TaxTMI Updates e-Newsletter
May 18,2022

Provisional attachment under Section 83 CGST Act, 2017 - Objection under Rule 159(5) of the CGST Rules, 2017 - Right to personal hearing and speaking order - Consideration of belated objections - Assailability of adverse speaking order by statutory remedy

Provisional attachment under Section 83 CGST Act, 2017 - Objection under Rule 159(5) of the CGST Rules, 2017 - Right to personal hearing and speaking order - Consideration of belated objections - Writ petition to be treated as an objection under Rule 159(5) and respondent to reconsider provisional attachment after personal hearing and by passing a speaking order within a fixed short timeline despite belated filing. - HELD THAT: - The Court directed that the writ petition filed against the provisional attachment of the petitioner's bank account effected under Section 83 of the CGST Act, 2017 be treated as an objection under sub rule (5) of Rule 159 of the CGST Rules, 2017. The authorized representative of the petitioner was ordered to present before the concerned officer on the specified date and the officer was directed to grant personal hearing and pass a speaking order. The Court mandated completion of this exercise within three days from presentation of the authorized representative, expressly permitting consideration notwithstanding that the objection was filed after the period prescribed by Rule 159(5). A copy of the speaking order was to be furnished to the petitioner, and an adverse order would be open to challenge in accordance with law. These directions constitute remand for fresh consideration of the provisional attachment on the merits through the statutory objection mechanism with an opportunity of hearing and a time bound speaking order. [Paras 3, 5]

The writ petition is to be treated as an objection under Rule 159(5); the concerned officer shall grant personal hearing and pass a speaking order within three days of presentation, despite belated filing, and furnish a copy to the petitioner; any adverse order may be challenged in accordance with law.

Consideration of precedents while deciding statutory objections - Assailability of adverse speaking order by statutory remedy - Concerned officer directed to take specified judicial decisions into account while passing the speaking order; petitioner retains right to challenge any adverse order. - HELD THAT: - The Court recorded the judgments relied upon by the petitioner and directed that the concerned officer shall take those judgments into account when deciding the objection. The Court further clarified that if the speaking order is adverse to the petitioner, the petitioner is at liberty to assail the same by invoking appropriate legal remedies. This requires the officer to consider the cited precedents in the fresh adjudicatory exercise and preserves the petitioner's appellate or remedial rights against any adverse conclusion. [Paras 5]

The officer shall consider the judgments relied upon by the petitioner while passing the speaking order; an adverse speaking order remains open to challenge in accordance with law.

Final Conclusion: Writ petition disposed by treating it as an objection under Rule 159(5) of the CGST Rules; the concerned officer to grant personal hearing and pass a reasoned speaking order within three days despite belated objection, consider the cited judgments, furnish a copy to the petitioner, and leave open statutory remedies against any adverse order.

Summary order. Application for permission to travel abroad (Dubai) filed by the petitioner is listed for 19.05.2022; respondent to seek instructions.

Provisional attachment to protect revenue - Condition precedent of pending proceedings for provisional attachment - Service of notice as commencement of proceedings under Section 74 - Validity of attachment in absence of jurisdictional satisfaction - Non applicability of statutory amendment retrospectively

Provisional attachment to protect revenue - Condition precedent of pending proceedings for provisional attachment - Service of notice as commencement of proceedings under Section 74 - Validity of attachment in absence of jurisdictional satisfaction - Impugned provisional attachment dated 22.10.2021 was without jurisdiction because proceedings under Section 74 had not been commenced by issuance/service of notice on the date of attachment. - HELD THAT: - The Court examined the affidavit material filed by the respondent and the statutory scheme of Section 74. Sub sections (1) to (4) of Section 74 demonstrate that proceedings under Section 74 commence with issuance and service of a notice or, in certain cases, by service of a statement under sub section (3) leading to deemed service under sub section (4). The respondent admitted that no notice under Section 74 had been issued as on the date of the attachment order. Because the statutory condition precedent for invoking provisional attachment under Section 83 - namely the existence of specified pending proceedings - was absent on 22.10.2021, the Commissioner had no jurisdiction to pass the provisional attachment order, rendering the attachment unsustainable. [Paras 4, 5, 9]

Attachment dated 22.10.2021 quashed as made without jurisdiction for want of Section 74 proceedings having been commenced by notice.

Non applicability of statutory amendment retrospectively - Provisional attachment to protect revenue - Amendment to Section 83 effected by the Finance Act, 2021 (and brought into force w.e.f. 01.01.2022) did not apply to validate the attachment dated 22.10.2021. - HELD THAT: - The Court noted reference to Section 115 of the Finance Act, 2021 and the notification declaring the appointed date for certain provisions as 01.01.2022. The amended provision of Section 83 came into force only with effect from 01.01.2022. Consequently, the post enactment amendment could not be relied upon to validate an attachment made on 22.10.2021 when the amended provision was not yet in force. [Paras 10, 11, 12]

Amendment to Section 83 is not applicable to the impugned order of 22.10.2021; attachment cannot be sustained on that basis.

Final Conclusion: Writ petition allowed; the provisional attachment order dated 22.10.2021 is quashed. Respondents are at liberty to proceed in accordance with law.

Cancellation of GST registration - revocation of cancellation - show cause notice - non-application of mind - principles of natural justice - opportunity to be heard

Cancellation of GST registration - revocation of cancellation - show cause notice - opportunity to be heard - principles of natural justice - Prima facie finding that the respondent failed to apply its mind and breached principles of natural justice by rejecting the petitioner's application for revocation without taking into account the reply and without affording an opportunity to be heard. - HELD THAT: - The record shows an initial show cause notice indicating proposed cancellation, a subsequent order of cancellation, an application for revocation, and a later show cause notice stating the unit was found "non-existent". The petitioner filed a reply indicating change of address. The appellate and revocation proceedings culminated in rejection without apparent consideration of the reply or affording the authorised representative an opportunity of hearing. In these circumstances the court records a prima facie conclusion of non-application of mind and breach of natural justice and directs that the matter be placed before the concerned officer for fresh consideration after taking the petitioner's reply and hearing into account.

Issue notice to respondent; respondent to file instructions/counter-affidavit and the matter listed for further consideration, with the officer to take into account the petitioner's reply and afford an opportunity to be heard.

Final Conclusion: Notice issued to the respondent; respondent to file a counter-affidavit if resisting the petition. The court recorded a prima facie view of non-application of mind and breach of natural justice and directed that the petitioner's reply be considered and an opportunity of hearing be afforded before further adjudication; matter listed for hearing.

Cancellation of GST registration for non-filing of returns - principles of natural justice - alternative remedy of appeal under Section 107 - maintainability of writ petition against statutory orders - garnishee notice issued under Section 79(1)(c) - extension of limitation by Suo Motu orders

Cancellation of GST registration for non-filing of returns - alternative remedy of appeal under Section 107 - maintainability of writ petition against statutory orders - Writ challenge to the order dated 25.10.2019 cancelling the petitioner's GST registration is not entertainable in writ jurisdiction in view of unexplained delay and availability of alternative statutory remedy by appeal. - HELD THAT: - The Court found a gross and unexplained delay in approaching the High Court (the cancellation order dated 25.10.2019 was challenged by writ on 27.11.2021) and noted that the petitioner failed to exhaust the alternative remedy of appeal under the statutory scheme. Reliance was placed on the principle that writ jurisdiction should not be invoked where a specific statutory appeal remedy exists and the time for availing such remedy has long expired. In these circumstances and following binding precedents, the petition insofar as it assails cancellation of the GST registration was not entertained. [Paras 6]

Challenge to cancellation of GST registration dated 25.10.2019 dismissed on maintainability grounds for delay and non-exhaustion of statutory appeal remedy.

Garnishee notice issued under Section 79(1)(c) - principles of natural justice - extension of limitation by Suo Motu orders - The challenge to the garnishee notice dated 20.10.2020 was not decided on merits but the petitioner was granted liberty to assail that notice in an independent proceeding, with reference to the possible benefit of the extension of limitation granted by the Apex Court's Suo Motu orders. - HELD THAT: - The Court observed the petitioner's grievance that the garnishee notice (Form GST DRC 13) was issued without prior adjudication or opportunity to be heard. Rather than deciding the legality of the garnishee notice in the writ petition, the Court declined to adjudicate it in the present delayed writ and granted liberty to pursue a separate proceeding to challenge the garnishee notice. The Court acknowledged that the petitioner might invoke the extension of limitation effected by the Apex Court's Suo Motu orders relating to the COVID-19 period when framing any separate challenge. [Paras 7]

Liberty granted to the petitioner to challenge the garnishee notice dated 20.10.2020 in an independent proceeding; no adjudication on merits in the present writ.

Final Conclusion: The writ petition is disposed of: the challenge to the cancellation of GST registration dated 25.10.2019 is not entertained for delay and non exhaustion of the statutory appeal remedy; the petitioner is granted liberty to challenge the garnishee notice dated 20.10.2020 by initiating an independent proceeding, with the benefit of any applicable extension of limitation.

Input Tax Credit (ITC) - genuineness of transactions - verification of identity of supplier - effect of cancellation of supplier's registration on ITC - requirement of reasoned and speaking order - opportunity of hearing before adjudication

Input Tax Credit (ITC) - requirement of reasoned and speaking order - Validity of the impugned orders denying ITC and imposition of penalty and interest - HELD THAT: - The High Court found that the impugned adjudication orders dated 27th December, 2021 (and consequential orders dated 29th and 30th March, 2022) could not be sustained as passed without adequate consideration of the material placed by the petitioners. In view of the material on record and the petitioners' plea that invoices and related entries appeared on the Government portal, the Court set aside the impugned orders and directed the respondents to reconsider the claims. The Court required that any fresh adjudication be by a reasoned and speaking order and after giving the petitioners effective opportunity of hearing.

Impugned orders set aside; matter remanded for fresh adjudication with requirement of reasoned speaking order and hearing.

Genuineness of transactions - verification of identity of supplier - effect of cancellation of supplier's registration on ITC - Entitlement to Input Tax Credit on purchases from suppliers whose registrations were subsequently cancelled - remanded for fresh consideration - HELD THAT: - The Court did not finally determine the entitlement to ITC on merits. Instead, it remanded the question to the respondent officer to examine afresh whether the purchases and transactions were genuine and supported by valid documents, whether payments (including GST) were actually made to the suppliers, whether the transactions occurred before or after cancellation of the suppliers' registrations, and whether the petitioners complied with statutory obligations in verifying the suppliers' identity. The officer is also to consider any judicial precedents relied upon by the petitioners insofar as they are factually similar. The remand contemplates full verification of documents and facts and a fresh, reasoned conclusion.

Issue remanded to respondent for fresh consideration and verification on specified factual and legal points; benefit of ITC to be granted if verification establishes genuineness and compliance.

Final Conclusion: Writ petitions allowed to the extent that the impugned adjudication orders are set aside and the matters are remitted to the respondent officer to decide afresh, after verification of documents and facts (including timing of transactions relative to supplier registration cancellation, payment of GST, and compliance with verification obligations) and after affording the petitioners an opportunity of hearing; fresh decisions to be reasoned and rendered within eight weeks of communication of this order.

Principles of natural justice - audi alteram partem - right to know the case and to be heard - right to be furnished with material relied upon under Section 75(7) - show cause notice must specify particulars of the case - remand for fresh consideration after furnishing relied material and personal hearing

Principles of natural justice - audi alteram partem - right to know the case and to be heard - right to be furnished with material relied upon under Section 75(7) - show cause notice must specify particulars of the case - remand for fresh consideration after furnishing relied material and personal hearing - Whether the assessment/order passed without furnishing the material relied upon and without giving an effective opportunity of personal hearing violated principles of natural justice and required remand. - HELD THAT: - The Court held that the audi alteram partem rule requires that a person proceeded against must know the case to be met and be given an opportunity to controvert or comment on evidence or information relevant to the decision. A notice which does not mention the particulars on which the case against the person is based cannot furnish a foundation for the proceedings that follow. The impugned order referred to voluminous material (Exs.P1 and P2) relied upon by the authority but that material was never supplied to the petitioner. Section 75(7) of the Act requires that the demand in the order shall not exceed the amount specified in the notice and that no demand be confirmed on grounds other than those specified in the notice; concomitantly, the person should be given the material relied upon to meet the case. Relying on these principles and the Division Bench authority cited, the Court concluded that even if the allegations were grave, passing an order without providing the relied material and an opportunity to defend would be in violation of procedure established by law. For these reasons the matter was set aside and remanded to the assessing authority to decide afresh after furnishing the material relied upon and granting a personal hearing to the petitioner. [Paras 11, 12]

Impugned orders set aside; matter remanded to the assessing authority to decide afresh after furnishing the material relied upon and after affording the petitioner an opportunity of personal hearing.

Final Conclusion: Writ petitions allowed; assessment orders quashed and remitted for fresh consideration after supplying the material relied upon and granting personal hearing; no costs.

Detention, seizure and release of goods in transit - Confiscation of goods and conveyance and levy of tax, penalty and fine - Independence and mutual exclusivity of Sections 129 and 130 of SGST Act, 2017 - Requirement of opportunity of hearing under confiscation proceedings - Judicial review under Article 226-limited scope

Independence and mutual exclusivity of Sections 129 and 130 of SGST Act, 2017 - Confiscation of goods and conveyance and levy of tax, penalty and fine - Whether an order of confiscation under Section 130 of the SGST Act, 2017 can be passed only after following the procedure under Section 129 of the Act. - HELD THAT: - The Court accepted the view expressed by the Division Bench of the Gujarat High Court that Sections 129 and 130 operate in different spheres and are independent of one another. Section 129 deals with detention, seizure and release in transit and summary measures to secure payment of tax/penalty, whereas Section 130 contemplates confiscation and levy of tax, penalty and fine where there is contravention with intent to evade tax. A harmonious reading shows Section 130 is not dependent on prior invocation of Section 129; confiscation may be invoked without first following Section 129. The Court therefore agreed with and applied the reasoning in the cited Division Bench decision and declined to hold that Section 129 must mandatorily precede action under Section 130. [Paras 8]

Sections 129 and 130 are independent; invocation of Section 130 does not require prior compliance with Section 129.

Requirement of opportunity of hearing under confiscation proceedings - Judicial review under Article 226-limited scope - Whether the petitioner was denied the opportunity of hearing in contravention of the requirements of Section 130(4) and whether the writ court should interfere. - HELD THAT: - The Court noted that the petitioner submitted detailed written objections which are mentioned in the impugned order and that the order records the owner's statement that no personal hearing was required because a reply had been filed. Although the petitioner disputes that assertion, the record shows a written reply was placed before the authority. The Court observed that factual disputes requiring perusal of records and re-evaluation are matters more appropriately addressed in the statutory appeal provided under the Act. Given the limited scope of judicial review under Article 226, the Court found no ground to interfere with the impugned confiscation order on the basis of denial of hearing. [Paras 9]

No interference on the ground of denial of personal hearing; writ relief declined on that contention.

Judicial mitigation of excessive fine in confiscation orders - Direction for payment of tax and penalty as ordered - Whether the monetary fines imposed in the confiscation order required judicial modification. - HELD THAT: - While upholding the authority's power to confiscate, the Court exercised its discretionary supervisory jurisdiction to moderate the monetary penalties which it found to be on the higher side. The Court directed that tax and penalty as determined in the impugned order be paid, but reduced the fine imposed for confiscation of goods and the fine imposed for confiscation of the conveyance to amounts the Court deemed reasonable in light of the period the vehicle has been with authorities and proportionality concerns. [Paras 12]

Petitioner directed to pay tax and penalty as ordered; fine for confiscation of goods reduced and fine for confiscation of the conveyance reduced.

Final Conclusion: Writ petition dismissed except for judicial moderation of fines: the petitioner is directed to pay the tax and penalty as determined in the impugned order; the Court reduced the fine imposed for confiscation of goods and the fine relating to confiscation of the conveyance and otherwise declined to interfere with the confiscation order.

Benefit of input tax credit - commensurate reduction in price - anti profiteering - Section 171 of the CGST Act, 2017 - procedure and methodology for determination of profiteering - quantification of profiteering - refund with interest

Benefit of input tax credit - commensurate reduction in price - Section 171 of the CGST Act, 2017 - Whether the Respondent accrued additional benefit of input tax credit after introduction of GST and failed to pass it on to recipients by way of commensurate reduction in prices. - HELD THAT: - The Authority examined CENVAT/ITC data and turnover for the pre GST period (April 2016-June 2017) and post GST period (July 2017-June 2020). It found ITC as a percentage of turnover increased from 0.22% (pre GST) to 2.40% (post GST), giving an additional ITC benefit of 2.18% of taxable turnover. The Authority held that Section 171(1) mandates that any benefit of additional ITC must be passed on to recipients by way of commensurate reduction in prices and that this obligation extends to any supply. On the facts and submissions (including lack of documentary proof from the Respondent that post July 2017 prices already reflected ITC benefit), the Authority concluded that the Respondent did not pass on the additional ITC benefit to buyers.

The Respondent contravened Section 171 by not passing on the additional ITC benefit; profiteering is established for the period 01.07.2017 to 30.06.2020.

Quantification of profiteering - procedure and methodology for determination of profiteering - Whether the methodology and computation adopted by the DGAP to quantify profiteering was valid and the correct quantum of profiteering. - HELD THAT: - The Authority upheld the DGAP's use of the comparative ratio of CENVAT/ITC to turnover (pre GST v. post GST) to determine the net additional ITC benefit and its application to the Respondent's taxable turnover for recalibrating base prices and cum tax prices. The Authority observed that Section 171(1) and Rule 126 empower determination of methodology and that a single uniform mathematical formula cannot be prescribed for all sectors; methodology must account for case specific parameters. Applying the methodology to the records before it, the Authority accepted DGAP's computation of excess collection and quantified profiteering as Rs. 85,77,419 (inclusive of GST).

The DGAP's methodology and computation are upheld and the profiteered amount is fixed at Rs. 85,77,419 for the investigation period.

