TaxTMI Updates e-Newsletter
May 27,2021

Supply of services - intermediary - consideration - business - GST registration - liability to pay GST - place of supply (as intermediary) - pure agent

Intermediary - supply of services - place of supply (as intermediary) - Whether activities performed by DCCI LO constitute a supply under the GST law and whether DCCI LO is an intermediary - HELD THAT: - The Authority examined the applicant's stated liaison activities of connecting businesses in India with business partners in Dubai and applied the statutory definition of "intermediary". The three limbs of the definition were held to be satisfied: the applicant (i) is a person by whatever name called; (ii) arranges or facilitates supplies of goods or services between two or more persons by connecting businesses in India with Dubai counterparts; and (iii) does not supply such goods or services on its own account but acts on behalf of its Head Office. Consequently, the Authority concluded that the applicant performs intermediary services which amount to supply of services under the GST law. The Authority further noted that when an entity is an intermediary, the place of supply rules apply and, in this case, the place of supply is the location of the supplier (the applicant in Maharashtra). The Authority rejected the applicant's reliance on liaison-office character and certain advance rulings with different facts, finding those cases distinguishable. [Paras 5, 6]

Activities of DCCI LO are a supply of services and DCCI LO is an intermediary; place of supply is the location of the applicant in Maharashtra.

Consideration - pure agent - business - GST registration - Whether DCCI LO is required to obtain registration under GST - HELD THAT: - The Authority addressed the contention that reimbursements from the Head Office are not consideration and that the liaison office is a non profit/extension of the Head Office. On examination of financial records and submissions, the Authority found that the applicant received remittances in excess of expenses (surplus cash balances and liabilities shown to Head Office), undermining the claim of functioning strictly on a cost to cost basis. The Authority also observed that the applicant's activities fall within the ambit of "business" and that the applicant does not satisfy the conditions to be treated as a pure agent for the purpose of excluding amounts from value. In view of these findings, the applicant's receipts from the Head Office were held to amount to consideration and the applicant was held required to obtain GST registration. [Paras 2, 3, 5, 6]

DCCI LO is required to obtain registration under the GST law.

Liability to pay GST - consideration - supply of services - Whether DCCI LO is liable to pay GST - HELD THAT: - Having held that the applicant performs intermediary services constituting supply and that remittances in excess of expenses amount to consideration, the Authority held that such supplies are taxable. The Authority relied on the inclusive definitions of "supply" and "business" under the GST law and on the financial evidence of surplus remittances and cash balances to conclude that the applicant cannot be treated as a non profit merely by virtue of being a liaison office. Accordingly, the applicant was held liable to pay GST on its taxable supplies. [Paras 2, 3, 5, 6]

DCCI LO is liable to pay GST on its taxable supplies.

Final Conclusion: The Authority answered all questions in the affirmative: the liaison activities of DCCI LO constitute a supply (the applicant acts as an intermediary), DCCI LO is required to obtain GST registration, and DCCI LO is liable to pay GST on its taxable supplies.

Correction of GSTR-1 return - competence of Nodal Officer - administrative remedy by representation - authority bound to consider representation within fixed time

Correction of GSTR-1 return - competence of Nodal Officer - administrative remedy by representation - direction to consider representation within fixed time - Petition disposed directing the petitioner to file a fresh representation before the competent authority (Commissioner, CGST & Central Excise Jhansi Division) and directing that authority to consider and decide the representation within a stipulated time, without adjudicating the merits of the claim. - HELD THAT: - The petitioner had earlier filed a representation alleging mistakes in the Form GSTR-1 (B2B entry) and sought correction; the representation was addressed to the Nodal Officer. Respondents submitted that the Nodal Officer lacks competence to effect the correction and that the State authorities can only forward the return to the Central Authority, asserting that the Commissioner, CGST & Central Excise Jhansi Division is the competent authority who has not yet been approached. The High Court declined to enter into the merits of the grievance and instead disposed of the petition by directing the petitioner to file a fresh representation before the Commissioner, CGST & Central Excise Jhansi Division within two weeks and by obliging that authority to take necessary action in accordance with law within four weeks of receipt and to communicate its decision to the petitioner. The order thus sends the grievance for fresh administrative consideration rather than deciding the substantive question of correction of the return.

Petition disposed; petitioner to file fresh representation before the Commissioner, CGST & Central Excise Jhansi Division within two weeks and the competent authority to decide the same in accordance with law within four weeks and intimate the decision.

