.O. disallowed a percentage of expenses for want of justification. The CIT(A) examined comparative charts for prior years, noted that the books were audited, and that the A.O. had verified information on sample basis without adverse comment. In absence of any specific defect or abnormality pointed out by the A.O., the disallowance was found to be unjustified. [Paras 27, 29, 31]

The disallowance of expenses was deleted and that deletion was sustained.

Estimation of gross profit in best judgment assessment - requirement of specific basis for estimation - Deletion of addition made by estimating gross profit and enhancing turnover in a best judgment assessment. - HELD THAT: - The A.O. increased turnover and applied a higher gross profit rate without stating a proper basis or citing comparable cases; the assessee produced audited books and comparative gross profit rates for prior years which the A.O. verified on test check. The CIT(A) held that rejection of books or estimation of gross profit must be founded on specific reasons and evidence and that the A.O.'s arbitrary estimation was not sustainable. The Tribunal found no infirmity in that conclusion. [Paras 32, 34, 35, 36, 38]

The deletion of the gross profit estimation addition was upheld.

Validity of assessment framed for failure to issue jurisdictional notice under section 143(2) - Assessee's cross objection contesting the validity of the assessment on the ground that no notice under section 143(2) was served was not pressed and was dismissed. - HELD THAT: - The assessee did not press its grounds in cross objection before the Tribunal. Consequently the Tribunal dismissed the cross objection for want of prosecution and did not entertain the contention further. [Paras 5]

The assessee's cross objection was dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal in its entirety, upheld the CIT(A)'s admission of contemporary evidence and the deletions of the additions and disallowances challenged by the Revenue, and dismissed the assessee's unpressed cross objection; the Revenue's assessment framed ex parte thus stood set aside to the extent of the deletions affirmed above.

Taxability of amounts received under International Sales and Marketing Agreement (ISMA) as royalty - lifting the corporate veil / fac ade doctrine - representative assessee / agent liability under section 163 - obligation to deduct tax at source under section 195 - evidentiary effect of trademark registration certificate for situs and ownership of brand - remand to Assessing Officer for fresh consideration

Taxability of amounts received under International Sales and Marketing Agreement (ISMA) as royalty - evidentiary effect of trademark registration certificate for situs and ownership of brand - Whether the amounts received by the assessee under the ISMA are chargeable to tax as royalty in the hands of the assessee or in the hands of the owner of the trademark - HELD THAT: - The Tribunal recorded that the central controversy is whether the ISMA receipts constitute royalty and if so in whose hands they are taxable. The assessee produced a trademark registration certificate dated 21 August 2006 (application 24 November 2003) stating that Marriott Worldwide Corporation (MWC) is the registered owner. The Tribunal accepted that the situs and ownership of the brand, as evidenced by registration, indicate that royalty income would be chargeable in the hands of the brand owner outside India rather than the assessee, subject to verification. In view of the documentary evidence now placed before the Tribunal, the matters are set aside to the file of the Assessing Officer for fresh consideration of the certificate and to determine in whose hands the receipts are chargeable as royalty. The Tribunal therefore did not finally decide the taxability on merits but remanded the question to the AO for determination after considering the registration certificate and related documentary proof and giving the parties opportunity to be heard. [Paras 13, 14]

Matter remitted to the Assessing Officer to reconsider, in the light of the trademark registration dated 21 August 2006, whether the ISMA receipts are taxable as royalty in the hands of the assessee or the registered owner of the brand.

Representative assessee / agent liability under section 163 - obligation to deduct tax at source under section 195 - Whether the assessee is to be treated as an agent/representative assessee of the non-resident brand owner and whether tax was required to be deducted under section 195 by the Indian payers - HELD THAT: - The Tribunal observed that section 163 and the provisions governing agent/representative assessee and withholding under section 195 may be relevant depending on the factual matrix, including who received the sums on behalf of a non-resident. Rather than finally adjudicating these legal questions, the Tribunal directed the Assessing Officer to examine whether the assessee acted as agent of a non-resident, whether representative assessee provisions apply, and whether tax was required to be deducted by the payers under section 195. The AO is to issue requisite notices and reconsider these questions with reference to evidence and opportunities to the parties. [Paras 14]

Direct remand to the Assessing Officer to determine, after notice and evidentiary examination, whether the assessee is an agent/representative assessee under section 163 and whether withholding obligations under section 195 were triggered and complied with.

Lifting the corporate veil / fac ade doctrine - Whether the corporate veil should be lifted to tax the ISMA receipts in the hands of the ultimate brand owner or other group companies - HELD THAT: - The Tribunal recorded the factual findings and observations of earlier authorities regarding interlinked agreements, common addresses, and the allocation of brand-related receipts among group companies, which led earlier to an opinion that the assessee might be a fac ade of the brand owner and that corporate veil lifting could be justified. However, the present order does not finally uphold or reject lifting the veil; instead, it remits the matter to the Assessing Officer to consider the newly produced trademark registration and related factual evidence and to decide in the first instance whether, on these facts, the corporate veil should be pierced or other group entities should be assessed. [Paras 14, 15]

Issue remitted to the Assessing Officer for fresh consideration of whether corporate veil lifting is warranted in the light of documentary evidence and to decide taxability accordingly.

Penalty for furnishing inaccurate particulars - Whether penalty proceedings under section 271(1)(c) for furnishing inaccurate particulars are justified - HELD THAT: - The Assessing Officer had initiated penalty proceedings on the basis that the assessee failed to produce documentary evidence regarding brand ownership and allegedly furnished inaccurate particulars. The Tribunal's order does not finally decide the penalty question. Given the remand to the AO to examine ownership, agent status and withholding compliance, the circumstances relevant to penalty necessarily require re-examination; the AO was directed to issue requisite notices before proceeding against the assessee or other parties. Consequently, the validity of penalty proceedings is left for the Assessing Officer to reconsider in light of evidence. [Paras 15]

Penalty matter remitted to the Assessing Officer for fresh consideration after examination of the documentary evidence and after issuing requisite notice(s).

Final Conclusion: The Tribunal has not finally adjudicated the tax characterisation or agent/withholding questions; instead, in respect of Assessment Years 2006-07 to 2009-10 the matters are set aside to the Assessing Officer to reconsider (a) whether the ISMA receipts are taxable as royalty in the hands of the assessee or the trademark owner in light of the trademark registration dated 21 August 2006 and other evidence, (b) whether the assessee acted as agent/representative assessee under section 163 and whether withholding under section 195 was required and complied with, and (c) whether penalty proceedings under section 271(1)(c) are sustainable; the AO is to issue requisite notices and decide these questions afresh.

Penalty under Section 271(1)(c) for concealment of income or furnishing of inaccurate particulars - requirement of specific charge in the show cause notice - burden of proof shifting under Explanation to Section 271(1) - bona fide belief and disclosure in the return as defence to penalty - distinction between a claim unsustainable in law and furnishing inaccurate particulars

Requirement of specific charge in the show cause notice - penalty under Section 271(1)(c) for concealment of income or furnishing inaccurate particulars - Validity of penalty proceedings where the show cause notice did not specify which limb of Section 271(1)(c) was invoked - HELD THAT: - The Tribunal found that the show cause notice did not specify whether penalty was being invoked for concealment of income or for furnishing inaccurate particulars. It relied on binding High Court authority holding that an exact charge must be framed in the notice and that a defect in the notice vitiates the penalty proceedings. The factual record showed that the penalty was initiated in the assessment order but the notice itself lacked specification of the limb; the AO's penalty order ultimately proceeded on the basis of furnishing inaccurate particulars only. On this legal defect the Tribunal concluded that the penalty proceedings were null and void and unsustainable. [Paras 9, 11]

Penalty proceedings vitiated for defect in the show cause notice; penalty deleted on this ground.

Burden of proof shifting under Explanation to Section 271(1) - bona fide belief and disclosure in the return as defence to penalty - distinction between a claim unsustainable in law and furnishing inaccurate particulars - Whether, on the merits, penalty under Section 271(1)(c) was justified when the assessee had disclosed the transaction in the return and acted on a bona fide belief that the land was agricultural - HELD THAT: - On the facts the Tribunal held that the assessee had purchased the land as agricultural, had disclosed the sale in the financial statements and return, and had advanced a consistent explanation (including supporting documents) that it believed the land to be agricultural. Applying the principle that once an assessee offers a cogent explanation the onus shifts to Revenue under the Explanation to Section 271(1), the Tribunal found Revenue failed to establish concealment or furnishing of inaccurate particulars. The Tribunal distinguished decisions relied upon by the AO where surrender was involuntary or facts showed non bona fide conduct, and held that merely making a claim not sustainable in law does not ipso facto amount to furnishing inaccurate particulars. Consequently, on merits the imposition of penalty was unjustified. [Paras 7, 8, 30]

On merits, penalty not sustainable - assessee's bona fide disclosure and explanation discharged initial onus and Revenue did not prove concealment or inaccurate particulars.

Final Conclusion: The appeal is allowed; the penalty under Section 271(1)(c) for AY 2012-13 is deleted because (i) the show cause notice failed to specify the limb of Section 271(1)(c) thereby vitiating proceedings, and (ii) on merits the assessee's bona fide disclosure and explanation met the initial onus and Revenue did not prove concealment or furnishing of inaccurate particulars.

Condonation of delay - sufficient cause - advancing substantial justice over technicality - fee for default in furnishing statements (section 234E) - processing of TDS statements and intimations (section 200A) - prospective effect of statutory amendment

Condonation of delay - sufficient cause - advancing substantial justice over technicality - Whether the delay in filing the appeal before the Tribunal is to be condoned and the appeal admitted for adjudication on merits - HELD THAT: - The Tribunal applied the established principles favouring advancement of substantial justice where non-deliberate delay is shown. Noting the assessee's plea regarding prolonged illness and incapacity of its managing director and having regard to coordinate-bench authorities that a pragmatic, liberal construction of "sufficient cause" is appropriate, the Tribunal found the illness to constitute a sufficient cause for delay. The Tribunal balanced technical objections against the prejudice to substantial justice and followed precedents holding that nondeliberate delay should not bar adjudication on merits; accordingly the delay of 108 days was condoned and the appeal admitted for hearing on merits. [Paras 8, 9]

Delay of 108 days in filing the appeal is condoned and the appeal is admitted for adjudication on merits.