Scope of investigation - anti profiteering - Whether the DGAP was limited to investigating only the specific unit complained of by the applicant or could examine all supplies made by the Respondent. - HELD THAT: - Relying on Section 171(1) (which refers to 'any supply') and Rule 129(2), the Authority held that the obligation to pass on tax reduction or ITC benefit relates to each supply and does not confine investigation to the single unit mentioned in the application. The Standing Committee's prima facie reference to DGAP for detailed investigation was appropriate, and DGAP was justified in examining all impacted supplies of the Respondent.

DGAP was entitled to investigate all supplies beyond the specific unit complained of; the investigation was not restricted to the applicant's unit.

Natural justice - non speaking report - Whether the DGAP's Report and the Authority's proceedings violated principles of natural justice or were non speaking/vague. - HELD THAT: - The Authority found that the DGAP prepared its Report on the basis of documents and data furnished by the Respondent and the applicant, and that the Respondent was afforded opportunities to file written submissions and a personal hearing before the Authority. The Authority examined the Respondent's complaints of vagueness and non speaking nature and rejected them, holding that procedural and hearing opportunities were provided and considered.

Contentions of violation of natural justice or that the Report was non speaking are rejected.

Final Conclusion: The Authority found that M/s Savaliya Procon profiteered by Rs. 85,77,419 (inclusive of GST) by failing to pass on the additional ITC benefit for the period 01.07.2017 to 30.06.2020; it directed reduction of prices/ refund of the profiteered amount to the identified home/shop buyers with interest @18% from the date of profiteering, publication of the order for notice of buyers and compliance monitoring by the jurisdictional CGST/SGST Commissioner and the DGAP.

Commensurate reduction in prices - passage of benefit of tax rate reduction - calculation of profiteering by comparing pre-rate reduction average base price with actual post-rate reduction base price - inclusion of GST on the profiteered amount - deposit of profiteered amount in Consumer Welfare Fund - non-imposition of penalty due to retrospective inapplicability - provisions of Section 171 of the CGST Act, 2017

Commensurate reduction in prices - passage of benefit of tax rate reduction - provisions of Section 171 of the CGST Act, 2017 - Respondent contravened the obligation to pass on the benefit of reduction in the rate of tax by way of commensurate reduction in prices under Section 171(1) of the CGST Act, 2017. - HELD THAT: - The Authority noted that Section 171(1) mandates passing on tax-rate reduction to recipients by way of commensurate reduction in prices. Having examined the DGAP reports, the Authority observed that the DGAP, following the Authority's earlier direction on methodology, compared pre-rate reduction average sale prices with actual post-rate reduction sale prices. The respondent failed to provide requested documents and did not avail personal hearings despite multiple opportunities. On verification of DGAP's computations and methodology, the Authority agreed with DGAP's conclusion that the respondent did not reduce selling prices commensurately and thereby denied the benefit of the tax-rate reduction to customers. [Paras 11, 12, 13]

Findings of contravention of Section 171(1) established against the respondent.

Calculation of profiteering by comparing pre-rate reduction average base price with actual post-rate reduction base price - inclusion of GST on the profiteered amount - The quantum of profiteering was determined by comparing average pre-rate reduction base prices (01.06.2018 to 26.07.2018) with invoice-wise actual post-rate reduction base prices (27.07.2018 to 30.09.2018), and the profiteered amount was fixed. - HELD THAT: - Pursuant to the Authority's directive on methodology, DGAP computed average base prices (after discount) for the pre-reduction period and compared them with actual invoice-wise base prices (after discount) for supplies made in the post-reduction period. DGAP included the excess GST collected on the increased base price in the profiteered amount and illustrated the computation with sample item-level calculations. The Authority performed random verification of DGAP's calculations, found them correct, and noted that the respondent did not dispute the quantified amount. [Paras 5, 6, 13]

Profiteered amount determined at Rs. 4,19,069/- for the period 27.07.2018 to 30.09.2018 (computed using pre-period 01.06.2018 to 26.07.2018 averages).

Deposit of profiteered amount in Consumer Welfare Fund - interest at 18% from dates of realization - Directions for relief: respondent to reduce prices commensurately and to deposit the determined profiteered amount in specified Consumer Welfare Funds with interest. - HELD THAT: - In exercise of powers under Rule 133, the Authority directed the respondent to reduce prices commensurately. As the beneficiaries could not be identified, the Authority ordered deposit of the profiteered amount in two equal parts into the Central Consumer Welfare Fund and the Karnataka Consumer Welfare Fund. Interest at 18% is directed to be calculated from the dates on which the amounts were realised by the respondent until deposit. The Authority provided a three-month timeline for deposit and directed recovery measures in case of non-compliance. [Paras 14, 16]

Respondent directed to reduce prices and to deposit Rs. 4,19,069/- in two equal parts into the Central and Karnataka Consumer Welfare Funds with interest at 18%; deposit to be made within three months or recovered by jurisdictional Commissioners.

Non-imposition of penalty due to retrospective inapplicability - Penalty under Section 171(3A) of the CGST Act not imposed because the penal provision came into force after the period of contravention. - HELD THAT: - Although the Authority recorded that the respondent committed an offence under Section 171(3A) by denying the benefit of tax reduction, the penal provision came into force w.e.f. 01.01.2020 while the contravention period was 27.07.2018 to 30.09.2018. Consequently, retrospective imposition of the penalty was not permissible and issuance of a show-cause notice for penalty was held unnecessary. [Paras 15]

No penalty imposed under Section 171(3A) due to retrospective inapplicability; show-cause notice for penalty not required.

Final Conclusion: The Authority affirmed that the respondent contravened Section 171(1) by not passing on the benefit of GST rate reduction, accepted DGAP's computation fixing profiteering at Rs. 4,19,069/- for the period 27.07.2018 to 30.09.2018 (with pre-period averages from 01.06.2018 to 26.07.2018), directed reduction of prices and deposit of the amount in the Central and Karnataka Consumer Welfare Funds with interest, and declined to impose penalty as the penal provision was not in force during the contravention period.

Anti-profiteering - benefit of input tax credit - Section 171(1) of the CGST Act, 2017 - post-GST projects not liable under Section 171 for additional ITC - no pre-GST price history - inability to quantify profiteering - time of supply and commencement of output liability

Benefit of input tax credit - no pre-GST price history - inability to quantify profiteering - Existence of additional benefit of input tax credit to the Respondent which was not passed on to the Applicants. - HELD THAT: - The Authority found that the project was launched and environmental clearance obtained after implementation of GST (environmental clearance on 21.07.2017; draw of lots/allotment on 08.08.2017) and that agreements and receipts arose only in the post GST period. There was therefore no continuity of any pre GST sale price or turnover and no pre GST input tax credit position in respect of the project that could serve as a comparison point. The Government fixed ceiling of Rs. 4,000 per sq. ft. was held to be an indicative maximum and not the actual pre GST sale price charged by the Respondent; consequently that ceiling could not be treated as a pre GST base price for comparison. Because both turnover and credit were nil in the pre GST period for the project, the ratio of ITC to turnover in a pre GST period could not be derived and the differential benefit (if any) was therefore not quantifiable. On these findings the Authority concluded that no additional ITC benefit to the Respondent was established which required passing on to the Applicants. [Paras 17, 18, 19, 20]

No additional benefit of input tax credit to the Respondent was established and therefore there was no obligation to pass on any such benefit to the Applicants.

Anti-profiteering - Section 171(1) of the CGST Act, 2017 - post-GST projects not liable under Section 171 for additional ITC - time of supply and commencement of output liability - Whether the Respondent contravened the provisions of Section 171(1) of the CGST Act, 2017. - HELD THAT: - The Authority held that the anti profiteering provisions in Section 171(1) apply where a supplier was supplying the goods or services before the introduction of GST so that an additional benefit of ITC or reduction in tax rate arising on GST implementation must be passed on to recipients. In the present case the supply (allotment and sale of flats) and the obligations to discharge output tax arose only after GST came into force; hence there was no pre GST supply to compare with post GST position. The Applicants failed to produce evidence substantiating that the Respondent retained any ITC benefit or that the Respondent had earned interest on any ITC to the detriment of the Applicants. In view of absence of pre GST comparators and lack of evidence, the Authority concluded that Section 171(1) was not attracted and no profiteering was established. [Paras 18, 19, 20, 21]

The Respondent did not contravene Section 171(1) of the CGST Act, 2017; the applications alleging profiteering are dismissed.

Final Conclusion: The Authority dismissed the applications: finding that the project and allotments commenced post GST, no pre GST price/ITC baseline existed for comparison, no additional ITC benefit to the Respondent was established and Section 171(1) of the CGST Act, 2017 was not attracted.

Power to treat assessee as not being in default under Section 220(6) - Interim deposit as condition for stay of demand - Requirement of speaking order and opportunity of hearing - Discretionary exercise for stay of demand during pendency of appeal - Central Board of Direct Taxes instructions and office memorandum - Interest on unpaid demand under Section 220(2)

Power to treat assessee as not being in default under Section 220(6) - Interim deposit as condition for stay of demand - Requirement of speaking order and opportunity of hearing - Central Board of Direct Taxes instructions and office memorandum - Validity of the Assessing Officer's order asking for 20% of the disputed demand as a precondition to consider the application under Section 220(6), and the adequacy of the reasoning and opportunity afforded to the assessee. - HELD THAT: - The Court examined the impugned order which required payment of 20% of the outstanding demand as a condition precedent to consider the petitioner's application under Section 220(3) and 220(6) while an appeal was pending. The order was passed without affording a personal hearing or setting out reasons, and the Court found that the application required disposal after giving the petitioner an opportunity to be heard. Although the respondent relied on a CBDT Office Memorandum and earlier Board instructions suggesting payment of a percentage in certain cases, the Court did not finally adopt a rigid rule mandating 20% as the sole permissible precondition. Instead, having regard to the facts and submissions, the Court required the Assessing Officer to reconsider the application in a fair manner, afford hearing to the petitioner, and expeditiously dispose of the stay application during the pendency of the first appeal. The Court therefore intervened to direct interim relief tailored to the circumstances rather than endorse the mechanical imposition of the 20% condition without reasons or hearing. [Paras 7, 8]

The impugned approach of mechanically requiring 20% without affording opportunity and reasoned consideration was not permitted; the Assessing Officer was directed to afford hearing and reconsider the application and dispose of it expeditiously.

Interim deposit as condition for stay of demand - Discretionary exercise for stay of demand during pendency of appeal - Interest on unpaid demand under Section 220(2) - Interim measure to be adopted pending disposal of the appeal and stay application. - HELD THAT: - Balancing the need to protect revenue and the assessee's right to a fair hearing, the Court directed an interim deposit as a condition for relief during pendency of the appeal. The Court ordered the petitioner to deposit 10% of the outstanding demand within four weeks from receipt of the order and directed the Assessing Officer to consider the stay application and dispose of the appeal expeditiously after affording hearing. The Court recognised the statutory provision for interest under Section 220(2) but limited its immediate intervention to the specific interim deposit and expedited disposal of proceedings. [Paras 7, 8]

Petitioner directed to deposit 10% of the outstanding demand within four weeks; Assessing Officer directed to afford hearing and expeditiously dispose of the stay application and appeal.

Final Conclusion: Writ petition disposed by directing the Assessing Officer to afford the petitioner an opportunity of hearing and to expeditiously dispose of the application and appeal; interim relief granted by ordering deposit of 10% of the disputed demand within four weeks, with no order as to costs.

Reopening of assessment - procedure under Section 148A of the Income-tax Act - time limits for issuance of notice under Section 149 - non applicability of pre amendment limitation by deferred notification - ultra vires exercise of delegated legislative power by CB D T notifications - presumption of constitutionality of subordinate legislation and its limits

Reopening of assessment - procedure under Section 148A of the Income-tax Act - time limits for issuance of notice under Section 149 - Validity of notices of reassessment issued after 01.04.2021 without following the procedure introduced by the Finance Act, 2021 - HELD THAT: - The Court applied the Division Bench reasoning that the substituted reassessment scheme introduced by the Finance Act, 2021 governs any notice issued after 01.04.2021. The new scheme alters both the substantive test and the procedure, including the enquiry and notice mechanism under Section 148A, and modifies limitation periods under Section 149 so that notices issued after 01.04.2021 must conform to the substituted provisions. The first proviso to Section 149(1) prevents revival of notices which had become time barred before 01.04.2021 by relying on the later extended period. Consequently notices issued after 01.04.2021 without complying with the Section 148A procedure and the substituted limitation framework are invalid.

Notices of reassessment issued after 01.04.2021 without complying with the reassessment scheme under the Finance Act, 2021 (including the procedure under Section 148A and the substituted limitation rules) are invalid and quashed.

Ultra vires exercise of delegated legislative power by CB D T notifications - presumption of constitutionality of subordinate legislation and its limits - Validity of the CBDT notifications of 31.03.2021 and 27.04.2021 insofar as they purported to preserve pre amendment reassessment provisions for notices issued after 01.04.2021 - HELD THAT: - Relying on the principle that delegated legislation must remain within the powers conferred by the parent statute, the Court held that the Relaxation Act, 2020 empowered the Government only to extend time limits and not to alter or clarify the substantive operation of the amended reassessment provisions. The CBDT explanations purporting to apply pre amendment Section 148/Section 149 machinery after 01.04.2021 exceeded the scope of delegated power and could not change the clear statutory effect of the Finance Act, 2021. While subordinate legislation attracts a presumption of constitutionality, it cannot be read as valid if it conflicts with or goes beyond the enabling statute; the impugned explanatory notifications were therefore invalid.

The CBDT notifications attempting to preserve pre amendment reassessment provisions for notices issued after 01.04.2021 were beyond the delegated power and are invalid.

Final Conclusion: The reassessment notice dated 06.04.2021 for AY 2016-17 was issued after 01.04.2021 without complying with the reassessment scheme introduced by the Finance Act, 2021 and without following the Section 148A procedure; the notice is invalid and quashed. The CBDT notifications of 31.03.2021 and 27.04.2021 insofar as they sought to preserve the pre amendment regime are ultra vires and invalid.

Addition under unexplained expenditure (section 69C) - addition on account of undisclosed purchases and estimation of gross profit - relevance of customs assessable value vis-a -vis invoice value - requirement of reconciliation of customs information with books and bank records - remand for verification and fresh examination of invoices and duty payments

Addition under unexplained expenditure (section 69C) - addition on account of undisclosed purchases and estimation of gross profit - relevance of customs assessable value vis-a -vis invoice value - requirement of reconciliation of customs information with books and bank records - remand for verification and fresh examination of invoices and duty payments - Validity of additions made by the Assessing Officer on account of difference between customs imports data and books (including peak amount and customs duty component) and the correctness of CIT(A)'s deletion of the section 69C addition while confirming gross profit and peak additions - HELD THAT: - The Tribunal found that the customs information showed a shortfall in imports vis-a -vis the assessee's books and a disparity between invoice value and customs assessable value. The Tribunal held that assessable value for customs can legitimately differ from invoice value and such difference, by itself, does not automatically establish out-of-books purchases. The CIT(A)'s conclusion that additions could be limited to gross profit because corresponding sales were not disputed was unsustainable in the absence of material or verification showing that the imported quantities entered stock and were sold. The Tribunal emphasised that the Assessing Officer must examine bank payment records and procure and verify the actual invoices and corresponding customs duty entries before making or sustaining additions. Consequently, rather than deciding the merits on the record before it, the Tribunal set aside the CIT(A) order and remanded the matter to the Assessing Officer with directions to have the assessee produce all invoices and evidence of payment (including customs duty) and to reconcile purchases with the customs information; if discrepancies remain, the AO must give the assessee an opportunity of hearing and decide the issue on merits. The Tribunal clarified that reliance on customs assessable value alone is not a basis for addition without reconciliation and verification. [Paras 9, 10]

Order of the CIT(A) is set aside and the issue is remitted to the Assessing Officer for reconciliation of customs information with the assessee's books and bank records, production and examination of invoices and duty payments, hearing of the assessee and fresh decision on merits.

Final Conclusion: Both the Revenue's appeal and the assessee's cross-objection are allowed to the extent indicated; the CIT(A) order is set aside and the matter is remitted to the Assessing Officer with directions to verify invoices, bank payments and customs duty particulars, afford hearing and decide the issue on merits.

Capital expenditure v. revenue expenditure - enduring advantage test - Corporate Debt Restructuring (CDR) - increase in authorized share capital and ROC fee - treatment of implementation charges of CDR - deductibility of interest under section 43B(e) - disallowance under section 14A and computation of book profit under section 115JB

Increase in authorized share capital and ROC fee - capital expenditure v. revenue expenditure - enduring advantage test - Corporate Debt Restructuring (CDR) - Whether the fee paid to the Registrar of Companies for increase in authorized share capital is revenue in nature and deductible where the increase was necessitated by a CDR and there was no fresh inflow of funds. - HELD THAT: - The Tribunal distinguished cases holding that expenditure on expanding a company's capital base is capital in nature from decisions where there is no fresh inflow of funds. Applying the ratio in General Insurance Corporation, the Bench held that where an increase in authorized capital is effected only to give effect to a restructuring (CDR) and there is no augmentation of capital employed or fresh funds, the expenditure does not confer an enduring advantage and may be revenue in nature. The facts show the authorized-capital increase was to accommodate conversion into OCCRPS under the CDR without fresh capital infusion; accordingly Brooke Bond (expansion of capital base) did not apply and the ROC fee was held to be revenue and allowable. [Paras 9]

The ROC fee of Rs. 1,78,98,000/- incurred for increase in authorized share capital in consequence of CDR is revenue expenditure and allowable; the disallowance by the lower authorities is reversed.

Treatment of implementation charges of CDR - capital expenditure v. revenue expenditure - Corporate Debt Restructuring (CDR) - enduring advantage test - Whether expenses incurred for implementation of the CDR (CDR charges, including remuneration to the Monitoring Institution) are capital in nature or revenue and deductible. - HELD THAT: - The Tribunal examined the nature of the CDR as a reconditioning of existing loans and debts that granted concessions, waivers and relaxations but did not result in acquisition of an enduring advantage or increase in capital employed, as the conversion into OCCRPS did not involve fresh inflow of funds. The major component (remuneration to ICICI as Monitoring Institution) and other implementation charges were held to be akin to financing/facilitation charges (e.g., processing fees, documentation, compliance) and therefore revenue in nature. Applying the same reasoning as for the authorized-capital fee and relying on the absence of increased capital employed, the expenditure was allowed as revenue. [Paras 15]

The CDR implementation expenses of Rs. 1,46,45,814/- are revenue expenditure and allowable; the disallowance by the AO and CIT(A) is reversed.