Final Conclusion: The High Court disposed of the petition without deciding merits, directing the petitioner to approach the Commissioner, CGST & Central Excise Jhansi Division by fresh representation within two weeks; the Commissioner is directed to consider and decide the representation in accordance with law within four weeks and communicate the outcome to the petitioner.

Opportunity of hearing - principles of natural justice - mandatory requirement of Section 75(4) of the CGST Act, 2017 - remand for rehearing after personal hearing - availability of alternative remedy under Section 107 not a bar to writ

Mandatory requirement of Section 75(4) of the CGST Act, 2017 - opportunity of hearing - Impugned assessment is vitiated for non-compliance with the mandatory requirement of granting opportunity of hearing under sub-section (4) of Section 75. - HELD THAT: - The Court noted that sub-section (4) of Section 75 mandates that an opportunity of hearing be granted where a request in writing is received from the person chargeable or where any adverse decision is contemplated. The Assessing Authority initiated adverse action by issuing a show cause notice but proceeded to confirm the demand on the ground that the petitioner failed to file objections. The Court held that when an adverse decision is contemplated, the statutory requirement to afford hearing is indispensable and must be followed scrupulously; deviation from this mandatory provision vitiates the assessment order. [Paras 7, 8]

The assessment order is liable to be set aside for non-compliance with the mandatory hearing requirement under Section 75(4).

Principles of natural justice - Confirmation of demand without affording the prescribed hearing violated principles of natural justice. - HELD THAT: - The Court found that confirming the tax demand because the assessee did not respond to the show cause notice amounted to adopting a course prejudicial to the assessee without giving the required opportunity. Such procedure offended the principles of natural justice and compounded the statutory non-compliance, warranting setting aside of the impugned order. [Paras 8]

The impugned order is set aside on the ground of violation of principles of natural justice.

Remand for rehearing after personal hearing - availability of alternative remedy under Section 107 not a bar to writ - Matter remanded for fresh consideration after personal hearing; availability of appeal under Section 107 does not preclude issuance of writ in this case. - HELD THAT: - Having set aside the assessment for failure to afford hearing and breach of natural justice, the Court remanded the matter to the Assessing Authority to consider the objections afresh and pass appropriate orders after giving notice specifying date and time for personal hearing. The Court expressly directed that the petitioner or its authorised representative must attend the personal hearing and that the objections dated 18.03.2021 shall be considered. The Court rejected the respondents' contention that the existence of an alternative remedy under Section 107 rendered the writ petition non-maintainable, holding that the writ was maintainable in view of the statutory and natural justice breaches. [Paras 8, 9]

The assessment is remanded for fresh consideration and passing of orders after giving a notice of personal hearing and considering the objections; the plea of alternative remedy under Section 107 is rejected.

Final Conclusion: Writ petition allowed; assessment order dated 17.03.2021 is set aside for failure to comply with Section 75(4) and for violation of natural justice, and the matter is remanded to the Assessing Authority to decide afresh after giving notice of and conducting a personal hearing and considering the objections already filed.

Breach of principles of natural justice - opportunity to reply to show cause/draft assessment - invalidity of assessment passed before expiry of response time - assessment under Section 144B of the Act - availability of alternative statutory remedy not an absolute bar to writ jurisdiction

Breach of principles of natural justice - opportunity to reply to show cause/draft assessment - invalidity of assessment passed before expiry of response time - Impugned assessment, notice of demand and penalty initiation could not be sustained as the assessment order was passed before the time allowed to the petitioner to file its response had expired, resulting in breach of natural justice. - HELD THAT: - The Court found on the unchallenged facts that a show cause notice-cum-draft assessment dated 18.04.2021 had permitted the petitioner to respond by 23:59 hours on 22.04.2021, but the final assessment order was recorded on 22.04.2021 at 14:11 hours, i.e., well before the expiry of the response period. Once a show cause notice-cum-draft assessment is issued proposing variation in declared income, the noticee acquires the statutory right to file a reply and to seek a personal hearing which cannot be curtailed. The earlier, inquisitorial notices issued prior to the draft assessment do not supplant or cure the statutory entitlement arising from the draft assessment; the respondent's action in passing the final order before the response deadline resulted in denial of opportunity and thereby violated principles of natural justice. On these findings the impugned assessment order, notice of demand and notice initiating penalty proceedings were quashed. [Paras 4, 5, 7]

Impugned assessment order, notice of demand and notice for initiation of penalty proceedings dated 22.04.2021 quashed for breach of natural justice.

