TaxTMI Updates e-Newsletter
May 25,2022

Shipping bill operating as refund application under Section 54 of the CGST Act read with Section 16 of the IGST Act - refund of IGST on export of goods - Rule 96(1) of the CGST Rules - shipping bill deemed application for refund - statutory interest under Section 56 of the CGST Act where refund is delayed after notice

Shipping bill operating as refund application under Section 54 of the CGST Act read with Section 16 of the IGST Act - Rule 96(1) of the CGST Rules - shipping bill deemed application for refund - refund of IGST on export of goods - Petitioner entitled to refund of IGST paid on exported goods and shipping bill operates as the refund application. - HELD THAT: - The Court held that existing High Court precedents and applicable provisions establish that a shipping bill filed by an exporter functions as an application for refund of IGST. Reliance was placed on the combined operation of Section 54 of the CGST Act and Section 16(3)(b) of the IGST Act, together with Rule 96(1) of the CGST Rules, which deem the shipping bill to operate as the refund application. Given that the rates of duty drawback in Columns A and B were identical for the exported goods and that the petitioner had paid IGST, the petitioner is entitled to claim refund notwithstanding the inadvertent selection of the wrong drawback sub-serial, and a separate refund application was not required. [Paras 9]

Allow petition to the extent that the petitioner is entitled to refund of the IGST paid and the shipping bill is to be treated as the refund application.

Statutory interest under Section 56 of the CGST Act where refund is delayed after notice - Statutory interest is payable at 6% simple from 01.10.2021 until payment is made. - HELD THAT: - Although the petitioner did not seek correction of the shipping bill prior to approaching the Court, once notice in the writ petition was issued on 01.10.2021 and the revenue was represented, the Court regarded the revenue as forewarned. Distinguishing a case where correction had been effected earlier by the revenue, the Court awarded interest at the statutory rate of 6% simple from the date of issuance of notice in these proceedings (01.10.2021) until actual payment, directing expeditious refund. [Paras 11, 13]

Direct respondents to pay statutory interest at 6% simple from 01.10.2021 until payment is made.

Final Conclusion: Writ petition allowed to the extent that the respondents are directed to refund the IGST paid by the petitioner and to pay interest at 6% simple from 01.10.2021 until payment; respondents to effect refund and make necessary corrections in the web portal with expedition, and payment to be made within three weeks of the judgment.

Pre-show cause notice consultation - mandatory nature of Rule 142(1A) (unamended) - FORM GST DRC-01A requirement - voluntary statement not substitute for statutory consultation - show cause notice under Section 74 of the CGST Act

Pre-show cause notice consultation - mandatory nature of Rule 142(1A) (unamended) - FORM GST DRC-01A requirement - show cause notice under Section 74 of the CGST Act - Pre-show cause notice consultation under the unamended Rule 142(1A) was mandatory and failure to issue it vitiates the subsequently issued show cause notice. - HELD THAT: - The Court noted that sub rule (1A) of Rule 142, as it stood prior to amendment with effect from 15.10.2020, used mandatory language ('shall') requiring the proper officer to communicate details in Part A of FORM GST DRC 01A before service of notice under Section 73(1) or Section 74(1). The Court relied upon earlier coordinate-bench decisions interpreting similar consultative requirements in the master circular and concluded that the unamended Rule 142(1A) imposed a mandatory pre show cause consultation obligation. Applying that determinative principle to the facts, the Court held that the impugned show cause notice dated 21.05.2020, having been issued without the mandatory pre show cause consultation, was unlawful and set it aside, while permitting the revenue to proceed afresh after issuing the prescribed pre show cause consultation notice. [Paras 9, 10, 13]

Impugned show cause notice set aside for failure to comply with the mandatory pre show cause consultation requirement under the unamended Rule 142(1A); revenue may issue the prescribed consultation notice and take further steps as per law.

FORM GST DRC-01A requirement - pre-show cause notice consultation - Non activation of the statutory form on the revenue's web portal does not excuse failure to issue the pre show cause consultation notice. - HELD THAT: - The Court rejected the respondents' contention that absence of activation of the FORM GST DRC 01A on the web portal absolved them from issuing the pre show cause consultation notice. The Court observed that the statutory form could have been served manually and that failure to activate the portal did not relieve the revenue of the mandatory obligation imposed by the unamended Rule 142(1A). [Paras 5, 11]

Non activation of the form on the web portal is not a valid excuse for not issuing the mandatory pre show cause consultation notice.

Voluntary statement not substitute for statutory consultation - pre-show cause notice consultation - A voluntary statement recorded from the authorised signatory cannot substitute for the statutory pre show cause consultation contemplated by Rule 142(1A). - HELD THAT: - The Court followed recent coordinate bench precedents holding that voluntary statements are one way communications and do not constitute the consultative process envisaged by the statutory provision or the master circular. Consultation requires discussion and deliberation; therefore, the respondents' reliance on the voluntary statement of the authorised signatory did not satisfy the mandatory pre show cause consultation requirement and could not cure the defect in issuance of the show cause notice. [Paras 6, 11, 12]

Voluntary statement by the authorised signatory does not fulfil the statutory requirement of pre show cause consultation; it cannot validate the impugned notice.

Final Conclusion: Writ petition allowed; the show cause notice dated 21.05.2020 set aside for non compliance with the mandatory pre show cause consultation under the unamended Rule 142(1A). The revenue is at liberty to issue the prescribed pre show cause consultation notice (FORM GST DRC 01A) and proceed thereafter in accordance with law.

Refund of integrated tax on exports - zero rated supply - validation mismatch between FORM GSTR-1 and FORM GSTR-3B - system-driven refund mechanism under Rule 96 of the CGST Rules, 2017 - procedural infraction shall not defeat legitimate export incentives

Refund of integrated tax on exports - zero rated supply - validation mismatch between FORM GSTR-1 and FORM GSTR-3B - system-driven refund mechanism under Rule 96 of the CGST Rules, 2017 - procedural infraction shall not defeat legitimate export incentives - Whether the petitioner is entitled to sanction of refund of IGST paid on exports notwithstanding erroneous classification in FORM GSTR-3B and the consequent non-transmission of data by the GSTN portal, and what remedial step the respondent must take. - HELD THAT: - The Court held that legitimate export incentives recognised under the pre GST and GST regimes must not be defeated by procedural or technical irregularities in system driven returns. Although the GST refund process under Rule 96 operates through validations tied to data transmitted from the GSTN (and a mismatch between FORM GSTR 1 and FORM GSTR 3B may prevent automated processing), procedural requirements cannot be applied so strictly as to deny refunds where, on facts, exports were made and tax was debited. The Circular relied upon by the petitioner demonstrates administrative recognition of such validation issues and permissive rectification for relevant periods; more broadly, the Court applied the principle that procedures are handmaids of justice and not their mistress, and directed a practical remedy. Consequently, the respondent is directed to obtain the necessary data directly from the petitioner and verify the export transactions with the customs counterpart system; if verification shows valid exports and tax debit, the refund claim shall be sanctioned notwithstanding prior non receipt of portal data. The petitioner must furnish details within 30 days and the respondent shall thereafter consider, verify and process the refund if entitlement is established. The Court emphasised that procedural infractions shall not bar grant of refund under the IGST Act, 2017 read with the CGST Act, 2017 and the Rules. [Paras 10, 11, 12]

Directed respondent to obtain data from the petitioner and customs counterpart, verify exports and tax debit, and sanction the refund claim if entitlement is established; petitioner to furnish details within 30 days; procedural infractions shall not defeat legitimate refunds.

Final Conclusion: Writ petition disposed by directing the respondent to collect and verify requisite data from the petitioner and customs counterpart and, upon verification of valid exports and tax debit, to sanction the IGST refund; petitioner to furnish details within 30 days; no costs.

Supply under Section 7 of the CGST Act, 2017 - Definition of "business" under Section 2(17) of the CGST Act, 2017 - Activities of Central/State Government or local authority as public authorities treated as business under Section 2(17)(i) - Government Entity v. State Government (classification under GST notifications) - Exemption for services in relation to functions entrusted to a municipality under Article 243W of the Constitution

Supply under Section 7 of the CGST Act, 2017 - Definition of "business" under Section 2(17) of the CGST Act, 2017 - Activities of Central/State Government or local authority as public authorities treated as business under Section 2(17)(i) - Whether the activities carried out by the appellant to plot holders amount to a "supply" under Section 7 of the CGST Act, 2017. - HELD THAT: - The Appellate Authority examined the statutory definition of "supply" in Section 7 read with the definition of "business" in Section 2(17). Section 7 requires supply to be for a consideration and in the course or furtherance of business; Section 2(17)(i) expressly includes "any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities" within the meaning of "business." The authority held that the appellant's activities, being undertaken as a public authority under the GID Act, fall within clause (i) of Section 2(17) and therefore satisfy the statutory test for being a supply under Section 7. The Appellate Authority rejected reliance on pre-GST authorities and on Income tax decisions as not determinative under the GST statutory definitions. [Paras 21, 22, 23, 24]

The activities of the appellant to plot holders constitute "supply" under Section 7 of the CGST Act, 2017.

Government Entity v. State Government (classification under GST notifications) - 90% participation/control test for Governmental Authority/Government Entity - Whether the appellant is a "State Government" or a "Government Entity/Governmental Authority" for purposes of exemption notifications. - HELD THAT: - The Authority analysed the explanatory conditions in the GST notifications concerning classification as a "governmental authority" or "Government Entity," including (i) constitution by statute, (ii) 90% or more participation by way of equity or control, and (iii) carrying out functions entrusted to municipalities under Article 243W. On the facts as recorded from the GID Act - nomination and appointment provisions, control over appointment of key officers, budgeting and program approval, audit and dissolution powers of the State Government - the appellant satisfies the statutory/notification test of being a body set up by State Legislature with 90% or more participation/control. Consequently, the Appellate Authority disagreed with GAAR's conclusion that the appellant is a "State Government" and instead held that the appellant is covered as a "Government Entity." [Paras 28, 32, 33]

The appellant is not a "State Government" but is a "Government Entity" within the meaning of the relevant GST notification.

Exemption for services in relation to functions entrusted to a municipality under Article 243W of the Constitution - Notification-based exemption (Notification No.12/2017 and Notification No.14/2017) - Whether the appellant's services are exempt under the notification entry exempting activities by governmental authorities relating to functions entrusted to a municipality under Article 243W (Notification No.12/2017 as amended and Notification No.14/2017). - HELD THAT: - The Authority considered the threefold test for exemption: (a) the provider must be within the category specified by the notification (governmental authority/Government Entity as appropriate), and (b) the service must be "by way of any activity in relation to any function entrusted to a municipality under Article 243W", and (c) (for earlier wording) other temporal amendments. Although the appellant satisfies the first limb as a "Government Entity", the Authority examined the nature of functions performed by the appellant and whether those functions correspond to entries in the Twelfth Schedule (Article 243W). The Authority found the appellant's activities - development and allotment of industrial plots and provision of amenities targeted to industrial estates - are not coextensive with the municipal functions listed in the Twelfth Schedule and therefore do not qualify as functions "entrusted to a municipality" for the purpose of the notification. Consequently, the appellant is not eligible for the exemption under the cited notifications. [Paras 27, 30, 31, 33, 35]

The appellant is not eligible for exemption under Sr. No. 4 of Notification No. 12/2017 (as amended) nor under Notification No. 14/2017, because its functions are not those entrusted to a municipality under Article 243W.

Final Conclusion: The appeal is rejected. The Advance Ruling of GAAR is upheld insofar as it held that the appellant's activities amount to "supply" under Section 7 of the CGST Act, 2017 and are not exempt under the municipal function notifications; however, the GAAR's classification is modified to record that the appellant is a "Government Entity" (and not the "State Government").

Definition of "plant and machinery" (including foundation and structural supports) - exclusion of land, building or any other civil structures from "plant and machinery" - input tax credit admissibility for construction of foundation/structural supports - works contract services for construction of immovable property (blocked credit)

Definition of "plant and machinery" (including foundation and structural supports) - exclusion of land, building or any other civil structures from "plant and machinery" - Whether the LNG jetties being constructed by the appellant fall within the expression "plant and machinery" (including their foundation and structural supports) as per the Explanation to Section 17 of the CGST Act, 2017. - HELD THAT: - The Authority examined the statutory Explanation which treats "plant and machinery" as apparatus, equipment and machinery fixed to earth by foundation or structural support used for making outward supply, and which expressly excludes "land, building or any other civil structures." The jetties were found to be civil structures (approach trestles, unloading platforms, mooring and breasting dolphins, tug jetty, etc.) constructed to accommodate access, piping, cables, vehicles and berthing loads rather than exclusively to serve as foundations for plant or machinery. The Authority applied the statutory exclusions and held that where a construction is a civil structure excluded by clause (i) it cannot be recharacterised as a foundation or structural support qualifying as "plant and machinery." The panel also rejected the contention that the entire jetty, by reason of being necessary or inevitable for the appellant's operations, becomes a foundation for "plant and machinery," observing that essentiality alone does not convert excluded civil structures into plant and machinery. The Authority noted that certain items (e.g., unloading/loading arms, buffer vessels) might be apparatus or machinery, but they are to be attached to the jetty which itself does not qualify as foundation fixed to earth for plant and machinery under the Explanation. Consequently, the LNG jetties do not fall within the definition of "plant and machinery." [Paras 26, 27, 28]

LNG jetties are civil structures excluded from the definition of "plant and machinery" and therefore are not foundations or structural supports falling within that expression.