Deductibility of interest under section 43B(e) - scheduled bank - Whether interest payable to certain banks is disallowable under section 43B(e) where it was not paid before the due date for filing the return. - HELD THAT: - The Tribunal agreed with the AO that the banks to which interest was payable (HSBC, Standard Chartered Bank, Citi Bank) fall within the definition of 'scheduled bank' as per Explanation 4 and the Explanation to section 11(5)(iii). The Tribunal also accepted the AO's view that the interest must be payable 'in accordance with the terms and conditions of the agreement governing such loan or advance' and that the existence of a separate CDR scheme (which did not include these three banks) did not alter the contractual terms with those banks. On these bases the condition for non-allowance under section 43B(e) was satisfied and the disallowance was upheld. [Paras 21]

The disallowance of interest under section 43B(e) in respect of interest payable to the three banks is upheld.

Disallowance under section 14A and computation of book profit under section 115JB - Whether a disallowance under section 14A, if sustained in normal computation, can be added back while computing book profit under section 115JB. - HELD THAT: - The Tribunal followed the Special Bench decision in ACIT v. Vireet Investment Pvt. Ltd. which held that the disallowance under section 14A, even if sustained for normal computation, cannot be added for computing book profit under section 115JB. Respectfully following that Special Bench view, the Tribunal accepted the assessee's ground on this point. [Paras 23]

Disallowance under section 14A shall not be added back in computing book profit under section 115JB; the assessee's claim on this point is accepted.

Final Conclusion: The appeal is partly allowed: the Tribunal allows the ROC fee and CDR implementation charges as revenue deductions, upholds the AO's disallowance of interest under section 43B(e) in respect of the three banks, and accepts that any section 14A disallowance should not be added in computing book profit under section 115JB.

Registration under section 12AA(1)(b)(ii) - genuineness of activities - objects of the trust or institution - receipt of grants not converting into work contract - power to impose conditions on registration

Registration under section 12AA(1)(b)(ii) - genuineness of activities - receipt of grants not converting into work contract - Refusal of registration under section 12AA(1)(b)(ii) on the grounds recorded by the Commissioner was unsustainable and registration must be granted. - HELD THAT: - Clause (1)(b)(ii) of section 12AA permits refusal only where the authority is not satisfied about the objects or the genuineness of activities of the trust or institution. The Commissioner refused registration on four factual strands: (i) majority of funds received from a USA entity; (ii) office located in premises of a medical college without express permission on record; (iii) an office bearer allegedly receiving salary from the medical college; and (iv) existence of agreements for receipt of grants, suggesting execution of work contracts. Examination of the material shows that none of these strands demonstrate dissatisfaction with the nature of the objects or that the activities are ingenuine or fall outside the charitable ambit. Receipt of grants from one or several sources does not, by itself, impugn objects or genuineness. The claimed office address corresponds to the premises where revenue served notices and absence of a separate permission document is not a sufficient basis to deny registration. The factual assertion regarding salary was controverted in the appellate grounds. Further, receipt of grants pursuant to agreements does not automatically convert the receipts into consideration for execution of work contracts; grants may be structured by agreement without altering the charitable character. Because the Commissioner did not record any finding that the objects or activities were ipso facto ingenuine or contrary to section 2(15), the refusal lacks sustainable foundation. Consequently the appellate tribunal directed grant of registration, while leaving open the Commissioner's statutory discretion to impose lawful conditions at the time of registration. [Paras 8, 9]

The refusal of registration is set aside; registration is to be granted and the Commissioner may impose such conditions as lawful.

Final Conclusion: The appellate tribunal allowed the appeal, set aside the Commissioner's refusal under section 12AA(1)(b)(ii) as unsustainable on the reasons recorded, and directed that registration be granted subject to any lawful condition(s) the Commissioner may deem fit to impose.

Best judgment assessment under section 144 - breach of the principles of natural justice - admission of additional evidence under rule 46A(4) - conversion of assessment from section 144 to section 143(3) - onus under section 68 regarding cash credits - tests of identity, capacity and genuineness for unexplained credits - estimation of income on non-production of books

Best judgment assessment under section 144 - breach of the principles of natural justice - Validity of assessment completed under section 144 on the ground of denial of opportunity to produce books of account - HELD THAT: - The Tribunal found that although the single day time allowed by the Assessing Officer on 18/11/2009 was short, the assessee failed to inform the AO at that hearing (or subsequently) that books were located at Nagpur and made no attempt to procure or produce them despite further opportunity and a specific show cause notice dated 30/11/2009. The AO's remand report and surrounding conduct showed deliberate non production; by 01/12/2009 the assessee had effectively had 13 days to produce accounts and still did not; therefore invocation of section 144 was not vitiated by breach of natural justice. The CIT(A) nonetheless permitted adducing evidence in the interest of justice under rule 46A(4), converting the assessment into a section 143(3) assessment for consideration of that material, a course not disputed before the Tribunal. The plea of denial of opportunity was rejected as a ruse and afterthought. [Paras 4, 5]

Assessment under section 144 upheld; plea of breach of natural justice rejected.

Admission of additional evidence under rule 46A(4) - conversion of assessment from section 144 to section 143(3) - Admissibility and effect of additional evidence filed under rule 46A and the CIT(A)'s exercise of discretion - HELD THAT: - The Tribunal noted that the CIT(A), while treating the assessee's failure to produce accounts as deliberate and rejecting admission on merits under rule 46A(1)(d), exercised discretion under rule 46A(4) to permit the assessee to adduce evidence in the interest of justice. The Tribunal observed that this effectively converted the section 144 assessment into a section 143(3) assessment for purposes of considering that evidence; permissibility of such conversion was not disputed and the CIT(A)'s approach was not found to merit interference. [Paras 4]

CIT(A)'s exercise of discretion under rule 46A(4) to admit evidence in the interest of justice and consider the matter was sustained.

Onus under section 68 regarding cash credits - tests of identity, capacity and genuineness for unexplained credits - Sustainability of additions made under section 68 in respect of cash credits shown as capital contributions by two incoming partners - HELD THAT: - The Tribunal affirmed the CIT(A)'s conclusion that the assessee failed to discharge the onus under section 68. The credits (from Girija Shankar Mishra and Archana Mishra) were largely in cash, relevant ledger and personal account details called for by the AO were not produced, dates of introduction and correlation with alleged cash withdrawals were not established, and claimed sources (earlier loan withdrawals or other income) were inadequately substantiated or inconsistent. The Tribunal accepted the reasoning that mere identification of a partner does not satisfy the tests of capacity and genuineness; absent demonstration of availability of cash on the relevant dates and supporting bank/book records, the credits remained unexplained and additions under section 68 were correctly confirmed by the CIT(A). [Paras 4]

Additions under section 68 in respect of the two partners' credits confirmed.

Estimation of income on non-production of books - Validity of rejection of book results and estimation of business income by the AO (and confirmation by CIT(A)) - HELD THAT: - The Tribunal found that the assessee never produced its books of account to the AO and the ground challenging rejection of books was not pressed. Given the complete and deliberate non production, the AO's exercise of statutory powers to estimate income (applying a sale rate and profit percentage based on a relevant Tribunal decision) was appropriate. The Tribunal distinguished cases where books were produced and rejected without specific defects. The estimate produced a reasonable return and was not shown to be excessive; estimation of income does not preclude additions under section 68. [Paras 4]

Rejection of book results and the AO's estimation of income confirmed; no interference with the quantum of estimation.

Final Conclusion: The assessee's appeal is dismissed; the section 144 assessment and consequent estimation of income were held valid, and additions under section 68 in respect of the cash credits by the two incoming partners were confirmed.

Approval under section 80G(5)(vi) - Charitable purpose of education under section 2(15) - Registration under section 12AA - Denial of approval based solely on surplus or profit - Discrepancies between Form 10B and return relevant to assessment under section 11 - Withdrawal of approval consequent upon cancellation of registration (s.293C)

Approval under section 80G(5)(vi) - Denial of approval based solely on surplus or profit - Charitable purpose of education under section 2(15) - Registration under section 12AA - Whether the Commissioner (Exemptions) was justified in refusing approval under section 80G(5)(vi) solely on the ground that the society earned large surpluses from fees. - HELD THAT: - The Tribunal held that the society is registered under section 12AA and its objects include education, which is a charitable purpose within section 2(15) independent of profits generated in carrying out that purpose. The mere earning of profits or substantial surpluses from fee-charging educational activities does not, by itself, constitute a valid ground under section 80G(5)(vi) for denial of approval when the activity is otherwise charitable. The rules and the provision governing approval do not prohibit earning profits, and the existence of profits or capital expenditure for expansion does not convert educational activity into a non-charitable purpose in the present facts. Applying this legal principle, the Tribunal found no justifiable basis to sustain the denial of approval made solely on the footing of alleged 'huge' profits and set aside the impugned order. [Paras 4, 5]

Denial of approval under section 80G(5)(vi) solely because the society earned surpluses is not justified; set aside and approval directed.

Discrepancies between Form 10B and return relevant to assessment under section 11 - Approval under section 80G(5)(vi) - Whether discrepancies between amounts applied and amounts accumulated as shown in the audit report (Form 10B) and the computation of income justified refusal of 80G approval. - HELD THAT: - The Tribunal treated the noted differences between the audit report and the computation of income as accounting or assessment-related matters bearing on the quantum of exemption under section 11, which fall within the jurisdiction of the Assessing Officer in assessment proceedings. There is no material on record showing that exemption under section 11 has been denied to the assessee on that account, and such discrepancies accordingly do not constitute a valid ground to refuse approval under section 80G(5)(vi). [Paras 2, 4]

Discrepancies between Form 10B and the return are assessment-stage issues under section 11 and do not justify denial of 80G approval.

Withdrawal of approval consequent upon cancellation of registration (s.293C) - Registration under section 12AA - Whether the CIT(E)'s observation about initiating proceedings to cancel registration under section 12AA affected the decision on 80G approval. - HELD THAT: - The Tribunal noted that the CIT(E) had remarked about taking steps to cancel the society's registration under section 12AA, but there was no evidence that any cancellation proceeding or notice had been issued to the assessee. Since cancellation of registration, if effected, would have the statutory consequence of withdrawal of approval, an unexecuted statement of intended action carries no consequence for the present approval proceedings. The absence of any formal cancellation process on record rendered that observation irrelevant to the decision on granting 80G approval. [Paras 4]

The CIT(E)'s unexecuted statement about cancellation of registration is of no consequence; it does not justify denial of 80G approval.

Final Conclusion: The Tribunal allowed the appeal, set aside the order refusing approval, and directed grant of approval under section 80G(5)(vi) to the assessee-society from the date as applicable under law.

Deduction under section 80IA(4) - developer versus works contractor - Explanation to section 80IA(13) (retrospective amendment) - interest and incidental income 'derived from' the business for 80IA - unit wise computation of deduction under section 80IA(5) - set off of losses for computation of gross total income vis a vis chapter VIA deductions - disallowance under section 36(1)(iii) - diversion of interest bearing funds - bad debts as business/trading loss under section 28 - deduction under section 80GGB - penalty under section 271(1)(c) - bona fide claim/difference of opinion

Deduction under section 80IA(4) - developer versus works contractor - Explanation to section 80IA(13) (retrospective amendment) - Assessee's entitlement to deduction under section 80IA(4) - whether assessee is a 'developer' and not a 'works contractor'. - HELD THAT: - The Tribunal examined the tender documents, work orders and audited accounts and applied the legal distinction between a developer and a contractor. The Explanation inserted after section 80IA(13) excludes businesses 'in the nature of a works contract' from the deduction, so the primary question is whether the assessee undertook entrepreneurial risk, raised its own finance, procured materials and plant, employed technical staff, and bore responsibilities (including security deposits, performance guarantees, retention monies and penalties) characteristic of a developer. Considering the terms of the tenders (including requirement to arrange finance, materials, plant & machinery, operation and maintenance obligations, retention and defect liability periods), the assessee's balance sheet evidence of funds raised and fixed assets and recurring losses on projects, the Tribunal held that the assessee truly undertook development activity rather than performing mere construction on instructions. The Tribunal distinguished authorities relied upon by Revenue as factually different and found Rajkamal qualified as a 'developer' within the scope of section 80IA(4), thereby entitling it to the deduction. [Paras 25, 31, 33, 35, 43]

Claim for deduction under section 80IA(4) allowed - assessee is a developer and not a works contractor; deduction granted.

Interest and incidental income 'derived from' the business for 80IA - deduction under section 80IA(4) - Whether interest and other incidental income (e.g., interest on fixed deposits/security deposits/margin money) are income 'derived from' the business and eligible for deduction under section 80IA(4). - HELD THAT: - The AO treated interest receipts as income from investments of surplus funds and disallowed them from 80IA claim. The assessee explained that fixed deposits and margins were required by contract terms (security deposits, bank guarantees) and were made out of borrowed funds or for business necessities. The Tribunal followed binding and jurisdictional precedents recognizing that interest having direct nexus with the business (e.g., interest on margin money or security deposits placed as part of contract obligations) is income 'derived from' the business. Given the contractual requirement and accounting evidence showing material procurement and security deposits, the Tribunal accepted that such interest and incidental receipts arose from the business of the undertaking and are eligible for deduction under section 80IA(4). [Paras 44, 45, 46, 48]

Interest and other incidental income connected with contract performance (fixed deposits/margin/security deposits) held to be business income and eligible for deduction under section 80IA(4); claim allowed.

Unit wise computation of deduction under section 80IA(5) - set off of losses for computation of gross total income vis a vis chapter VIA deductions - Whether losses from some eligible infrastructure sites must be set off against profits of other eligible sites when computing deduction under section 80IA. - HELD THAT: - Revenue applied the principle that gross total income must be computed having regard to set off of losses between units, relying on Supreme Court authority on computation of gross total income. The Tribunal analysed section 80IA(5) and relevant case law and concluded that the quantum of deduction is to be computed as if the eligible undertaking's profit were the only source of income (unit wise computation). While gross total income for other statutory purposes may reflect inter unit set offs, deduction under section 80IA is to be allowed on the profit making eligible unit without setting off losses of other eligible units. The Tribunal followed relevant High Court and Tribunal precedents supporting unit wise allowance and directed the AO to grant relief accordingly. [Paras 51, 52, 53, 54, 55]

Losses of other eligible sites shall not be set off against profits of a profit making eligible site for computing deduction under section 80IA; deduction to be computed unit wise.

Disallowance under section 36(1)(iii) - diversion of interest bearing funds - Validity of additions under section 36(1)(iii) for alleged diversion of interest bearing funds (interest disallowance). - HELD THAT: - AO treated interest free advances as diversion of interest bearing funds and made notional interest additions. The Tribunal found Revenue did not establish nexus between interest bearing funds and the alleged advances nor prove diversion for non business purposes. Citing authority that investments can be presumed to have been funded from interest free funds when such funds exist, the Tribunal concluded Revenue's disallowance rested on assumption without basis. [Paras 60, 61, 62]

Additions under section 36(1)(iii) deleted; disallowance of interest expenditure quashed.

Bad debts as business/trading loss under section 28 - Allowability of amounts written off as bad debts/trading loss (loans/advances written off) in the hands of the assessee. - HELD THAT: - AO treated certain write offs as not qualifying as bad debts and added them back. The assessee demonstrated that advances were made in course of business (advance for purchase of goods; staff loan) and produced supporting evidence. The Tribunal applied jurisdictional High Court authority to hold that such losses incurred in the course of business are allowable as trading/business losses under section 28 and directed the AO to grant relief. [Paras 64, 65, 66, 67, 68]

Write offs held to be business/trading losses allowed under section 28; additions deleted.

Deduction under section 80GGB - Allowability of deduction claimed under section 80GGB for contribution to a political party. - HELD THAT: - The assessee claimed a contribution by account payee cheque and produced receipt. The AO initially disallowed in computation, but on review of law and evidence the Tribunal accepted that the contribution qualified for 100% deduction under section 80GGB as claimed in the return and allowed it. [Paras 69, 70]

Deduction under section 80GGB allowed as claimed.

Employees' contribution - section 36(1)(va) - Disallowance of employees' contributions under section 36(1)(va) for failure to credit contributions to the fund within prescribed time. - HELD THAT: - The AO disallowed employer's claim in view of jurisdictional High Court precedent (CIT v. GSRTC) which holds that if employees' contributions are not credited to the relevant fund on or before the due date, deduction is not available even if payment is made before filing return. The assessee conceded the precedent operates against it. The Tribunal declined to interfere. [Paras 71, 72]

Disallowance upheld; appeals on this ground dismissed.

Penalty under section 271(1)(c) - bona fide claim/difference of opinion - Sustenance of penalties under section 271(1)(c) where additions/deduction disallowances were deleted or claim was bona fide. - HELD THAT: - Penalties imposed in respect of disallowance of 80IA(4) claims and other additions were considered in light of the Tribunal's substantive decisions. Where the substantive additions were deleted or the disallowances arose from a bona fide difference of opinion (with particulars fully disclosed and no mala fide or untrue particulars), the Tribunal found penalty proceedings to be infructuous and relied on settled authorities on bona fide claims to delete penalties. [Paras 76, 77, 83, 84, 85]

Penalties under section 271(1)(c) deleted where founded on deleted additions or bona fide differences of opinion.

Final Conclusion: The Tribunal allowed the assessee's primary claim for deduction under section 80IA(4) on the basis that the assessee acted as a developer (not a mere works contractor), held interest and incidental receipts linked to contract performance eligible for 80IA deduction, directed unit wise computation of 80IA deduction without setting off losses of other eligible units, deleted interest and other contested additions and allowed business bad debts and section 80GGB deduction, upheld disallowance of employee contribution where precedent applied, and quashed related penalties where the substantive additions were deleted or the claim was bona fide.