Availability of alternative statutory remedy not an absolute bar to writ jurisdiction - The existence of an alternative statutory remedy did not preclude exercise of writ jurisdiction in the present case. - HELD THAT: - The Court rejected the respondent's contention that the petitioner's remedy under the Act constituted a bar to the writ petition. Relying on established principles, the Court held that where there is a violation of the principles of natural justice (as found here), the availability of an alternative remedy is not an absolute impediment to entertaining a writ petition. The factual matrix-specifically, the assessment being passed before the expiry of the response period-constituted a fit case for exercise of Article 226 jurisdiction despite alternative statutory remedies. [Paras 3, 6]

Writ jurisdiction properly invoked and alternative remedy held not to bar relief in this case.

Assessment under Section 144B of the Act - opportunity to reply to show cause/draft assessment - Prior opportunities given before issuance of the show cause notice-cum-draft assessment did not cure the denial of the specific statutory opportunity to respond to the draft assessment. - HELD THAT: - The Court observed that notices issued prior to a show cause notice-cum-draft assessment are inquisitorial and aimed at eliciting information, whereas issuance of a draft assessment crystallises the department's position and triggers the taxpayer's statutory right to file objections. Therefore, earlier opportunities do not justify or validate passing a final assessment before the deadline to reply to the draft assessment had expired; accepting the respondent's argument would impair the statutory rights of the taxpayer and disrupt the scheme under Section 144B. [Paras 6]

Earlier opportunities do not cure denial of the statutory opportunity afforded by a show cause notice-cum-draft assessment; such denial vitiates the assessment.

Final Conclusion: Writ petition allowed; the assessment order dated 22.04.2021, the notice of demand and the notice initiating penalty proceedings are quashed for breach of natural justice, subject to the revenue's liberty to pass a fresh assessment in accordance with law.

Interest under Section 220(2) of the Income Tax Act, 1961 - waiver of interest under Section 220(2A) of the Income Tax Act, 1961 - finality of administrative and appellate orders - maintainability of appeal before the Income Tax Appellate Tribunal

Interest under Section 220(2) of the Income Tax Act, 1961 - waiver of interest under Section 220(2A) of the Income Tax Act, 1961 - finality of administrative and appellate orders - Validity of a demand for interest under Section 220(2) in respect of assessment year 2007-08 where the waiver application under Section 220(2A) was dismissed and the appellate remedy before the Tribunal was held not maintainable. - HELD THAT: - The Court noted that the impugned communication is a demand for interest under Section 220(2) relating to arrears for assessment year 2007-08. The petitioner's application for waiver of that interest under Section 220(2A) was dismissed by the Principal Commissioner on 14.02.2019. The petitioner appealed to the Income Tax Appellate Tribunal, which dismissed the appeal as not maintainable by order dated 18.12.2019. Those administrative and appellate decisions have attained finality. In view of that finality, the Court held that no challenge lay to the interest demand in the writ petition and accordingly dismissed the petition at the admission stage. [Paras 1, 2, 3]

Writ petition dismissed at the admission stage; demand for interest under Section 220(2) in respect of assessment year 2007-08 is not susceptible to challenge in these proceedings following final administrative and appellate orders.

Final Conclusion: The petition was dismissed at the admission stage because the demand for interest under Section 220(2) for assessment year 2007-08 had attained finality after dismissal of the waiver application under Section 220(2A) and the Tribunal's order that the appeal was not maintainable.

Registration under section 12AA - genuineness of activities - charitable nature of objects - application of income premature at registration stage - voluntary contributions forming corpus and taxability

Registration under section 12AA - application of income premature at registration stage - voluntary contributions forming corpus and taxability - Rejection of registration under section 12AA solely on the ground that taxes were payable on voluntary contributions/corpus and had not been paid. - HELD THAT: - The Tribunal held that at the stage of granting registration under section 12AA the Commissioner is required to examine the objects of the trust and be satisfied about the genuineness of its activities, and not to adjudicate on the application or taxability of income which is a matter for assessment proceedings. Reliance was placed on precedents that the question of application of income is premature at the registration stage and that proposed activities suffice to satisfy the requirement of activities for registration. Here the Department did not dispute the charitable nature of the objects or the genuineness of activities; the CIT(Exemption)'s rejection rested solely on non-payment of tax on donations. The Tribunal found no factual finding that objects or activities were not in order, and held that non-payment of tax on voluntary contributions is a matter for assessment and cannot be a ground to deny registration under section 12AA. Accordingly the order rejecting registration was set aside and registration directed to be granted. [Paras 6, 7, 8, 9]

Order of CIT(Exemption) rejecting registration under section 12AA on account of unpaid tax on donations is untenable; registration under section 12AA is to be granted and taxability of contributions is to be considered in assessment proceedings.