Input tax credit admissibility for construction of foundation/structural supports - works contract services for construction of immovable property (blocked credit) - Whether the appellant can avail input tax credit of GST paid on inputs, input services and capital goods procured for construction of the LNG jetties. - HELD THAT: - Section 17(5)(c) and (d) deny ITC in respect of works contract services and goods/services received for construction of immovable property (other than plant or machinery). The Explanation allows ITC for foundation and structural supports where those supports are for "plant and machinery" used for outward supply. Because the jetties were held to be civil structures excluded from "plant and machinery," the construction work is within the blocked category. The Authority further noted that the EPC contract structure indicates the appellant receives works-contract services for construction of the jetties, meaning input credit on materials procured by the contractor would not be available to the appellant in any event. Applying these statutory provisions and the factual findings about the nature and use of the jetties, the Authority concluded that ITC on inputs, input services and capital goods for construction of the LNG jetties is not admissible. [Paras 16, 23, 28, 29]

Input tax credit for GST paid on inputs, input services and capital goods used in construction of the LNG jetties is not admissible under Sections 16 and 17 of the CGST Act, 2017.

Final Conclusion: The appeal is rejected and the Advance Ruling is upheld: the LNG jetties are civil structures excluded from the definition of "plant and machinery" and the appellant is not entitled to input tax credit on GST paid for construction of those jetties.

Mandamus - Local Committees to deal with Taxpayers' Grievances from High Pitched Scrutiny Assessment - implementation of administrative instructions issued by the CBDT - statutory remedy of appeal or revision under the Income Tax Act - principles of natural justice - initiation of administrative action against erring officers

Statutory remedy of appeal or revision under the Income Tax Act - Writ petition disposed with liberty to petitioner to avail statutory remedies under the Income tax Act. - HELD THAT: - The Court recorded that the petitioner has available statutory remedies in the form of filing a revision petition before the jurisdictional Principal Commissioner of Income Tax or filing an appeal before the Commissioner of Income Tax (Appeals). The petitioner had sought withdrawal of the writ to avail those remedies; in view of the availability of efficacious alternate remedies under the Act the Court disposed of the writ petition granting liberty to proceed under the statutory provisions. The disposal is therefore on the basis that the statutory routes remain open and appropriate for redressal of the grievances asserted by the petitioner. [Paras 12, 13]

Writ petition disposed granting liberty to the petitioner to pursue statutory appeal or revision as advised.

Mandamus - Local Committees to deal with Taxpayers' Grievances from High Pitched Scrutiny Assessment - implementation of administrative instructions issued by the CBDT - initiation of administrative action against erring officers - principles of natural justice - Court issued directions in the nature of mandamus to ensure effective implementation, publicity, constitution and monitoring of the CBDT instructions regarding Local Committees to address high pitched or arbitrary assessments. - HELD THAT: - The Court found that the CBDT instruction dated 23.04.2022, issued under the Board's powers, and the respondent Government's affidavit statements required active and effective implementation to address problems of conflicting and high pitched assessments and breaches of principles of natural justice. Recognising recurring grievances and the limited remedial value of mere forums without accountability, the Court directed respondent No.1 to take concrete steps: circulate the instruction to tax bar associations, display the instruction and the respondent's affidavit content on the Income Tax Department website, regularly publish details of constitution and functioning of Local Committees in specified newspapers for one year, constitute any outstanding Local Committees within fifteen days, establish a monitoring cell at Government/CBDT level to review functioning and quarterly reports, and ensure Local Committees dispose of grievances within prescribed timelines with written communication of results and administrative action where warranted. The directions seek to operationalise the remedial mechanism, ensure publicity and monitoring, and secure administrative accountability where assessments are found to be high pitched or in breach of natural justice. [Paras 8, 9, 11, 14]

Directed respondent No.1 to implement and publicise the CBDT instructions, constitute and monitor Local Committees, establish monitoring mechanisms, ensure timely disposal of grievances and communicate actions to affected taxpayers.

Final Conclusion: The writ petition is disposed of: the petitioner is granted liberty to pursue statutory remedies under the Income tax Act, and the Court directs the Government/CBDT to implement, publicise, constitute and monitor Local Committees and related mechanisms to address high pitched or arbitrary assessments and ensure administrative accountability and compliance with principles of natural justice.

Procedure in appeal under Section 250 of the Income tax Act - Power of Commissioner (Appeals) to adjudicate and make further inquiry - Requirement of a speaking order stating points for determination and reasons - Non prosecution does not permit summary dismissal of appeal by CIT(A) - Deletion of ad hoc disallowance of security expenses as revenue expenditure

Procedure in appeal under Section 250 of the Income tax Act - Requirement of a speaking order stating points for determination and reasons - Non prosecution does not permit summary dismissal of appeal by CIT(A) - Whether the CIT(A) could dismiss the assessee's appeal for non prosecution without affording opportunity, making further inquiry or passing a speaking order in terms of the procedure in appeal. - HELD THAT: - The Tribunal examined sub sections of Section 250 which empower the CIT(A) to make further inquiry or direct the AO to inquire before disposing the appeal and which require the disposal order to be in writing stating points for determination, the decision and reasons. The Tribunal relied on precedents emphasising that once an appeal under Section 246A is filed the appellate machinery must be applied and the CIT(A) is obliged to apply his mind and dispose the appeal on merits; the CIT(A) cannot summarily dismiss an appeal for non appearance so as to effectually produce the result of a withdrawal. In the present case the CIT(A) dismissed the appeal on the ground of non prosecution without a speaking order or evident application of the enquiry powers under Section 250, and failed to take cognisance of the coordinate bench's order in the assessee's own case which was on record. While such procedural breach would ordinarily warrant remand to the CIT(A) to decide the appeal after following Section 250, the Tribunal observed that the substantive issue was covered by the coordinate bench's decision in the assessee's own case and therefore proceeded to decide the appeal on merits. [Paras 10, 11, 12, 13, 15]

CIT(A)'s summary dismissal for non prosecution was unsustainable as it did not comply with the procedure in appeal and the requirement of a speaking order; however, the Tribunal, taking cognisance of a binding coordinate bench decision, disposed the appeal on merits rather than remanding.

Deletion of ad hoc disallowance of security expenses as revenue expenditure - Application of coordinate bench decision in the assessee's own case - Whether the ad hoc disallowance of 75% of security expenses should be sustained for AY 2009 10. - HELD THAT: - The Tribunal noted that a coordinate bench of the ITAT, in the assessee's own case for relevant years including the same issue, had examined the nature of various expenditures and concluded that the impugned categories (including security expenses) were revenue in nature and deleted similar disallowances. The Tribunal found that the coordinate bench ruling applied with equal force to AY 2009 10 and that the CIT(A) had not given any reasoned contrary conclusion. In view of the coordinate bench's considered decision and its availability on record, the Tribunal followed that precedent and held that the ad hoc disallowance of 75% of the security expenses was not sustainable. [Paras 16, 17]

The ad hoc disallowance of Rs.55,05,750 (75% of the security expenses) for AY 2009 10 is deleted following the coordinate bench decision; the assessee's appeal is allowed on this ground.

Final Conclusion: The CIT(A)'s ex parte dismissal for non prosecution was procedurally improper for failure to follow Section 250 and to pass a speaking order, but since the issue on security expenses was covered by a coordinate bench ITAT decision in the assessee's own case, the Tribunal deleted the ad hoc 75% disallowance for AY 2009 10 and allowed the assessee's appeal.

Revision under section 263 - assessment erroneous and prejudicial to the interest of revenue - examination under section 133(6) - permissible view - jurisdictional error - quashing of revision order

Revision under section 263 - jurisdictional error - Validity of the exercise of revisional jurisdiction by the Pr. Commissioner of Income-tax under section 263. - HELD THAT: - The Tribunal found that the Pr. Commissioner invoked section 263 on the ground that the Assessing Officer had not properly examined the source of cash deposits and that the assessment was thereby erroneous and prejudicial to the revenue. The record, however, shows that the Assessing Officer had issued enquiries including a requisition to the bank under section 133(6), perused bank statements and the audited financial statements of the two proprietorships, and accepted the explanations on sources (sales collections and inter-account transfers). Where the Assessing Officer has made enquiries and reached a view reasonably open on the material, the revisionary jurisdiction under section 263 cannot be validly exercised merely because the Pr. Commissioner considers that further enquiry should have been made. In the facts of this case the Tribunal held that the Pr. Commissioner's conclusion was general and did not identify any specific illegality or prejudicial error in the assessment; consequently the invocation of revisional jurisdiction amounted to a jurisdictional error. [Paras 9, 10, 11]

Invocation of revisional jurisdiction under section 263 was erroneous and is quashed; the revision order is set aside.

Examination under section 133(6) - permissible view - Whether the Assessing Officer had conducted sufficient enquiries into the source of the cash deposits and taken a permissible view. - HELD THAT: - The Tribunal examined the assessment record and the assessee's explanations showing frequent withdrawals, inter-account transfers and cash collections from debtors, along with the AO's use of bank information obtained under section 133(6) and perusal of audited accounts. The AO reconciled the deposits and recorded that the deposits were found to be in order. Given that the AO conducted specific enquiries and accepted a view that was open on the material, the Tribunal concluded that the AO's conclusion was a permissible one. The mere fact that the Pr. Commissioner desired further verification did not render the AO's conclusion incorrect or prejudicial to revenue. [Paras 4, 6, 9]

The Assessing Officer had conducted adequate enquiries and taken a permissible view; the assessment under section 143(3) is restored.

Final Conclusion: The Tribunal allowed the appeal, quashed the impugned order passed under section 263 as affected by jurisdictional error, and restored the assessment order dated 22.11.2016 for AY 2014-15.

Reassessment proceedings - reasons to believe - tangible material for formation of belief - entitlement to copy of reasons recorded under section 148(2) - unexplained cash credit under section 68 - onus to prove identity, creditworthiness and genuineness of transactions - failure to produce documentary evidence called for by assessing authority - ex parte hearing

Reassessment proceedings - reasons to believe - tangible material for formation of belief - entitlement to copy of reasons recorded under section 148(2) - Assessee's challenge to legality of reopening assessment under section 147/148 was rejected. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the assessee failed to substantiate its contention that the AO lacked tangible material to reopen the assessment. The assessee did not produce a copy of the reasons recorded or otherwise rebut the reopening before the CIT(A). In those circumstances the onus lay on the assessee to show, by reference to the reasons recorded, that the AO had no material to form the requisite belief; having failed to do so, the relief sought against the initiation of reassessment could not be granted. The appellate authority therefore correctly dismissed the grounds attacking the legality of the reassessment.

Grounds challenging the initiation of reassessment are dismissed for want of rebuttal and failure to produce the reasons recorded.

Unexplained cash credit under section 68 - onus to prove identity, creditworthiness and genuineness of transactions - failure to produce documentary evidence called for by assessing authority - Addition of Rs.20,00,00,000 treated as unexplained credit under section 68 was sustained. - HELD THAT: - The Tribunal agreed with the CIT(A) that the assessee failed to discharge the statutory onus under section 68 to establish identity and creditworthiness of the parties and the genuineness of the journaled transactions. The CIT(A) had given opportunity by calling for vouchers, correspondence, ledgers and bank statements of the concerned parties (including NCHPL), but the assessee did not produce the documents. In absence of those records the possibility of inter-party entries and pass-through credits could not be ruled out. On this factual and evidentiary basis the addition under section 68 was rightly confirmed.

Addition under section 68 confirmed for failure to produce required documentary evidence and failure to discharge onus.

Final Conclusion: The assessee's appeal is dismissed; the reassessment stands upheld and the addition under section 68 is confirmed, the appeal being heard ex parte for the assessee.