Fee for default in furnishing statements (section 234E) - processing of TDS statements and intimations (section 200A) - prospective effect of statutory amendment - Validity of levy of fee under section 234E in relation to TDS statements filed prior to 1.6.2015 - HELD THAT: - The Tribunal recognised that, if the ratio of the Karnataka High Court in Fatehraj Singhvi is applied, levy of fee under section 234E for TDS returns filed prior to 1.6.2015 would be impermissible because the amended processing provisions authorising computation at the time of processing came into force only from 1.6.2015. Given the factual posture, the timing of the returns (relating to FY 2012-13 / AY 2013-14) and the authorities addressing identical questions, the Tribunal did not decide the substantive question itself but found it appropriate in the interests of justice to remit the issue to the Commissioner (Appeals) for fresh consideration in accordance with the observations in the order. [Paras 11, 12]

The question of levy of fee under section 234E for the TDS statements in issue is remanded to the Commissioner of Income-tax (Appeals) for fresh consideration.

Final Conclusion: The Tribunal condoned the delay of 108 days and admitted the appeal for adjudication; the substantive issue regarding levy of fee under section 234E for the relevant TDS statements (relating to FY 2012-13 / AY 2013-14) is remanded to the CIT(A) for fresh consideration in accordance with the observations in this order. The appeal is treated as allowed for statistical purposes.

Reassessment under section 147 of the Income Tax Act - onus under section 68 to prove identity, creditworthiness and genuineness of share subscription - additions under section 68 treated as unexplained cash credit - evidentiary value of statements recorded during survey under section 133A - deletion of additions where revenue fails to rebut documentary evidence - sufficient reasons to form belief to reopen assessment based on tangible information

Reassessment under section 147 of the Income Tax Act - sufficient reasons to form belief to reopen assessment based on tangible information - Validity of reopening assessment and initiation of reassessment proceedings under section 147 - HELD THAT: - The assessee did not press grounds challenging initiation of reassessment. The Tribunal records that the reassessment was initiated after approval of higher authorities on the basis of information from search/survey and investigation, and that the Assessing Officer had tangible information to form a belief that income had escaped assessment. Consequently, the legal challenge to initiation of reassessment was not pursued by the assessee and is decided against the assessee. [Paras 5]

Reopening and initiation of reassessment under section 147 upheld (issues not pressed by the assessee).

Onus under section 68 to prove identity, creditworthiness and genuineness of share subscription - additions under section 68 treated as unexplained cash credit - evidentiary value of statements recorded during survey under section 133A - deletion of additions where revenue fails to rebut documentary evidence - Sustenance of addition of share capital and share premium as unexplained cash credit under section 68 - HELD THAT: - The Tribunal applied the three-fold test under section 68 - identity of investors, creditworthiness of investors and genuineness of the transactions. The assessee produced for the investor entities share application forms, share certificates, bank cheques and deposit slips, bank statements, board resolutions, certificate of incorporation, audited financial statements, ITR acknowledgements, company master data and other documentary material showing that the investments passed through banking channels and that the investor companies had sufficient net worth. The sole adverse material was a retracted statement recorded during survey under section 133A; the Tribunal noted such statements have limited evidentiary value if not supported by corroborative material. Revenue did not bring forward evidence to rebut the documentary proof. Following earlier orders in the assessee's own and sister concerns on identical facts, the Tribunal held that the assessee discharged the onus under section 68 and that additions could not be sustained. [Paras 6, 7, 8, 10]

Addition of share capital and share premium under section 68 deleted; appeal allowed on this issue in favour of the assessee.

Deletion of additions where revenue fails to rebut documentary evidence - Disposition of consequential claims on set-off, interest and penalty - HELD THAT: - The Tribunal observed that deletion of the addition requires consequential relief such as allowing set-off of losses as permissible under law. Other grounds relating to interest and penalty were characterised as premature, formal or consequential and did not require separate adjudication in the order. The Tribunal followed earlier coordinate-bench decisions and directed recomputation in terms of its findings. [Paras 8, 9, 10]

Consequential relief granted (set-off of losses); claims on interest deemed premature or formal and need no adjudication; recomputation directed.

Final Conclusion: The appeal is allowed in part: initiation of reassessment under section 147 is recorded as not pressed and upheld; the addition of share capital and share premium under section 68 is deleted on the ground that the assessee discharged the onus by documentary evidence and revenue failed to rebut the same; consequential reliefs follow and the file is directed to be recomputed in accordance with the order.

Estimation of income by adopting net profit ratio - Rejection of books of account - Precedential value of coordinate bench decisions - Direction to Assessing Officer to adopt net profit ratio for assessment

Estimation of income by adopting net profit ratio - Precedential value of coordinate bench decisions - Whether the Assessing Officer's adoption of a 12% net profit rate on net contract receipts for estimating the assessee's income was excessive and whether the Tribunal should direct adoption of an 8% net profit rate following a coordinate-bench decision. - HELD THAT: - The Assessing Officer completed assessment by applying a 12% net profit rate on net contract receipts after rejecting the books of account; the CIT (Karnal) had earlier set aside the original assessment under section 263 leading to fresh assessment at the estimated 12% rate, which the CIT(A) upheld. The assessee placed before the Tribunal a paper book containing several appellate decisions of coordinate Benches where lower net profit rates were applied and contended that the AO disregarded those orders in a non speaking manner. The Revenue's representative did not object to the assessee's submission proposing adoption of an 8% net profit rate. Respectfully following the coordinate bench decision of the ITAT, Delhi in Nand Kishore Pundir (reproduced in the paper book) and having regard to the similar facts and circumstances, the Tribunal found that relief was warranted and directed the Assessing Officer to determine the assessee's income by adopting a net profit ratio of 8% on the assessee's net contract receipts.

The Assessing Officer is directed to estimate the assessee's income by applying a net profit rate of 8% on net contract receipts; the appeal is partly allowed.

Final Conclusion: Appeal partly allowed; assessment to be recomputed by the Assessing Officer using an 8% net profit ratio on the assessee's net contract receipts in accordance with the Tribunal's directions.

International transaction of Advertisement, Marketing and Promotion (AMP) expenses - acting in concert - arm's length price - transfer pricing - most appropriate method - Profit Split Method (PSM) - Residual Profit Split Method (RPSM) - Bright Line Test (BLT) - keeping and furnishing information of associated enterprises under Section 92D - bench marking under TNMM, Resale Price Method or Cost Plus Method

International transaction of Advertisement, Marketing and Promotion (AMP) expenses - acting in concert - Existence of an international transaction in respect of AMP expenses incurred by the assessee - HELD THAT: - On the facts and material on record the Tribunal upheld the finding that AMP expenses constituted an international transaction as defined in section 92B read with clause (v) of section 92F. The Tribunal relied on the assessee's own disclosures (imports of demo/loaner equipment and consumables from AEs), documentary evidence of invoices for such imports, participation of AE representatives in promotional seminars, and the assessee's website emphasizing the global brand. Applying the test of whether the circumstances permit an inference that the parties acted 'in concert', the Tribunal concluded that the revenue discharged the onus of proving an arrangement/understanding between the assessee and its AEs and therefore the AMP expenditure could not be negated at the threshold. The Tribunal distinguished Maruti Suzuki and Whirlpool on facts (where taxpayers were manufacturers/economic owners) and followed coordinate bench precedents addressing distributor cases and 'acting in concert'. Accordingly the Tribunal dismissed the assessee's grounds challenging the existence of an international transaction. [Paras 25, 29]

The existence of an international transaction in relation to the AMP expenses is upheld and the assessee's grounds challenging that finding are dismissed.

Most appropriate method - Profit Split Method (PSM) - Residual Profit Split Method (RPSM) - keeping and furnishing information of associated enterprises under Section 92D - bench marking under TNMM, Resale Price Method or Cost Plus Method - Appropriateness of the method adopted by the TPO (RPSM/PSM) for benchmarking AMP expenses and related remedial directions - HELD THAT: - The Tribunal examined the TPO's adoption of the Residual Profit Split Method on the stated basis that audited financials of AEs were not furnished. It reiterated the statutory duty under Section 92D and Rule 10D to maintain and produce information and observed that absence of AE financials permits the authority to draw adverse inference. However, rather than finally endorsing the RPSM adjustment, the Tribunal held that, in light of binding coordinate bench decisions (including the assessee's own earlier ITA) and the need to follow the directions of the Delhi High Court (notably on aggregation under TNMM or alternative benchmarking), the question of benchmarking should be restored to the TPO. The Tribunal directed the TPO to re examine benchmarking following the High Court's directions - by considering aggregated TNMM with purchases or, alternatively, Resale Price Method, Cost Plus Method or Profit Split Method as appropriate - after affording the assessee opportunity to supply all relevant documents including audited financials of AEs; failing production, authorities may act in accordance with law. The Tribunal thus allowed the related grounds for statistical purposes and remanded the matter for fresh determination. [Paras 36, 40]

Bench marking of AMP expenses is restored to the TPO for fresh determination in accordance with the directions of the Delhi High Court and the Tribunal's order; the TPO shall consider TNMM (aggregated) or RPM/CPM/PSM as appropriate, after giving the assessee an opportunity to produce AE records.

Penalty proceedings under section 271(1)(c) - Validity of initiating penalty proceedings under section 271(1)(c) for alleged furnishing of inaccurate particulars - HELD THAT: - The Tribunal treated the challenge to initiation of penalty proceedings as consequential and premature since the transfer pricing and assessment issues on which any penalty contention would depend were being remanded for fresh adjudication. Given this consequential character, the Tribunal did not entertain the penalty ground on merits. [Paras 41]

Ground relating to penalty proceedings is dismissed as premature and consequential.

Final Conclusion: The Tribunal affirms that the AMP expenditure constituted an international transaction on the facts of the case, but does not sustain the benchmarking carried out by the TPO; the matter of determining ALP is remitted to the TPO to re compute in accordance with the Delhi High Court's directions (TNMM aggregated or RPM/CPM/PSM as may be appropriate) after affording the assessee an opportunity to furnish AE documents and financials; the penalty challenge is dismissed as premature and the appeal is partly allowed for statistical purposes.