Final Conclusion: Appeal allowed; the Tribunal set aside the CIT(Exemption)'s order and directed grant of registration under section 12AA, holding that taxability of voluntary contributions/corpus is a matter for assessment and cannot justify denial of registration when objects and genuineness of activities are not controverted.

Rectification of mistake apparent from record - review versus rectification - scope of section 254(2) of the Income Tax Act, 1961 - error of judgment - appeal effect of Tribunal order

Rectification of mistake apparent from record - scope of section 254(2) of the Income Tax Act, 1961 - error of judgment - Miscellaneous application under section 254(2) seeking rectification of the Tribunal's order construed as a review of the decision - HELD THAT: - The Tribunal held that the assessee's Miscellaneous Application was, in substance, an attempt to seek review of its factual and judicial conclusions and not aimed at correcting a mistake apparent from the record. The scope of section 254(2) is confined to rectification of mistakes which are apparent on the face of the record and does not permit re-opening or re-appraisal of conclusions which amount to an error of judgment. Reliance was placed on the jurisdictional High Court's observation that the Tribunal cannot, under its rectification power, look into circumstances to re-evaluate its conclusions; the power is limited to correcting manifest clerical or apparent errors on the record. The assessee's complaint about the Assessing Officer's compliance with the Tribunal's order and the giving of appeal effect was noted, but the Tribunal observed that non-grant of appeal effect is a matter for other legal remedies and does not convert the rectification jurisdiction under section 254(2) into a forum for review. [Paras 3, 4]

Application dismissed as an impermissible review; no rectification under section 254(2) was warranted.

Appeal effect of Tribunal order - Assessee's grievance that the Assessing Officer has not given effect to the Tribunal's order - HELD THAT: - The Tribunal recorded that whether the Assessing Officer gives appeal effect is not a matter remedied by a rectification application under section 254(2). The bench observed that other legal recourses are available to the assessee to enforce the Tribunal's order, but such enforcement issues do not fall within the limited rectification jurisdiction and therefore cannot be addressed in the present Miscellaneous Application. [Paras 3]

Grievance on non-giving of appeal effect is outside the scope of section 254(2) and not remedied by the Miscellaneous Application.

Final Conclusion: Miscellaneous Application dismissed: the rectification jurisdiction under section 254(2) is limited to mistakes apparent on the record and does not permit review of the Tribunal's conclusions or remedy failures to give appeal effect, for which other legal remedies are available.

Prospective application of the amendment introducing reference to Dispute Resolution Panel under section 144C - denovo assessment on remand and the procedure to be followed - limitation for fresh assessment under section 153(2A) - nullity of a final assessment order which is time barred or made without jurisdiction

Prospective application of the amendment introducing reference to Dispute Resolution Panel under section 144C - denovo assessment on remand and the procedure to be followed - limitation for fresh assessment under section 153(2A) - nullity of a final assessment order which is time barred or made without jurisdiction - Validity of the assessment framed on 19.08.2011 in proceedings where the Assessing Officer followed the procedure under section 144C despite the provision being introduced w.e.f. 01.04.2009 and whether the final assessment is barred by limitation. - HELD THAT: - The original assessment was completed on 28.03.2006 and, following the Tribunal's order dated 31.08.2009 directing de novo consideration, the Assessing Officer issued a draft assessment (30.12.2010), obtained DRP directions (10.08.2011) and framed the final order dated 19.08.2011. The Tribunal applied the reasoning in Vedanta Ltd. (Madras HC) that the amendment introducing reference to the Dispute Resolution Panel under section 144C is substantive in nature and is to be given prospective effect (from AY 2011 12), having regard to the principle that the law applicable on the first day of the assessment year governs assessment proceedings. Consequently, framing and following a draft order under section 144C where that procedure was not lawfully applicable rendered the draft order null; the final order made in reliance on that process is therefore subject to the limitation regime for fresh assessments. Having regard to the time limits in section 153(2A) for making a fresh assessment pursuant to an order under section 254, the final order dated 19.08.2011 is held to be barred by limitation. The bench distinguished other authorities relied upon by Revenue (including Headstrong and Division Bench decisions addressing different questions) and confined the decision to the present controversy, quashing the assessment without adjudicating the merits. [Paras 8, 16, 17, 19]

The assessment order dated 19.08.2011 is quashed as barred by limitation because the procedure under section 144C was not applicable and the fresh assessment could not validly be made outside the period prescribed.