Unexplained credit u/s.68 - onus of proof for creditworthiness and genuineness - admission of additional evidence under Rule 29 ITAT Rules - opportunity to Assessing Officer under Rule 46A - disallowance under section 41(1) - distinction between section 68 and section 41(1) - remand for fresh adjudication

Unexplained credit u/s.68 - onus of proof for creditworthiness and genuineness - admission of additional evidence under Rule 29 ITAT Rules - remand for fresh adjudication - Admissibility of additional evidence in support of share application money assessed as unexplained credit under section 68 and the consequent course of adjudication. - HELD THAT: - The assessee filed additional confirmations and identity documents for share applicants before the Tribunal under Rule 29. The Tribunal found that the proferred evidence went to the root of the controversy and would assist adjudication on whether the share application advances were genuine and whether the creditors were creditworthy. In the interests of natural justice and proper determination of the question of proof under section 68, the Tribunal admitted the additional evidence and remitted the matter to the Assessing Officer for fresh adjudication and verification of genuineness and creditworthiness. The Tribunal therefore did not decide the merits on the evidence itself but directed reconsideration by the AO after permitting the newly-filed documents to be taken on record; the appeal on this issue was allowed for statistical purposes. [Paras 5, 7]

Additional evidence admitted and matter remanded to the Assessing Officer for fresh adjudication on the genuineness of share application money credited under section 68; appeal allowed for statistical purposes.

Disallowance under section 41(1) - distinction between section 68 and section 41(1) - opportunity to Assessing Officer under Rule 46A - remand for fresh adjudication - Correct legal characterisation of sundry creditors-whether to be assessed as unexplained credit under section 68 or treated as ceased liabilities assessable under section 41(1) - and procedural objection that appellate consideration of evidence was taken without giving opportunity to the AO. - HELD THAT: - The CIT(A) after examining ledger accounts, remand report and additional documents treated a portion of sundry creditor balances as liabilities that had ceased to exist and therefore assessable under section 41(1), while holding that other additions under section 68 could not be sustained. Revenue contended that evidence considered on appeal was taken without giving the AO an opportunity in terms of Rule 46A. The Tribunal observed competing contentions from both sides and concluded that the factual and legal questions as to whether the credits arose from bona fide purchases, whether liabilities had ceased, and whether section 41(1) rather than section 68 applied required fresh consideration by the AO. Accordingly, the Tribunal set aside the CIT(A)'s conclusion and remitted the matter to the AO for fresh adjudication, enabling the AO to examine the ledger entries, subsequent payments and the applicability of section 41(1) or section 68 and to deal with any procedural opportunity required under the rules; the issue was allowed for statistical purposes. [Paras 8, 12]

Issue set aside and remitted to the Assessing Officer for fresh adjudication on the characterisation of sundry creditors (section 41(1) v. section 68) and on any procedural opportunities to be afforded; appeals allowed for statistical purposes.

Disallowance under section 41(1) - distinction between section 68 and section 41(1) - remand for fresh adjudication - Determination for assessment year 2014-15 of the same controversy concerning sundry creditors and applicability of section 41(1) versus section 68. - HELD THAT: - Facts and contentions for AY 2014-15 were identical to AY 2012-13. On the same reasoning applied to the earlier year, the Tribunal restored the issue to the file of the Assessing Officer for re-adjudication so that the AO may examine ledgers, subsequent transactions and decide whether the amounts represent genuine trade creditors or ceased liabilities assessable under section 41(1) instead of unexplained credits under section 68. [Paras 13, 14]

Matter remitted to the Assessing Officer for fresh adjudication for AY 2014-15 on the same issues; appeals allowed for statistical purposes.

Final Conclusion: Both the assessee's and Revenue's appeals for assessment years 2012-13 and 2014-15 are disposed of for statistical purposes: the Tribunal admitted additional evidence relating to share application money and remitted that issue to the Assessing Officer for verification and fresh adjudication, and set aside the CIT(A)'s characterisation of sundry creditors directing a fresh adjudication by the AO on whether amounts are to be taxed under section 68 or as ceased liabilities under section 41(1), with procedural opportunities to be afforded as required.

Revision under section 263 - erroneous and prejudicial to the revenue - Estimation of income by percentage of turnover where books not maintained - Allowability of interest and depreciation on estimated profits - Scope of two views and limits of supervisory revision under section 263 - Dropping penalty proceedings for non-maintenance of books

Revision under section 263 - erroneous and prejudicial to the revenue - Estimation of income by percentage of turnover where books not maintained - Allowability of interest and depreciation on estimated profits - Scope of two views and limits of supervisory revision under section 263 - Whether the Principal Commissioner was justified in exercising revisionary jurisdiction under section 263 on the ground that the Assessing Officer erred in allowing depreciation and interest after estimating profits by applying a percentage of turnover. - HELD THAT: - The Tribunal examined the AO's order and found that the AO had expressly recorded that section 44AD did not apply to the assessee and that the assessee had estimated profit in the absence of books by adopting a percentage (and that the AO, after consideration of facts and details, increased that percentage to 10%). The PCIT's conclusion that the AO had applied section 44AD and thereby impermissibly allowed interest and depreciation was a misconstruction of the AO's findings. Applying the principle that section 263 cannot be used to supplant the AO's appreciation where a plausible view exists, the Tribunal held that the PCIT's satisfaction of an error prejudicial to revenue on this basis was not tenable. The Tribunal relied on the Supreme Court's test that both error and prejudice must be established and that a difference of opinion or a debatable view of the material does not attract revision under section 263. Consequently the PCIT's interference on this ground substituted his view for that of the AO without establishing that the AO's view was unsustainable in law. [Paras 14, 15, 16, 17, 18]

PCIT's revision under section 263 is not sustainable insofar as it set aside the assessment on the ground that the AO erred in allowing depreciation and interest after estimating profits; that part of the revision is quashed.

Dropping penalty proceedings for non-maintenance of books - Revision under section 263 - erroneous and prejudicial to the revenue - Whether the PCIT was justified in holding that the AO's dropping of penalty proceedings for non-maintenance of books was erroneous and prejudicial to the revenue. - HELD THAT: - The Tribunal considered the facts regarding initiation and subsequent dropping of penalty proceedings and the AO's reliance on a jurisdictional High Court decision. The PCIT distinguished that decision on facts and held the AO's decision to drop penalty proceedings to be erroneous. The Tribunal noted prior coordinate-bench decisions on identical questions and observed that the PCIT had afforded the assessee an opportunity in the revision proceedings. Having regard to those decisions and the opportunity given, the Tribunal declined to interfere with the PCIT's observations on the penalty issue and followed the coordinate-bench precedents which supported the PCIT's scrutiny of the AO's decision to drop penalty proceedings. [Paras 19, 20, 21, 22, 23]

Tribunal does not interfere with the PCIT's conclusion regarding the dropping of penalty proceedings; PCIT's observation on that aspect is maintained.

Final Conclusion: Appeal partly allowed: the revision under section 263 is set aside insofar as it quashed the assessment on the ground that the AO wrongly allowed interest and depreciation after estimating profits (the AO's view was a permissible one), but the Tribunal does not interfere with the PCIT's conclusion relating to the dropping of penalty proceedings for non-maintenance of books.

Certain deductions to be made only on actual payment - deduction in respect of any sum payable by the assessee by way of tax, duty, cess or fee - disallowance under section 43B where expenditure is claimed in profit and loss account - treatment of Goods and Services Tax as current liability versus claimed expenditure

Certain deductions to be made only on actual payment - disallowance under section 43B where expenditure is claimed in profit and loss account - treatment of Goods and Services Tax as current liability versus claimed expenditure - Whether disallowance under section 43B could be made in respect of CGST/SGST not claimed as an expenditure but shown as a current liability in the balance sheet. - HELD THAT: - The Tribunal held that the operation of the provision relating to deductions only on actual payment applies where the assessee has claimed the relevant sum as an expenditure in computing income. The proviso in effect prevents claiming specified deductions unless actually paid, but its invocation presupposes that the amount has been claimed as an expense in the profit and loss account. In the present case the audited financial statements show that the GST amount was not routed through the profit and loss account and was reflected as a current liability on the balance sheet. Consequently the sum was not a claimed deduction within the ambit of the provision and could not be disallowed under that provision. The Tribunal also observed that liabilities and penal consequences for non-payment of GST are governed by the GST law and that the CIT(A)'s rationale about preventing the assessee from using money due to the Government did not address the statutory test for disallowance under the income-tax provision. The Tribunal followed its earlier decisions cited by the assessee and reversed the disallowance. [Paras 8, 9, 10, 11]

Since the alleged CGST/SGST was not claimed as an expenditure in the profit and loss account but shown as a current liability, section 43B could not be invoked and the disallowance was deleted.

Final Conclusion: The appeal is allowed: the disallowance of CGST/SGST under the provision relating to deductions only on actual payment is reversed because the amount was not claimed as an expenditure but shown as a current liability.

Remand for de novo assessment - restoration to Assessing Officer for fresh adjudication - acceptance of fresh documents by appellate authority - opportunity to Assessing Officer under Rule 46A of the Income Tax Rules - assessment to be completed afresh where primary records were not examined

Remand for de novo assessment - restoration to Assessing Officer for fresh adjudication - assessment to be completed afresh where primary records were not examined - Whether the appeals should be restored to the file of the Assessing Officer for de novo assessment. - HELD THAT: - The Tribunal observed that during assessment proceedings the assessees were unable to produce books of accounts and supporting documents because the factories were sealed, and therefore the Assessing Officer had re-computed net profits without examination of primary records. On appeal, the CIT(A) accepted fresh submissions and granted relief on assumptions and presumptions without obtaining an adequate remand report or completing necessary verification. Both Revenue and assessees requested restoration to the Assessing Officer, and the Tribunal relied on an identical earlier order in which matters were restored for de novo assessment because neither books nor relevant documents had been examined and the Assessing Officer had not completed requisite inquiries. In these circumstances the Tribunal set aside the CIT(A) orders and restored the matters to the Assessing Officer for fresh adjudication so that proper verification, examination of records and probe as may be necessary can be undertaken afresh. [Paras 5, 6]

Impugned orders of the CIT(A) set aside and matters restored to the Assessing Officer for de novo assessment.

Acceptance of fresh documents by appellate authority - opportunity to Assessing Officer under Rule 46A of the Income Tax Rules - Treatment of allegation that CIT(A) erred in admitting fresh cash book and deciding appeal without giving opportunity to the Assessing Officer under Rule 46A. - HELD THAT: - The ground that the CIT(A) accepted cash books as fresh submissions and thereby violated Rule 46A was raised by the Revenue. The Tribunal noted the contention but observed that both parties sought restoration to the Assessing Officer and that the factual matrix warranted fresh adjudication. Rather than adjudicating the Rule 46A complaint on merits, the Tribunal restored the matters to the Assessing Officer so that the Assessing Officer may consider the fresh documents, conduct necessary verification and follow procedures (including any obligations under Rule 46A) during the de novo proceedings.

Allegation regarding admission of fresh documents and Rule 46A not decided on merits; matter remanded to Assessing Officer to consider such issues afresh during de novo assessment.

Final Conclusion: All appeals of the Revenue are disposed of by setting aside the CIT(A) orders and restoring the matters to the Assessing Officer for de novo assessment; appeals are treated as allowed for statistical purposes.

Revision under section 263 of the Income Tax Act - Erroneous and prejudicial to the interests of revenue - Application of mind by the Assessing Officer - Verification of documentary evidence for cost of improvement - De novo assessment directed

Revision under section 263 of the Income Tax Act - Erroneous and prejudicial to the interests of revenue - Application of mind by the Assessing Officer - Whether the Commissioner was justified in invoking section 263 and setting aside the assessment on the ground that the assessment order was erroneous and prejudicial to the interests of revenue. - HELD THAT: - The Tribunal noted that during scrutiny assessment the Assessing Officer accepted the assessee's claim for cost of improvement largely on the basis of a self prepared statement and vouchers which were undated, unsigned and lacked basic particulars; there was no material on the assessment record to show verification of the alleged payments or correspondence with the parties claimed to have received payment. The Commissioner, on perusal of the records, concluded that the AO had not applied his mind to verification of the improvement claim and that the assessment therefore appeared to be erroneous and prejudicial to revenue. The Tribunal found no material evidence filed before it to rebut the Commissioner's findings and recorded that it was not in a position to interfere with the exercise of revision under section 263 in these circumstances.

The invocation of section 263 and setting aside of the assessment as erroneous and prejudicial to the interests of revenue was upheld; the assessee's challenge to the 263 order is rejected.

Verification of documentary evidence for cost of improvement - Application of mind by the Assessing Officer - De novo assessment directed - Whether the matter should be remitted to the Assessing Officer for fresh adjudication and verification of the cost of improvement claim. - HELD THAT: - Having held that the AO had not applied his mind and that the vouchers and declarations on record had not been verified, the Commissioner set aside the assessment and directed the AO to make a fresh assessment afresh after giving the assessee an opportunity. The Tribunal, while upholding the Commissioner's exercise of revision, recorded that no substantive evidence was placed before it to justify interference and therefore dismissed the appeal, leaving the direction for de novo assessment to be given effect to by the AO.