Unexplained cash credit under section 68 of the Act - Onus to prove identity, capacity and genuineness of creditor - Peak credit determination for unexplained loan - Allowability of business expenditure under section 37(1) of the Act - Donation versus business expense; relevance of quid pro quo - Personal element in business expenses and proportionate disallowance

Unexplained cash credit under section 68 of the Act - Onus to prove identity, capacity and genuineness of creditor - Peak credit determination for unexplained loan - Addition under section 68 sustained in respect of unsecured loan from Mrs. Firdos Mondal by treating peak credit as unexplained cash credit. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the assessee failed to discharge the onus of proving identity, capacity and genuineness of the creditor in respect of amounts shown as due to Mrs. Firdos Mondal. Although documentary material such as bank statements and ledger entries were placed on record, the assessee did not provide the present address or facilitate examination of the creditor so as to enable verification of the genuineness of transactions. In these circumstances the CIT(A) was justified in directing the Assessing Officer to compute the peak credit in the creditor's account and treat that peak as unexplained cash credit under section 68. The Tribunal found no error or perversity in applying peak credit after adjusting repayments and accordingly dismissed the ground challenging the addition. [Paras 5]

Ground No.1 dismissed; addition under section 68 in respect of Mrs. Firdos Mondal upheld by treating peak credit as unexplained cash credit.

Allowability of business expenditure under section 37(1) of the Act - Donation versus business expense; relevance of quid pro quo - Disallowance of payment to mosque upheld because the assessee failed to establish that the payment was wholly and exclusively for staff welfare and not a voluntary donation. - HELD THAT: - The Tribunal agreed with the CIT(A) that the assessee did not furnish corroborative evidence to show that the sum paid to the mosque was a quid pro quo exclusively for free lunches provided to the assessee's employees. The mosque provided free lunch to artisans and others in the locality and was not under the control of the assessee; the payment therefore could not be established as incurred wholly and exclusively for business and allowable under section 37(1). In absence of supporting documentary proof or evidence of exclusivity, the payment was more appropriately characterized as a voluntary donation rather than a business expense. [Paras 5]

Ground No.2 dismissed; disallowance of the amount paid to the mosque sustained.

Personal element in business expenses and proportionate disallowance - Allowability of business expenditure under section 37(1) of the Act - Sustained 20% disallowance of travelling and petrol expenses on account of personal use. - HELD THAT: - The Tribunal found no materials before it to rebut the finding of the CIT(A) that an element of personal use existed in the travelling and petrol expenses claimed by the assessee. The assessee failed to substantiate that the expenditures were purely for business and free from personal use; consequently the CIT(A)'s approach to disallow 20% of such expenditure was upheld as a proportionate deduction to reflect the non-business element. [Paras 5]

Ground No.3 dismissed; 20% disallowance of travelling expenses on account of personal use sustained.

Final Conclusion: All grounds of the assessee's appeal are dismissed and the order of the CIT(A) confirming the additions and disallowances is upheld.

Applicability of section 68 to seized loose papers and non-maintenance of books of account - Presumption as to genuineness and ownership of seized documents under section 132(4A)/section 292C - Proof required for exemption as agricultural income under section 10(1) - Taxation of unaccounted sales - only gross profit taxable - Disallowance under section 40A(3) where income estimated by gross profit rate - Treatment of jewellery found on search - family holdings and reconciliation with wealth returns - Notional interest on unexplained advances

Applicability of section 68 to seized loose papers and non-maintenance of books of account - Addition under section 68 based on amounts recorded on seized loose papers where the assessee did not maintain books of account - HELD THAT: - The Tribunal upheld the view that section 68 is attracted only where a sum is found credited in the books of account maintained for the relevant previous year. Loose papers/diary not constituting books of account cannot, by themselves, sustain an addition under section 68. The appellant did not maintain regular books and the entries relied upon were loose seized papers; the CIT(A) and the Tribunal applied settled authorities holding that such documents are not 'books' for s.68 purposes. The Tribunal further observed that, in any event, the seized material on its face recorded the receipts as advances against sale of agricultural land and, insofar as they were capital receipts or advances, they were not chargeable as income under section 68 in the year of receipt.

Addition of Rs. 2.75 crore (AY 2015-16) and similar additions based on seized loose papers were deleted as not sustainable under section 68.

Presumption as to genuineness and ownership of seized documents under section 132(4A)/section 292C - Evidentiary weight and effect of seized papers under section 132(4A)/section 292C in assessing nature of receipts - HELD THAT: - The Tribunal recognised that seized documents attract the statutory presumptions in section 132(4A) and section 292C, i.e., their contents are prima facie to be treated as true and belonging to the person in whose possession they were found. However, the presumption is rebuttable. On facts, the seized page (page 71A) expressly recorded advances against Ramgarh land with dates, payors and broker details; no material was produced by the Revenue to contradict that description. The Tribunal held that where the seized entry itself explains the nature of receipt as advance against sale of land and no contrary material is produced, the presumption supports the assessee's explanation and the Revenue cannot convert such receipts into unexplained cash credits under section 68.

Seized entries recording advances against sale of land were accepted in character as advances; the statutory presumption supported the assessee and the Revenue's addition was dismissed.

Proof required for exemption as agricultural income under section 10(1) - Whether the agricultural income declared by the assessee is genuine and entitled to exemption - HELD THAT: - The Tribunal applied the settled allocation of burdens: Revenue must prove income is taxable, but the assessee must prove entitlement to exemption. The CIT(A) had held the assessee failed to prove the claim for AY 2015-16; on appeal the Tribunal examined the totality of material (khasra/girdawari, P&L for agricultural activity, sale statements, agreement for trees, affidavits of family members and seized bills) and the extent of land holdings. On this factual matrix the Tribunal found the assessee had produced sufficient evidence to support the claimed agricultural income for the years in issue.

The Tribunal accepted the assessee's claim of agricultural income and allowed the grounds challenging its treatment as bogus; agricultural income declared for AYs 2015-16 and 2016-17 was held genuine and exempt as claimed.

Treatment of jewellery found on search - family holdings and reconciliation with wealth returns - Assessment of jewellery found on search and whether unexplained jewellery additions were justified - HELD THAT: - The Tribunal accepted the CIT(A)'s reasoning that jewellery found across family premises/lockers could legitimately be family-held 'stri-dhan' and personal holdings, particularly where no other family member had been assessed for additions and where wealth-tax returns and person-wise lists furnished at search reconciled the holdings. The CIT(A) applied the CBDT guidance (and judicial precedents) that reasonable quantum of jewellery within family norms need not be treated as unexplained. The Revenue did not bring contrary material to show unexplained acquisition.

Additions in respect of jewellery were deleted; the unexplained jewellery addition of Rs. 25,34,587 (AY 2016-17) was not sustained.

Taxation of unaccounted sales - only gross profit taxable - Disallowance under section 40A(3) where income estimated by gross profit rate - Whether whole unaccounted sale proceeds can be taxed or only gross profit, and interaction with disallowance under section 40A(3) - HELD THAT: - The Tribunal followed precedent that the entire sale proceeds cannot be treated as income absent material showing unexplained investment/costs; only the profit embedded in such sales is taxable. The CIT(A) had applied a 10% gross profit rate; the Tribunal, on the comparative material and submissions, reduced the estimate to 5% as a fair and reasonable gross profit rate on the unaccounted turnovers identified. Once income is estimated on gross profit basis, an independent disallowance under section 40A(3) in respect of cash purchases is not called for because the gross profit estimation subsumes purchase/cost considerations; CIT(A)'s deletion of the section 40A(3) addition was sustained.

Addition for unaccounted sales reduced to taxation of gross profit; Tribunal fixed gross profit at 5% (partly allowing Revenue's appeal). Consequential disallowance under section 40A(3) was deleted.

Unexplained cash credits and notional interest on advances - Whether balances shown in seized papers were unexplained cash credits attracting section 68 and whether notional interest could be added - HELD THAT: - The Tribunal analysed the seized entries and the explanations that many entries represented temporary advances made by the assessee which were subsequently repaid or related to amounts already offered in return. The CIT(A) found these entries were not credits in the assessee's books (a pre requisite for s.68) and, on the facts, were repayments/realisation of advances rather than unexplained receipts. There was no evidence that interest was ever received; notional interest additions were therefore held to be conjectural and unsupported by seized material.

Additions treating the balance as unexplained cash credits (and the related notional interest) were deleted.

Final Conclusion: The Tribunal dismissed the Revenue's appeal against deletion of the addition of Rs. 2.75 crore (AY 2015-16) and upheld deletions relating to jewellery, unexplained cash loans and certain cash-credit additions where the seized documents did not amount to books of account or where seized entries showed advances against land; it accepted the assessee's agricultural income on the evidence produced; it held that unaccounted sales are taxable only to the extent of gross profit and fixed that gross profit at 5% for the relevant assessment(s); consequential additions and notional interest were deleted or adjusted and the appeals were disposed as recorded.

Fees for Technical Services (FTS) - Section 195 - obligation to deduct tax at source - Section 9(1)(vii) - income deemed to accrue or arise in India - Assessee in default under Section 201 - Interest under Section 201(1A) - Double Taxation Avoidance Agreement (DTAA) - applicability of FTS clauses - Marketing/sales services versus managerial/technical/consultancy services - Substance over form in contract interpretation - Exclusion of teaching/educational services from FTS under DTAA

Fees for Technical Services (FTS) - Section 195 - obligation to deduct tax at source - Section 9(1)(vii) - income deemed to accrue or arise in India - Marketing/sales services versus managerial/technical/consultancy services - Substance over form in contract interpretation - Whether amounts paid to foreign agents/"consultants" for student recruitment/admission are fees for technical services chargeable in India and trigger assessee's obligation to deduct tax under section 195 (consequentially making the assessee an assessee in default under section 201). - HELD THAT: - The Tribunal examined the MoUs and the nature of services actually performed. Applying the principle of substance over form, it held that the agreements, although using the word "consultant," primarily required the foreign parties to market Sharda University's courses, collect and forward student documentation, and secure admissions subject to the University's sole discretion. The agents had no management, control or decision-making authority over admissions, and their entitlement to commission was contingent on successful enrolment; they performed promotional/marketing tasks rather than rendering managerial, technical or consultancy services to the University. Following precedents and the tests for managerial, technical and consultancy services, the Tribunal concluded that such marketing/sales activities do not constitute FTS under Explanation 2 to section 9(1)(vii). Because the payments were not chargeable to tax in India, there was no obligation on the assessee to deduct tax under section 195 and the assessee could not be treated as an assessee in default under section 201 for those remittances; corresponding interest under section 201(1A) was directed to be deleted.

Payments to foreign agents for student recruitment/admission are not FTS and are not chargeable in India; the assessee was not obliged to deduct TDS under section 195 and is not an assessee in default under section 201 in respect of those payments (demand and interest deleted).

Fees for Technical Services (FTS) - Section 195 - obligation to deduct tax at source - Section 9(1)(vii) - income deemed to accrue or arise in India - Whether payments made to non-resident evaluators for Ph.D. thesis evaluation constitute fees for technical services chargeable in India and attract the assessee's duty to deduct tax under section 195 (and consequential deeming under section 201). - HELD THAT: - The Tribunal considered whether evaluators rendered technical services to the assessee such that their receipts would be deemed to accrue or arise in India. Although evaluators possess technical skill, the Tribunal found their activity to be the application of expertise in evaluating academic theses for the benefit of the examinees and the academic process, not the provision of managerial, technical or consultancy services to the University as a payer. The payments, therefore, did not constitute FTS within the meaning of Explanation 2 to section 9(1)(vii) and were not chargeable to tax in India. Consequently, no obligation to deduct tax under section 195 arose and the assessee could not be held an assessee in default under section 201 for these payments; the related interest was accordingly deleted.

Remittances for Ph.D. thesis evaluation are not FTS chargeable in India; TDS was not required and the assessee is not an assessee in default under section 201 (demand and interest deleted for these payments).

Fees for Technical Services (FTS) - Double Taxation Avoidance Agreement (DTAA) - applicability of FTS clauses - Exclusion of teaching/educational services from FTS under DTAA - Section 195 - obligation to deduct tax at source - Whether payments made for faculty development/training to a non-resident (notably Singapore) are fees for technical services chargeable in India or are excluded (under DTAA provisions on teaching/educational services), and whether TDS was required. - HELD THAT: - The Tribunal examined the nature of the faculty development services and the relevant DTAA provisions. Article provisions in the India-Singapore DTAA exclude payments for teaching in or by educational institutions from the definition of FTS. The Tribunal accepted that payments for faculty development/training were for educational/teaching purposes and, coupled with the undisputed absence of a permanent establishment of the foreign provider in India, held that the amounts were not chargeable to tax in India. Therefore, the assessee had no obligation to deduct tax under section 195 and could not be treated as an assessee in default under section 201; interest under section 201(1A) was to be deleted.

Faculty development/training payments (including payments to the Singapore provider) are not FTS taxable in India under the DTAA exclusion for teaching; no TDS obligation arose and the assessee is not an assessee in default (demand and interest deleted).

Section 9(1)(vii) - income deemed to accrue or arise in India - Royalty versus membership/affiliation fees - Section 195 - obligation to deduct tax at source - Whether membership/affiliation fees paid to foreign universities/international bodies constituted royalty or FTS chargeable in India (thus attracting TDS), or whether such fees were for membership/recognition and not taxable in India. - HELD THAT: - On consideration of the documents relating to membership/affiliation fees (recognition, candidacy status, consortium membership, annual subscriptions), the Tribunal (following the CIT(A)'s assessment of the documents) found that these payments were for membership, recognition and accreditation and did not involve use of trademarks/logo/goodwill or technical services that would render them royalty or FTS under section 9(1)(vi) or 9(1)(vii). Accordingly, the AO's treating such payments as taxable was held incorrect and the CIT(A)'s decision to disallow the AO's demand on this head was accepted.

Membership/affiliation fees were not in the nature of royalty or FTS chargeable in India; the AO's demand for TDS on these payments was incorrect (relief allowed to assessee on this head).

Final Conclusion: The Tribunal, applying substance-over-form analysis and relevant statutory and treaty provisions, held that (i) payments to foreign agents for student recruitment were marketing/sales services and not Fees for Technical Services under section 9(1)(vii), (ii) Ph.D. thesis evaluation fees did not amount to FTS chargeable in India, (iii) faculty development/teaching payments (including under the India-Singapore DTAA) were excluded from FTS, and (iv) membership/affiliation fees were not royalty/FTS. Consequential demands under section 201 and interest under section 201(1A) in respect of these heads were set aside; the appeals were partly allowed for A.Y. 2011-12 to 2017-18 in accordance with these findings.

Speculative transaction - genuineness of trade transactions - verification of documentary evidence - remand for fresh consideration - opportunity of being heard

Genuineness of trade transactions - speculative transaction - verification of documentary evidence - opportunity of being heard - remand for fresh consideration - Whether the claim of business loss on purchase and sale of guargum is to be treated as speculative or genuine and whether the matter requires fresh verification by the Assessing Officer. - HELD THAT: - The Tribunal found a material discrepancy between the assessment record and the appellant's contention: the Assessing Officer recorded that no individual purchase or sale bills or quantitative details were furnished and recorded an admission by the assessee's representative that delivery was not taken, whereas the assessee's authorised representative maintained that bills and godown receipts had been filed and no such admission was made. Because the audit report and the assessment order do not clearly record whether quantitative details, stock statement or godown receipts were on file, the Tribunal held that it would be appropriate in the interests of justice to remit the matter to the Assessing Officer for a fresh and limited enquiry. The Assessing Officer is directed to verify all bills, godown receipts, stock statements and any documents accompanying the audit report (Form Nos. 3CB/3CD), to ascertain the factual position on purchase, sale and delivery of the commodity, and to afford the assessee an opportunity of being heard before forming any final view on whether the transactions are speculative or genuine. The Tribunal did not decide the substantive question on merits and expressly set aside the issue for fresh verification. [Paras 6, 7]

Matter remitted to the Assessing Officer for verification of documentary evidence and stock details and for affording the assessee an opportunity of being heard; substantive question left open.

Final Conclusion: The appeal is allowed for statistical purposes and the issue of whether the loss is a speculation loss or a business loss is remitted to the Assessing Officer for fresh verification of bills, godown receipts, stock statements and related audit documents, with an opportunity to the assessee to be heard.

Regular registration under section 12AB - provisional registration - registration under section 12A(1)(ac)(i) - procedure for fresh registration - genuineness of activities and compliance verification - power to impose conditions for grant of registration

Registration under section 12A(1)(ac)(i) - regular registration under section 12AB - power to impose conditions for grant of registration - Whether the assessee, having applied under section 12A(1)(ac)(i), was entitled to regular registration under section 12AB for five years and whether provisional registration with conditions was permissible in the circumstances. - HELD THAT: - The Tribunal examined the statutory scheme. Section 12A(1)(ac)(i) applies to trusts previously registered under section 12A/12AA and requires an application within the specified period. Section 12AB(1)(a) provides that where an application is made under sub-clause (i) the Principal Commissioner or Commissioner shall pass an order in writing registering the trust for a period of five years. The provision for provisional registration under section 12AB(1)(c) is distinct and applies to applications made under sub-clause (vi) (and provisional registration is intended for institutions yet to commence activities). The Tribunal found that the assessee was duly registered earlier under section 12AA and therefore its application fell squarely under section 12A(1)(ac)(i) and section 12AB(1)(a). Section 12AB(1)(a) does not authorise the authority to grant provisional registration subject to conditions in place of the mandated five-year registration. Consequently, the impugned order granting provisional registration with conditions was not in accordance with the statutory mandate. [Paras 11]

The grant of provisional registration with conditions was not proper where the application was under section 12A(1)(ac)(i); the assessee was entitled to consideration for regular registration under section 12AB(1)(a).

Procedure for fresh registration - genuineness of activities and compliance verification - Whether the matter should be remitted for fresh consideration and, if so, the extent of direction to the designated authority. - HELD THAT: - Having concluded that the application was not properly considered for grant of registration under the correct provision, the Tribunal did not decide the merits of registration itself but directed a fresh, de novo consideration by the designated authority under section 12AB. The Tribunal recognised that where enquires about genuineness of activities or compliance under other laws are statutorily permissible (see provisions dealing with other sub-clauses), such matters are to be addressed by the authority on reconsideration. The order therefore remits the application to the designated authority for fresh adjudication in accordance with law. [Paras 12]

Directed de novo consideration of the assessee's application by the designated authority under section 12AB and allowed the grounds raised by the assessee for statistical purposes.