Final Conclusion: Appeal allowed; the impugned assessment order is quashed as time barred and void, and the Tribunal did not decide the merits since the assessment was set aside on limitation/nullity grounds.

Maintainability of appeal before Tribunal based on monetary limit / low tax effect - percentage of completion method for revenue recognition - progress billing versus stage of completion not determinative of revenue recognition - accumulation under completed contract method and treatment of inventories - grant of TDS credit on verification of Form 26AS - deductibility of education cess and higher and secondary education cess - remand for consequential relief / claim of depreciation pending outcome of earlier year appeal - restoration of foreign tax credit claim to assessing officer for fresh adjudication - interest under section 234A and effect of return filed within time

Maintainability of appeal before Tribunal based on monetary limit / low tax effect - Maintainability of Revenue's appeal where tax effect is below CBDT monetary threshold. - HELD THAT: - The Tribunal examined the tax effect of the amount disputed by the revenue as reflected in the grounds, the CIT(A) order and the assessing officer's order giving effect. The disputed amount was found to produce a tax effect well below the Rs.50 lakhs monetary limit prescribed by CBDT circular No.17/2019. As neither party controverted the computation and the Departmental Representative did not oppose, the appeal was dismissed on the ground of low tax effect. [Paras 4, 5]

Revenue's appeal dismissed for want of maintainability due to low tax effect.

Percentage of completion method for revenue recognition - progress billing versus stage of completion not determinative of revenue recognition - Validity of additions made by treating revenue on billings instead of the percentage of completion method consistently followed by the assessee. - HELD THAT: - The Tribunal applied its earlier decisions in the assessee's own cases for preceding assessment years where the percentage of completion method, computed as costs incurred to date vis-a -vis total budgeted cost applied to contract value, had been accepted. No revenue leakage was shown and there was no evidence that the remaining income would not be offered in subsequent years. Merely because progress billing exceeded the stage of completion did not warrant overturning the consistent accounting method. Respectfully following the coordinate bench decisions in the assessee's own cases, the impugned additions were deleted. [Paras 10, 11]

Addition deleted; grounds allowed in favour of the assessee.

Accumulation under completed contract method and treatment of inventories - Deletion of addition relating to excess of progress billing over inventories where completed contract/accumulation method was followed. - HELD THAT: - The Tribunal relied on earlier findings in the assessee's own cases that cost and revenue under the projects had been accumulated in the balance sheet by following the completed contract method and that similar treatment had been accepted in prior years. There was no showing of revenue leakage. Disturbing a consistent method of accounting in these circumstances was unwarranted. Consequently, the additions on account of excess of progress billing over inventories were deleted. [Paras 16, 17]

Additions deleted; grounds allowed.

Grant of TDS credit on verification of Form 26AS - Claim for TDS credit not granted by assessing officer to be verified and decided. - HELD THAT: - The Tribunal directed the assessing officer to verify Form 26AS and other materials on record and grant TDS credit in accordance with law. The direction is limited to verification and allowance as admissible under the statutory scheme. [Paras 20]

TDS credit directed to be verified and granted by the assessing officer.

Deductibility of education cess and higher and secondary education cess - Allowability of deduction for education cess and higher and secondary education cess paid on income-tax. - HELD THAT: - Following the jurisdictional High Court decision in Sesa Goa Ltd v JCIT and a co-ordinate bench decision, the Tribunal held that amount paid towards education cess and higher and secondary education cess on income-tax is an allowable deduction. The Tribunal admitted and allowed the assessee's claim accordingly. [Paras 24]

Deduction allowed; additional grounds upheld.

Remand for consequential relief / claim of depreciation pending outcome of earlier year appeal - Claim for depreciation in the current year restored to assessing officer for fresh decision contingent on outcome of assessee's appeal in AY 2008-09. - HELD THAT: - The expenditure on which depreciation was claimed in the current year arose from amounts debited as revenue expenditure in AY 2008-09, an appeal in which before the Tribunal had been heard but decision awaited. If the Tribunal in AY 2008-09 accepts the assessee's claim as revenue expenditure, the present claim would be infructuous; if the expenditure is held capital in nature, the assessee would be entitled to depreciation. Therefore the Tribunal restored the matter to the assessing officer to decide afresh in the light of the Tribunal's decision in AY 2008-09, giving the assessee an opportunity of being heard. [Paras 29]

Issue restored to the assessing officer for fresh adjudication in accordance with the Tribunal's outcome in AY 2008-09.