The assessment was set aside and remitted to the Assessing Officer for de novo assessment and verification of the improvement expenditure after granting opportunity to the assessee.

Final Conclusion: The Tribunal dismissed the assessee's appeal against the Commissioner's order under section 263; the 263 revision was sustained on the ground that the AO had not verified the disputed cost of improvement and had not applied his mind, and the matter was remitted to the Assessing Officer for de novo assessment after affording the assessee an opportunity.

Section 148A of the Income Tax Act, 1961 - notice under Section 148 - show cause notice - error apparent on the face of the record - quash and set aside - liberty to issue fresh notice in accordance with law

Section 148A of the Income Tax Act, 1961 - show cause notice - error apparent on the face of the record - Validity of the order passed under clause (d) of Section 148A dated April 1, 2022 and the consequent notice under Section 148 where the assessee had furnished a written response to the initial notice on March 30, 2022. - HELD THAT: - An initial notice under clause (b) of Section 148A for assessment year 2015-16 was issued on March 23, 2022 requiring the assessee to show cause why a notice under Section 148 should not be issued. The assessee lodged a written response and the e-proceedings acknowledgement dated March 30, 2022 is on record. The impugned order under clause (d) of Section 148A dated April 1, 2022 proceeded on the basis that no reply was furnished. The Court found an error apparent on the face of the impugned order because the Department failed to take into account the assessee's response received on March 30, 2022 before passing the order under Section 148A(d) and issuing the notice under Section 148 on the same date. In consequence, the order under Section 148A(d) could not be sustained and required interference. [Paras 4, 5, 6]

Impugned order under Section 148A(d) dated April 1, 2022 is set aside and the notice under Section 148 dated April 1, 2022 is quashed; Department permitted to consider the assessee's response of March 30, 2022 and, if entitled, issue a fresh notice in accordance with law.

Final Conclusion: The writ petition is allowed: the order under Section 148A(d) and the notice under Section 148 dated April 1, 2022 are quashed for failure to consider the assessee's response; the Department may reconsider the matter afresh and issue a fresh notice in accordance with law, if entitled. No order as to costs.

Violation of the principles of natural justice - right to file reply to show cause notice and draft assessment order - assessment under Section 143(3) read with Section 144B of the Income tax Act, 1961 - judicial notice of COVID 19 pandemic related difficulties in accessing official records and e portal - maintainability of writ petition despite existence of alternative remedy

Violation of the principles of natural justice - right to file reply to show cause notice and draft assessment order - judicial notice of COVID 19 pandemic related difficulties in accessing official records and e portal - assessment under Section 143(3) read with Section 144B of the Income tax Act, 1961 - Impugned assessment order dated 23rd May 2021 was set aside for violation of natural justice as the assessee could not file objections to the show cause notice and draft assessment order due to pandemic related inability to access e portal and records. - HELD THAT: - The Court found that the Assessing Officer extended the timeframe for response but proceeded to pass the assessment without any reply from the petitioner. The petitioner's Chartered Accountant filed a sworn affidavit stating that login credentials and official records were maintained at his office and were inaccessible after the lockdown imposed on 19th April 2021, rendering the petitioner unable to place an adjournment request or file objections on the e portal. The Court took judicial notice of the difficulties caused by the COVID 19 pandemic in filing replies to show cause notices and held that past instances of filing replies were irrelevant to the petitioner's independent statutory right to be heard in respect of the draft assessment. For these reasons the assessment under Section 143(3) read with Section 144B was held to have been passed in breach of natural justice and was set aside, with directions for the petitioner to file its reply and for the authority to pass a fresh assessment in accordance with law. [Paras 2, 3, 5, 6, 8]

Impugned assessment order, notice of demand and notice initiating penalty proceedings dated 23rd May 2021 for AY 2018 19 set aside; petitioner permitted to file reply within two weeks and fresh assessment to be framed within four weeks thereafter.

Maintainability of writ petition despite existence of alternative remedy - exceptions to alternative remedy rule where fundamental rights, natural justice or jurisdictional violations are alleged - Writ petition was held maintainable notwithstanding the availability of an appeal under Section 246, since the case involved breach of natural justice. - HELD THAT: - The Court reiterated that availability of an alternative remedy is not an absolute bar to writ jurisdiction where the petition seeks enforcement of fundamental rights, where principles of natural justice have been violated, where proceedings are wholly without jurisdiction, or where vires of legislation is challenged. Given the finding of a breach of the right to be heard, the High Court exercised writ jurisdiction and entertained the petition rather than relegating the petitioner solely to the appellate remedy. [Paras 7, 8]

Writ petition entertained and adjudicated despite alternative statutory appeal being available, on account of the violation of natural justice.

Final Conclusion: The assessment order, notice of demand and penalty notice dated 23rd May 2021 for Assessment Year 2018 19 are quashed; petitioner directed to file its reply to the show cause notice and draft assessment within two weeks and the National Faceless Assessment Centre directed to pass a fresh assessment order within four weeks thereafter in accordance with law.

Allowability of commission expenses as wholly and exclusively for business (application of Section 37) - Test of commercial expediency in assessing business expenditure - Related-party payments and inference of lack of commercial justification - Weight of concurrent findings of fact by AO, CIT(A) and ITAT

Allowability of commission expenses as wholly and exclusively for business (application of Section 37) - Test of commercial expediency in assessing business expenditure - Related-party payments and inference of lack of commercial justification - Whether part of the commission payments made to seven persons was correctly disallowed as not being expenditure wholly and exclusively for the purpose of business. - HELD THAT: - The Court examined the factual findings recorded by the Assessing Officer, the Commissioner of Income Tax (Appeals) and the ITAT that the seven recipients of commission were three Directors and four relatives of the Directors and that the assessee had not demonstrated any special expertise or services rendered by them in procuring the required Iron Ore Fines. The Court accepted that the supply of IOF was not the assessee's regular business and, although the procurement was time-bound, mere deduction of TDS and disclosure by the recipients did not establish that the payments were commercially expedient business expenditures. The Court held that the AO had applied the commercial expediency test and disallowed only part of the claimed commission after objectively considering the matter; the disallowance was not arbitrary. The decision in J.K. Woollen Manufacturing was held to be distinguishable on its facts, since there the expenditure related to the regular business and was judged from the businessman's viewpoint. In the present facts, given the related-party nature of the payments and absence of proof of services or expertise, the Court upheld the concurrent conclusion that the disallowed portion was not for the purpose of business. [Paras 11, 12, 13, 14, 15]

Part of the commission payments was rightly disallowed as not being expenditure wholly and exclusively for the purpose of business; concurrent orders of AO, CIT(A) and ITAT are upheld.

Final Conclusion: The appeal is dismissed; the assessment addition disallowing part of the commission payments is sustained and the concurrent findings below are not interfered with. No order as to costs.

Mutual Agreement Procedure (MAP) - correlative relief under MAP - Competent Authority's procedure to call for records and documents under amended Rule 44G - preference of DTAA over domestic law where beneficial to the assessee (section 90(2) of the I-T Act) - Article 27(2) of the India-US DTAA - implementation notwithstanding domestic procedural limits - assessee's disclosure obligation in Form No.34F - condition of withdrawal of appeals as part of MAP acceptance - obligation to amend assessment orders and refund correlative relief with interest

Mutual Agreement Procedure (MAP) - assessee's disclosure obligation in Form No.34F - Competent Authority's procedure to call for records and documents under amended Rule 44G - preference of DTAA over domestic law where beneficial to the assessee (section 90(2) of the I-T Act) - Whether the tax authorities could lawfully defer implementation of the MAP settlement for assessment year 2013-14 on the ground that the petitioner did not disclose Indian transfer pricing adjustments. - HELD THAT: - The Court found that the MAP between the Indian and US Competent Authorities was concluded by April 2019 and was processed and communicated to the petitioner after the amendment to the procedural rules (with effect from 06.05.2020) which unified MAP procedure under amended Rule 44G. Under the amended procedure the Indian-CA is required to call for relevant records, and the MAP Guidance/2020 applies to cases pending as on 6th May 2020. Once the communication of the MAP settlement (Annexure D) was issued under the amended procedure and the petitioner complied with the conditions of acceptance (including withdrawal of appeals), the authorities could not re invoke the pre amendment regime or defer implementation on the basis that the petitioner had not separately disclosed the Indian TP adjustments in Form No.34F. Further, where MAP yields correlative relief beneficial to the assessee, the DTAA (and section 90(2)) gives precedence to the MAP outcome and Article 27(2) requires implementation notwithstanding domestic procedural limits. The Court therefore held that procedural non disclosure could not be used to defeat a concluded MAP processed under the amended rule and DTAA provisions applicable to the petitioner. [Paras 34, 35, 36, 38]

It is not lawful for the respondents to defer implementation of the MAP settlement for AY 2013-14 on the ground of non-disclosure in Form No.34F once the MAP was processed under the amended Rule 44G and the petitioner accepted the terms.

Correlative relief under MAP - condition of withdrawal of appeals as part of MAP acceptance - obligation to amend assessment orders and refund correlative relief with interest - Article 27(2) of the India-US DTAA - implementation notwithstanding domestic procedural limits - Whether the respondents must be directed to amend the assessment orders and refund correlative relief (with interest) for assessment years 2010-11 to 2013-14 and within what timeframe. - HELD THAT: - The respondents conceded non-contestation of the MAP settlement for AYs 2010-11 to 2012-13 and the Court found that the petitioner had complied with the amended Rule 44G requirements for acceptance and withdrawal of appeals. Given the precedence of the DTAA where beneficial and Article 27(2)'s command on implementation, the Court concluded that the authorities are obliged to amend assessment orders and give effect to the correlative relief for AY 2010-11 to 2013-14. The Court declined to permit withholding of refunds or deferral of implementation for these years on the basis of procedural or disclosure objections, and directed the respondents to complete the exercise within a reasonable, specified period. [Paras 29, 34, 38]

Respondents are directed to amend the assessment orders for AY 2010-11 to 2013-14 in conformity with the MAP settlement and to allow refund of the correlative relief with permissible interest; the exercise to be completed within four months from receipt of certified copy of the order.

Final Conclusion: The petition is allowed. The Court declared that the respondents cannot defer implementation of the MAP settlement (Annexure D) for AY 2010-11 to 2013-14 on grounds of non disclosure and directed amendment of the assessment orders and refund of correlative relief with interest, the authorities to complete the process within four months from receipt of a certified copy of this order.

Principles of natural justice - faceless assessment scheme - opportunity to be heard / right to reply - technical failure of e filing portal as a ground for vitiation - remand for fresh consideration

Principles of natural justice - opportunity to be heard / right to reply - faceless assessment scheme - technical failure of e filing portal as a ground for vitiation - Validity of the assessment order dated 14.07.2021 passed under Section 143(3) read with Section 144B in view of the assessee's inability to upload replies/documents due to alleged technical glitches in the e filing portal. - HELD THAT: - The Court recorded that the assessee made a sincere attempt to upload replies before the last date 11.06.2021 but was prevented by technical glitches in the web portal, a fact acknowledged by the Revenue in its communication dated 12.06.2021. Although the Revenue contended the portal functioned in July 2021, the petitioner asserted the portal remained non functional until September 2021. The assessment was finalized on 14.07.2021 without the assessee's reply having been received. In these circumstances the Court found that passing the assessment order without waiting for the assessee to be able to submit its reply deprived the assessee of the chance to be heard, thereby violating the principles of natural justice. The Court therefore concluded that the impugned assessment order was vitiated for failure to afford a fair opportunity to reply under the Faceless Assessment Scheme where portal dysfunction prevented compliance within the prescribed mechanism. [Paras 11, 12, 13]

Impugned assessment order dated 14.07.2021 set aside as vitiated for breach of the assessee's right to be heard.

Remand for fresh consideration - faceless assessment scheme - opportunity to be heard / right to reply - Relief and direction after setting aside the assessment - scope and manner of reconsideration by the Revenue. - HELD THAT: - Having held the assessment order invalid, the Court remitted the matter to the respondents for fresh consideration. The Court directed that the respondents issue a fresh notice to the petitioner and grant time to reply either through the E assessment system under Section 144B or by some other appropriate method, thereby ensuring the petitioner a proper opportunity to submit documents and make submissions before any fresh finalization of assessment. The remand is for reconsideration with the specific mandate to afford the opportunity to reply and then proceed to pass a fresh assessment order. [Paras 14]

Matter remitted for fresh consideration with directions to issue fresh notice and afford the petitioner an opportunity to reply (via e assessment system or otherwise) before passing any fresh assessment order.