Treatment as unexplained cash credit under section 68 - burden on assessee to prove identity, creditworthiness and genuineness of creditors - onus shifts to revenue only after prima facie proof by assessee - exercise of power to summon under section 131(1)

Treatment as unexplained cash credit under section 68 - burden on assessee to prove identity, creditworthiness and genuineness of creditors - exercise of power to summon under section 131(1) - Whether the addition of Rs.20,70,000 as unexplained cash credit under section 68 was rightly sustained. - HELD THAT: - The Tribunal concurred with the Assessing Officer and CIT(A) that the primary onus to explain credits in the books rested on the assessee and, in the absence of satisfactory evidence on identity, creditworthiness and genuineness of the lenders, the entries qualify as unexplained cash credits under section 68. During assessment the assessee furnished only a PAN for one lender and no details for the other; notices issued under section 133(6) to the identified lender elicited no response and bank statements or corroborative documents proving source and genuineness were not produced. The CIT(A) rightly observed that mere production of a PAN at the appeal stage did not discharge the assessees' initial obligation and that the assessee's assertion that loans were 'borrowed from the market' did not substitute for prima facie proof. The Tribunal further addressed the contention that the department should have summoned lenders under section 131(1): while acknowledging that the department has power to summon, the Tribunal found no infirmity in non-exercise where the assessee had failed to place any material during assessment to justify such a step and had sought summons only for the first time on appeal. Consequently, the assessee failed to shift the onus to the revenue and the addition under section 68 was correctly sustained. [Paras 7, 8, 9, 10, 11]

Addition of Rs.20,70,000 as unexplained cash credit under section 68 is upheld.

Final Conclusion: The appeal is dismissed; the order of the CIT(A) is upheld and the addition under section 68 for assessment year 2012-13 is confirmed.

Legality of extension of investigation under Section 110(2) of the Customs Act, 1962 - power to initiate confiscation proceedings under Section 124 of the Customs Act, 1962 after quashing of seizure proceedings - interim stay of departmental proceedings pending adjudication of writ petition - effect of retrospective amendment removing reference to Proper Officer on ongoing proceedings

Power to initiate confiscation proceedings under Section 124 of the Customs Act, 1962 after quashing of seizure proceedings - interim stay of departmental proceedings pending adjudication of writ petition - Respondents restrained from proceeding pursuant to notice dated 23.04.2022 issued under Section 124 of the Customs Act, 1962, until the next date of hearing. - HELD THAT: - The petitioner relied on a High Court order dated 02.03.2022 in WPC No.5388 of 2021 which quashed the notice under Section 110(2) of the Customs Act, 1962 and held subsequent notices/summons to be without authority of law. The respondents' challenge to that order is pending before the Division Bench and hence the order has not attained finality. Having heard learned counsel and noting the pendency of the writ petition now before this Court, the Court exercised its power to grant interim relief by restraining respondents from taking further steps pursuant to the impugned notice dated 23.04.2022 issued under Section 124 of the Act. The Court recorded that the respondents were granted time to file their reply, and on the balance of convenience and in view of the earlier order quashing the Section 110(2) notice, directed that no further proceedings be taken under the April 23 notice until the next listing.

Interim restraint granted; respondents shall not proceed pursuant to the notice dated 23.04.2022 under Section 124 of the Customs Act, 1962, till the next date of hearing.

Final Conclusion: In view of the earlier order quashing the notice under Section 110(2) and pending adjudication of the present writ, the Court granted interim relief restraining further action under the notice dated 23.04.2022 and listed the matter after four weeks.

Status quo order - scope of status quo in oppression and mismanagement proceedings - specificity required in status quo directions - interference with day-to-day management and operations of a company - raising of additional debt during pendency of interim orders

Status quo order - specificity required in status quo directions - raising of additional debt during pendency of interim orders - interference with day-to-day management and operations of a company - Whether the NCLT was justified in making its interim status quo order dated 17.01.2020 absolute and keeping approvals/resolutions with respect to raising of any additional debt in abeyance. - HELD THAT: - The Tribunal found that the original status quo order of 17.01.2020 was in wide terms and lacked specification as to whether it applied to management, shareholding or assets; in proceedings alleging oppression and mismanagement interim directions must be tailored to protect the petitioners' interest and should be specific. The NCLT's subsequent order making the interim order absolute and expressly keeping approvals/resolutions for raising additional debt in abeyance amounted to an impermissible interference with the day-to-day management of a Board managed company. The Appellant company, being board managed, must be able to conduct business decisions necessary for its functioning as a going concern; the Tribunal accepted that the appellants had filed an affidavit apprising the NCLT of the ECLGS decision and that a prima facie case was made out. While the NCLT could require prior permission before certain actions, a blanket prohibition on raising additional debt without a clearer specification unacceptably restricted ordinary business operations. Applying the principle that status quo directions should indicate the subject matter or context to which they relate, the Tribunal held that the portion of the impugned order which kept approvals/resolutions for raising additional debt in abeyance was excessive and ought to be set aside. [Paras 31, 34, 41, 42]

The portion of the NCLT order (18.06.2021) stating that approvals/resolutions with respect to raising any additional debt shall be kept in abeyance pending the main petition is quashed and set aside; appeal allowed to that extent.

Final Conclusion: The appeal is allowed insofar as the NCLT's direction keeping approvals/resolutions for raising additional debt in abeyance is quashed; otherwise the status quo direction remains subject to the need for specificity so as not to impede the company's day to day functioning. No order as to costs.

Jurisdiction to decide title and fraud disputes - rectification of register of members - prima facie evidence of share certificate - prima facie evidence of register of members - exclusive jurisdiction of civil court for disputed questions of title - validity of share transfer forms executed before 01.04.2014 (Form-7B) versus Form SH-4

Consideration for transfer of shares - prima facie evidence of share certificate - Petitioner had given part consideration for transfer of shares - HELD THAT: - The Tribunal recorded the parties' admissions and surrounding probabilities and held that respondents have admitted receipt of Rs. 10,00,000 as part consideration for the 40% shareholding claimed by the petitioner. The Tribunal observed that whether the acknowledgement letters and other documents are genuine or fabricated cannot be resolved without evidence, and that the absence of original share certificates in the petitioner's possession and the respondent's possession of the certificates are material. In view of these contested factual questions and the admitted payment, the Tribunal indicated that recovery of the admitted amount must be pursued by the appropriate forum rather than decided in these proceedings. [Paras 8]

Admitted payment of Rs. 10,00,000 by the petitioner is recognised; rights to recover the amount lie to be enforced before the appropriate forum and factual issues as to genuineness of documents require evidence.

Jurisdiction to decide title and fraud disputes - rectification of register of members - exclusive jurisdiction of civil court for disputed questions of title - validity of share transfer forms executed before 01.04.2014 (Form-7B) versus Form SH-4 - Tribunal lacks jurisdiction to decide disputed questions of fraud, forgery and title and cannot grant the rectification and related reliefs sought - HELD THAT: - Relying on settled authorities and a purposive reading of the scope of rectification, the Tribunal held that claims which raise seriously disputed civil rights, title to securities or allegations of forgery and manipulation fall outside the summary rectification jurisdiction and are better suited for adjudication by civil courts where evidence can be tested. The Tribunal noted precedent that share certificates constitute prima facie evidence of title and that disputed allegations as to signatures and documents require trial or expert examination. The Tribunal also observed a procedural point on form of transfer (Form-7B being valid only up to 01.04.2014) which further underscores the requirement for evidence and proper adjudication. For these reasons the Tribunal declined to decide the merits of the petition and to grant the reliefs sought. [Paras 8]

Petition dismissed for want of jurisdiction to adjudicate disputed questions of title, fraud and genuineness of documents; such matters must be pursued before the appropriate civil fora.

Final Conclusion: The Tribunal dismissed the petition, holding that disputed questions of title, fraud and the genuineness of documents cannot be resolved in these proceedings and must be adjudicated by the appropriate civil forum; the petitioner is recognised to have paid part consideration which may be recovered by appropriate proceedings and factual/contentious issues require evidence.

Limitation under Section 18 of the Limitation Act - acknowledgment of debt and promise to pay - application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - promise to pay under Section 25(3) of the Indian Contract Act, 1872 - effect of entries in balance sheets as acknowledgment - suspension of remedy under SICA and exclusion of limitation period

Limitation under Section 18 of the Limitation Act - application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - Whether the Section 9 application was barred by limitation in the absence of clear and timely acknowledgments by the corporate debtor. - HELD THAT: - The Tribunal accepted the Adjudicating Authority's finding that default occurred on 19.06.2006 and that the documents placed on record did not disclose a clear, unequivocal acknowledgement of the operational debt within the three year period required to sustain continuous extension of limitation under Section 18. The assorted receipts/endorsements on letters and faxes relied upon were either deficient, suspect as to genuineness, or made by persons without demonstrated authority (or after their period of agency), and therefore could not be treated as satisfying the strict requirement for acknowledgment to revive the limitation period. The Tribunal further examined balance sheets filed later and found no specific, unequivocal admission of the debt in those statements to change the conclusion on limitation. On these bases, the Tribunal held that the Adjudicating Authority did not err in finding the Section 9 petition time barred. [Paras 19, 20, 21, 22, 25]

Section 9 application is barred by limitation as there was no clear and timely acknowledgment by the corporate debtor to extend limitation under Section 18.

Promise to pay under Section 25(3) of the Indian Contract Act, 1872 - acknowledgment of debt and promise to pay - Whether the alleged later 'promise to pay' (including letter dated 21.10.2015) operates to revive limitation for the Section 9 application. - HELD THAT: - The Tribunal observed the distinction between an acknowledgment under Section 18 of the Limitation Act and a promise under Section 25(3) of the Indian Contract Act. For the purpose of extending limitation under Section 18, the acknowledgment must occur within the statutory period; a later promise to pay (on 21.10.2015) cannot retrospectively satisfy the requirement for continuous extension of limitation from the date of default in 2006. Accordingly, the purported promise/acknowledgment in 2015 could not cure the time bar applicable to the Section 9 petition. [Paras 20, 21, 25]

The later alleged promise to pay does not revive or extend the limitation under Section 18 for the Section 9 application.