Percentage of completion method for revenue recognition - For AY 2015-16, identical percentage of completion method issues decided in favour of the assessee as per earlier part of the order. - HELD THAT: - The Tribunal applied its reasoning and conclusions reached in relation to AY 2010-11 to the identical grounds in AY 2015-16, holding that the percentage of completion method and the related findings in the assessee's own precedents required deletion of the corresponding additions. [Paras 31]

Grounds allowed; additions deleted for AY 2015-16 on the same reasoning.

Grant of TDS credit on verification of Form 26AS - For AY 2015-16, short grant of TDS directed to be verified and allowed as admissible. - HELD THAT: - The Tribunal directed the assessing officer to verify Form 26AS and other records and to allow TDS credit as may be admissible under law, granting relief for statistical purposes. [Paras 35]

TDS credit issue remitted to assessing officer for verification and allowance.

Restoration of foreign tax credit claim to assessing officer for fresh adjudication - Claim for foreign tax credit raised for the first time before the Tribunal and not considered by the DRP is remitted to the assessing officer for examination and decision. - HELD THAT: - The Tribunal noted the foreign tax credit issue was not considered by the DRP and was raised for the first time on appeal; relevant facts had not been examined at any prior stage. The matter was therefore restored to the assessing officer to examine admissibility of credit and decide in accordance with law, providing the assessee a reasonable opportunity of being heard. The Tribunal expressly did not express any opinion on merits. [Paras 37]

Foreign tax credit claim restored to the assessing officer for fresh adjudication.

Interest under section 234A and effect of return filed within time - Levy of interest under section 234A to be examined in light of date of filing of return under section 139(1). - HELD THAT: - The assessee contended the return was filed within the time prescribed by section 139(1) and therefore no interest under section 234A could be charged. The Tribunal directed the assessing officer to verify the date of filing and, if the return was filed within the due date, to disallow interest under section 234A accordingly. [Paras 39]

Interest under section 234A to be charged only if return was not filed within the time under section 139(1); matter remitted to assessing officer for verification.

Deductibility of education cess and higher and secondary education cess - For AY 2015-16 additional grounds claiming deduction of education cess and higher and secondary education cess allowed. - HELD THAT: - The Tribunal admitted and allowed the additional grounds in AY 2015-16 following the same High Court and co-ordinate bench authorities relied upon in the AY 2010-11 decision, granting the deduction. [Paras 41]

Additional grounds allowed and deduction permitted.

Final Conclusion: The Tribunal dismissed the Revenue's appeal for lack of maintainability due to low tax effect; allowed in part the assessee's appeals by deleting additions relating to the percentage of completion method and related inventory issues for AY 2010-11 and AY 2015-16; directed verification and grant of TDS credit; allowed deduction of education cesses; remanded the depreciation claim for fresh decision contingent on the Tribunal's outcome in AY 2008-09; restored the foreign tax credit claim to the assessing officer for fresh adjudication; and directed verification of levy under section 234A in relation to the date of filing of the return.

Compliance with section 250(6) of the Income Tax Act - Remand for fresh adjudication - Restoration of appeal to the Commissioner (Appeals) - Opportunity of hearing and consequences of ex parte orders

Compliance with section 250(6) of the Income Tax Act - Remand for fresh adjudication - Opportunity of hearing and consequences of ex parte orders - Whether the order passed by the Commissioner (Appeals) complied with the mandate of section 250(6) and whether the appeal should be restored for adjudication on merits. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) had recorded non-compliance by the assessee with show-cause notices but did not decide the appeal in accordance with section 250(6) which requires the CIT(A) to pass an order stating the points of determination, the decision thereon and the reasons for such decision. The ld. CIT(A) proceeded ex parte and affirmed the penalty without dealing with the grounds on merits or recording reasons as mandated. In view of this procedural infirmity the Tribunal declined to enter into the merits and held that the proper course is to restore the appeal to the file of the CIT(A) for fresh adjudication on all grounds in accordance with law. The assessee was directed to attend the hearing before the CIT(A) and to furnish necessary evidence and information, with a caution against frivolous adjournments. [Paras 6, 7]

Appeal restored to the file of the Commissioner (Appeals) for fresh adjudication on merits in accordance with section 250(6); directions given to the assessee to appear and furnish necessary evidence.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes and restored the matter to the Commissioner (Appeals) for de novo consideration of all grounds in compliance with section 250(6) of the Income Tax Act, directing the assessee to cooperate in the proceedings.