Final Conclusion: The assessment order dated 14.07.2021 for AY 2018-19 was set aside for denial of opportunity to be heard caused by e filing portal dysfunction; the matter is remitted to the Revenue to issue fresh notice, permit filing of replies/documents (through the e assessment system or otherwise) and thereafter proceed to pass a fresh assessment. No costs.

Assessment under Section 153A - Search and seizure under Section 132 - Requirement of incriminating material / nexus between seized material and additions - Additions under undisclosed income provisions (including application of Section 69) arising from post-search assessments - Reassessment/abatement mechanism for six years on account of search

Assessment under Section 153A - Search and seizure under Section 132 - Requirement of incriminating material / nexus between seized material and additions - Validity of the assessment framed under Section 153A/143(3) where no incriminating material was found during search under Section 132. - HELD THAT: - The Tribunal found on record that the second search dated 03/03/2011 resulted in no incriminating material being seized from the assessee (the Panchnama recorded only jewellery and cash which were released). Relying on the ratio in CIT v. Kabul Chawla as summarized in the impugned order, the Tribunal applied the principle that while Section 153A empowers fresh assessments for the relevant six years, completed assessments can be disturbed under Section 153A only on the basis of incriminating material unearthed during the search or other material having a nexus with the seized evidence. Absent any such incriminating material in the present case, the Tribunal held that the reassessment under Section 153A could not sustain additions made by the Assessing Officer and upheld by the CIT(A). [Paras 10, 11]

The assessment framed under Section 153A/143(3) was quashed insofar as it proceeded in the absence of any incriminating material seized during the search.

Additions under undisclosed income provisions (including application of Section 69) arising from post-search assessments - Requirement of incriminating material / nexus between seized material and additions - Sustainability of additions treated as unexplained (u/s 69) in the impugned assessment where the AO relied on alleged nondisclosure but no incriminating material was seized. - HELD THAT: - The Tribunal examined the specific additions: amounts treated as unexplained on account of share transactions and deposits allegedly from third parties. Having held that no incriminating material was seized in the search and that the Section 153A assessment cannot be used to make additions without nexus to seized material, the Tribunal concluded that the additions under Section 69 lacked the necessary foundation. The Tribunal therefore followed the Kabul Chawla principle that, in the absence of seized incriminating material or other post-search material establishing undisclosed income, such additions cannot be sustained and must be deleted. [Paras 10, 11]

Additions made and confirmed under Section 69 in the impugned Section 153A assessment were deleted.

Final Conclusion: The appeal is allowed: the reassessment/assessment under Section 153A/143(3) for AY 2007-08 and the additions treated as unexplained (including those under Section 69) are quashed/deleted because no incriminating material was seized during the search and there was no requisite nexus between any seized material and the additions.

Penalty under Section 112(a) of the Customs Act, 1962 - Confiscation under Section 111 of the Customs Act, 1962 - Customs Brokers Licensing Regulations - contraventions and concurrent proceedings - Abetment and liability for acts or omissions rendering goods liable to confiscation - Import of counterfeit goods and IPR enforcement at customs

Penalty under Section 112(a) of the Customs Act, 1962 - Customs Brokers Licensing Regulations - contraventions and concurrent proceedings - Abetment and liability for acts or omissions rendering goods liable to confiscation - Whether penalty under Section 112(a) could be sustained against the Customs Broker M/s. Sun Sea Shipping Agency - HELD THAT: - The Show Cause Notice alleged that the Customs Broker failed to verify the antecedents and identity/functioning of the importer, which are violations framed under the Customs Brokers Licensing Regulations. The Adjudicating Authority in separate proceedings under the CBLR found contraventions of Regulations 10(a), 10(b) and 10(n) (read with corresponding 2013 provisions) but also recorded that there was no evidence of any arrangement to share benefits of fraudulent imports. On that factual foundation the Tribunal held that the Department failed to establish the ingredients of Section 112(a) against the Customs Broker. Given absence of evidence of abetment or acts/omissions that would render the goods liable to confiscation, the penalty under Section 112(a) was not justified and was set aside. [Paras 15, 16]

Penalty under Section 112(a) imposed on M/s. Sun Sea Shipping Agency is set aside.

Penalty under Section 112(a) of the Customs Act, 1962 - Abetment and liability for acts or omissions rendering goods liable to confiscation - Import of counterfeit goods and IPR enforcement at customs - Whether penalty under Section 112(a) could be sustained against Shri C. Solomon Selvaraj and, if so, whether the quantum required modification - HELD THAT: - The Show Cause Notice implicated Shri C. Solomon as the person who represented the importer and submitted documents to the Customs Broker. The appellant contended he was merely an intermediary and had no knowledge of the counterfeit goods. The Tribunal, on appreciation of the material, concluded that filing of the Bill of Entry would not have occurred without the documents furnished by Shri Solomon and that he had acted in relation to the improper importation. Thus the findings of the authorities that he was liable under Section 112(a) were upheld. However, the Tribunal found the penalty amount excessive in the facts of the case and reduced it to a proportionate sum to meet the ends of justice. [Paras 21, 22, 23]

Penalty under Section 112(a) against Shri C. Solomon Selvaraj is sustained but reduced from the amount imposed below to a lesser penalty of Rs.1,00,000/-.

Final Conclusion: The appeal of the Customs Broker is allowed and the penalty under Section 112(a) set aside; the appeal of Shri C. Solomon Selvaraj is partly allowed by sustaining liability under Section 112(a) but reducing the penalty to Rs.1,00,000/-, with consequential reliefs as applicable.

Refund of Special Additional Duty (SAD) where SAD was discharged by debiting incentive scrips - validity of administrative circulars imposing additional conditions on a statutory notification (ultra vires) - requirement of invoice endorsement/non specification of duty for claiming exemption under Notification No. 102/2007 Cus

Refund of Special Additional Duty (SAD) where SAD was discharged by debiting incentive scrips - validity of administrative circulars imposing additional conditions on a statutory notification (ultra vires) - Entitlement to refund of SAD where the SAD was discharged by debiting MEIS scrip - HELD THAT: - The Tribunal held that the rejection of the refund claim on the sole ground that SAD had been discharged by debiting an incentive scrip was unsustainable. Relying on the reasoning in ALLEN DIESELS INDIA PVT. LTD., the Court applied the principle that a circular cannot impose additional conditions which are not part of the statutory notification and thus cannot curtail the scope of Notification No. 102/2007 Cus. Consequently, administrative circulars seeking to deny refund where SAD was paid by utilization of scrips are ultra vires and cannot be used to deny refund. The Tribunal found the factual position in the present case squarely covered by that authority and therefore concluded that payment of SAD by debiting MEIS scrip does not render the refund inadmissible.

Refund of SAD could not be denied merely because SAD was paid by debiting MEIS scrip; the appellant was entitled to refund.

Requirement of invoice endorsement/non specification of duty for claiming exemption under Notification No. 102/2007 Cus - Effect of absence of the prescribed endorsement on the commercial invoice on entitlement to refund under Notification No. 102/2007 Cus - HELD THAT: - The Tribunal held that the absence of the specific endorsement on the invoice did not defeat the refund claim where the invoice itself did not specify the duty element. Relying on the Larger Bench decision in CHOWGULE & COMPANY PVT. LTD., the Court treated the endorsement requirement as procedural/technical and observed that the object of the condition is satisfied if the commercial invoice does not indicate the duty element, thereby affirming entitlement to exemption subject to other conditions of the notification. Applying that ratio to the present facts, the Tribunal found no merit in denying refund for lack of the endorsement.

Refund could not be refused solely for want of the endorsement on the invoice when the invoice did not disclose the duty element; the appellant was entitled to refund.

Final Conclusion: The Tribunal set aside the impugned remand order of the Commissioner (Appeals) and, applying the precedents cited, held that the appellant was entitled to refund of the SAD; the appeal is allowed.

Power of Tribunal to restore struck off companies under Section 252 of the Companies Act, 2013 - Effect of striking off and restoration of name on register of companies - Obligation to file pending statutory documents and consequent fees/fines on restoration - Registrar's compliance with striking off procedure under Section 248 - Publication of restoration order in the Official Gazette and consequential formalities - Order confined to specified violations without prejudice to separate actions by Registrar

Power of Tribunal to restore struck off companies under Section 252 of the Companies Act, 2013 - Effect of striking off and restoration of name on register of companies - Restoration of the struck off company's name to the register and declaration of its status as active as if not struck off. - HELD THAT: - The Tribunal, exercising statutory powers under the Companies Act, 2013, allowed the Company Petition for restoration of the name of P.C. Mazumdar & Co. Pvt. Ltd. The Registrar of Companies, West Bengal had confirmed that the striking off was carried out after complying with the procedure under Section 248; nevertheless, the RoC raised no objection to restoration. In view of the material that the company remained a going concern and had assets and liabilities, the Tribunal concluded that the name should be restored and directed the RoC to reinstate the company's status on the register as if the name had not been struck off.

Petition allowed; RoC, West Bengal directed to restore the company's name and change its status from 'struck off' to 'Active'.

Obligation to file pending statutory documents and consequent fees/fines on restoration - Requirement that the struck off company file all pending statutory documents including annual accounts and annual returns for specified years within a stipulated time and pay prescribed fees/additional fee/fine as determined by the RoC. - HELD THAT: - The Tribunal directed the struck off company to regularise statutory non-compliance occasioning the striking off by filing the pending annual accounts and annual returns for the financial years 2016-17, 2017-18, 2018-19, 2019-20 and 2020-21. The filings must be accompanied by the prescribed fees, additional fee and/or fines as decided by the Registrar, and are to be completed within 45 days from the date of restoration. This direction conditions the restoration on the company's compliance with its statutory filing obligations.

Company required to file pending statutory documents for the listed years within 45 days of restoration and to pay prescribed fees/additional fee/fine as decided by the RoC.

Publication of restoration order in the Official Gazette and consequential formalities - Procedural directions for implementation of restoration, including payment of costs, delivery of certified copy to the RoC, and publication in the Official Gazette. - HELD THAT: - The Tribunal imposed procedural steps to give effect to the restoration: payment of costs by the applicant through the MCA portal as directed; delivery of a certified copy of the order to the Registrar within thirty days; and, upon delivery and compliance with directions, the RoC was directed to publish the order in the Official Gazette under its office name and seal. These directions implement the restoration and ensure public and statutory record-keeping.

Applicant to pay directed cost and deliver certified copy to RoC within thirty days; RoC to publish the order in the Official Gazette after compliance.

Order confined to specified violations without prejudice to separate actions by Registrar - Limitation that the restoration order is confined to the violations that led to the striking off and does not preclude the RoC from taking independent action for any other violations/offences. - HELD THAT: - The Tribunal expressly confined its order to the specific violations that resulted in striking off and clarified that the restoration would not preclude the Registrar of Companies, West Bengal from initiating or continuing appropriate proceedings in accordance with law for any other violations or offences committed by the company before or during the period its name remained struck off. This preserves the RoC's power to take separate regulatory or enforcement action.

Restoration order limited to specified violations; RoC free to take appropriate actions for other violations/offences.

Final Conclusion: The petition for restoration of P.C. Mazumdar & Co. Pvt. Ltd. is allowed; the RoC, West Bengal is directed to restore the company's name and status on the register subject to the company filing prescribed pending statutory documents for 2016-17 to 2020-21 within 45 days, payment of directed costs and fees, delivery of a certified copy of the order, and publication in the Official Gazette, without prejudice to the RoC's power to pursue any other violations.

Exclusion of moratorium period in computing limitation - effect of moratorium under Section 14 of the Insolvency and Bankruptcy Code - application under Section 11(6) of the Arbitration and Conciliation Act, 1996 by a corporate debtor - powers of the resolution professional to represent and act for the corporate debtor - limitation as a jurisdictional bar

Exclusion of moratorium period in computing limitation - effect of moratorium under Section 14 of the Insolvency and Bankruptcy Code - application under Section 11(6) of the Arbitration and Conciliation Act, 1996 by a corporate debtor - powers of the resolution professional to represent and act for the corporate debtor - Whether Section 60(6) of the Insolvency and Bankruptcy Code excludes the period of moratorium in computing limitation for suits or applications brought by a corporate debtor (including an application under Section 11(6) of the Arbitration and Conciliation Act, 1996). - HELD THAT: - The Court held that Section 60(6) plainly provides that, where an order of moratorium has been made under Part II of the IBC, the period during which the moratorium is in place shall be excluded in computing the period of limitation for any suit or application by a corporate debtor. The statutory scheme shows that moratorium under Section 14 displaces the management and places conduct of proceedings in the hands of the interim/resolution professional, but does not amount to an express bar on the corporate debtor (through its authorized representative) launching proceedings. The language of Section 60(6) - in particular the words "any suit or application" and the reference to suits or applications "by a corporate debtor for which an order of moratorium has been made" - must be given their plain meaning. Applying principles of literal and purposive construction, the Court rejected the narrower interpretation urged by the appellant that the exclusion should be confined only to suits which are themselves stayed by Section 14; instead the exclusion applies to proceedings brought by the corporate debtor during the moratorium period, and hence the moratorium period is to be subtracted when computing limitation for such proceedings. The Court therefore concluded that an application under Section 11(6) filed by or on behalf of a corporate debtor is subject to the benefit of Section 60(6) and the moratorium period must be excluded in computing limitation. [Paras 24, 25, 26, 27, 28]

Section 60(6) of the IBC excludes the entire period of the moratorium from computation of limitation in respect of suits or applications by a corporate debtor; accordingly the Section 11(6) application was not time-barred on that ground.