Effect of entries in balance sheets as acknowledgment - acknowledgment of debt and promise to pay - Whether the balance sheets and annual reports produced by the corporate debtor constituted an unequivocal acknowledgment of liability sufficient to extend limitation. - HELD THAT: - The Tribunal considered the jurisprudence that entries in financial statements may amount to acknowledgment only if they are clear and unambiguous. The annual reports produced (for 2012 13 to 2017 18) contained consolidated figures without a specific, unequivocal admission of the appellant's claim and thus did not demonstrate acknowledgment of the operational debt. Therefore, those documents did not operate to extend the limitation period for the Section 9 application. [Paras 17, 21, 22]

The balance sheets/annual reports relied upon do not contain the clear, unequivocal acknowledgment necessary to extend limitation.

Suspension of remedy under SICA and exclusion of limitation period - Whether the period during which the corporate debtor was a sick unit under SICA is to be excluded from computation of limitation in favour of the appellant. - HELD THAT: - The Tribunal applied earlier decisions and found that exclusion of time spent under SICA is available only where the creditor's legal remedy was actually suspended as part of the scheme and the creditor was a party to or affected by the scheme. The appellant was not part of any rehabilitation scheme and therefore could not claim exclusion of the SICA period for computing limitation. [Paras 9, 23, 24]

The appellant is not entitled to exclusion of the SICA period in computing limitation because it was not part of the rehabilitation scheme.

Final Conclusion: The appeal is dismissed. The Tribunal upheld the Adjudicating Authority's finding that the Section 9 petition was time barred: acknowledgments relied upon were not clear, unambiguous or within the requisite period to extend limitation under Section 18; the later alleged promise did not revive limitation; balance sheet entries did not establish acknowledgment; and no exclusion of SICA period was available to the appellant.

Pre-existing dispute - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Section 8 notice - plausible contention / not patently feeble dispute (Mobilox test) - cheque as admission of liability - presumption under Section 139 of the Negotiable Instruments Act, 1881

Pre-existing dispute - Section 9 of the Insolvency and Bankruptcy Code, 2016 - Section 8 notice - plausible contention / not patently feeble dispute (Mobilox test) - Existence of a pre-existing dispute prior to service of the Section 8 notice and its effect on maintainability of the Section 9 application. - HELD THAT: - The Tribunal found that correspondence and steps taken by the corporate debtor prior to the Section 8 notice (notably the letter dated 12.03.2018 instructing stop payment of the post-dated cheque, the criminal complaint filed on 21.05.2018, and the reply dated 24.10.2018 denying liability) evidenced a real dispute existing before the demand notice dated 11.09.2019. Applying the standard in Mobilox - that the adjudicating authority must reject a Section 9 application if notice of dispute or record of dispute shows a plausible contention which is not a patently feeble or spurious defence - the Tribunal held that the corporate debtor's contentions were supported by material on record and were neither illusory nor unsupported. The Adjudicating Authority erred in admitting the Section 9 application because it failed to treat the documented pre-existing dispute as disentitling the operational creditor to relief under Section 9. [Paras 19, 20, 21, 22]

There was a pre-existing dispute prior to the Section 8 notice; the Section 9 application was accordingly not maintainable and the impugned admission order was set aside.

Cheque as admission of liability - presumption under Section 139 of the Negotiable Instruments Act, 1881 - Whether issuance of a post-dated cheque and the presumption under Section 139 NI Act conclusively established the corporate debtor's liability so as to defeat the plea of pre-existing dispute. - HELD THAT: - The Tribunal observed that the legal presumption under Section 139 of the NI Act (that a cheque was issued for discharge of a liability) was not the determinative question in the insolvency context where the narrow issue is existence of a pre-existing dispute. Here the corporate debtor had, prior to presentation of the post-dated cheque, communicated that it did not accept liability and had instructed the bank to stop payment; the cheque was subsequently dishonoured on stop payment instructions. In the factual matrix the Tribunal held that the mere issuance of the cheque did not obliterate the contemporaneous and earlier communications and criminal proceedings indicating a genuine dispute. Thus the Section 139 presumption did not preclude finding a bona fide pre-existing dispute for the purpose of Section 9 adjudication. [Paras 14, 15, 16, 18]

The presumption under Section 139 NI Act and the issuance of the cheque did not conclusively establish liability to defeat the plea of a bona fide pre-existing dispute in the Section 9 proceedings.

Final Conclusion: The appeal is allowed. The impugned order admitting the Section 9 application is set aside and the Section 9 application is rejected on the ground of a bona fide pre-existing dispute; the amount deposited by the appellant is to be returned and the parties shall bear their own costs.

Extension of time for implementation of resolution plan - power of Adjudicating Authority to accept a revised payment schedule - monitoring committee duties in implementation of the resolution plan - liability to pay contractual interest for delayed payment under an approved/revised resolution plan - section 74(3) IBC - criminal liability for knowing and wilful contravention of resolution plan - forfeiture and refund of amounts deposited under a resolution plan - non-speaking order and judicial review for failure to consider material facts

Extension of time for implementation of resolution plan - power of Adjudicating Authority to accept a revised payment schedule - non-speaking order and judicial review for failure to consider material facts - Validity of the Adjudicating Authority's rejection of the Appellant's applications for inspection and extension of time and whether those orders dated 01.11.2021 should be set aside - HELD THAT: - The Tribunal found that the Adjudicating Authority had failed to consider material facts and documents placed before it, including the revised payment schedule approved by the Monitoring Committee and recorded by the Adjudicating Authority on 03.09.2019 and substantial payments subsequently made by the Appellant. The Monitoring Committee minutes of 07.10.2019 recorded that the Monitoring Professional should consider moving an application for extension of time because of issues in implementation; the Monitoring Professional did not file such an application and the Appellant filed C.A. 2357/2019 seeking extension. The Adjudicating Authority's order of 01.11.2021 rejected C.A. 2357/2019 and C.A. 1170/2019 without addressing these grievances or the payments made, and included observations that did not take into account this Tribunal's interlocutory directions and earlier orders. Having reviewed the sequence of events, the Tribunal concluded that the order was unsustainable because it was essentially non speaking and omitted adjudication of the core issues raised by the Appellant. The Tribunal therefore set aside the impugned order in relation to these applications and allowed C.A. 2357/2019, granting the Appellant specified time to deposit the balance amount subject to conditions.

Impugned order dated 01.11.2021 in C.A. Nos. 2357/2019 and 1170/2019 set aside; C.A. No. 2357/2019 allowed and Appellant granted time to deposit the balance amount subject to conditions.

Liability to pay contractual interest for delayed payment under an approved/revised resolution plan - Extent and period of interest payable by the Appellant on the unpaid balance when permitted to complete payment - HELD THAT: - The Monitoring Committee's revised schedule (recorded in the Adjudicating Authority's order of 03.09.2019) expressly provided for interest at 11% p.a. from the date of approval of the resolution plan until credit of money to the corporate debtor. The Appellant had undertaken to pay interest at that rate. The Tribunal held that the Appellant cannot deny the contractual/consensual obligation to pay interest. However, because the Appellant's application for extension (C.A. 2357/2019) remained pending before the Adjudicating Authority for a protracted period and the Monitoring Professional had not filed the contemplated application for extension despite minutes recording such consideration, the Tribunal apportioned the interest liability: interest at 11% p.a. simple shall be payable from 30.05.2019 (date of plan approval) up to 28.10.2019, and thereafter from 02.11.2021 until the date of actual payment. The Tribunal directed the Appellant to compute and deposit such interest along with the balance amount when making payment.

Appellant liable to pay interest @11% p.a. simple for the periods 30.05.2019 to 28.10.2019 and 02.11.2021 until payment; Appellant to calculate and deposit the same along with the balance.

Section 74(3) IBC - criminal liability for knowing and wilful contravention of resolution plan - forfeiture and refund of amounts deposited under a resolution plan - monitoring committee duties in implementation of the resolution plan - Whether the Adjudicating Authority was justified in directing reference to the IBBI under Section 74(3) and ordering forfeiture of amounts deposited by the Appellant - HELD THAT: - The Tribunal observed that Section 74(3) requires pleadings and prima facie material that the person knowingly and wilfully contravened the terms of the approved resolution plan. The application by the Monitoring Professional (C.A. 1246/2019) did not plead or establish such willful contravention; nor did the Adjudicating Authority record prima facie satisfaction to refer the matter to the IBBI or to order forfeiture. The Adjudicating Authority's order of 01.11.2021 also failed to notice that the Appellant had deposited substantial sums (70.25 Crores) and that the 03.09.2019 order had recorded the revised timeline. Given these omissions and the Monitoring Professional's role (under the statutory scheme) to assist and facilitate implementation rather than act as an adversary, the Tribunal held the order unsustainable. Consequently, the Tribunal set aside the impugned order in C.A. 1246/2019 and dismissed that application.

Impugned order dated 01.11.2021 in C.A. No. 1246/2019 set aside; C.A. No. 1246/2019 dismissed and directions for forfeiture/reference under Section 74(3) quashed.

Monitoring committee duties in implementation of the resolution plan - forfeiture and refund of amounts deposited under a resolution plan - Reliefs and incidental directions upon acceptance of deposit by the Appellant - HELD THAT: - On allowing the Appellant to deposit the balance amount subject to payment of the specified interest, the Tribunal imposed consequential directions to effectuate implementation: the Monitoring Committee and Monitoring Professional were directed to hand over physical possession of movable and immovable assets (including deeds and titles) within two weeks of payment; financial creditors to issue no dues certificates and clearances within two weeks after receipt; and the Monitoring Professional to file a compliance report before the Adjudicating Authority and this Tribunal within six weeks detailing disbursements and other relevant facts. These directions flow from the Tribunal's conclusion that, once the Appellant complies with the payment and interest conditions, the successful implementation of the approved resolution plan must follow without undue delay.