Penalty under section 221(1) of the Income Tax Act, 1961 - assessee in default - failure to pay self-assessment tax/advance tax - payment in instalments under section 220 - assessment by rejecting books of accounts and assessment under section 143(3)/144

Penalty under section 221(1) of the Income Tax Act, 1961 - assessee in default - failure to pay self-assessment tax/advance tax - payment in instalments under section 220 - Validity of imposition of penalty under section 221(1) for non-payment of tax despite grant of instalments and notices - HELD THAT: - The assessee filed the return for AY 2009-10 without paying self-assessment tax and, following assessment, a substantial demand was raised which remained unpaid. The CIT(A) had permitted payment of the demand in instalments under the statutory procedure, but the assessee failed to comply with the instalment schedule. The Assessing Officer issued notices, treated the assessee as an "assessee in default", gave opportunity to show cause and to pay, but the assessee neither appeared nor furnished an explanation. The Tribunal records that the assessee's representative could not demonstrate availability of funds on the due dates of advance tax or on the date of self-assessment; further, the assessment involved rejection of books of account, which the Tribunal regarded as indicative of lack of bona fides towards tax compliance. The assessee's reliance on earlier decisions was held to be distinguishable on facts. On these findings - non-payment of tax, non-compliance with instalment directions, failure to respond to notices and absence of satisfactory explanation - the imposition of penalty under section 221(1) was held to be justified and rightly sustained by the CIT(A). [Paras 5]

Penalty under section 221(1) confirmed and appeal dismissed.

Final Conclusion: The Tribunal upheld the confirmation of the penalty imposed under section 221(1) for default in payment of tax (AY 2009-10), concluding that the assessee failed to comply with the instalment schedule, did not offer a satisfactory explanation or appear to show cause, and therefore the appeal is dismissed.

Revisionary jurisdiction under section 263 - survey proceedings and statement recorded under section 131 - survey action under section 133A - taxability of undisclosed/on money as business income - non allowance of deductions against undisclosed income under section 115BBE(2) - allowance of partners' interest under section 40(b) - requirement of application of mind by the Assessing Officer

Revisionary jurisdiction under section 263 - requirement of application of mind by the Assessing Officer - taxability of undisclosed/on money as business income - non allowance of deductions against undisclosed income under section 115BBE(2) - allowance of partners' interest under section 40(b) - Validity of the Principal Commissioner of Income Tax's order under section 263 setting aside the assessment for AY 2015-16 as erroneous and prejudicial to the revenue. - HELD THAT: - The Tribunal held that the Assessing Officer had examined and adjudicated the disclosure of 'on money' of Rs. 4,75,00,000/ during survey, recorded in the partner's statement, and had incorporated that amount in the profit and loss account as 'income disclosed'. The AO considered the nature of the receipts (relating to bookings and sales in the project's business), examined books of account, audited statements and supporting documents, applied his mind and accepted the return after allowing interest to partners under section 40(b), resulting in assessed total income accepted at the returned figure. The Tribunal found that where the AO has sufficiently inquired into and considered the material on record and reached a plausible view, the mere possibility that further material could be gathered does not render the assessment order erroneous so as to attract revision under section 263. The PCIT's objection that deductions should have been disallowed under section 115BBE(2) (or that the receipts are exigible under section 69A) did not demonstrate that the AO had not applied his mind or that the order was perverse; accordingly the jurisdiction under section 263 was not properly invoked. The Tribunal also relied upon the stated principle (as recorded in the impugned order) that an AO's order is not vitiated simply because the department might attempt further inquiries to disprove the assessee's claim, and noted the Coordinate Bench authority Plastic Concern vs. ACIT to the same effect. On these findings, the Tribunal quashed the PCIT's revisionary order. [Paras 11, 12, 13]

The order of the Principal Commissioner of Income Tax under section 263 setting aside the assessment for AY 2015-16 is quashed and the assessee's appeal is allowed.

Final Conclusion: The Tribunal held that the Assessing Officer had examined the disclosed 'on money', applied his mind, and reached a plausible conclusion; consequently the PCIT's invocation of revisionary jurisdiction under section 263 was unwarranted. The section 263 order setting aside the assessment for AY 2015-16 was quashed and the appeal of the assessee allowed.