Final Conclusion: The appeal is dismissed. The Court held that Section 60(6) of the Insolvency and Bankruptcy Code excludes the period of moratorium from computation of limitation for suits or applications by a corporate debtor; no order as to costs.

Scope of examination under Section 11(6A) of the Arbitration and Conciliation Act, 1996 - arbitrability and referral to arbitration where disputes are not ex facie incapable of adjudication - effect of approval of a resolution plan and the "clean slate" principle under the Insolvency and Bankruptcy Code, 2016

Scope of examination under Section 11(6A) of the Arbitration and Conciliation Act, 1996 - when courts may decline to appoint an arbitrator as exercise in futility - Whether the Court should appoint a nominee arbitrator notwithstanding the respondent's plea that the claim stands extinguished by the approved Resolution Plan - HELD THAT: - The Court applied the limited scope of examination under Section 11(6A) of the A&C Act, observing that ordinarily the court's inquiry is confined to the existence of an arbitration agreement relatable to the dispute and that where it is not ex facie clear that the dispute is non-arbitrable or incapable of adjudication the matter should be referred to arbitration. The Court noted authorities emphasising the conservative approach of 'when in doubt refer' and that only in exceptional cases where it is absolutely clear that disputes cannot be entertained will the court refuse appointment. The respondent's contention based on the Resolution Plan and the "clean slate" principle raised a contentious question as to whether the liabilities asserted by the petitioner were extinguished; that question was not amenable to determination at the Section 11 stage as being plainly unsupportable on the face of the record. The NCLAT's order was held to indicate that certain of the petitioner's claims related to post-insolvency commencement date liabilities which could not be collated by the Resolution Professional, demonstrating that the issue was disputable rather than deadwood. Consequently, the court declined to adjudicate the merits and permitted the parties to have the dispute decided by the arbitral tribunal. [Paras 27, 31, 35, 36, 38]

Petition under Section 11(6) of the A&C Act allowed and a nominee arbitrator appointed; contentious questions about extinguishment by the Resolution Plan left for the arbitral tribunal.

Final Conclusion: The petition for appointment of a nominee arbitrator is allowed; because it is not manifestly clear that the disputes are incapable of adjudication due to the approved Resolution Plan, the parties are relegated to arbitration and Justice (Retired) Pankaj Naqvi is appointed as the respondent's nominee arbitrator subject to statutory disclosures and eligibility.

Distribution of liquidation assets under Section 53 - realisation and relinquishment of security interest under Section 52 - realisation of security interest and Regulation 37 of the IBBI (Liquidation Process) Regulations, 2016 - effect of moratorium and invocation of Bank Guarantee/orders of this Tribunal on pending civil/garnishee proceedings

Distribution of liquidation assets under Section 53 - realisation and relinquishment of security interest under Section 52 - Transfer of fixed deposit and amounts retained by the respondent to the liquidator for distribution among stakeholders under Section 53 of the Code. - HELD THAT: - The Tribunal found that the only liquidation estate available for distribution comprised the fixed deposit and the retained bill amount produced by the respondent. Having considered Section 53 (order of priority for distribution) and Section 52 together with Regulation 37 (procedures for realisation and relinquishment of secured assets), the Tribunal held that the proceeds forming part of the liquidation estate must be made available to the liquidator to effect distribution in accordance with the statutory priority. On the factual matrix the Tribunal concluded there were no other corporate-debtor assets to realize and directed the respondent to transfer the fixed deposit (with accrued interest) and the retained amount to the liquidator's bank account for distribution under Section 53 within two weeks. [Paras 19, 20, 21]

Application allowed; respondent directed to transfer the fixed deposit with interest and the retained bill amount to the liquidator's account for distribution under Section 53 of the Code within two weeks.

Effect of moratorium and invocation of Bank Guarantee/orders of this Tribunal on pending civil/garnishee proceedings - realisation of security interest and Regulation 37 of the IBBI (Liquidation Process) Regulations, 2016 - Whether garnishee/injunction proceedings before civil courts preclude the respondent from transferring the amounts to the liquidator. - HELD THAT: - The Tribunal examined the status of garnishee and injunction proceedings and the conduct of the parties. It observed that several garnishee holders had filed claims before the liquidator under the liquidation regulations and thereby relinquished their rights in the lower courts, rendering those proceedings infructuous. The respondent, being a party to the civil proceedings, has a duty to apprise the civil courts of the moratorium and the Tribunal's orders including invocation of bank guarantees. While recognising that injunctions of other courts could legally preclude the respondent from parting with amounts unless vacated, the Tribunal found on the record that the claims process and the Tribunal's prior directions disentitled garnishee holders from pursuing those attachments, and therefore did not bar transfer to the liquidator in this case. [Paras 17, 18]

Findings recorded that garnishee claimants had filed claims before the liquidator (thereby relinquishing lower court remedies) and that the respondent must bring the Tribunal's orders to the attention of civil courts; such garnishee/injunction proceedings do not preclude the transfer ordered.

Final Conclusion: The application is allowed. The Tribunal directed the respondent to transfer the fixed deposit with accrued interest and the retained bill amount to the liquidator's bank account for distribution in accordance with Section 53 of the Insolvency and Bankruptcy Code, 2016 within two weeks; the Registry to return the fixed deposit receipt to the respondent on request to facilitate transfer.

CENVAT Credit - input service - transaction in money - nexus between input service and output service - debit note as document for availment - invoice and service identification - remand for fresh adjudication

CENVAT Credit - input service - debit note as document for availment - invoice and service identification - nexus between input service and output service - Whether the appellants are entitled to avail CENVAT Credit of Service Tax debited by the Development Manager where the credit was passed by way of a debit note without clear evidence of the service rendered, invoice, or nexus with the appellants' output service. - HELD THAT: - The Tribunal found that the record did not permit a categorical conclusion on admissibility of the credit. Critical elements - the precise nature of the service rendered to the appellants, identification of the service provider and recipient in an invoice, the consideration actually charged for any service to the appellants, and the existence of a nexus between the input service on which credit is claimed and the appellants' output service - were not established on the material before the adjudicating authority. Although Service Tax had been levied and became input credit in the hands of the finance company and arguably the Development Manager, it was not shown whether the Development Manager had itself raised an invoice charging Service Tax to the appellants or whether the Service Tax component claimed to have been passed on related to services actually supplied to the appellants rather than to transactions of money consumed by the Development Manager. The Tribunal also recorded that the debit note alone, without supporting invoice and particulars of the service, cannot justify automatic availment of CENVAT Credit, particularly where the amounts debited related to processing fees on a larger loan availed by the Development Manager and only a portion was transferred to the appellants. In view of these lacunae in the record and the findings of the Commissioner which did not examine these aspects comprehensively, the Tribunal considered it necessary that all relevant issues and evidence be examined afresh by the adjudicating authority. [Paras 13, 14, 15, 16]

Matter remanded to the adjudicating authority for fresh adjudication of admissibility of CENVAT Credit with liberty to the parties to produce evidence and for the authority to examine invoice, nature of service, consideration and nexus; all issues kept open.

Final Conclusion: The appeal is allowed in part by remanding the matter to the adjudicating authority for a fresh decision on admissibility of the contested CENVAT Credit; the adjudicating authority shall consider invoices, detailed evidence of services rendered, the relationship between input services and the appellants' output service, and other relevant facts and pass a fresh order within 12 weeks.

Cenvat credit - input service - construction service/works contract exclusion - renovation and repair inclusion - nexus to setting up

Cenvat credit - input service - renovation and repair inclusion - construction service/works contract exclusion - Entitlement to Cenvat credit for services of re-carpeting existing roads in an industrial estate. - HELD THAT: - The Tribunal found as an admitted fact that the industrial estate and tar roads already existed and that the works executed related to re-carpeting of those existing roads. The Board minutes corroborated that the work was re-carpeting and not new construction. Applying the definition of input service in Rule 2(l) of the Cenvat Credit Rules, 2004, the Tribunal held that services used for repair, renovation or modernization of existing premises fall within the inclusive part of the definition and are therefore eligible for credit. The exclusion of construction services/works contract in the definition is directed at services used for initial setting up (the nexus to setting up) and does not negate credit where the same or similar services are used for renovation/repair of an existing facility. The reasoning follows earlier Tribunal decisions accepting credit where construction-type services were used for modernization/renovation rather than initial construction, and the impugned denial based on characterising the works as new construction was rejected.

Cenvat credit allowed for the re-carpeting works treated as repair/renovation; impugned order set aside and appeal allowed.

Final Conclusion: The Tribunal allowed Cenvat credit on the service of re-carpeting existing roads in the industrial estate, holding that such work constitutes repair/renovation falling within the inclusive part of the definition of input service, and is not excluded as construction/works contract used for initial setting up.

Recording of reasons by quasi-judicial authority - Tribunal as final fact finding authority and requirement of independent application of mind - Remand for fresh hearing for want of a speaking/reasoned order - Condonation of delay in re filing appeal - Substantial questions of law: failure to examine contentions and perversity of findings

Condonation of delay in re filing appeal - Delay in re filing the appeal of 411 days is condoned. - HELD THAT: - The application for condonation of delay was allowed. The Court accepted the explained sequence of events regarding initial filing, registry objections, the clerk's familial emergency and subsequent re filing, and noted that a coordinate bench had rendered a judgment in connected matters which affected the position. Having regard to parity with the coordinate bench's treatment of the same impugned order and the altered factual position since that judgment, the Court concluded that the appeal should not be subjected to different treatment and condoned the delay. [Paras 6]

Application for condonation of delay allowed and delay of 411 days condoned.

Recording of reasons by quasi-judicial authority - Tribunal as final fact finding authority and requirement of independent application of mind - Remand for fresh hearing for want of a speaking/reasoned order - Substantial questions of law: failure to examine contentions and perversity of findings - The Tribunal's order dated 20.04.2017 is set aside and the matter is remanded to the Tribunal for fresh hearing and decision on merits. - HELD THAT: - The Court accepted that the same substantial questions of law framed and decided in the coordinate bench's judgment (CEAC 7/2018 dated 16.05.2018) arise in this appeal, namely whether the Tribunal failed to examine and discuss the contentions raised and whether its findings were perverse. Relying on the principles summarized from the Supreme Court in Kranti Associates Pvt. Ltd. and earlier Delhi High Court decisions, the Court held that the impugned order merely reproduced the order in original without independent examination, thereby failing to record cogent reasons and to apply fresh and independent mind as the final fact finding appellate authority. For these deficiencies the impugned order did not meet the legal requirements of a speaking/reasoned order and, without commenting on merits, the Court set aside the Tribunal's order and remanded the matter for rehearing on merits uninfluenced by the impugned order. [Paras 11]

Appeal allowed; impugned Tribunal order set aside qua the appellant and remitted to the Tribunal for fresh decision on merits.

Final Conclusion: Delay in re filing is condoned; the appeal is allowed, the Tribunal's order dated 20.04.2017 is set aside as non speaking for lack of independent reasoning, and the matter is remanded to the Tribunal for fresh hearing and decision on merits without being influenced by the impugned order.

Reasoned and speaking order - quasi-judicial authority must record reasons - independent application of mind by appellate authority - remand for fresh decision on merits - judicial accountability and transparency

Reasoned and speaking order - quasi-judicial authority must record reasons - independent application of mind by appellate authority - Whether the Tribunal's order dated 20.04.2017 complied with the requirement to record independent and adequate reasons and to apply its mind afresh to the contentions raised by the appellants. - HELD THAT: - The Court held that the impugned order merely reproduced the order-in-original and did not independently and specifically examine or deal with the diverse factual and legal contentions raised before the Tribunal. Applying the principles summarized by the Supreme Court in Kranti Associates Pvt. Ltd., the Court emphasised that a final fact-finding and quasi-judicial appellate authority must record cogent, clear and succinct reasons and demonstrate an independent application of mind rather than a 'rubber-stamp' repetition of lower authority's conclusions. The impugned order lacked the requisite elucidation of factual contentions, did not consider the effect of retraction or documentary evidence as required of a first appellate fact-finding body, and therefore failed the standards of fairness, transparency and judicial accountability necessary for judicial review. [Paras 9, 10, 11]

The impugned order dated 20.04.2017 does not meet the legal requirements of a reasoned and speaking order and is set aside; the matter is remitted to the Tribunal for fresh hearing and decision on merits.