Final Conclusion: The impugned provisional registration with conditions was not in accordance with the statutory scheme where the application fell under section 12A(1)(ac)(i); the Tribunal set aside that order and remitted the application to the designated authority for de novo consideration and decision under section 12AB.

Deduction under section 80IC/80IE - reallocation of common administrative and selling expenses for deduction claims - disallowance under section 14A read with Rule 8D - treatment of dividend/foreign dividend for applicability of section 14A - international transaction - corporate guarantee within section 92B - arm's length price for corporate guarantee commission - transfer pricing adjustment - interest on delayed receivables - application of precedent in assessing arm's length guarantee fee

Deduction under section 80IC/80IE - Whether items such as claims received, miscellaneous income and sundry balances written back form part of operational income for computing deduction under section 80IC. - HELD THAT: - The Tribunal found that identical issues in the assessee's own earlier assessments were restored to the Assessing Officer for fresh adjudication and directions. Following those coordinate-bench decisions, the Tribunal restored the issue to the file of the Assessing Officer for fresh determination after providing the assessee an opportunity of being heard. The ground is allowed for statistical purposes and remitted for fresh adjudication. [Paras 7]

Issue remanded to the Assessing Officer for fresh consideration with directions; ground allowed for statistical purposes.

Reallocation of common administrative and selling expenses for deduction claims - deduction under section 80IC/80IE - Whether 50% of certain administrative and selling & marketing expenses of non-eligible units can be reallocated to eligible units for computing deduction under section 80IC. - HELD THAT: - The Tribunal followed binding precedents in the assessee's own case where the DRP was directed not to restrict the claim of deduction by reallocating common indirect expenses. On the facts of the impugned year and in view of identical earlier decisions which the revenue could not distinguish, the Tribunal directed the Assessing Officer not to reallocate 50% of the specified expenses to the eligible units. [Paras 8]

Assessing Officer directed not to restrict the section 80IC claim by reallocating 50% of the specified administrative and selling & marketing expenses.

Disallowance under section 14A read with Rule 8D - treatment of dividend/foreign dividend for applicability of section 14A - Whether disallowance under section 14A read with Rule 8D is warranted where the assessee claims no exempt income (dividend offered to tax in India). - HELD THAT: - Relying on the Tribunal's decision in the assessee's own case, the Tribunal recorded that if no exempt income is earned in the year, no disallowance under section 14A read with Rule 8D can be made. The Tribunal directed the Assessing Officer to delete the disallowance after verifying the assessee's factual claim that no exempt income was earned. It also noted that section 115JB computation cannot generally proceed by invoking section 14A adjustments except as per the specific Explanation to section 115JB. [Paras 9]

Assessing Officer directed to delete the section 14A disallowance after factual verification of the assessee's claim that no exempt income was earned.

International transaction - corporate guarantee within section 92B - Whether provision of corporate guarantees by the assessee for its associated enterprises falls within the definition of 'international transaction' under section 92B. - HELD THAT: - The Tribunal followed earlier decisions in the assessee's own case for earlier assessment years and held that provision of corporate guarantees to associated enterprises falls within the meaning of 'international transaction' under section 92B. This view was recorded as consistent with prior findings. [Paras 10]

Provision of corporate guarantees to associated enterprises is an international transaction under section 92B.

Arm's length price for corporate guarantee commission - application of precedent in assessing arm's length guarantee fee - Whether the Transfer Pricing Officer's benchmarking of corporate guarantee commission at 2% is sustainable and what is the arm's length rate. - HELD THAT: - The Tribunal referred to binding decisions of the Bombay High Court and the Tribunal in the assessee's own earlier years, which held that the guarantee commission should not exceed 0.5% of the guarantee amount. Applying those precedents to the facts of the impugned year, the Tribunal directed the TPO/AO to restrict the corporate guarantee commission to 0.5% instead of the 2% estimated by the TPO. [Paras 11, 12]

TPO/AO directed to restrict the corporate guarantee commission to 0.5% of the guarantee amount for ALP purposes; the 2% benchmark set by TPO rejected.

Transfer pricing adjustment - interest on delayed receivables - Whether interest should be imputed on outstanding receivables from associated enterprises and included in ALP where the assessee does not charge interest from either AEs or non-AEs. - HELD THAT: - On the facts that the assessee follows a consistent practice of not charging interest to AEs and non-AEs and generally receives payments within stipulated credit periods (with only exceptional delays), and having regard to relevant precedents relied upon by the assessee, the Tribunal held that interest on delayed debtors should be excluded when computing the ALP. The AO/TPO was directed accordingly. [Paras 13]

AO/TPO directed to exclude imputation of interest on delayed receivables from associated enterprises in computing ALP.

Final Conclusion: The appeal is partly allowed: the issue of certain items forming part of operational income for section 80IC deduction is remitted to the Assessing Officer for fresh adjudication; the AO is directed not to reallocate 50% of specified administrative and selling expenses to eligible units; the section 14A disallowance is to be deleted after factual verification that no exempt income was earned; provision of corporate guarantees is an international transaction but the guarantee commission must be restricted to 0.5% (TPO's 2% disallowed); and interest on delayed receivables from associated enterprises is to be excluded for ALP computation.

Explanation of cash deposits - rental security deposits as source of cash - addition under section 69 of the Income Tax Act, 1961 - admission of additional evidence under rule 46A of the Income Tax Rules, 1962 - principle of consistency

Explanation of cash deposits - rental security deposits as source of cash - addition under section 69 of the Income Tax Act, 1961 - admission of additional evidence under rule 46A of the Income Tax Rules, 1962 - principle of consistency - Whether the cash deposits in the assessee's bank accounts were adequately explained by rental security deposits and whether the additions made and enhanced under section 69 should be sustained. - HELD THAT: - The Tribunal examined the totality of material, including the cash flow statement produced before it and the additional evidence admitted under rule 46A. It noted (i) the assessee received refundable rental security deposits from various tenants aggregating Rs.1.54 crores during the relevant period and (ii) deposits into bank accounts thereafter totalled Rs.1,07,72,650. The Tribunal observed that the lower authorities' sole ground for rejecting the explanation was the time gap between receipt of cash rental deposits and subsequent bank deposits. The Tribunal held that absence of exact day to day coincidence does not, by itself, rebut the claimed source where there is no evidence that the receipts were utilised for other purposes. In the absence of any material to show the funds were diverted or consumed, and having regard to the cash flow reconciliation presented, the Tribunal was satisfied that it was reasonable to presume that the bank deposits were out of the cash rental deposits received earlier. The Tribunal further noted that on the same set of evidence the addition in the assessee's wife's case was deleted by the appellate authority, pointing to the relevance of consistency, but its primary conclusion rested on sufficiency of source and lack of contrary evidence. Applying these considerations, the Tribunal concluded that the additions made by the Assessing Officer and enhanced by the Commissioner (Appeals) could not be sustained. [Paras 15, 16, 17]

The additions under section 69 in respect of the cash deposits were deleted and the appeal allowed.

Final Conclusion: The appeal is allowed and the addition enhanced by the appellate authority is deleted; the Tribunal accepted that the cash bank deposits were reasonably attributable to rental security deposits produced as source evidence.

Eligibility for exemption under Notification No. 21/2002-Cus - extended period of limitation and invocation of extended time-bar - bona fide belief and consistent past practice as defence to extended limitation - interpretation of a notification and limits on Tribunal's jurisdiction - finality of precedent upheld by the Supreme Court

Eligibility for exemption under Notification No. 21/2002-Cus - interpretation of a notification and limits on Tribunal's jurisdiction - finality of precedent upheld by the Supreme Court - Whether the imported goods "Skin Barrier Microporus Surgical Tapes" are eligible for exemption under Notification No. 21/2002-Cus dated 1.3.2002. - HELD THAT: - The Tribunal held that the question of eligibility was no longer open because the decision of the Bangalore Bench in 3M India Ltd. - which negatived the exemption in similar circumstances - has been upheld by the Hon'ble Supreme Court and thus attained finality. While the appellants contended that a punctuation error in the notification and factual distinctions (dual-purpose product, past departmental allowances) entitled them to exemption, the Bench observed that any error in the notification should have been rectified by the competent authorities and that this Tribunal, as a statutory appellate forum, cannot sit in judgment to override the settled precedent or re-write the notification. The Tribunal followed earlier orders of the same Registry and concluded that the product named "Skin Barriers Micropore Surgical Tapes" exists as distinct and that the exemption is not available to the appellant. [Paras 10, 11]

Exemption under Notification No.21/2002-Cus is not available to the appellant; the demand of duty is sustained for the normal period on merits following the binding precedent.

Extended period of limitation and invocation of extended time-bar - bona fide belief and consistent past practice as defence to extended limitation - Whether the extended period of limitation could be invoked and penalty imposed on the appellant for the impugned imports. - HELD THAT: - The Tribunal found that the appellants had shown that identical goods had been imported over the years and that the Department had repeatedly allowed such imports after examination, including post introduction of self-assessment, which established a consistent practice and a bona fide belief in entitlement to the exemption. On these facts the Tribunal concluded that there was no suppression or misrepresentation warranting invocation of the extended period of limitation. For the same reason, imposition of penalty was held not sustainable. [Paras 12]

Extended period of limitation cannot be invoked; penalty imposed on the appellant is set aside.

Final Conclusion: Appeal partly allowed: demand of duty sustained for the normal period, but invocation of extended limitation and penalty are set aside.

Revocation of Customs Broker Licence as an extreme penalty requiring proportionality - Duties of a Customs Broker under the Customs Broker Licensing Regulations, 2018 including obligation to advise client and to act with speed - Responsibility of declarant/shipping line in transhipment and forwarding of transhipment documents - Obligations of custodian and transporter under the Handling of Cargo in Customs Area Regulations, 2009 - Time bar and procedural timelines under Regulation 17 of the Customs Broker Licensing Regulations, 2018

Responsibility of declarant/shipping line in transhipment and forwarding of transhipment documents - Duties of a Customs Broker under the Customs Broker Licensing Regulations, 2018 including obligation to advise client and to act with speed - Whether the appellant Customs Broker was obliged to give advance intimation to CONCOR / custodian or otherwise ensure placement of high value cargo on arrival at ICD - HELD THAT: - The Tribunal found on documentary evidence (IGMs, Transhipment Permit, CONCOR forwarding note and rail summary) and deposition of CONCOR's manager that the shipping line had informed CONCOR at the gateway port that container CAIU 6840387 carried silver bars and that CONCOR, as transporter/custodian, prepared rail summaries and had knowledge of the cargo description. The applicable transhipment notifications and SMTP circulars impose specific responsibilities on the declarant (shipping line) and on the transporter/custodian (CONCOR) for transhipment and movement of containers. The appellant's appointment was limited to document processing as CHA and it was not authorised by importer, shipping line or customs to give advance intimation to CONCOR or to undertake physical handling; there were no Customs instructions addressed to Customs Brokers obliging them to give such intimation. Considering these statutory/regulatory responsibilities and the record, the adjudicating authority erred in attributing to the appellant the duties cast on the shipping line and CONCOR. The Tribunal therefore held that the appellant cannot be held liable under the CBLR 2018 for failure to intimate CONCOR or for not arranging placement of container on arrival. [Paras 4]

Appellant not responsible for advance intimation or placement of high value cargo; charge under Regulation 10(d) of CBLR 2018 fails.

Obligations of custodian and transporter under the Handling of Cargo in Customs Area Regulations, 2009 - Responsibility of custodian to verify IGM/Transhipment documents and to place containers in demarcated area - Whether the appellant Customs Broker was responsible for failure to shift the high value container to the designated warehouse immediately on arrival at ICD - HELD THAT: - The Tribunal examined Handling of Cargo in Customs Area Regulations, 2009 and relevant notifications which place primary responsibility on the custodian/transporter to demarcate areas, verify import manifest and not permit unloading without import manifest, and to place containers according to nature of goods. Evidence, including CONCOR's own tariff, rail summaries, forwarding note and depositions, showed CONCOR's operational role in unloading, survey, and placement and that CONCOR left the container at its first location for two days despite documents indicating silver bars. The adjudicating authority did not adequately consider these provisions and documentary evidence and wrongly attributed CONCOR's custody and operational failures to the appellant. Given the appellant's limited role as CHA and absence of authority to undertake physical handling, the Tribunal concluded that the appellant cannot be held liable under Regulation 10(m) of CBLR 2018 for placement of the container. [Paras 4]

Appellant not responsible for failure to shift container to designated warehouse; charge under Regulation 10(m) of CBLR 2018 fails.

Verification of seals and exercise of due diligence by Customs Broker - Allocation of seal verification responsibility to custodian/shipper under Public Notices and Facility Notes - Whether the appellant failed to exercise due diligence in verifying the container seal and thereby breached Regulation 10(e) of CBLR 2018 - HELD THAT: - The Tribunal considered the Public Notice No.36/2009 and Trade Facility Note No.02/2012 which prescribe that verification of seal and gross weight on arrival is to be performed by custodian, shipping line or their surveyors. Record evidence, police and enquiry reports, statements of CONCOR personnel and the surveyor's own admission established that CONCOR and its appointed surveyor did not physically verify the seal and recorded incorrect seal and weight; CONCOR's weighment slip and internal reports showed acknowledgement of discrepancies that were not communicated to customs or the CHA. The appellant's contractual arrangement with the forwarder and the importer's limited authorization meant the appellant's role ceased once the bill of entry was cleared under RMS without examination; the CHA had no mandate to take physical delivery or verify the seal. Therefore the appellant's representative's absence at seal cutting or lack of personal verification was not a basis to hold the CHA culpable. The adjudicating authority failed to consider these decisive facts. [Paras 4]

Appellant not responsible for failure to verify seal; charge under Regulation 10(e) of CBLR 2018 fails.

Time bar and procedural timelines under Regulation 17 of the Customs Broker Licensing Regulations, 2018 - Whether the adjudication and revocation proceedings were time barred under Regulation 17 of CBLR 2018 - HELD THAT: - The appellant contended that inquiries and reports required under Regulation 17(5) should have been completed within prescribed timelines and relied upon relevant circulars and precedents to show delay. The Tribunal observed that the appellant had made out a strong prima facie case on limitation. However, because the Tribunal decided the matter on merits -exonerating the appellant on the substantive charges- it declined to pronounce a final finding on limitation and did not set aside the proceedings solely on time bar grounds. [Paras 2, 4]

Limitation issue not finally decided; prima facie case on time bar noted but left open.

Proportionality in imposition of revocation of licence - Whether revocation of the appellant's Customs Broker licence was proportionate and sustainable - HELD THAT: - The Tribunal emphasised that revocation of a CHA licence is an extreme, livelihood denying penalty that should be imposed only in the rarest of rare cases involving serious, mala fide or dishonest conduct such as mis declaration, undervaluation, mis classification or evasion. On facts, the Tribunal found no evidence of such misconduct by the appellant; the appellant had acted bona fide (including informing DRI) and the adjudicating authority failed to consider material statutory provisions and documentary evidence which attributed primary responsibility to the shipping line and CONCOR. Given the absence of culpable conduct by the appellant and the regulatory allocation of duties to others, the Tribunal held that revocation was a disproportionate and unwarranted punishment. [Paras 4, 5]

Revocation was disproportionate; impugned order set aside and appeal allowed.

Final Conclusion: The Tribunal set aside the adjudicating order revoking the appellant's Customs Broker licence and holding the appellant liable under Regulation 10(d), 10(e) and 10(m) of CBLR 2018, finding that the regulatory scheme and facts attribute primary responsibility to the shipping line and CONCOR (transporter/custodian), that the CHA's role was limited to document processing and did not extend to advance intimation, placement or seal verification, and that revocation was disproportionate; the limitation plea was noted as prima facie strong but not finally decided.

Eligibility for exemption under Notification No. 21/2002-Cus - interpretation of tariff description and plain meaning rule in tax law - inability of adjudicatory forum to supply omission or punctuation in a notification - distinction between product description and end use (capability vs matching description) - invocation of extended period of limitation for duty recovery based on suppression or misrepresentation - penalty cannot be sustained where extended period is not invokable

Eligibility for exemption under Notification No. 21/2002-Cus - interpretation of tariff description and plain meaning rule in tax law - distinction between product description and end use (capability vs matching description) - inability of adjudicatory forum to supply omission or punctuation in a notification - Whether the imported goods described as Skin Barriers Micropore Surgical Tapes qualify for exemption under Notification No. 21/2002-Cus (Sl. No. 363A). - HELD THAT: - The Tribunal examined whether the impugned imports matched the description contained in the notification and whether any punctuation or omission in the notification could be supplied to bring the goods within the exemption. The Bench noted that a coordinate decision (3M India Ltd.) and the Apex Court's pronouncements require application of the plain meaning rule where the language of a taxing notification is clear. On the material placed, the Revenue produced evidence that products known as "Skin Barriers Micropore Surgical Tapes" exist and that the appellants' goods did not satisfy the description in the notification. The Tribunal held that it is not competent to supply a missing comma or otherwise rewrite the notification; where the description is clear and corresponding products exist, the goods must match that description to qualify. While noting that some parts of the notification list items used in ostomy procedures, the Bench emphasised that eligibility turns on whether the imported goods fall within the textual description, not merely on their potential or incidental use in ostomy procedures. Applying these principles, the Tribunal concluded that the impugned goods do not satisfy the description and are not eligible for the exemption. [Paras 11, 12, 23, 26]

The impugned goods are not eligible for exemption under Notification No. 21/2002-Cus, and the demand of duty for the normal period is confirmed.

Invocation of extended period of limitation for duty recovery based on suppression or misrepresentation - penalty cannot be sustained where extended period is not invokable - Whether the extended period of limitation for recovery of duty could be invoked and whether penalties could be imposed. - HELD THAT: - The appellants demonstrated a history of importing the goods since 1993 with departmental examination and allowance of exemption in earlier consignments, including after introduction of self assessment. The Tribunal found that there was no suppression or misrepresentation by the appellants warranting invocation of the extended period. In view of absence of deliberate concealment, the extended limitation could not be applied and consequently penalties premised on such extended period were not maintainable. The Tribunal therefore restricted recoveries to the normal period and set aside imposed penalties. [Paras 13]

Extended period of limitation cannot be invoked; demands confined to the normal period and penalties set aside.