On deposit of balance and interest, Monitoring Committee/Monitoring Professional to hand over possession and all deeds/titles within two weeks; financial creditors to issue no dues and clearances in two weeks; Monitoring Professional to file a compliance report within six weeks.

Final Conclusion: The Tribunal set aside the Adjudicating Authority's orders dated 01.11.2021: C.A. No. 1246/2019 filed by the Monitoring Professional was dismissed; C.A. No. 2357/2019 was allowed and the Appellant permitted to deposit the balance amount subject to payment of interest at 11% p.a. for specified periods. Upon such deposit the Monitoring Committee/Monitoring Professional and financial creditors were directed to hand over possession, deeds and clearances within prescribed timelines and to file a compliance report.

Setting aside ex-parte order - service of notice - sufficient cause for non-appearance - pre-existing dispute under Section 8 of the IBC - time for filing under Section 9 of the IBC - presumption of service under Section 27 of the General Clauses Act - limited pre-admission notice - scope of merits when deciding an application to set aside ex parte order

Setting aside ex-parte order - service of notice - sufficient cause for non-appearance - presumption of service under Section 27 of the General Clauses Act - Whether the ex parte orders dated 17.03.2022 and 21.03.2022 should be set aside on the grounds of non service of notice or sufficient cause for non appearance. - HELD THAT: - The Tribunal applied the settled test that an application to set aside an ex parte order must demonstrate either that notice was not duly served or that the applicant was prevented by sufficient cause from appearing. The Applicant's primary contention was that the office was closed or functioning with skeleton staff due to Covid 19 and therefore service was not effected or appearance was prevented. The affidavit filed in reply admitted limited office functioning and the presence on the relevant date of persons who could have executed transactions, which undermined the claim of complete non functioning. The Tribunal observed that vague formulations such as "it seems" or "perhaps" reflected uncertainty in the Applicant's stand. Reliance was placed on the principle that where notice is sent to the correct address by registered post and returned with endorsements (e.g., "refused"), service is to be presumed under Section 27 of the General Clauses Act, subject to proof of fabrication or fraud. The Applicant failed to establish non service or sufficient cause for non appearance, and no cogent explanation was shown to rebut the presumption of service. [Paras 6, 15, 20, 21]

Application to set aside the ex parte orders dismissed for failure to prove non service of notice or sufficient cause for non appearance.

Pre-existing dispute under Section 8 of the IBC - limited pre-admission notice - time for filing under Section 9 of the IBC - Whether the reply dated 06.01.2022 (and earlier reply dated 04.10.2021) disclosed a pre existing dispute under Section 8 so as to affect maintainability of the Section 9 petition. - HELD THAT: - The Tribunal examined Sections 8 and 9 of the IBC and noted that the right to file under Section 9 accrues after ten days from the date of delivery of the demand notice, unless a notice of dispute under Section 8(2) is received. The Tribunal considered the reply notices on record (04.10.2021 and 06.01.2022) and found that they did not, on their face, establish a pre existing dispute in the sense required by Section 8 - they merely contained contractual denials and contentions without documentary proof of a pre existing suit or arbitration or evidence substantiating the assertions. The Tribunal held that even if the later reply had been placed on record earlier, the same conclusion would have followed because no supporting documents proving a pre existing dispute were produced. [Paras 10, 11, 12, 13, 20]

Reply notices did not disclose a pre existing dispute under Section 8 that would bar the Section 9 petition; suppression of any later reply did not vitiate admission in the circumstances.

Scope of merits when deciding an application to set aside ex parte order - limited pre-admission notice - Whether the Tribunal may go into the merits of the underlying dispute while deciding an application to set aside an ex parte admission order. - HELD THAT: - The Tribunal reviewed authorities and concluded that the adjudicatory exercise on an application to set aside an ex parte order is confined to the twin questions of service and sufficient cause for non appearance. The object of the limited pre admission notice is to enable the Adjudicating Authority to satisfy itself that there is no pre existing dispute as envisaged by Section 8. If the corporate debtor did not appear in response to that limited notice and did not raise a dispute in the prescribed manner, the Adjudicating Authority cannot be faulted for admission. Thus, the Tribunal will not ordinarily embark upon a full blown examination of merits when deciding an application to set aside an ex parte order, except insofar as to see whether a reply properly discloses a pre existing dispute under Section 8. [Paras 11, 16, 19, 20]

Tribunal will not go into the merits of the petition in extenso when deciding an application to set aside ex parte admission; inquiry is limited to service/sufficient cause and whether a proper Section 8 reply disclosed a pre existing dispute.

Final Conclusion: The application to set aside the ex parte orders dated 17.03.2022 and 21.03.2022 is dismissed: the Applicant failed to prove non service of notice or sufficient cause for non appearance, the reply notices did not disclose a pre existing dispute under Section 8 of the IBC, and the Tribunal correctly confined its inquiry to service and the limited question of whether a Section 8 reply barred admission.

Refund of service tax under Notification No.12/2013-ST - SEZ duty-free receipt of services for authorized operations - approval committee specified services - overriding effect of the SEZ Act - refund under Section 11B of the Central Excise Act - interest under Section 11BB of the Central Excise Act - strict construction of fiscal statute

Refund of service tax under Notification No.12/2013-ST - approval committee specified services - SEZ duty-free receipt of services for authorized operations - overriding effect of the SEZ Act - Entitlement to refund for services received for authorised operations in SEZ even if such services are not listed as specified services approved by the Approval Committee - HELD THAT: - The Tribunal accepted the appellant's contention that units in SEZ are entitled to duty-free receipt of services for authorised operations and that Notification No.12/2013-ST provides the route for refund of service tax remitted by service providers. Reliance was placed on the appellant's earlier Tribunal decision reported in 2013 (32) STR 543 (Tri-Ahmd.) and several Division Bench decisions of the Tribunal which construed the notifications as procedural facilitation and not as denying immunity conferred by the SEZ statute and SEZ Rules. The counter-reliance on Kolland Developers (Tri.-Mumbai) and the Apex Court's admonition that notifications be read strictly were considered; Kolland was distinguished on the ground that Division Bench authorities on the point were not taken into account in that decision. In view of the binding factual and legal precedents applying the overriding effect of the SEZ Act and the SEZ Rules' exemption scheme, the Tribunal held that refund must be allowed even where the service was not included in the list approved by the Approval Committee. [Paras 4]

Refund allowed in respect of services received for authorised operations in the SEZ notwithstanding absence of such services in the Approval Committee's specified list.

Refund under Section 11B of the Central Excise Act - interest under Section 11BB of the Central Excise Act - strict construction of fiscal statute - Claim to interest on delayed refund under Section 11BB where refund is governed by Section 11B - HELD THAT: - The Tribunal applied the principle in Ranbaxy Laboratories Ltd. (Supreme Court) that interest under Section 11BB becomes payable if refund is not made within three months from receipt of the application under Section 11B. Observing that Notification No.12/2013-ST contains no specific mechanism superseding Section 11B, the Tribunal treated the refunds as governed by Section 11B and held that interest is payable under Section 11BB. The settled rule of strict construction of fiscal statutes was noted but did not preclude interest where the statutory refund machinery under Section 11B/11BB applies. [Paras 4]

Appellants entitled to interest under Section 11BB on the refunds found due.

Final Conclusion: Appeals allowed: refunds granted for the listed periods in respect of services used for authorised SEZ operations even if not included in the Approval Committee's specified list, and interest under Section 11BB held payable as the refunds are governed by Section 11B.

Condonation of delay - limitation in filing appeal - service and proof of notice - pre-deposit requirement for admission - remand for fresh decision on merits - opportunity of hearing and filing evidence

Condonation of delay - limitation in filing appeal - service and proof of notice - pre-deposit requirement for admission - Delay in filing the appeal before the Commissioner (Appeals) and its condonation. - HELD THAT: - The Tribunal found that the appellant cogently explained the delay in filing the appeal to the Commissioner (Appeals). The explanation included the date of service of the Order-in-Original, reliance on a Chartered Accountant to prepare the appeal who was incapacitated by a family medical emergency, subsequent disturbances due to COVID, and difficulty in obtaining registration to make the pre-deposit required for admission. The Tribunal noted defects in the adjudicating authority's record regarding service of the show-cause notice (absence of postal receipt number or dispatch date) but based on the overall explanation held that there was no deliberate delay or laches on the part of the appellant. In the interest of justice, the Tribunal exercised its discretion to condone the delay and set aside the dismissal of the appeal on limitation grounds. [Paras 5]

Delay in filing the appeal is condoned and the appeal is allowed on this ground.

Remand for fresh decision on merits - opportunity of hearing and filing evidence - Whether the appeal should be remanded to the Commissioner (Appeals) for adjudication on merits after affording opportunity to the appellant. - HELD THAT: - Having condoned the delay, the Tribunal remanded the matter to the learned Commissioner (Appeals) with directions to decide the appeal on merits. The appellant was directed to appear before the Commissioner (Appeals) within 60 days of receipt of the Tribunal's order, to seek hearing and to furnish fresh grounds of appeal, explanations and any evidence relied upon. The remand was for a fresh adjudication on merits after giving the appellant opportunity to present pleadings and evidence. [Paras 5, 6]

Appeal remanded to the Commissioner (Appeals) to decide on merits after hearing the appellant and permitting filing of grounds and evidence.

Final Conclusion: The Tribunal condoned the delay in filing the appeal, allowed the appeal by way of remand to the Commissioner (Appeals) for fresh decision on merits after affording the appellant an opportunity of hearing and filing of evidence; the allowance is subject to deposit of prescribed costs.

Admissibility of CENVAT credit - input service - post-sale services - Del Credere Agent services - refusal to admit appeal under proviso to Section 35B(1) of the Central Excise Act - precedent of this Tribunal in Technova Imaging Systems Pvt. Ltd.