Remand for fresh decision on merits - judicial accountability and transparency - The relief to be granted in consequence of the deficiency in the Tribunal's order. - HELD THAT: - Having concluded that the Tribunal's order was legally deficient for want of independent reasoning and application of mind, the Court answered the substantial questions of law in favour of the appellants and against the respondent and directed remand. The Court clarified that it did not express any view on the merits and mandated that the Tribunal re-hear and decide the matters afresh on merits without being influenced by the impugned order. [Paras 3, 11]

The appeal is allowed; the impugned order is set aside qua the appellant and the matter is remanded to the Tribunal for fresh adjudication on merits without influence from the earlier order.

Final Conclusion: The appeal is allowed; the impugned Tribunal order dated 20.04.2017 is set aside insofar as the appellant is concerned and the matter is remitted to the Tribunal for de novo consideration and decision on merits, the Court expressing no opinion on the merits.

Entitlement to Cenvat credit of education cess and secondary higher education cess on countervailing duty - refund claim after voluntary reversal of Cenvat credit - distinction between time bar for demand and refund adjudication

Entitlement to Cenvat credit of education cess and secondary higher education cess on countervailing duty - refund claim after voluntary reversal of Cenvat credit - Whether the appellant was entitled to refund of Cenvat credit in respect of education cess and secondary higher education cess on CVD where the appellant had reversed the credit after accepting that such credit was not admissible. - HELD THAT: - The Tribunal found that the core question for refund determination is whether the Cenvat credit was admissible on merits. The appellant had initially availed the credit but, after audit objection and accepting that Cenvat credit in respect of CVD was not admissible, reversed the credit by making debit entries and paid the amount. The matter is therefore not one of an adjudicated demand but of entitlement. Since this Tribunal has held (in the cited Nirma decision) that such Cenvat credit was not admissible on merits, the appellant was not entitled to the credit and consequently the refund claim based on reversal could not be sustained. The refund application was correctly decided on the merits and rejected by the authorities below. [Paras 4, 5]

Refund claim rejected on merits; appellant was not entitled to refund after voluntary reversal of inadmissible Cenvat credit.

Distinction between time bar for demand and refund adjudication - application of limitation for recovery proceedings versus refund claims - Whether the Tribunal's limitation based decision in Nirma Ltd. (setting aside demand for extended period) assists the appellant in their refund claim. - HELD THAT: - The Tribunal emphasised the legal distinction between proceedings for recovery/demand and determination of refund claims. The limitation rules and time bar applicable to issuance of a demand notice under statutory provisions operate in the context of recovery; they are not directly applicable to adjudication of a refund claim founded on entitlement. The Nirma decision relied upon by the appellant related to striking down a demand for extended period and therefore concerned limitation in recovery proceedings. That reasoning could not be transposed to the present refund claim where the question is admissibility of the credit on merits. Consequently, the limitation argument based on Nirma was held to be inapplicable to the facts of these appeals. [Paras 4]

Limitation-based protection in demand proceedings does not assist the appellant's refund claim; Nirma Ltd. is inapplicable to refund adjudication here.

Final Conclusion: The Tribunal upheld the impugned orders rejecting the refund claims on merits, dismissing the appeals.

Determination of annual capacity of production - monthly duty liability under Pan Masala Rules - deeming provisions regarding operating packing machines - treatment of sealed or uninstalled packing machines - retrospective amendment to Rule 8 and its effect - remand for redetermination and finalisation of show cause notices

Determination of annual capacity of production - monthly duty liability under Pan Masala Rules - Whether the matters should be remitted to the original authority for fresh determination of annual capacity of production and consequent duty in view of subsequent retrospective amendment and later decisions. - HELD THAT: - The tribunal observed that the Pan Masala Rules require determination of annual capacity of production on the basis of the declaration under Rule 6 and that duty for a month is to be calculated under Rule 7 on the number of operating packing machines. Noting that Rule 8 was retrospectively amended (with effect from 13.4.2010) by the Finance (No.2) Act, 2014 and that several later decisions interpreting sealing, operation and deeming aspects post-dated the impugned orders, the tribunal held that the impugned orders (dated 2011-2012) require reconsideration in the light of the retrospective amendment and subsequent judicial pronouncements. The tribunal therefore remanded the matters to the original authority for redetermination of annual capacity of production taking into account the retrospective amendment and the observations made by the tribunal in the order, and directed that the original authority should also adjudicate and finalise all show cause notices in a time bound manner. [Paras 4, 5]

Matter remanded to the original authority for redetermination of annual capacity of production in light of the retrospective amendment and related observations, and for finalisation of show cause notices.

Treatment of sealed or uninstalled packing machines - deeming provisions regarding operating packing machines - Whether a packing machine sealed or uninstalled in accordance with the Rules is to be treated as an operating packing machine for determination of capacity and duty. - HELD THAT: - The tribunal agreed with earlier decisions of the Tribunal and the High Court that where a packing machine has been uninstalled and sealed in the manner prescribed by the Rules (and there is no evidence of de-sealing or use), it cannot be treated as an operating machine merely on assumptions that it could be moved or used. The tribunal held that imposition of liability on the basis that sealed machines could be moved and used amounted to assumption and presumption; consequently, a machine properly sealed/uninstalled in terms of the Rules should not be taken into account for determining annual capacity or monthly duty. [Paras 4]

A machine uninstalled and sealed in accordance with the Rules is not to be treated as an operating packing machine for the purposes of capacity determination and duty calculation.

Remand for redetermination and finalisation of show cause notices - The manner and timeframe in which the original authority is to proceed on remand. - HELD THAT: - The tribunal recognised the delay caused by the passage of time and the fact that the retrospective amendment and subsequent decisions were not considered when the impugned orders were passed. While remanding for redetermination, the tribunal directed that the original authority should, while re-determining annual capacity after taking into account the retrospective amendment and the tribunal's observations, also adjudicate and finally determine all show cause notices issued in the matter. The tribunal imposed a time-bound mandate that all show cause notices shall be finalised within three months of receipt of the tribunal's order. [Paras 4, 5]

On remand the original authority shall redetermine capacity in light of the retrospective amendment and tribunal observations and finalise all show cause notices within three months of receipt of the order.

Final Conclusion: Appeals allowed to the extent that the matters are remanded to the original authority for redetermination of annual capacity of production in view of the retrospective amendment to Rule 8 and subsequent decisions; sealed/uninstalled machines shall not be treated as operating machines; the original authority is directed to adjudicate and finalise all show cause notices within three months of receipt of this order.

Cenvat credit - input services - admissibility of credit for Hotel Accommodation Service and Air Travel Agent Service - precedential value of earlier tribunal orders

Cenvat credit - input services - Hotel Accommodation Service - Air Travel Agent Service - precedential value of earlier tribunal orders - Entitlement to Cenvat credit in respect of Hotel Accommodation Service and Air Travel Agent Service - HELD THAT: - The Tribunal examined whether service tax paid on Hotel Accommodation Service and Air Travel Agent Service qualifies as Cenvat creditable input services. The appellant relied on earlier decisions of the Tribunal, including the appellant's own earlier order, which held these services to be input services under Rule 2(l) of the Cenvat Credit Rules, 2004 and therefore admissible for credit. The revenue did not place any contrary decision or evidence showing that the services were not used for sale/marketing of manufactured goods. In view of consistent Tribunal precedents and absence of contradictory material, the Tribunal applied the precedents and concluded that the impugned order denying credit was not sustainable.

Impugned order set aside and appeal allowed; Cenvat credit for Hotel Accommodation Service and Air Travel Agent Service held admissible following Tribunal precedents.

Final Conclusion: Appeal allowed; the Tribunal set aside the impugned order and upheld entitlement to Cenvat credit for Hotel Accommodation Service and Air Travel Agent Service, following earlier Tribunal decisions and in absence of contrary material.

Definition of "Goods" under Section 2(d) of the Central Sales Tax Act, 1956 - alcoholic liquor for human consumption versus alcohol not fit for human consumption - issuance of "C" form for concessional central sales tax on interstate sale - exclusion under the levy provisions of the GST Act (Section 9(1) and proviso regarding alcoholic liquor for human consumption) - precedent establishing that Rectified Spirit and ENA are not alcoholic liquor for human consumption

Definition of "Goods" under Section 2(d) of the Central Sales Tax Act, 1956 - alcoholic liquor for human consumption versus alcohol not fit for human consumption - Whether Extra Neutral Alcohol (ENA) and Malt Spirit in their original form fall within the amended definition of "Goods" as "alcoholic liquor for human consumption" under Section 2(d) of the CST Act. - HELD THAT: - The Court compared the pre-amendment wide definition of "Goods" with the narrowed, post-amendment list which expressly includes specified items and "alcoholic liquor for human consumption". It held that before amendment ENA and similar materials fell within the general definition, but after the amendment only items expressly listed and alcoholic liquor fit for human consumption are covered. Relying on the Constitutional Bench decision in Synthetics and Chemicals Ltd. v. State of U.P., the Court accepted the principle that Rectified Spirit and ENA in their original form are not alcoholic liquors fit for human consumption. Applying that principle to the amended clause, ENA and Malt Spirit therefore do not fall within the amended definition of "Goods" as "alcoholic liquor for human consumption" and are excluded from that category under the CST Act amendment. [Paras 6, 7, 8, 9]

ENA and Malt Spirit in original form are not "alcoholic liquor for human consumption" and thus do not fall within the amended definition of "Goods" under Section 2(d) of the CST Act.

Exclusion under the levy provisions of the GST Act (Section 9(1) and proviso regarding alcoholic liquor for human consumption) - issuance of "C" form for concessional central sales tax on interstate sale - Whether the exemption/exclusion in Section 9(1) and the notification mechanism in Section 9(2) of the GST Act render ENA and Malt Spirit eligible for C forms or otherwise affect their classification for concessional CST. - HELD THAT: - Section 9(1) of the GST Act excludes supply of "alcoholic liquor for human consumption" from the levy of central GST; Section 9(2) contemplates notifications for specified petroleum and fuel items. The Court found that because ENA and Malt Spirit are not alcoholic liquor fit for human consumption, Section 9(1)'s exclusion is inapplicable to them. Similarly, Section 9(2) concerns only the listed items (petroleum crude, HSD, petrol, natural gas, ATF) and does not assist the petitioner; no notification mechanism under Section 9(2) affects ENA or Malt Spirit. Consequently, reliance on Section 9(1) or (2) cannot entitle the petitioner to C forms for ENA and Malt Spirit. [Paras 10, 11]

Section 9(1) and (2) of the GST Act do not render ENA or Malt Spirit eligible for treatment as "alcoholic liquor for human consumption" nor do they mandate issuance of C forms for those materials.

Issuance of "C" form for concessional central sales tax on interstate sale - precedent establishing that Rectified Spirit and ENA are not alcoholic liquor for human consumption - Whether the respondent's refusal by letter dated 26-07-2019 to issue C forms for procurement of ENA and Malt Spirit was liable to be set aside. - HELD THAT: - Having determined that ENA and Malt Spirit are not "alcoholic liquor for human consumption" within the amended definition of "Goods," the Court held that the respondents correctly declined to issue C forms for those materials. The Court distinguished the coordinate-bench decision relied upon by the petitioner (concerning high speed diesel and notification under Section 9(2)) as factually different and inapplicable. On the statutory construction and the binding precedent, the denial of C forms was lawful. [Paras 12, 13]

The communication dated 26-07-2019 refusing issuance of C forms for ENA and Malt Spirit was valid; the petition seeking to set it aside is dismissed.

Final Conclusion: The petition is dismissed. The Court upheld the respondents' refusal to issue C forms for procurement of ENA and Malt Spirit on the ground that those materials are not "alcoholic liquor for human consumption" within the amended definition of "Goods" under the CST Act, and Section 9 of the GST Act does not alter that conclusion.