Final Conclusion: Appeals partly allowed: duty demand confirmed for the normal limitation period (goods held not eligible for the exemption), but extended period and penalties set aside; Revenue appeals disposed in the same terms.

Scheme of Arrangement by way of Demerger - Dispensing with convening of meetings of shareholders and creditors - Appointed date for demerger - Accounting treatment in conformity with Section 133 of the Companies Act, 2013 - Service of notice on regulatory and tax authorities

Dispensing with convening of meetings of shareholders and creditors - Dispensation of convening/holding meetings of equity shareholders and unsecured creditors in respect of the Demerged Company - HELD THAT: - The Tribunal recorded that the Demerged Company has two equity shareholders and two unsecured creditors and that certificates from chartered accountants and consent affidavits of all stakeholders were placed on record. Having considered those consents, and noting that there are no secured creditors, the Tribunal dispensed with convening meetings of the equity shareholders and of the unsecured creditors for the Demerged Company and observed that convening a meeting of secured creditors does not arise. [Paras 7, 13]

Convening of meetings of equity shareholders and unsecured creditors of the Demerged Company is dispensed with; no meeting for secured creditors is necessary.

Dispensing with convening of meetings of shareholders and creditors - Dispensation of convening/holding meetings of equity shareholders and unsecured creditors in respect of the Resulting Company - HELD THAT: - The Tribunal noted that the Resulting Company filed a list of seven equity shareholders and twelve unsecured creditors together with consent affidavits and certificates from chartered accountants. On the basis of the consent affidavits of all seven shareholders and affidavits from ten unsecured creditors representing 91.26% in value of unsecured debt, and the absence of secured creditors, the Tribunal dispensed with convening meetings of equity shareholders and of unsecured creditors; meeting of secured creditors was unnecessary. [Paras 8, 13]

Convening of meetings of equity shareholders and unsecured creditors of the Resulting Company is dispensed with; no meeting for secured creditors is necessary.

Appointed date for demerger - Fixing of the appointed date for the Scheme - HELD THAT: - The Tribunal accepted and confirmed the appointed date as specified in the Scheme. That appointed date is recorded in the order and will govern the operative effect of the demerger under the Scheme. [Paras 12]

Appointed date for the Scheme is fixed and confirmed as 01st April, 2022.

Accounting treatment in conformity with Section 133 of the Companies Act, 2013 - Validation of the accounting treatment proposed under the Scheme - HELD THAT: - The Tribunal noted that certificates from the statutory auditors of the applicant companies were placed on record certifying that the accounting treatment proposed in the Scheme conforms with the applicable provisions and is in accordance with Section 133 of the Companies Act, 2013. On that basis the Tribunal accepted that the accounting treatment is in conformity with the statutory requirement. [Paras 10]

Accounting treatment proposed in the Scheme is accepted as being in conformity with Section 133 of the Companies Act, 2013.

Service of notice on regulatory and tax authorities - Directions as to service of notice of the application on statutory and sectoral authorities - HELD THAT: - The Tribunal directed that notice of the application be served on the Regional Director, Registrar of Companies and the Income Tax Department (with disclosure of PAN, ward numbers and assessing officers to enable a timely reply), and on any other sectoral regulators as required. These directions ensure that interested regulatory and tax authorities are given opportunity to respond to the Scheme application. [Paras 14]

Notice of the application shall be served on the Regional Director, Registrar of Companies, Income Tax Department (with specified disclosures) and any other sectoral regulators as required.

Final Conclusion: The joint application under sections 230-232 for approval of the Scheme of Arrangement by way of Demerger is allowed on the stated terms: meetings of shareholders and unsecured creditors insofar as dispensed with are dispensed with, the appointed date is fixed as 01st April, 2022, the accounting treatment is accepted as compliant with Section 133, and directed notices shall be served on the specified authorities; the application is disposed of accordingly.

Scheme of Merger by Absorption - Dispensation of meetings of shareholders and creditors - Convening of meetings and publication of notices - Approval under sections 230-232 of the Companies Act, 2013 - Exemption from notarization/apostille requirements - Service of notice to statutory authorities including Income Tax Authorities - Filing of Second Motion Petition with disclosure of PAN

Dispensation of meetings of shareholders and creditors - Scheme of Merger by Absorption - Dispensation of meetings of equity shareholders, optionally convertible and non-convertible preference shareholders, secured creditors and unsecured creditors of the Transferee (Applicant) Company. - HELD THAT: - The Tribunal considered the application under the Companies Act, 2013 for sanction of a Scheme of Merger by Absorption and the certifications of shareholder and creditor consents submitted by the Applicant. Having examined the records and the affidavits/certificates as to consents, the Tribunal exercised its power to dispense with the convening of meetings of equity shareholders, optionally convertible and non-convertible preference shareholders, secured creditors and unsecured creditors of the Transferee Company and thereby dispensed with the requirement of issuing and publishing notices for such meetings. [Paras 18]

Meetings of the equity shareholders, preference shareholders, secured creditors and unsecured creditors of the Transferee Company are dispensed with.

Exemption from notarization/apostille requirements - Application for exemption from filing notarized/apostilled documents. - HELD THAT: - The Applicant sought exemption from filing notarized/apostilled documents by a separate application (CA No. 29/2022). The Tribunal considered that request and allowed the exemption sought, permitting the records to be accepted without the notarization/apostille formalities as prayed. [Paras 17]

Exemption from filing notarized/apostilled documents is allowed.

Filing of Second Motion Petition with disclosure of PAN - Service of notice to statutory authorities including Income Tax Authorities - Liberty and directions to the Applicant to file the Second Motion Petition with specific prayers for service of notices on statutory authorities and disclosure of PAN in the petition title. - HELD THAT: - While allowing the First Motion Application, the Tribunal granted liberty to the Applicant to present the Second Motion Petition and directed that the Applicant must make a specific prayer for sending notice to the Central Government, Registrar of Companies, Competition Commission of India, Official Liquidator, Income Tax Authorities and other relevant statutory authorities. The Tribunal further directed that the Applicant should disclose the PAN numbers of the Applicant Company in the title of the Second Motion Petition so as to provide the Income Tax Department and other authorities a proper opportunity to respond. [Paras 19]

Liberty granted to file Second Motion Petition; Applicant directed to seek service of notice on the listed statutory authorities and to disclose PAN in the petition title.

Sanction of First Motion Application - Scheme of Merger by Absorption - Disposition of CA (CAA) No. 09/BB/2022 (First Motion Application). - HELD THAT: - The Tribunal, after hearing counsel and perusing the records including board resolution, valuation and auditor certificates and consent evidence, allowed the First Motion Application seeking directions in respect of the proposed Scheme of Merger by Absorption, subject to the directions regarding filing of the Second Motion Petition and service upon statutory authorities. The order records supply of the copy of the order to the Applicant's counsel. [Paras 18, 19]

CA (CAA) No. 09/BB/2022 stands allowed, with the directions recorded for the Second Motion Petition and service/disclosure requirements.

Final Conclusion: The Tribunal allowed the First Motion Application for sanctioning the Scheme of Merger by Absorption, dispensed with convening meetings of the shareholders and creditors of the Transferee Company, allowed exemption from notarization/apostille of documents, and granted liberty to file the Second Motion Petition with directions to serve specified statutory authorities and to disclose the Applicant Company's PAN in the petition title.

Violation of Regulation 3 and 4 of the SEBI (PFUTP) Regulations, 2003 - Applicability of penalty under Section 15HA of the SEBI Act, 1992 - Reversal trades / synchronized trades as market manipulation and deceptive device - Precedential application of Tribunal decision - Settlement of proceedings under Section 15JB and settlement schemes under Regulation 26 of the SEBI (Settlement Proceedings) Regulations, 2018

Violation of Regulation 3 and 4 of the SEBI (PFUTP) Regulations, 2003 - Applicability of penalty under Section 15HA of the SEBI Act, 1992 - Reversal trades / synchronized trades as market manipulation and deceptive device - Precedential application of Tribunal decision - Appeals against AO orders imposing penalty under Section 15HA for alleged reversal trades were dismissed and the transactions were held to be manipulative and violative of Regulation 3 and 4. - HELD THAT: - The Tribunal found that the appellants did not dispute execution and subsequent reversal of trades alleged in the show cause notices. Execution of trades in an illiquid market with precise order placement, coupled with significant price differences between sell and buy executed within minutes or seconds, indicated prior meeting of minds to effect reversal trades at predetermined prices. Such transactions were held to be manipulative, a deceptive device to create desired losses or profits, and therefore fraudulent, amounting to violations of Regulation 3 and 4 of the PFUTP Regulations. The Tribunal applied its earlier decision in Global Earth Properties and Developers Pvt. Ltd. (supra) as directly covering the controversy and dismissed the appeals accordingly. The Tribunal also noted that arguments based on non-joinder of brokers, non-supply of investigation report, alleged excessiveness of penalty, and reliance on other Supreme Court decisions were not sufficient to alter this conclusion where the factual admission of trades and their character as manipulative remained unchallenged. [Paras 2, 3, 5]

All appeals dismissed; the impugned transactions were fraudulent and violative of Regulation 3 and 4, attracting penalty under Section 15HA as per precedent.

Settlement of proceedings under Section 15JB - Settlement schemes for specified classes under Regulation 26 of the SEBI (Settlement Proceedings) Regulations, 2018 - Discretion to frame one-time settlement scheme for large class of similar defaults - SEBI was directed to consider framing a one-time settlement scheme under Regulation 26 for the large class of entities implicated in similar illiquid stock-option reversal trades. - HELD THAT: - The Tribunal observed that SEBI investigation revealed thousands of entities engaged in non-genuine reversal trades, resulting in over 14,000 proceedings pending before Adjudicating Officers and logistical congestion. Noting the non-obstante power in Regulation 26, which permits the Board to specify procedure and terms of settlement for any class of persons involved in similar specified defaults, the Tribunal held that the affected entities form a class suitable for a scheme under Clause 26. The Tribunal recommended that SEBI frame an attractive, one-time settlement scheme, taking into account (a) the amendment history and differing minima under Section 15HA (pre- and post-September 8, 2014), (b) the fact that many trades involved few transactions and small gains and some noticees were exonerated, and (c) possible reduction of penalties already imposed. The Tribunal directed the Registry to send a certified copy of the order to the SEBI Chairperson for necessary action. [Paras 16, 17, 18, 20, 21]

SEBI should reconsider and, pursuant to Regulation 26, frame a one-time settlement scheme for the class of persons involved in similar reversal-trade defaults and take into account relevant factors including pre- and post-amendment penalties and prior exonerations; Registrar directed to send certified copy to SEBI Chairperson.

Final Conclusion: The Tribunal dismissed the appeals, holding the reversal trades to be manipulative and violative of Regulation 3 and 4 and liable to penalty under Section 15HA (following Tribunal precedent), and advised SEBI to formulate, under Regulation 26 of the Settlement Regulations, 2018, an attractive one-time settlement scheme for the large class of similarly placed entities to clear the backlog and consider adjustments in penalty quantum.

Insider - Unpublished Price Sensitive Information (UPSI) - Connected person - Structured digital database (SD database) under Regulation 3(5) - Burden of proof on the regulator - Ad interim ex parte restraint / debarment from securities market - Prima facie satisfaction

Insider - Unpublished Price Sensitive Information (UPSI) - Structured digital database (SD database) under Regulation 3(5) - Burden of proof on the regulator - Ad interim ex parte restraint / debarment from securities market - Sustainability of the confirmatory order upholding the ex parte ad interim restraint placed on the appellant from buying or selling securities. - HELD THAT: - The Tribunal held that continuation of the interim debarment could not be sustained in respect of the appellant. The SD database mandated under Regulation 3(5), which records persons who had direct access to UPSI with time stamping and audit trails, did not include the appellant or the designated employee alleged to have communicated UPSI, prima facie indicating absence of direct access to UPSI (para 10(a), (b)). Recorded telephonic calls and emails between the appellant and the designated employee related to non price sensitive employment benefits and thus discharged the appellant's initial burden of explanation as to non possession or non communication of UPSI (para 10(c)). The Tribunal reiterated that the onus to prove access to UPSI or insider status lies on the prosecution/regulator and not on the appellant, and that burden was not met on the material before the WTM (para 10(d)). Given absence of direct or indirect evidence against the appellant, his non trading in the scrip, and ongoing investigation, continuing the debarment on prima facie suspicion or departmental expectation from his senior position was unjustified (paras 10(e), 11, 13). The Tribunal also noted that directions to recover alleged unlawful gains had been issued against the trading partnership firms, thereby safeguarding market interest (para 12). The observations of the Tribunal are tentative and intended not to influence the continuing investigation (para 14). [Paras 11, 12, 13, 14, 15]

The confirmatory order and the ad interim restraint, insofar as they relate to the appellant, are quashed and the appeals are allowed; parties to bear their own costs.

Final Conclusion: On the material before it, and having regard to absence of the appellant's name in the SD database, evidence that communications related to non sensitive matters, the regulator's unestablished burden of proof and the appellant's non trading in the scrip, the Tribunal set aside the interim debarment and quashed the confirmatory order, while leaving the ongoing investigation to proceed unimpaired.

Reference of disputes to arbitration - appointment of arbitral tribunal under Section 11 - validity of demand and counter-demand - permissibility of party-appointed arbitrator under contractual clause - effect of pending insolvency proceedings and moratorium on arbitration - priority of insolvency proceedings over arbitration

Validity of demand and counter-demand - Petitioner had made a demand/counter-demand and disputes had arisen between the parties. - HELD THAT: - The respondent issued a demand letter dated 31.12.2021 which was met by the petitioner's reply-cum-notice of dispute dated 13.01.2021. The reply not only disputed the respondent's claim but also called upon the respondent to pay a specified sum to the petitioner and recorded that disputes had arisen; the petitioner thereafter proceeded to appoint an arbitrator under the contract. The court noted that the merits or validity of the claimed amounts need not be adjudicated in a Section 11 petition, but the correspondence sufficed to show existence of disputes arising under the agreement. [Paras 8, 9, 10]

There was a valid demand/counter-demand and an arbitration-triggering dispute existed between the parties.

Permissibility of party-appointed arbitrator under contractual clause - appointment of arbitral tribunal under Section 11 - Although the contract authorised the petitioner to appoint a sole arbitrator, the petitioner could not unilaterally constitute an Arbitral Tribunal in view of precedents and therefore legitimately sought court appointment under Section 11. - HELD THAT: - The arbitration clause provided that the petitioner would be entitled to appoint a sole arbitrator. However, having regard to the Supreme Court's decision in Perkins Eastman Architects DPC v. HSCC (India) Ltd., the petitioner was not entitled to constitute the Arbitral Tribunal by unilateral appointment. Consequently, the petitioner was entitled to invoke the supervisory jurisdiction of the High Court under Section 11 for appointment of an arbitrator to adjudicate the claims and counterclaims. [Paras 11, 20]

Petitioner was not entitled to unilaterally constitute the tribunal and the court properly appointed a sole arbitrator under Section 11.

Effect of pending insolvency proceedings and moratorium on arbitration - priority of insolvency proceedings over arbitration - A pending insolvency petition does not automatically bar arbitration proceedings so long as the insolvency petition has not been admitted and no moratorium has commenced; accordingly, the objection based on a Section 9 petition before NCLT was rejected. - HELD THAT: - The respondent relied on Indus Biotech Private Ltd. to contend that the petitioner should have filed a Section 8 application before the NCLT where a Section 9 insolvency petition is pending. The court observed that Indus Biotech holds that where an insolvency petition is admitted and a moratorium is in place the IBC proceedings take precedence and an arbitration application under Section 8 would not be maintainable. However, so long as the insolvency petition before the NCLT remains pending and unadmitted and no moratorium has commenced, there is no embargo on initiating or referring disputes to arbitration. Therefore the objection that the Section 9 petition ousted the remedy under the Arbitration Act was without merit in the present facts. [Paras 15, 16, 17, 18, 19]

The pendency of a Section 9 petition before the NCLT does not preclude court appointment of an arbitrator where the insolvency petition has not been admitted and no moratorium has begun.

Final Conclusion: Petition under Section 11 was allowed: the court found a dispute triggering the arbitration clause, held that the petitioner could not unilaterally constitute the tribunal and that a pending unadmitted insolvency petition did not bar arbitration; Mr. Justice S.P. Garg (Retd.) was appointed sole arbitrator, his fees to follow the Fourth Schedule of the Act, and he shall make disclosures under Section 12 within two weeks; petition disposed accordingly.

Liquidation under Section 33 - committee of creditors resolution - appointment of liquidator - consent of resolution professional - moratorium under Section 14 and Section 33(5) - notice of discharge under Section 33(7) - duties of liquidator under Section 35(1) - preliminary report under Regulation 13

Liquidation under Section 33 - committee of creditors resolution - Liquidation of the corporate debtor ordered on account of rejection of the resolution plan and the Committee of Creditors' resolution to liquidate. - HELD THAT: - The Tribunal recorded that the CIRP produced only one resolution plan which was rejected by the Committee of Creditors through e-voting, and that in the 9th CoC meeting the CoC resolved with 100% vote share to file for liquidation. Having found no viable resolution plan and that the CoC had duly considered and decided for liquidation, the adjudicating authority allowed the application under Section 33(2) of the Code and ordered commencement of liquidation in the manner prescribed by the Code and applicable regulations. [Paras 16, 18, 24, 26]

Application under Section 33(2) allowed and corporate debtor directed to be liquidated as per Chapter III of Part II of the Code.