Refusal to admit appeal under proviso to Section 35B(1) of the Central Excise Act - Admissibility of the appeal in view of the proviso to Section 35B(1) where the duty involved is less than Rs.2 lakhs. - HELD THAT: - The Tribunal noted that the duty involved in the impugned order is Rs.1,46,148/-, which is below the threshold of Rs.2 lakhs. Under the proviso to Section 35B(1) the Appellate Tribunal may, in its discretion, refuse to admit appeals where the duty involved does not exceed two lakh rupees. Applying that discretion, the Tribunal held that the appeal could be refused admission on that ground and proceeded to dismiss the appeal as not admitted for that reason. [Paras 4]

Appeal not admitted under the proviso to Section 35B(1) as the duty involved is below Rs.2 lakhs.

Admissibility of CENVAT credit - input service - post-sale services - Del Credere Agent services - precedent of this Tribunal in Technova Imaging Systems Pvt. Ltd. - Whether CENVAT credit of service tax paid on services of a Del Credere Agent (guaranteeing solvency and recovery) is admissible as an input service. - HELD THAT: - The Tribunal examined the nature of the services rendered by the Del Credere Agent and applied the definition of 'input service' which requires that a service be used, whether directly or indirectly, in or in relation to the manufacture of final products and clearance of final products up to the place of removal. The Tribunal found that the services in question relate to post-sale activities (guarantee of customer solvency and recovery of payment) and are not in relation to manufacture or clearance up to the place of removal. Relying on the Tribunal's earlier decision in Technova Imaging Systems Pvt. Ltd. , which disallowed credit for similar post-sale services, the Tribunal held that such services do not fall within the inclusive scope of 'input service' and therefore CENVAT credit is not admissible. [Paras 4]

CENVAT credit on Del Credere Agent (post-sale) services is not admissible; the appeal is dismissed on merits.

Final Conclusion: The appeal is dismissed both by refusing admission under the proviso to Section 35B(1) (duty involved below Rs.2 lakhs) and on merits: CENVAT credit for Del Credere Agent/post-sale services is not admissible for the period Dec 2015 to Nov 2016.

Interest payable three months from date of refund application - deeming fiction for appellate or court order not affecting commencement date of interest - entitlement to interest despite post-application disputes - strict construction of fiscal legislation

Interest payable three months from date of refund application - entitlement to interest despite post-application disputes - deeming fiction for appellate or court order not affecting commencement date of interest - Whether the appellant was entitled to interest on the refund from three months after filing the original refund claim notwithstanding subsequent disputes and the date of the appellate order. - HELD THAT: - The Tribunal applied the reasoning of the Hon'ble Apex Court in RANBAXY LABORATORIES, holding that interest under the statutory scheme becomes payable on expiry of three months from the date of receipt of the refund application, irrespective of subsequent disputes regarding admissibility. The Explanation that treats an appellate or court order as an order under the relevant refund provision does not postpone the date from which interest becomes payable; it only deems the higher authority's order to be an order under the provision. Fiscal statutes are to be construed strictly, and nothing may be read into the provision to delay commencement of interest. Decisions relied upon by the Revenue pre-dating the Apex Court decision were distinguished as not overruling the ratio in RANBAXY. Applying that principle, the Tribunal found that the appellant became entitled to interest from after three months of filing the original refund claim and that the lower authorities erred in denying interest on the ground that the refund was granted within three months of the appellate order. [Paras 4, 5]

The appeal is allowed; the impugned order denying interest is set aside and consequential relief granted in accordance with the ratio of RANBAXY LABORATORIES.

Final Conclusion: Following the Apex Court's interpretation in RANBAXY LABORATORIES, interest on the refund was held to be payable from three months after filing the refund application regardless of subsequent disputes or the date of the appellate order; the impugned order denying interest was set aside and consequential relief granted.

Confiscation of goods - treatment of goods lying outside factory premises as part of registered premises - job work under Notification No. 214/86-CE - permissibility of conversion of old and used moulds/scrap into finished goods without payment of duty - Cenvat credit admissibility where inputs were stored outside but later included within factory premises - requirement of evidence to substantiate clandestine clearance

Confiscation of goods - treatment of goods lying outside factory premises as part of registered premises - Confiscation of goods lying outside the factory premises and demand of duty in respect of such goods - HELD THAT: - The Tribunal found on the undisputed facts that the appellants had applied for extension of their ground plan to include the premises where the goods were stored and that the ground plan was subsequently approved. The goods in question were received for job work under Notification No.214/86-CE and no Cenvat credit had been taken on them; they were not therefore excisable goods liable to confiscation. The goods were later brought into the factory and used in manufacture. In view of these facts, confiscation and demand of duty on those goods were held unsustainable. [Paras 4]

Confiscation and duty demand on goods allegedly lying outside the factory premises set aside.

Job work under Notification No. 214/86-CE - permissibility of conversion of old and used moulds/scrap into finished goods without payment of duty - requirement of evidence to substantiate clandestine clearance - Liability to pay duty on C.I. moulds manufactured on job work basis from old and used moulds supplied under Notification No.214/86-CE - HELD THAT: - The Tribunal noted that suppliers had filed the statutory declarations required by Notification No.214/86-CE and that the appellants received old and used moulds under challans issued in terms of Rule 4(5)(a). The department failed to produce evidence to show clandestine clearance or that fresh moulds were manufactured for sale (for example, no records showed receipt of fresh moulds by recipients). Documentary records, invoices for job work charges and ER-1 returns supported that the work was genuine job work. The Tribunal relied on the settled position from earlier decisions that conversion of own-generated scrap/old and used moulds into finished goods by a job worker under the notification is permissible and therefore the demand was unsustainable. [Paras 4]

Demand of duty on C.I. moulds manufactured on job work basis under Notification No.214/86-CE is not sustainable and is set aside.

Cenvat credit admissibility where inputs were stored outside but later included within factory premises - Demand of duty on coal stored outside the factory premises and denial of Cenvat credit on such coal - HELD THAT: - The Tribunal recorded that the appellants had not taken Cenvat credit while the coal was stored outside and that credit was availed only after the coal was brought into the factory. The premises where the coal was stored were owned by the appellants and were brought within the approved ground plan by prior application. Therefore there was no breach of Cenvat Credit Rules, and denial of credit and demand of duty on this score were held to be without basis. [Paras 4]

Demand of duty on coal and denial of Cenvat credit set aside.

Final Conclusion: The Tribunal allowed the appeals, set aside the impugned order including demands, confiscation and penalties, and granted consequential relief in accordance with law.

Service of adjudicating order - burden of proof of service - service in accordance with section 37C - limitation for filing appeal - consequence of defective service - remand for decision on merits

Service of adjudicating order - burden of proof of service - service in accordance with section 37C - consequence of defective service - limitation for filing appeal - Whether the Commissioner (Appeals) was justified in dismissing the appellant's appeal as barred by limitation having regard to service of the Order-in-Original. - HELD THAT: - The Tribunal found that the Department's records exhibited a material inconsistency in the dispatch register - the file number did not match the file number in the impugned Order-in-Original - and that the alleged proof of service did not identify the name or designation of any authorised representative or employee of the appellant. The Commissioner (Appeals) had accepted the Department's contention of service based on an illegible signature and a dispatch entry, and concluded that the appellant received the order on 24.10.2017. The Tribunal held that the Department failed to discharge the legal burden of establishing valid service as required by the statute, and that vague or irregular entries and absence of a proper acknowledgment are insufficient to treat the appeal as time-barred. The Tribunal further noted that the appellant had contemporaneously informed the adjudicating authority of prior litigation on the same subject and had sought abeyance, which under the circumstances made it implausible that the appellant would remain passive if properly served. Applying the requirement of service in accordance with the statutory provision, the Commissioner (Appeals)'s conclusion that the appeal was barred by limitation was found to be erroneous. [Paras 9]

Finding that service was not satisfactorily proved and that the order was not validly served, the order-in-original could not be the basis for dismissal of the appeal as barred by limitation.

Remand for decision on merits - right to hearing - What relief should follow from the finding of defective service and erroneous dismissal on limitation grounds. - HELD THAT: - Given the conclusion that service was not established and the dismissal on limitation was therefore unsustainable, the Tribunal did not decide the substantive question of classification or duty. Instead, it directed that the matter be restored for adjudication of the appeal on merits. The appellant was granted an opportunity to obtain and produce a copy of the impugned order before the Commissioner (Appeals) and to seek hearing; the Commissioner (Appeals) was directed to hear and decide the appeal on merits afresh. [Paras 10, 11]

The appeal is allowed in part by setting aside the impugned order and remitting the matter to the Commissioner (Appeals) for fresh hearing and decision on merits, with opportunity to the appellant to appear and seek hearing.

Final Conclusion: The Tribunal set aside the Order-in-Original insofar as it was relied upon to dismiss the appeal as time-barred, held that service was not satisfactorily proved under the statute, and remanded the matter to the Commissioner (Appeals) for hearing and determination on merits after affording the appellant opportunity to be heard.

Valuation of component for levy of trade tax - effectiveness of subordinate notifications vis-a -vis central price revision - no change in tax rate where only value of taxable goods is enhanced - liability to pay tax on enhanced price collected by dealer - unjust enrichment

Valuation of component for levy of trade tax - effectiveness of subordinate notifications vis-a -vis central price revision - Date from which the enhanced value of the Nitrogen component in DAP became applicable for levy of Trade Tax - HELD THAT: - The Court accepted the concurrent findings of the authorities below that the Union Government's enhancement of the DAP rate with effect from 29.01.1999 resulted in an increased value of the Nitrogen component which, once the revisionist charged the enhanced DAP price, became the operative value for Levy of Trade Tax. The notification of 27.05.1998 fixing the Nitrogen value at Rs.1381.30 remained in force until superseded by the changed factual valuation following the Central Government's enhancement; the subsequent circular/communication by the Commissioner dated 26.02.2000 only circulated the earlier change but did not operate to make the enhanced valuation retrospective to a later date. The Tribunal's conclusion that the enhanced rate was effective from 1999 and not from the date of the State circular in 2000 was upheld. [Paras 5, 11, 16, 18]

Enhanced value of the Nitrogen component in DAP was effective from 1999 (from the date DAP rate was enhanced by the Union), not from 26.02.2000.