Power of the Commissioner under revisional jurisdiction to call for and examine records - authority to grant permission for reassessment - reassessment procedure under section 29 - rectification of mistakes apparent on the face of record - limits of revisional power

Authority to grant permission for reassessment - reassessment procedure under section 29 - limits of revisional power - Whether the assessing authority can seek permission from the Commissioner under section 56(1) (revisional provision) to initiate reassessment proceedings, instead of following the reassessment procedure provided under section 29. - HELD THAT: - The Court examined the statutory scheme governing reassessment and revision. Section 29(7) expressly empowers the Commissioner to authorise reassessment within the extended eight-year period, and section 29 prescribes the procedure for reassessment by the assessing authority. Section 56(1) confers upon the Commissioner (or an authorised officer not below Joint Commissioner) the power to call for and examine records to satisfy himself as to the legality or propriety of subordinate orders and to pass such orders as he thinks fit. However, section 56 does not provide the Commissioner with power to grant permission to an assessing authority to initiate reassessment on the assessing authority's application; permitting such a procedure would render the reassessment provisions under section 29 redundant and constitute an impermissible deviation from the statutory procedure. The Court relied on earlier precedent holding that revisional authority is limited to satisfying itself about propriety or legality of orders and is not empowered to initiate reassessment or rectification proceedings which are governed by separate provisions. The Joint Commissioner (Executive) therefore exceeded jurisdiction by granting permission for reassessment under the guise of section 56(1), and the Tribunal erred in upholding that action without applying the correct statutory scheme. [Paras 19, 20, 21, 22, 23]

Permission for reassessment could not be validly granted to the assessing authority under section 56(1); reassessment must follow the procedure in section 29 and the Joint Commissioner exceeded jurisdiction in granting such permission.

Rectification of mistakes apparent on the face of record - power of the Commissioner under revisional jurisdiction to call for and examine records - The proper scope of sections 31 and 56 with regard to rectification and revisional examination. - HELD THAT: - Section 31 permits rectification of mistakes apparent on the face of the record by the officer, authority, the Tribunal or the High Court, typically on application or on its own motion within three years and subject to procedural safeguards. Section 56 authorises the Commissioner to call for and examine records of subordinate orders to satisfy himself as to legality or propriety and to pass such orders as he deems fit. The Court observed that these provisions operate in their respective domains: rectification under section 31, revisional scrutiny under section 56, and reassessment under section 29. The Commissioner's revisional power under section 56 does not subsume the distinct remedial procedure of section 29 or permit the Commissioner to authorise reassessment on an assessing authority's request under section 56(1). [Paras 12, 16, 17, 18, 19]

Sections 31 and 56 have distinct functions; revisional power under section 56 does not authorise the Commissioner to grant permission for reassessment which is governed by section 29.

Final Conclusion: The Tribunal's order upholding permission granted under section 56(1) for reassessment is set aside. The Joint Commissioner (Executive) exceeded jurisdiction in granting permission for reassessment under section 56(1); reassessment must conform to the procedure in section 29. Revision allowed with costs.

Acquittal under Section 256(1) Cr.P.C. - judicial discretion in dismissal for non-prosecution - requirement to record reasons before dismissing for non-prosecution - adjournment versus dismissal for non-prosecution - representation under Section 205 Cr.P.C.

Acquittal under Section 256(1) Cr.P.C. - judicial discretion in dismissal for non-prosecution - requirement to record reasons before dismissing for non-prosecution - adjournment versus dismissal for non-prosecution - Validity of the Metropolitan Magistrate's order acquitting the accused under Section 256(1) Cr.P.C. for non-prosecution when the complainant was absent. - HELD THAT: - The Court held that acquittal under Section 256(1) Cr.P.C. is not automatic upon the complainant's absence; the magistrate must exercise judicial discretion and record reasons why it is not proper to adjourn the hearing. Although the accused was represented under Section 205 Cr.P.C., the learned Magistrate dismissed the case without forming or recording any opinion that adjournment was improper or that there existed good reasons for dismissal. The impugned order merely noted the complainant's absence and characterized it as a delaying tendency, without addressing the complainant's prior diligence in attending earlier dates or considering whether personal attendance was essential on the date in question. For these reasons the trial court's approach was held to be erroneous and contrary to the requirement that the court judicially and fairly apply Section 256(1) before acquitting the accused for non-prosecution (paras 7-8). [Paras 7, 8]

Impugned order of acquittal under Section 256(1) Cr.P.C. is set aside for lack of recorded judicial discretion and reasons; matter remitted for fresh disposal in accordance with law.

Final Conclusion: Appeal allowed; order dated 10th April, 2018 setting aside the complaint is quashed and the matter is remitted to the learned Magistrate to dispose of the case expeditiously in accordance with law.

Presumption under Section 118 of the Negotiable Instruments Act - authority to fill blanks under Section 20 of the Negotiable Instruments Act - onus and burden of proof under the Indian Evidence Act - admissibility of signature where execution is admitted - no requirement of thumb impression

Presumption under Section 118 of the Negotiable Instruments Act - onus and burden of proof under the Indian Evidence Act - The presumption that promissory notes were made for consideration under Section 118 is available and, once raised, the onus lies on the executant to rebut it with proof. - HELD THAT: - The trial Court rightly invoked the statutory presumption under Section 118 of the Negotiable Instruments Act after the defendant admitted execution and issuance of the promissory notes. Applying the concepts of proved and disproved under the Indian Evidence Act, the Court held that a mandatory statutory presumption must be rebutted by proof and cannot be displaced by mere reasonable explanation. The first Appellate Court erred in failing to apply this presumption and in improperly shifting the burden onto the plaintiff. Consequently, the presumption that Ex.A1 to Ex.A3 were supported by consideration stands unless the defendant discharges the onus by cogent proof. [Paras 12, 14, 15, 18]

The presumption under Section 118 operates in favour of the plaintiff and the defendant failed to discharge the onus to rebut it.

Authority to fill blanks under Section 20 of the Negotiable Instruments Act - A holder is entitled under Section 20 to fill up blanks in an instrument; the first Appellate Court was wrong to reject the plaintiff's right to fill the promissory notes. - HELD THAT: - Where execution and issuance of blank promissory notes are admitted, Section 20 permits the holder to fill up the blanks and to negotiate the instrument for a specified amount. The lower Appellate Court disregarded this statutory authority and the admitted facts, thereby wrongly invalidating the instrument. The trial Court's acceptance of the plaintiff's right under Section 20 was legally sustainable. [Paras 6, 13, 17]

The plaintiff was entitled to fill the blanks under Section 20 and the first Appellate Court erred in rejecting that right.

Admissibility of signature where execution is admitted - no requirement of thumb impression - The absence of a thumb impression and a naked-eye comparison do not defeat the promissory notes where execution and signatures are admitted. - HELD THAT: - The defendant had admitted execution, signature and issuance of Ex.A1 to Ex.A3 in pleadings and evidence. There is no statutory requirement to obtain a thumb impression on a promissory note, and the first Appellate Court erred in treating the absence of such impression and a naked-eye comparison as sufficient to displace the admitted execution. Suspicion based on lack of thumb impression is impermissible when signatures and issuance are not disputed. [Paras 11, 12, 16, 17, 18]

The first Appellate Court wrongly relied on absence of thumb impression and naked-eye comparison to dismiss the suit despite admitted execution.

Final Conclusion: The second appeal is allowed; the first Appellate Court's reversal is set aside and the trial Court decree and attachment before judgment are restored because the statutory presumptions under the Negotiable Instruments Act and the holder's right under Section 20 were correctly applied by the trial Court and the defendant failed to rebut those presumptions.

Maintainability of fresh Section 11(6)(C) application after quashing of award - effect of quashing arbitral award and right to commence arbitration afresh - limited supervisory role of courts to ensure fairness in arbitration - violation of natural justice as ground for setting aside an award - appointment of arbitrator pursuant to arbitration clause - obligation of tribunal to comply with mandate of Section 24(1)

Maintainability of fresh Section 11(6)(C) application after quashing of award - effect of quashing arbitral award and right to commence arbitration afresh - limited supervisory role of courts to ensure fairness in arbitration - violation of natural justice as ground for setting aside an award - Whether a second application under Section 11(6)(C) is maintainable in the absence of an express liberty granted by the court which quashed the earlier award - HELD THAT: - The Court held that a fresh application under Section 11(6)(C) is maintainable where the earlier award has been quashed and the underlying dispute thus remains unresolved. The reasoning recognises that the supervisory jurisdiction of courts under the Arbitration and Conciliation Act is limited to ensuring fairness and correcting violations such as fraud, bias or breach of natural justice, and that where an award is set aside on such grounds the parties remain entitled to have the dispute adjudicated rather than left undecided. The Court relied on the principle in McDermott International Inc. Vs. Burn Standard Co. Ltd. that quashing an award leaves parties free to begin arbitration afresh, and on subsequent authority reiterating that when an award is set aside the underlying disputes require fresh determination and . Applying those principles to the facts - where the award was quashed for failure to follow the mandate of Section 24(1) (a natural justice defect) and the dispute remains undecided - the Court concluded that technical absence of an express liberty in the earlier order does not preclude maintainability of a new appointment application because otherwise the dispute would remain remediess. [Paras 17, 19]

A fresh application under Section 11(6)(C) is maintainable notwithstanding that the earlier order quashing the award did not expressly grant liberty to file a fresh appointment application, when the award has been set aside and the dispute remains unresolved.

Appointment of arbitrator pursuant to arbitration clause - obligation of tribunal to comply with mandate of Section 24(1) - Whether a fresh arbitrator should be appointed and, if so, the appointment made by the Court - HELD THAT: - Having held the fresh Section 11(6)(C) application maintainable, the Court exercised its power to appoint a sole arbitrator to ensure the unresolved dispute is adjudicated. The Court noted the parties' suggestion for the arbitrator and, subject to the disqualification provisions in Section 12(5), appointed the person proposed by counsel. The Court directed the arbitrator to decide the dispute expeditiously, to be guided by the statutory ceilings for fees and the timelines mandated by the Act, and to commence and endeavour to conclude proceedings within the period indicated. [Paras 20, 21, 23, 24]

A sole arbitrator is appointed as requested by the parties (name specified in the order), subject to Section 12(5), with directions to proceed expeditiously and within the time and fee limits provided by the Act.

Final Conclusion: The application under Section 11(6)(C) is allowed: the Court ruled that a fresh appointment application is maintainable after an award is quashed leaving the dispute unresolved, and appointed the sole arbitrator proposed by the parties (subject to statutory disqualification), with directions to proceed expeditiously.

Maintainability of writ petition despite alternative statutory remedy - Availability of remedy under the SARFAESI Act - Concurrent invocation of SARFAESI proceedings and arbitration - Effect of arbitration agreement on enforcement under SARFAESI Act - Exercise of extraordinary jurisdiction under Article 226

Maintainability of writ petition despite alternative statutory remedy - Availability of remedy under the SARFAESI Act - Exercise of extraordinary jurisdiction under Article 226 - Writ petition dismissed on ground of availability of alternative and efficacious remedy under the SARFAESI Act. - HELD THAT: - The High Court held that the petitioners have an alternative statutory remedy under the SARFAESI Act and that in view of earlier coordinated decisions of the Court in identical matters, the question of maintainability is no longer res integra. The Court accepted the reasoning of the coordinate Single Judge and Division Bench orders which declined to exercise extraordinary jurisdiction under Article 226 where a specific and efficacious remedy under the SARFAESI Act is available and where controversies raised were suitable for resolution under the statutory scheme. Reliance upon a different factual precedent (Harshad Govardhan Sondagar) was found inapposite as it concerned distinct provisions and facts. Accordingly, the Court declined to entertain the writ petition and dismissed it for want of necessity to invoke extraordinary constitutional jurisdiction.

Writ petition dismissed on account of availability of alternative remedy under the SARFAESI Act; pending application disposed of.

Concurrent invocation of SARFAESI proceedings and arbitration - Effect of arbitration agreement on enforcement under SARFAESI Act - Arbitration clause and invocation of Section 9 of the Arbitration Act do not preclude initiation of proceedings under the SARFAESI Act. - HELD THAT: - The Court, following the decisions of the Supreme Court in M.D. Frozen Foods Exports Pvt. Ltd. and Indiabulls Housing Finance Limited, held that proceedings under the SARFAESI Act are enforcement proceedings and may be resorted to concurrently with arbitration proceedings, which are adjudicatory. The Court rejected the contention that an arbitration agreement or the filing of a Section 9 application bars the creditor from invoking SARFAESI remedies, observing that the two remedies are cumulative and that earlier Supreme Court precedents permit simultaneous resort to both regimes. Decisions concerning the interplay between civil court remedies and arbitration (SBP & Co., Vidya Drolia) were held inapplicable since they did not involve the SARFAESI Act.

Contention that arbitration or Section 9 invocation bars SARFAESI proceedings rejected; SARFAESI proceedings permissible concurrently with arbitration.

Final Conclusion: The writ petition is dismissed: petitioners possess an alternative and efficacious remedy under the SARFAESI Act, and the presence of an arbitration clause or an application under Section 9 does not bar initiation of SARFAESI enforcement proceedings; pending application disposed of.