Appointment of liquidator - consent of resolution professional - Appointment of Mr. Debashish Nanda as Liquidator based on implied withdrawal of the incumbent Resolution Professional's consent and absence of written consent to act as liquidator. - HELD THAT: - The Tribunal noted that the incumbent Resolution Professional had annexed the consent form of Mr. Debashish Nanda and that no written consent in the prescribed form was placed on record by Mr. Shravan Kumar Vishnoi to act as liquidator. In view of Section 34(1) read with Section 34(4)(c) of the Code and the absence of the required written consent from the incumbent, the Tribunal held it appropriate to appoint Mr. Debashish Nanda as Liquidator. [Paras 25]

Mr. Debashish Nanda appointed as Liquidator.

Moratorium under Section 14 and Section 33(5) - notice of discharge under Section 33(7) - duties of liquidator under Section 35(1) - preliminary report under Regulation 13 - Consequential directions on cessation of earlier moratorium, commencement of liquidation moratorium, discharge of employees, and duties and timelines for the liquidator were issued. - HELD THAT: - The Tribunal directed that the earlier moratorium under Section 14 shall cease and a fresh moratorium under Section 33(5) shall commence. The order is to be treated as notice of discharge to officers, employees and workmen under Section 33(7). The Liquidator was directed to proceed with the liquidation process in accordance with Chapter III of Part II of the Code, to investigate the corporate debtor's financial affairs pursuant to Section 35(1), to pursue pending applications and recovery steps as per law, and to submit a preliminary report within seventy-five days from the liquidation commencement date in accordance with Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016. Registry was directed to communicate the order to RoC and IBBI and copies were to be sent to stakeholders for necessary action. [Paras 26]

Fresh moratorium under Section 33(5) to commence; discharge notice under Section 33(7) deemed given; liquidator to carry out duties under Section 35(1) and submit preliminary report as per Regulation 13.

Final Conclusion: The Tribunal allowed the liquidation application under Section 33(2) of the Code, appointed Mr. Debashish Nanda as Liquidator in place of the incumbent RP due to absence of written consent, directed commencement of liquidation and associated moratorium and discharge consequences, and issued consequential directions to the Liquidator and registry in accordance with the Code and relevant regulations.

Voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code - Declaration of solvency and audited financial statements - Special resolution for voluntary liquidation and appointment of liquidator - Distribution of assets in specie among contributories - Compliance with IBBI (Voluntary Liquidation Process) Regulations, 2017 - Final report of the liquidator and application for dissolution - Notification to Registrar of Companies and statutory authorities - Preservation of liquidator's registers and books for eight years

Voluntary liquidation under Section 59 of the Insolvency and Bankruptcy Code - Declaration of solvency and audited financial statements - Special resolution for voluntary liquidation and appointment of liquidator - Compliance with IBBI (Voluntary Liquidation Process) Regulations, 2017 - Final report of the liquidator and application for dissolution - Whether the petitioner complied with the statutory and regulatory requirements for voluntary liquidation under Section 59 and the Voluntary Liquidation Process Regulations, 2017 and whether the Corporate Person should be dissolved. - HELD THAT: - The Tribunal examined the declarations by the majority of directors verifying solvency and accompanying audited financial statements and valuation, the special resolution approving voluntary liquidation and appointment of the liquidator within the statutory timeframe, the public announcement and invitation for claims, preparation of stakeholder list and registers, transfer and management of company funds, preparation and submission of the preliminary and final reports, intimation to statutory authorities including the Registrar of Companies and the Income Tax Department (which issued a 'No Dues Certificate' for filings up to AY 2020-21), and closure of the company bank account. The Tribunal found that the material requirements under Section 59 and the applicable Regulations were complied with and that the affairs of the Corporate Person had been wound up and assets liquidated to the extent required to permit dissolution. On that basis the petition for dissolution was allowed and the Corporate Person was ordered to stand dissolved with immediate effect. [Paras 3, 4, 5]

Petition allowed; M/s. Raajeevan Hospitals Private Limited is dissolved with immediate effect.

Notification to Registrar of Companies and statutory authorities - Preservation of liquidator's registers and books for eight years - Directions to be issued to the liquidator concerning transmission of the dissolution order and preservation of records. - HELD THAT: - In exercise of the powers under Section 59(7) the Tribunal directed the liquidator to forward a copy of the dissolution order to the Registrar of Companies for appropriate entry on the MCA website and to furnish copies to all statutory authorities connected with the affairs of the Corporate Person within specified timelines. The Tribunal further directed that the liquidator preserve either physically or electronically the reports, registers and books of account referred to in the Regulations for a period of at least eight years after dissolution, either with himself or with an information utility. [Paras 5]

Liquidator directed to forward copies of the order to the Registrar of Companies and statutory authorities and to preserve the records for at least eight years.

Final Conclusion: The petition filed by the liquidator is allowed; the company stands dissolved immediately and the liquidator is directed to notify the Registrar of Companies and statutory authorities and to preserve the liquidation records for eight years.

Operational debt - Corporate Insolvency Resolution Process - Maintainability of an application under Section 9 - Pre-existing dispute - Instrumentality of the State - Applicability of the Insolvency and Bankruptcy Code to Government Companies

Operational debt - Pre-existing dispute - Maintainability of an application under Section 9 - Whether the Section 9 application by the applicant is maintainable in view of a pre-existing dispute regarding the quantum and existence of an agreement for brokerage/commission, and whether the claim qualifies as an operational debt. - HELD THAT: - The Tribunal found that the applicant had rendered services but there was no concluded written agreement fixing the quantum of brokerage; the applicant's letter itself qualified the proposed charges as "to be discussed and mutually agreed" and no evidence of any mutual agreement was produced. The respondent had communicated that the State Government approved a lesser brokerage and expressed willingness to pay that approved amount, while the applicant did not accept or bill for that amount. On these facts the Tribunal held that a genuine and bona fide pre-existing dispute existed as to the quantum payable and the terms of payment. In view of the existence of that dispute, the application under Section 9 was not maintainable and could not be entertained as a claim for operational debt under the Code. The Tribunal therefore rejected the Section 9 application on this ground. [Paras 13, 15]

Application under Section 9 dismissed as not maintainable owing to a pre-existing bona fide dispute regarding quantum and absence of an agreed contract; claim not admitted as operational debt.

Corporate Insolvency Resolution Process - Whether the adjudicating forum has jurisdiction to entertain the application and whether the application was filed within the period of limitation. - HELD THAT: - The Tribunal noted that the registered office of the respondent is in Ahmedabad and accordingly the Tribunal has territorial jurisdiction to hear the application. The date of default as shown in the application and the filing date establish that the petition was filed within the limitation period specified in the form submitted. These procedural prerequisites were satisfied. [Paras 11, 12]

Tribunal has jurisdiction and the application was filed within the period of limitation, but despite meeting these requirements the petition is dismissed on merits due to pre-existing dispute.

Applicability of the Insolvency and Bankruptcy Code to Government Companies - Instrumentality of the State - Whether the Tribunal adjudicates on the applicability of the Code to the respondent being a Government Company wholly owned by the State. - HELD THAT: - The Tribunal noted binding Supreme Court authority that the Code applies to Government Companies unless the company is performing sovereign functions or is an instrumentality of the State; however, the broader question of applicability of the IBC to government companies is pending before the Supreme Court. In view of that pending reference and the factual and legal complexity involved in determining whether a government company is an instrumentality of the State, the Tribunal expressly restrained itself from expressing any final opinion on that question in this proceeding. [Paras 14]

Question of IBC's applicability to the Government Company left open for determination by higher judicial authority; Tribunal refrains from deciding the issue.

Final Conclusion: The Section 9 petition is dismissed on merits because a bona fide pre-existing dispute existed as to the quantum and terms of brokerage, notwithstanding that the Tribunal had jurisdiction and the petition was filed within limitation; the broader question of the IBC's applicability to government companies was not decided and is left open.

Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - statutory demand under Section 8 of the Code - operational debt - existence of dispute / notice of dispute - rejection under Section 9(5)(2)(d) pursuant to Mobilox principle

Existence of dispute / notice of dispute - operational debt - statutory demand under Section 8 of the Code - Whether the application under Section 9 seeking initiation of CIRP on account of claimed detention and demurrage charges could be admitted in view of a pre existing dispute raised by the corporate debtor. - HELD THAT: - The Tribunal found that the claim asserted by the applicant related solely to detention and demurrage charges and that a dispute in respect of liability for those charges existed prior to the statutory demand. The record shows a legal notice dated 08.09.2020 (raising issues about liability and payment by a third party buyer) and an email reply by the corporate debtor before the Section 8 demand, as well as the corporate debtor's subsequent responses contesting liability and asserting settlement/adjustment of payments. Applying the principle that where a plausible dispute exists on facts or law the adjudicating authority must refuse admission (as explained in the Mobilox line of authority), the Tribunal held that the dispute was not a spurious or illusory defence requiring detailed adjudication at the admission stage, and therefore the Section 9 application could not be admitted. [Paras 18, 19, 20]

The Section 9 application is rejected because a pre existing dispute regarding detention and demurrage charges was established, precluding admission of the insolvency petition.

Final Conclusion: Application under Section 9 of the IBC, 2016 filed by the operational creditor was rejected and disposed of on the ground that a pre existing dispute as to liability for detention and demurrage charges existed prior to the statutory demand.

Initiation of insolvency resolution process against personal guarantor - NCLT jurisdiction to admit personal guarantor proceedings where corporate CIRP is pending - Co extensive liability of surety under the Indian Contract Act - Irrevocable guarantee and enforceability of demand notice - Approval of a corporate resolution plan does not ipso facto discharge the personal guarantor - Moratorium during insolvency resolution process of a personal guarantor

NCLT jurisdiction to admit personal guarantor proceedings where corporate CIRP is pending - NCLT is the competent forum to admit an application under the Personal Guarantor Rules where a Corporate Insolvency Resolution Process in respect of the Corporate Debtor is pending. - HELD THAT: - The Tribunal applied the principle that when corporate CIRP is pending before the Adjudicating Authority, the NCLT has jurisdiction to entertain an application for insolvency resolution of a personal guarantor to that corporate debtor. The decision follows the recognition of the Central Government notification bringing Part III of the Code into force for personal guarantors and the statutory linkage in Section 60(2) of the Code which vests competence in the Adjudicating Authority dealing with the corporate insolvency. The Tribunal therefore proceeded to hear and decide the application filed by the Financial Creditor against the personal guarantor of the Corporate Debtor. [Paras 2]

The Tribunal held that it was the competent forum to admit the application against the personal guarantor.

Co extensive liability of surety under the Indian Contract Act - Approval of a corporate resolution plan does not ipso facto discharge the personal guarantor - Irrevocable guarantee and enforceability of demand notice - The personal guarantor's liability survives approval of a resolution plan of the corporate debtor and the guarantor remains liable under an irrevocable deed of guarantee; the creditor may realise dues from the guarantor upon invocation. - HELD THAT: - Relying on the co extensive liability principle under Section 128 of the Indian Contract Act and the Supreme Court's exposition that approval of a resolution plan does not automatically discharge a personal guarantor, the Tribunal found that the guarantor's obligations continued. The Deed of Guarantee contained an irrevocability clause and provided that a demand notice by the lenders would constitute sufficient notice to the guarantors. In view of these contractual terms and the authoritative pronouncements, the Tribunal concluded that the Financial Creditor remained entitled to proceed against the personal guarantor for recovery of the invoked guarantee. [Paras 13, 14]

The Tribunal held that the guarantor remained liable notwithstanding approval of the corporate resolution plan and that the invoked, irrevocable guarantee supported initiation of proceedings against the guarantor.

Initiation of insolvency resolution process against personal guarantor - Moratorium during insolvency resolution process of a personal guarantor - The application under Section 95 read with the Personal Guarantor Rules was admitted and Corporate Insolvency Resolution Process (CIRP) initiated against the personal guarantor; moratorium and procedural directions were imposed and the Resolution Professional directed to proceed as provided by the Code. - HELD THAT: - On consideration of the application, the IRP's report that default existed above the monetary threshold, the existence of invoked guarantee and requisite filing formalities, and in view of the absence of a recommendation for negotiation, the Tribunal found the case fit for admission. The Tribunal accordingly admitted the petition, declared the moratorium from the date of admission (subject to the statutory time limits), appointed/confirmed the Resolution Professional and directed publication of notices, claim submission timelines, preparation of the list of creditors, formulation and submission of a repayment plan, and convening of creditors' meeting in accordance with the Code. The Tribunal emphasised that the Resolution Professional shall perform duties in compliance with the Code of Conduct. [Paras 13]

The Tribunal admitted the application, initiated CIRP against the personal guarantor, declared moratorium and issued directions for the Resolution Professional to carry out the statutory processes.

Final Conclusion: The Tribunal admitted the application filed by the Financial Creditor under the Personal Guarantor provisions, held that the NCLT was the competent forum, concluded that the guarantor's liability survives approval of the corporate resolution plan and that an invoked irrevocable guarantee justified initiation of CIRP against the personal guarantor, and consequently initiated the CIRP with attendant moratorium and statutory directions to the Resolution Professional.

Prospective operation of executive notification - threshold limit for initiation of Corporate Insolvency Resolution Process - maintainability of insolvency petition determined by filing date - operational creditor's claim and minimum default amount - application of amended threshold to petitions filed on or after notification

Prospective operation of executive notification - application of amended threshold to petitions filed on or after notification - Notification dated 24/03/2020 increasing the minimum default limit is prospective and applies to applications filed on or after that date. - HELD THAT: - The Tribunal considered whether the Ministry of Corporate Affairs notification of 24/03/2020 (which raised the minimum default threshold) operates retrospectively. While noting an earlier NCLAT view that the notification is prospective and did not apply to petitions pending before its issuance, the Tribunal held that where an application is filed after the notification date the increased threshold governs maintainability. The Tribunal relied on the subsequent NCLAT decision in Jumbo Paper Products v. Hansraj Agrofresh Pvt. Ltd., which held that for petitions filed on or after 24/03/2020 the threshold of Rs. One Crore is applicable even if the date of default predates the notification. Applying that principle, the Tribunal concluded that the notification operates prospectively but governs petitions filed after its issuance.

The notification dated 24/03/2020 is prospective in nature and its increased threshold applies to petitions filed on or after 24/03/2020.

Threshold limit for initiation of Corporate Insolvency Resolution Process - maintainability of insolvency petition determined by filing date - operational creditor's claim and minimum default amount - Whether the petition filed by the operational creditor on 28/10/2020 is maintainable where the claimed default is below the increased threshold. - HELD THAT: - The petition before the Tribunal was filed on 28/10/2020, i.e., after the 24/03/2020 notification. The claimed debt in default is below the threshold established by the notification. In view of the binding principle that the amended threshold applies to applications filed on or after 24/03/2020, the petition is not maintainable. The Tribunal therefore dismissed the application relying on the NCLAT precedent that the threshold applicable to filings on or after the notification date is Rs. One Crore, regardless of the date of default.

The petition filed on 28/10/2020 is not maintainable because the claimed default amount is below the threshold prescribed by the notification applicable to petitions filed after 24/03/2020; the petition is dismissed.

Final Conclusion: The application under Section 9 of the IBC filed on 28/10/2020 is dismissed as not maintainable because it was filed after the Ministry of Corporate Affairs notification of 24/03/2020 raising the minimum default threshold, and the claimed debt is below that threshold.

Rectification of orders under NCLT Rules - de-listing of securities and effect on public shareholding obligations - extinguishment of existing share capital on effective date - typographical or clerical error not affecting substance of a resolution plan - monitoring committee compliance with de-listing

Rectification of orders under NCLT Rules - typographical or clerical error not affecting substance of a resolution plan - Direction in the order dated 14.10.2021 requiring the Resolution Applicant to maintain minimum 5% public shareholding is a typographical error and liable to be rectified. - HELD THAT: - The Tribunal examined the terms of the approved Resolution Plan (para 4.6.1) which expressly provided for de-listing of the Corporate Debtor's equity shares from BSE and NSE upon the NCLT approval of the Resolution Plan. The impugned order (para 10(10)(X)) simultaneously extinguished the existing share capital on the effective date and yet contained an inconsistent direction to maintain minimum 5% public shareholding which applies to listed companies. The Monitoring Committee had actioned the de-listing by intimating the stock exchanges and applications were filed; NSE and BSE allowed delisting with effect from 16.03.2022, such that the corporate debtor ceased to be a listed entity in accordance with the Resolution Plan. In these circumstances the Tribunal held that the requirement to maintain 5% public shareholding was unintended clerical/typographical error which does not affect the object or implementation of the Resolution Plan and may be rectified under the NCLT Rules. [Paras 5, 6]

The direction to maintain minimum 5% public shareholding in para 10(10)(X) of the order dated 14.10.2021 is a typographical error and the para is to be read without that requirement.

De-listing of securities and effect on public shareholding obligations - monitoring committee compliance with de-listing - extinguishment of existing share capital on effective date - Compliance with the Resolution Plan's delisting and extinguishment provisions has been effected and stands validated; no further public shareholding obligation survives post-delisting. - HELD THAT: - The Tribunal recorded that para 4.6.1 of the Resolution Plan required the Monitoring Committee to intimate stock exchanges and file the delisting application post NCLT approval. The Monitoring Committee transmitted the order to the exchanges and filed the requisite application. The NSE and BSE permitted delisting effective 16.03.2022. The order had already provided for extinguishment of existing share capital on the effective date. Given delisting and extinguishment have been carried out as envisaged by the approved plan, the statutory public shareholding norm applicable only to listed companies does not survive; therefore, no consequence arises from removing the inadvertent 5% requirement. [Paras 4, 5]

The Monitoring Committee's actions and the stock exchanges' approvals complete the delisting and, coupled with the extinguishment direction, confirm that the public shareholding requirement is inapplicable post-delisting.

Final Conclusion: IA No.12 of 2022 in CP(IB) 221 of 2019 is allowed; para 10(10)(X) of the order dated 14.10.2021 is rectified to omit the requirement to maintain minimum 5% public shareholding, leaving the extinguishment and the entitlement of the Resolution Applicant to issue new equity intact.