No change in tax rate where only value of taxable goods is enhanced - liability to pay tax on enhanced price collected by dealer - unjust enrichment - Whether the dealer could avoid liability to pay Trade Tax at the enhanced valuation on the ground that the State notification formalizing the change was issued later - HELD THAT: - The Court found that there was no alteration in the percentage rate of Trade Tax (which remained at 6.5%); what changed was the taxable value (the Nitrogen component) following the Central price revision. The revisionist had collected the enhanced DAP price from 1999 and therefore was liable to pay Trade Tax calculated on that enhanced valuation. Allowing the revisionist to pay tax at the earlier lower valuation would result in unjust enrichment. The revisionist produced no material to displace the concurrent factual finding that it had realised the enhanced price. [Paras 15, 16, 17]

Dealer liable to pay Trade Tax on the enhanced valuation from 1999; cannot claim lower valuation since that would lead to unjust enrichment.

Final Conclusion: The revision is dismissed. The enhanced value of the Nitrogen component in DAP is held effective from 1999 when the Union Government enhanced DAP rates, and the revisionist-having collected the enhanced price-is liable to pay Trade Tax on that enhanced valuation; permitting payment at the earlier valuation would amount to unjust enrichment.

Input Tax Credit reversal for bill trading - bill trading - opportunity of being heard / procedural fairness - assessment remand and reconsideration - penalty under Section 27(3) and 27(4) of the TNVAT Act - interest under Section 42(3) of the TNVAT Act

Input Tax Credit reversal for bill trading - bill trading - Validity of the Revenue's conclusion that purchases/sales between sister concerns located in the same premises constituted bill trading and warranted reversal of the claimed input tax credit. - HELD THAT: - Following the earlier remand, the assessing authority twice sought documents and the petitioner responded but did not produce transport or movement documents, asserting that buyer and seller were sister concerns within the same campus and no separate movement or transportation charges were incurred. The Revenue examined the records provided and found that a very large proportion of purchases were from the sister concern located in the same premises and that commercial indicators pointed to bill trading (no movement documents, concentration of inter-group transactions, and the risk of circulation of undue ITC). The High Court held that this conclusion was supported by the materials produced and the petitioner's own stand on non-production of transport documents; the finding of bill trading and the consequent reversal of the claimed input tax credit were therefore held to be justifiable and sustainable. [Paras 13, 14, 15, 16, 17]

Finding of bill trading sustained and reversal of the claimed input tax credit upheld.

Opportunity of being heard / procedural fairness - assessment remand and reconsideration - Whether the petitioner was denied opportunity to meet a new reason for reversal of ITC or was otherwise procedurally prejudiced after the remand order. - HELD THAT: - The Court noted that after its remand order the Revenue issued notices on two occasions and the petitioner replied both times, producing general documents and explaining non-production of transport documents. The petitioner contended that the Revenue raised a new reason without prior notice, but the Court found that the Revenue's conclusions arose from the documents and explanations furnished by the petitioner (notably the admission that buyer and seller were co-located and absence of transport evidence). On that basis the Court concluded there was no failure of opportunity or procedural unfairness warranting interference with the assessment. [Paras 2, 11, 12, 16, 17]

No procedural prejudice; opportunities were afforded and the reassessment did not violate principles of fair hearing.

Final Conclusion: The High Court dismissed the writ petition, holding that the reassessment after remand including reversal of input tax credit on bill-trading findings and confirmation of penalty and interest was supported by the record and not vitiated by procedural infirmity; no costs were ordered.

Refund of tax - processing of representations - mandate to decide pending claims expeditiously - adjustment against future arrears - statutory interest under Section 44 of the KGST Act - fresh representation without condonation of delay

Refund of tax - processing of representations - mandate to decide pending claims expeditiously - Respondents directed to consider and decide the petitioner's pending representations (Ext.P7, Ext.P7(a), Ext.P7(b) and Ext.P7(c)) relating to refunds for the stated assessment years within a stipulated time. - HELD THAT: - The Court noted that refund orders (Exts.P1 to P6) established eligibility for refunds in relation to the assessment years listed and that representations from 2013 onwards remained undetermined. Having heard the respondents' stand that one year was refunded and other claimed amounts were adjusted against future arrears, the Court did not finally adjudicate the merits of any adjustment but directed the 1st respondent to take a decision upon Ext.P7 and the accompanying representations as expeditiously as possible and in any event within two months from receipt of the judgment. The direction is administrative and amounts to remanding the claims for fresh consideration and decision by the competent authority without further delay. [Paras 4]

The 1st respondent must consider and decide Ext.P7, Ext.P7(a), Ext.P7(b) and Ext.P7(c) in respect of refunds for the assessment years 2000-2001, 2002-2003, 2003-2004 and 2004-2005 within two months.

Adjustment against future arrears - statutory interest under Section 44 of the KGST Act - fresh representation without condonation of delay - Liberty granted to the petitioner to file a fresh representation and clarification on interest and condonation of delay. - HELD THAT: - The Court, observing the long delay between the original claim and present proceedings, permitted the petitioner to file a fresh representation pointing out details and attaching a copy of the writ petition. The Court expressly clarified that allowing a fresh representation does not amount to condoning any earlier delay in making the claim. Further, the Court recorded that if, upon consideration, a refund is found to be eligible, statutory interest shall accrue in accordance with law (specifically under Section 44 of the KGST Act), and needful action shall be taken without further delay. The Court thus resolved that interest is payable if eligibility for refund is established, while leaving the factual and legal determination of eligibility and any adjustment against arrears to the authority's reconsideration. [Paras 5]

Petitioner may file a fresh representation; such filing does not condone prior delay; if refund is found due, statutory interest under Section 44 of the KGST Act shall be payable and the authority shall act without further delay.

Final Conclusion: Writ petition disposed of by directing the 1st respondent to decide the petitioner's pending refund representations relating to AY 2000-2001, 2002-2003, 2003-2004 and 2004-2005 within two months; petitioner permitted to file a fresh representation (without condonation of past delay) and, if refund is found due, statutory interest shall accrue in accordance with law.

Summary order. The earlier judgment was set aside by the Supreme Court and the writ appeals were remanded for fresh consideration; the matters were adjourned and directed to be listed on 16.06.2022.

Abuse of process - ex parte interim stay in Letters Patent Appeal - withdrawal of appeal with liberty to file appropriate proceedings - extension/continuation of interim relief - vacation of ex parte interim order - judicial propriety in granting interim relief affecting SARFAESI proceedings - quashing of High Court order

Ex parte interim stay in Letters Patent Appeal - extension/continuation of interim relief - vacation of ex parte interim order - quashing of High Court order - Validity of the Division Bench orders insofar as they continued/extended the ex parte ad interim stay, reduced the cost imposed by the Single Judge and directed that earlier observations not be considered by a future forum. - HELD THAT: - The Division Bench was not justified in extending the ex parte ad interim relief and in permitting withdrawal of the appeal while simultaneously continuing the interim protection and reducing the cost imposed by the learned Single Judge. Granting and continuing the interim relief in the circumstances-after strong findings by the Single Judge and with this Court seised of a challenge to that ex parte order-virtually allowed the appellant to enjoy the fruits of interim orders and had the effect of stalling the SARFAESI proceedings. The Division Bench's observation that a future forum shall not be influenced by the Single Judge's findings, given while permitting withdrawal of the appeal, was beyond its competence and amounted to effectively nullifying the Single Judge's order. For these reasons the challenged portions of the Division Bench order (extension of interim relief, reduction of cost and the direction in paragraph 4) are unsustainable and are quashed; the ex parte interim order granted in the Letters Patent Appeal is vacated. [Paras 5, 6]

Paragraphs 3(ii), 3(iii) and paragraph 4 of the Division Bench order dated 04.03.2022 are quashed and set aside; the ex parte interim order in the Letters Patent Appeal is vacated.

Abuse of process - withdrawal of appeal with liberty to file appropriate proceedings - judicial propriety in granting interim relief affecting SARFAESI proceedings - Conduct of respondent in withdrawing the Letters Patent Appeal to render this Court's proceedings infructuous and the consequence of multiple proceedings instituted to delay recovery under SARFAESI. - HELD THAT: - The respondent instituted successive proceedings and, after this Court had issued directions, withdrew the Letters Patent Appeal with liberty to file fresh proceedings and sought continuation of interim protection, thereby making the SLP pending before this Court infructuous. Such conduct is reprehensible and constitutes an abuse of the process of court, aimed at frustrating recovery proceedings initiated by the bank. Having regard to this conduct and the history of delay, this Court imposed costs on respondent No.1 as a consequence. [Paras 4, 6]

Respondent's conduct deprecated as abuse of process; costs quantified and directed to be paid by respondent No.1.

Final Conclusion: The appeals are allowed to the extent indicated: the Division Bench order dated 04.03.2022 is quashed insofar as it extended interim relief, reduced the Single Judge's cost and directed non-consideration of earlier observations; the ex parte interim order in the Letters Patent Appeal is vacated; the respondent's conduct is deprecated as an abuse of process and costs of Rs. 1,00,000 are imposed on respondent No.1 to be deposited with the Gujarat High Court Legal Services Committee within four weeks.

Reference to arbitration under Section 21 of the Arbitration Act, 1940 - Agreement of all parties for reference to arbitration - Consent in writing before the court for reference to arbitration - Distinction between arbitrator and commissioner/expert - Appointment of commissioner under Order XXVI Rules 9 and 11 of the Code of Civil Procedure, 1908 - Expert report as non-binding and evidentiary - Power of court to engage experts to assist in suits

Reference to arbitration under Section 21 of the Arbitration Act, 1940 - Agreement of all parties for reference to arbitration - Consent in writing before the court for reference to arbitration - Whether the application dated 23rd December 1994 and the order of the trial court amounted to a reference to arbitration under Section 21 of the Arbitration Act, 1940. - HELD THAT: - The Court held that Section 21 requires an agreement between all interested parties that matters in dispute shall be referred to arbitration and an application in writing to the court for an order of reference. The application in this case was moved only by the plaintiff and was framed as a request for appointment of a chartered accountant to conduct an enquiry/audit and submit a report to the court, not as a joint written application by all parties to refer the dispute to arbitration. The order of 23rd December 1994 recorded that the defendant's counsel had no objection to the proposed person acting as a "panch", but that observation was confined to appointment of an expert/commissioner and did not amount to consent to substitute court adjudication by arbitration. The court therefore concluded there was no consensus ad idem to forego court adjudication and refer the suit (or part thereof) to arbitration under Section 21. [Paras 15, 18, 20, 21]

The order and appointment did not constitute a reference to arbitration under Section 21; there was no agreement of all parties to arbitrate.