Insolvency Resolution Process against Personal Guarantor - NCLT jurisdiction where CIRP of Corporate Debtor is pending - Liability of surety co-extensive with principal debtor - Approval of a resolution plan does not discharge personal guarantor - Irrevocable Deed of Guarantee - Moratorium under Section 101 of the IBC, 2016

Insolvency Resolution Process against Personal Guarantor - NCLT jurisdiction where CIRP of Corporate Debtor is pending - Irrevocable Deed of Guarantee - Liability of surety co-extensive with principal debtor - Approval of a resolution plan does not discharge personal guarantor - Admission of the application under Section 95 of IBC, 2016 and initiation of Corporate Insolvency Resolution Process against the Personal Guarantor. - HELD THAT: - The Tribunal found that the Financial Creditor filed the application under Section 95 read with the Personal Guarantor Rules after invocation of the guarantee and service of demand notice. The IRP's report confirmed a default exceeding the statutory threshold and recommended admission. The Tribunal relied on the Deed of Guarantee (which contained an irrevocable guarantee clause), Section 128 of the Indian Contract Act regarding co extensive liability of surety, and the Supreme Court's decision in Lalit Kumar Jain that approval of a resolution plan does not ipso facto discharge a guarantor. Given that a CIRP in relation to the Corporate Debtor was pending before the Adjudicating Authority and that the guarantee obligations subsist, the Tribunal held that the NCLT is the proper forum and that this is a fit case for admission and initiation of CIRP against the Personal Guarantor. [Paras 10, 13]

Application under Section 95 admitted and Corporate Insolvency Resolution Process initiated against the Personal Guarantor.

Moratorium under Section 101 of the IBC, 2016 - Claims notice and creditors' meeting procedure - Repayment plan under Section 105 - Declaration of moratorium and directions to the Resolution Professional regarding publication of notice, claims invitation, preparation of list of creditors, and conduct and submission of repayment plan and creditor proceedings. - HELD THAT: - On admission, the Tribunal declared the moratorium operative from the date of admission for the period prescribed by the Code and recorded the concomitant restraints on legal actions, transfers and other specified transactions. The Tribunal directed the appointed Resolution Professional to publish the Adjudicating Authority's order, invite claims within the statutory period, prepare the list of creditors on the basis of disclosed information and received claims, and to prepare and submit a repayment plan within the timelines specified by the Code. The Tribunal also set out the procedure for convening and conducting the creditors' meeting and required the Resolution Professional to submit periodic reports and comply with the Code of Conduct.

Moratorium declared; the Resolution Professional directed to publish notice, invite and verify claims, prepare the creditors' list, convene creditors' meeting if required, and submit the repayment plan and periodic reports within the timelines prescribed by the Code.

Final Conclusion: The Tribunal admitted the Financial Creditor's application under Section 95 of the IBC, 2016, initiated CIRP against the Personal Guarantor, declared the statutory moratorium, and directed the Resolution Professional to take statutory steps to invite claims, prepare the creditors' list, convene creditor proceedings as necessary and submit a repayment plan within the timelines mandated by the Code.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - extension of time under settlement scheme - quashing of recovery notices - treatment of writ petition as representation - discretion of administrative authority to grant leeway by parity

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - extension of time under settlement scheme - Whether the Court should exercise its power to extend the timeframe prescribed under the Scheme and permit payment beyond the statutory deadline. - HELD THAT: - The Court recorded that ordinarily it is not appropriate for the Court to direct an extension of the timeframe prescribed under the Scheme, as such extensions fall within the prerogative of the respondents and are to be considered in light of administrative and factual realities. Consequently, the writ court refrained from issuing a blanket direction to extend the prescribed timeframe under the Scheme and left the question of any extension to the concerned authority to determine in accordance with its discretion. [Paras 5]

No direction granted by the Court for extension of the Scheme timeframe; extension is to be considered by the respondents in their discretion.

Treatment of writ petition as representation - discretion of administrative authority to grant leeway by parity - quashing of recovery notices - Whether the petitioner's writ petition should be remitted to the authority for consideration in view of the petitioner's illness and prior communications, and the manner in which such consideration is to be conducted. - HELD THAT: - In light of the petitioner's claim of serious illness and the correspondence placed on record after the Scheme deadline, the Court directed that the writ petition be treated as a representation and referred to the designated committee or other appropriate authority for disposal. The authority is to examine whether any leeway has been granted in other cases and, if so, whether the petitioner's circumstances are comparable such that similar treatment may be afforded. The Court mandated that this exercise be completed within a specified timeframe, thereby preserving the administrative discretion of the authority while ensuring an expeditious decision on the representation. [Paras 5, 6]

Writ petition to be treated as a representation and disposed of by the concerned authority on merits, including consideration of parity with other cases; disposal to be completed within eight weeks.

Final Conclusion: The petition was not allowed to the extent of directing an extension of the Scheme deadline; instead the writ petition is treated as a representation and remitted to the designated authority to consider, on the petitioner's stated illness and in comparison with any leeway granted in other cases, whether similar relief should be accorded, and to dispose of the representation within eight weeks.

Classification of services - works contract service - cum-duty value / inclusive of service tax value - voluntary compliance encouragement scheme (VCES) - verification and consequences - exemption for construction of road - penalty under the Finance Act and its incompatibility with amnesty schemes - calculation and quantification of service tax demand

Calculation and quantification of service tax demand - Whether the demand confirmed by the Commissioner suffers from calculation errors or inadequate explanation - HELD THAT: - The Tribunal found contradictions between the Commissioner's stated conclusion that a differential amount of Rs.1,29,744/- was recoverable (as recorded in paragraph 34) and the larger amount confirmed in the impugned order. The adjudicating order did not set out the calculation relied upon in a manner that reconciles the figures, and the Department's alternative calculation was not reflected or explained in the order. In view of these unexplained contradictions and the absence of a proper, transparent computation in the impugned order, the matter of quantification requires fresh consideration by the adjudicating authority. [Paras 13, 14]

Quantification/demand set aside for reconsideration; matter remanded to the adjudicating authority for proper calculation and explanation.

Classification of services - works contract service - Whether the adjudicating authority was correct in classifying the appellant's activities as "Works Contract Service" - HELD THAT: - The Tribunal observed that the Commissioner's classification was substantially based on the fact of the appellant's registration and contained internal contradictions (the Commissioner both criticised absence of documents and proceeded to classify on the basis of contracts). The Tribunal emphasised that classification must depend on the nature of the work and the terms of the contracts rather than nomenclature or registration entry, and that facts of cited precedents were not identical. Because the Commissioner did not consistently apply the correct criterion and did not adequately examine the contracts and related documents, the issue of proper classification needs fresh adjudication on the basis of the material to be placed by the appellant. [Paras 15, 17, 18, 20]

Classification not finally upheld; remanded for fresh appreciation of nature of services and contracts.

Cum-duty value / inclusive of service tax value - section 67(2) application - Whether the appellant is entitled to treat amounts as inclusive of service tax (cum-duty benefit) under section 67(2) - HELD THAT: - The Tribunal found that the appellant had made out a prima facie case for cum-duty treatment and that decisions relied upon by the appellant (including Advantage Media Consultant and related Tribunal authorities) supported the contention that amounts received may be treated as inclusive of tax under section 67 framework. The Tribunal noted that demands were based on Income Tax returns and TDS entries which may reflect gross (cum-tax) values. Given these considerations and the absence of a final determination in the impugned order on this point, the question of entitlement to cum-duty value requires reassessment by the adjudicating authority. [Paras 21, 22]

Entitlement to cum-duty treatment not finally determined; remanded for fresh consideration.

Exemption for construction of road - Whether the appellant's road-construction services are eligible for exemption - HELD THAT: - The Tribunal examined the statutory definitions and observed that the relevant provisions do not distinguish between public and private roads for the purpose of exclusion from certain taxable categories. The Commissioner's reasons - that the road was private, not for general public access, and that values were not separately stated - were found to be legally insufficient. Because the appellant did not place full evidence before the Commissioner, and the Commissioner did not apply the legal position correctly, the matter is remanded for the adjudicating authority to consider exemption claims afresh on the basis of documents and law. [Paras 23, 24, 25, 26]

Exemption issue not finally decided; remanded to adjudicating authority for fresh adjudication with opportunity to place documentary evidence.

Penalty under the Finance Act and its incompatibility with amnesty schemes - Voluntary Compliance Encouragement Scheme (VCES) - Whether penalties imposed on the appellant should be sustained in a case opened after a VCES declaration - HELD THAT: - The Tribunal held that imposing penalties in an assessment opened after a declaration under VCES would be contrary to the object of an amnesty scheme and would deter voluntary compliance. Given that the authorities may verify correctness of the VCES claim but that penal consequences would defeat the scheme's purpose, the Tribunal concluded that penalties ought not to be imposed in the circumstances of this case. [Paras 27]

Penalties imposed by the Commissioner set aside.

Final Conclusion: The appeal is partly allowed: issues of quantification, classification, cum-duty treatment and exemption for road construction are remanded to the adjudicating authority for fresh consideration on facts and law with opportunity to place documents; penalties originally imposed are set aside.

Cash refund of unutilised Cenvat credit - refund of Cenvat credit on account of closure of manufacturing activities - proviso to section 11B(2) of the Central Excise Act - cash refund where credit cannot be utilised

Cash refund of unutilised Cenvat credit - proviso to section 11B(2) of the Central Excise Act - cash refund where credit cannot be utilised - Cash refund under the proviso to section 11B(2) where an assessee is unable to utilise input/Cenvat credit - HELD THAT: - The Tribunal considered the question whether a cash refund is permissible where an assessee cannot utilise accumulated Cenvat credit. It followed the decision of the Bombay High Court in Gauri Plasticulture Pvt Ltd, which framed and answered the question in the negative. The Tribunal held that the High Court's reasoning is dispositive of the issue and therefore denied the appellant's contention seeking a cash refund of unutilised credit. [Paras 3]

Claim for cash refund of unutilised Cenvat credit denied; question answered against the assessee.

Refund of Cenvat credit on account of closure of manufacturing activities - cash refund of unutilised Cenvat credit - Whether refund of unutilised Cenvat credit can be granted on account of closure of manufacturing activities - HELD THAT: - The Tribunal examined whether a refund of unutilised Cenvat credit on closure of manufacturing activities can be granted. Relying on the Bombay High Court decision in Gauri Plasticulture Pvt Ltd, which answered this question negatively, and on earlier Tribunal precedent rejecting similar claims, the Tribunal concluded that refund on account of closure cannot be allowed. The appellant's grounds for setting aside the first appellate authority's order were found to lack merit in view of these authorities. [Paras 3]

Refund of unutilised Cenvat credit on account of closure of manufacturing activities not permissible; appeal dismissed.

Final Conclusion: Appeals dismissed; claims for refund of accumulated Cenvat credit (including on account of inability to utilise credit or closure of activities) are not permissible in light of the Bombay High Court decision relied upon and the Tribunal's earlier precedents.

Extended period of limitation - penalty and interest for extended period - distinction between site erected/fixed furniture and removable furniture - precedential effect of Craft Interiors Pvt. Ltd. and Inter scape - adjustment of amounts deposited against demand - Rule 41 of the CESTAT (Procedure) Rules, 1982

Distinction between site erected/fixed furniture and removable furniture - precedential effect of Craft Interiors Pvt. Ltd. and Inter scape - Whether the items found during search could be treated as excisable furniture contrary to the ratio of the cited precedents. - HELD THAT: - The Tribunal noted earlier decisions including the Hon'ble Supreme Court in Craft Interiors and this Tribunal in Inter scape which distinguish site erected or non removable installations from removable furniture. The Tribunal observed that the Commissioner attempted to distinguish those precedents but such a thin distinction could not be permitted to override binding precedent of the Supreme Court. The Tribunal recorded that, in a prior decision in respect of the same assessee, the penalty and interest for the extended period were set aside in light of that ratio and directed readjudication for the normal period; the present proceedings cannot evade those precedents. [Paras 4, 6, 7]

Findings treating the recovered items as excisable in a manner inconsistent with the ratios in Craft Interiors and Inter scape could not be sustained; the precedents control the legal classification.

Extended period of limitation - penalty and interest for extended period - Whether invocation of the extended period and imposition of penalty and interest were sustainable. - HELD THAT: - The Tribunal examined the Commissioner's confirmation of demand, interest and penalty including invocation of the extended period. It observed that the earlier Tribunal decision in respect of the assessee had set aside penalty and interest for the extended period on the ground that there existed reasonable doubt on liability. The present Commissioner's confirmation, even while attempting to distinguish precedent, could not be sustained. Taking these considerations together the Tribunal allowed the appeal partly on limitation grounds. [Paras 6, 8]

Invocation of the extended period and the related penalty/interest could not be sustained and the appeal was partly allowed on limitation grounds.

Rule 41 of the CESTAT (Procedure) Rules, 1982 - adjustment of amounts deposited against demand - Whether the matter should be remanded for recomputation or finally disposed of by adjusting amounts already deposited. - HELD THAT: - Although an earlier direction contemplated readjudication for the normal period, the Tribunal, with consent of both parties, invoked Rule 41 of the CESTAT (Procedure) Rules, 1982 to finally put an end to the long running litigation. The Tribunal noted that the assessee had paid an amount of Rs.3,50,000/- during investigation which exceeded the demand for the period within limitation and would meet the interest component. In view of this, the Tribunal declined to remit the matter for fresh computation and directed adjustment of the deposited amount against the demand within limitation; the assessee was estopped from claiming any refund of any balance. [Paras 7, 8]

Matter finally disposed under Rule 41 by directing adjustment of the amount deposited against the demand within limitation; no remand for recomputation.

Final Conclusion: The Tribunal partly allowed the assessee's appeal on limitation grounds, held that the Commissioner could not sustain invocation of the extended period or related penalties contrary to the cited precedents, and, invoking Rule 41, directed adjustment of the amount already deposited against the demand within limitation; the departmental appeal was dismissed.

Grant of bail to an undertrial after extended pre-trial incarceration - Speedy trial and prolonged custody as a ground for enlargement on bail - Less stringent standard under Section 43D(5) of the Unlawful Activities (Prevention) Act, 1967 compared to stringent bail test under NDPS regime - Risk of tampering with evidence, influencing witnesses and absconsion as legitimate considerations to refuse bail - Priority examination of witnesses who apprehend threat to life

Grant of bail to an undertrial after extended pre-trial incarceration - Speedy trial and prolonged custody as a ground for enlargement on bail - The petitioner, who had been in custody for nearly eight years with little prospect of early trial conclusion, was entitled to be released on bail. - HELD THAT: - The Court noted that the petitioner was arrested in May 2014 and had remained in custody for almost eight years while only a small fraction of the prosecution evidence had been completed; the trial still required examination of over a hundred witnesses and the trial court had indicated a probable further delay of two to three years. Having regard to the extended period of incarceration, the limited progress of the trial and precedent recognising enlargement on bail where speedy trial cannot be secured, the Court held that continued detention pending such prolonged trial would be unjust. The order therefore concluded that the balance of interests favoured enlargement on bail subject to conditions to be fixed by the trial court. The Court emphasised that its observations were limited to the bail application and that the merits at trial would be decided on evidence and in accordance with law.

Allow the appeal; set aside the impugned order and direct release of the petitioner on bail subject to conditions to be fixed by the trial court.

Less stringent standard under Section 43D(5) of the Unlawful Activities (Prevention) Act, 1967 compared to stringent bail test under NDPS regime - Risk of tampering with evidence, influencing witnesses and absconsion as legitimate considerations to refuse bail - Section 43D(5) of the UAPA does not impose a precondition as stringent as that under the NDPS Act and is not an absolute bar to bail in the face of prolonged detention and limited progress of trial. - HELD THAT: - Relying on the Court's earlier reasoning in Union of India v. K.A. Najeeb, the bench observed that while considerations such as gravity of offence, risk of tampering, influencing witnesses or absconsion remain relevant to bail inquiries, Section 43D(5) presents a comparatively less onerous standard than the NDPS regime. Applying this principle to the present facts-serious charges on record but protracted custody and scant progress in witness examination-the Court found that the statutory provision did not preclude enlargement of the petitioner on bail. The Court also took into account that one co-accused had earlier been released on bail and that the State had not shown a compelling, specific risk from the petitioner warranting continued detention.

Section 43D(5) did not prevent the grant of bail in the circumstances; bail was to be granted subject to appropriate conditions.

Final Conclusion: The appeal succeeds: in view of nearly eight years' pre-trial detention, limited progress of the trial and the less stringent bail standard under Section 43D(5) of the UAPA, the petitioner is directed to be released on bail subject to conditions to be fixed by the trial court; the trial court will decide the case on merits in accordance with law.

Liability under Section 138 of the Negotiable Instruments Act for cheque dishonour - criminal liability limited to drawer or signatory of the cheque - scope of process against banks in cheque bounce prosecutions - exception for offences by company or partnership where signatory is concerned - magistrate's duty to apply mind before summoning accused

Liability under Section 138 of the Negotiable Instruments Act for cheque dishonour - criminal liability limited to drawer or signatory of the cheque - scope of process against banks in cheque bounce prosecutions - magistrate's duty to apply mind before summoning accused - Whether the criminal proceedings under Section 138 read with Section 142 of the Negotiable Instruments Act against the bank (petitioner) could be sustained or ought to be quashed. - HELD THAT: - The Court held that an offence under the provision for cheque dishonour is visited upon the drawer - the holder of the account who issues and signs the cheque - and liability cannot be extended to the bank which is merely the custodian of customers' funds and acts on customers' instructions. The Court noted the limited exception applicable to companies or firms under the provision dealing with offences by or on behalf of such entities where a signatory may be proceeded against, which was inapplicable to the petitioner bank. The learned Magistrate had failed to appreciate these legal constraints and had issued process against the bank without applying the requisite judicial mind; summoning must reflect consideration of the nature of allegations and the evidence and not be a matter of routine. In those circumstances, continuation of proceedings against the bank was unwarranted while reserving the complainant's right to proceed against the drawer/signatory in accordance with law. [Paras 13, 15, 16, 17]

Proceedings under Sections 138 and 142 of the Negotiable Instruments Act against the petitioner/HDFC Bank in C.R. Case No. 182(S) of 2020 are set aside and quashed; proceedings may continue against the drawer/accused No.1 in accordance with law.

Final Conclusion: The petitions are allowed; the criminal process as to the bank is quashed for lack of a legally cognisable role in the cheque dishonour, while the complaint may be pursued against the drawer/signatory in accordance with law.