Distinction between arbitrator and commissioner/expert - Appointment of commissioner under Order XXVI Rules 9 and 11 of the Code of Civil Procedure, 1908 - Expert report as non-binding and evidentiary - Power of court to engage experts to assist in suits - Whether S.K. Mantri acted as an arbitrator or as a commissioner/expert and the legal effect of his report. - HELD THAT: - The Court analysed authorities and statutory provisions to draw a clear distinction: an arbitrator adjudicates disputes by applying the law to the material and issues a binding award; a commissioner or expert performs a ministerial/expert function to investigate, examine or adjust accounts or ascertain facts and submits a report to assist the court. Order XXVI Rules 9 and 11 permit appointment of commissioners for local investigation or examination of accounts, whose reports are not self-executing judgments but evidentiary material which the court may accept, vary or reject. The letter of appointment, the scope of work entrusted (audit/examination of accounts) and the content of the report itself show that S.K. Mantri's role was limited to examination of accounts and preparing a report for the court; he did not decide the broader disputes between parties. Consequently his report is a commission/expert report and not an arbitral award. [Paras 22, 29, 31, 33, 35]

S.K. Mantri acted as a commissioner/expert; his report is not an arbitral award but a commissioner's/expert's report admissible as evidence and not binding on the court.

Agreement of all parties for reference to arbitration - Expert report as non-binding and evidentiary - What is to follow in the trial court after holding that the appointment and report were of a commissioner/expert and not an arbitrator/award. - HELD THAT: - The Court allowed the appeal, set aside the High Court's judgment upholding the reference to arbitration and held that objections to the commissioner's report must be considered afresh. The trial court retains jurisdiction to decide the suit on merits; it may consider the commissioner's report as evidence, hear objections to it, and then proceed to adjudicate all disputed issues (including rate, deductions, liabilities and claims for rent/security) without being bound by the commissioner's conclusions. The observations in the judgment are confined to the limited question of characterising the appointment and report; the suit must now continue to final disposal on merits. [Paras 36]

Set aside the High Court order; treat the report as a commissioner's/expert's report; objections to the report to be considered and the trial to proceed on merits.

Final Conclusion: The appeal is allowed: the appointment and report of S.K. Mantri are held to be that of a court-appointed commissioner/expert under Order XXVI (and not a reference to arbitration under Section 21 of the Arbitration Act, 1940); the report is evidentiary and not a binding award; the High Court order upholding referral to arbitration is set aside; objections to the report shall be considered and the trial shall proceed to final adjudication on merits.

Chapter IIIB of the Reserve Bank of India Act as a complete code for NBFC regulation - overriding effect of Chapter IIIB (Section 45Q) - exclusive legislative power of Parliament under Article 246(1) - doctrine of repugnancy/eclipse in the context of Union and State enactments - pith and substance analysis for competing statutes - regulatory supremacy of Reserve Bank of India over Non Banking Financial Companies

Chapter IIIB of the Reserve Bank of India Act as a complete code for NBFC regulation - regulatory supremacy of Reserve Bank of India over Non Banking Financial Companies - Whether NBFCs registered under Chapter IIIB of the RBI Act remain subject to State money lenders enactments - HELD THAT: - The Court held that Chapter IIIB, as revamped by the 1997 amendments, constitutes a comprehensive statutory code governing the registration, prudential norms, supervision and even winding up of NBFCs. Chapter IIIB empowers RBI to regulate virtually all aspects of NBFC business (registration, capital and prudential norms, information, directions, inspection, board removal, winding up and related measures) and is supplemented by binding regulations, directions and Master Circulars governing loan terms and conduct. The scope and scheme of Chapter IIIB demonstrate Parliament's intention to occupy the field of regulation of NBFCs, such that parallel State regulation controlling the same subject matter (even if focused on borrower protection) cannot be allowed to apply to NBFCs registered and regulated under the RBI Act. [Paras 6, 7]

Chapter IIIB of the RBI Act is a complete code and NBFCs registered under it are not subject to the State money lenders enactments.

Overriding effect of Chapter IIIB (Section 45Q) - exclusive legislative power of Parliament under Article 246(1) - doctrine of repugnancy/eclipse in the context of Union and State enactments - pith and substance analysis for competing statutes - Whether State enactments such as the Kerala Money Lenders Act, 1958 and the Gujarat Money Lenders Act, 2011 can validly be applied to NBFCs registered under the RBI Act - HELD THAT: - The Court applied constitutional distribution of legislative powers and established that the RBI Act is traceable to entries in the Union List while the State Acts are traceable to Entry 30 of the State List. Where Parliament has enacted a comprehensive statutory scheme occupying the field of regulation of NBFCs, Article 246(1) renders Parliamentary legislation exclusive in that field. Section 45Q gives Chapter IIIB an express overriding operation over other laws. Even if the State Acts might originally have been valid as money lenders legislation, they are rendered inoperative to the extent they seek to regulate NBFCs registered under Chapter IIIB because the Parliamentary code either directly conflicts with or occupies the subject matter, producing an eclipse/repugnancy insofar as State law seeks to control registered NBFCs. The Court further noted concrete areas of collision (for example, enforcement and forum provisions) to illustrate actual conflict, and rejected the contention that mere absence of active RBI intervention on rates of interest leaves room for State prescription. [Paras 7, 8, 9, 10, 11]

The Kerala and Gujarat money lenders Acts have no application to NBFCs registered under and regulated by Chapter IIIB of the RBI Act; the State provisions are inoperative to that extent.

Final Conclusion: Appeals by NBFCs against the Kerala High Court decision allowed; appeals by the State of Gujarat dismissed. The FIR against an NBFC officer under the Kerala Act is quashed. The principles laid down apply equally to similar State pawn broker/money lender enactments insofar as they seek to regulate NBFCs registered under the RBI Act.

Retrospective application of penal procedural amendments - power of appellate court to direct interim deposit under Section 148 of the Negotiable Instruments Act - statutory timeframe for compliance with interim deposit direction - prohibition on review/alteration of final judgments under Section 362 Cr.P.C. and limits on modification of interlocutory orders - reasoned exercise of judicial discretion while imposing bail/suspension conditions

Retrospective application of penal procedural amendments - power of appellate court to direct interim deposit under Section 148 of the Negotiable Instruments Act - Applicability of Section 148 of the Negotiable Instruments Act to appeals arising out of complaint cases filed prior to the amendment. - HELD THAT: - The Court analysed the object and purpose of the 2018 amendment and the binding pronouncements of the Supreme Court in Surender Singh Deswal and subsequent authorities. It accepted that Section 148 does not take away any substantive right of appeal and is aimed at preventing frivolous delays and affording relief to complainants. On a purposive reading and in light of the Apex Court's observations, Section 148 is capable of operating in appeals that arise out of complaint cases filed before 1.9.2018; consequently an appellate court may adjudicate applications under Section 148 in such appeals. The Court, however, noted that the Supreme Court decisions did not directly address the precise factual posture where both complaint, appeal and suspension of sentence pre-dated the amendment, but concluded that the retrospective operation recognised by the Supreme Court supports availability of the remedy to complainants in appeals arising from pre-amendment complaints. [Paras 29, 33, 35]

Section 148 is applicable to appeals arising out of complaints filed prior to the 2018 amendment and the Appellate Court was not wrong in entertaining an application under Section 148 in the present proceedings.

Statutory timeframe for compliance with interim deposit direction - Whether an appellate court may direct deposit of the amount within a period shorter than the statutory minimum under Section 148(2). - HELD THAT: - Section 148(2) prescribes that the amount shall be deposited within sixty days from the date of the order, with a possible extension not exceeding thirty days on sufficient cause. The Court held that the statutory period is mandatory and an appellate court has no power to curtail the minimum period granted by the statute. Authorities from High Courts emphasising the mandatory nature of the 60-day period were noted. Applying that legal position to the impugned order, the Court found the direction to deposit within one month to be contrary to the express statutory timeframe and therefore illegal. [Paras 41, 42]

The Appellate Court cannot direct deposit within a period shorter than sixty days as mandated by Section 148(2); the one month period in the impugned order was illegal.

Prohibition on review/alteration of final judgments under Section 362 Cr.P.C. and limits on modification of interlocutory orders - reasoned exercise of judicial discretion while imposing bail/suspension conditions - Whether the learned Additional Sessions Judge could, by the impugned order, vacate/suspend the earlier suspension of substantive sentence granted in 2018 by imposing a retrospective condition of deposit. - HELD THAT: - The Court examined the bar on alteration of judgments under Section 362 Cr.P.C., distinguishing final judgments from interlocutory orders. It recognised that while interlocutory orders may be revisited, a court may not impermissibly review its earlier order by going into merits and effectively undoing the substantive relief previously granted unless lawful power to do so exists. The ASJ, in entertaining the Section 148 application, re appreciated the matter and imposed a condition that non-payment within the directed period would vacate the suspension granted four years earlier. The Court held that to the extent the ASJ's direction operated as a retrospective review and removal of a previously granted suspension without appropriate legal foundation or extraordinary circumstances, it exceeded the Appellate Court's permissible exercise of power. [Paras 36, 37, 39, 44]

The condition vacating the suspension of sentence imposed retrospectively by the learned ASJ was impermissible; the ASJ exceeded its powers in effectively reviewing and overturning its earlier suspension order.

Final Conclusion: The Appellate Court was competent to entertain an application under Section 148 in an appeal arising from a complaint filed prior to the 2018 amendment, but the impugned order is set aside insofar as it (a) curtailed the statutory minimum sixty day period for deposit by prescribing one month, and (b) imposed a retrospective condition that resulted in vacating a suspension of sentence granted earlier - an exercise found to be impermissible. The petition is allowed and the impugned order is quashed to the extent indicated.