Deduction under section 80GGA for donations to charitable trusts - bogus donation - onus of proof on assessee and burden shifting to Assessing Officer - reliance on search admission insufficient without corroborative evidence - requirement of inquiry by Assessing Officer before disallowance

Deduction under section 80GGA for donations to charitable trusts - bogus donation - reliance on search admission insufficient without corroborative evidence - requirement of inquiry by Assessing Officer before disallowance - Whether deduction claimed under section 80GGA in respect of donation of Rs.15,00,000 to Navjeevan Charitable Trust could be denied on the basis that the donation was a bogus donation and the amount was routed back to the donor. - HELD THAT: - The Tribunal found that the assessee had produced evidence that the donation was paid by cheque on 21/06/2004, the cheque was cleared from the assessee's bank account, a valid receipt and Form No.58A were issued by the trust, and the trust had valid registration at the time of donation (the approval was withdrawn only subsequently). The Assessing Officer denied the deduction relying primarily on admissions recorded during a search at the trust and the allegation that receipts were returned in cash after deducting commission. The Tribunal held that, except for the trustee's statement, there was no positive or corroborative evidence on record to show that the donated amount was returned to the assessee. In these circumstances the assessee had discharged the onus cast upon him and it was incumbent upon the Assessing Officer to conduct further inquiry and bring on record affirmative evidence to rebut the claim. In absence of such inquiry or corroboration, denial of deduction on mere allegation was not justified. The Tribunal followed its earlier coordinate decision on identical facts and directed the Assessing Officer to allow the deduction and recompute income. [Paras 6]

The denial of deduction under section 80GGA was set aside and the Assessing Officer was directed to allow the deduction and recompute the assessee's income.

Final Conclusion: Appeal allowed; deduction under section 80GGA in respect of the donation to Navjeevan Charitable Trust is to be granted and the Assessing Officer directed to recompute the assessee's income.

Revisionary jurisdiction under section 263 - Taxability of lottery winnings and special rate under section 115BB - Set-off of business losses under section 71 - Classification of receipts as business income versus income from other sources - Allowability of expenditure against winnings and section 58(4)

Revisionary jurisdiction under section 263 - Debatable questions and scope of revision - Whether the Principal Commissioner of Income tax was justified in invoking revisionary jurisdiction under section 263 in respect of the assessment for A.Y.2014 15. - HELD THAT: - The Tribunal held that the ld. PCIT erred in invoking section 263 because (i) the view taken by the AO on the character and computation of the assessee's income was a debatable one in the light of conflicting judicial authorities, and (ii) even assuming error, the order was not prejudicial to the revenue because the tax and revenue effect was neutral. The Tribunal applied the twin conditions from Malabar Industrial Co. Ltd. that an order must be both erroneous and prejudicial to the revenue to justify revision; here those conditions were not cumulatively satisfied. The Tribunal further noted that the AO had made relevant enquiries, considered the assessee's replies and supporting material, and his view was one of the permissible conclusions on the disputed legal question, so revision would amount to substituting the PCIT's view for that of the AO, which is impermissible where the issue is debatable. [Paras 7]

The revision order passed by the ld. PCIT under section 263 was quashed; assumption of jurisdiction was held invalid.

Taxability of lottery winnings and special rate under section 115BB - Classification of receipts as business income versus income from other sources - Set-off of business losses under section 71 - Whether winnings from unsold lottery tickets are to be treated as income of the assessee's business (and thus available for set off against business losses) or as income taxable under section 115BB, and whether business loss can be set off against such winnings. - HELD THAT: - On merits the Tribunal held that the winnings from unsold lottery tickets were incidental to and arose from the assessee's business of distribution of lottery tickets and thus partake the character of business receipts. The Tribunal analysed statutory scheme and purposive construction: computation of total income follows heads of income and then set off provisions under Chapter VI (including section 71) operate before tax computation, and section 115BB prescribes the rate at which winnings are to be taxed but does not, by its terms, prohibit set off of business losses. The Tribunal relied on the distinction between persons who participate as consumers and persons engaged in distribution (citing Mysore Sales International and related authorities), applied noscitur a sociis and mischief principles, and concluded that business loss arising on account of unsold tickets is allowable to be set off against winnings. Even if winnings were treated under 'Income from Other Sources', section 71 permits set off of business loss against such income and the net amount (after set off) would be subject to tax at the special rate under section 115BB; because the tax rates were tax neutral for the year under consideration, there was no prejudice to revenue. [Paras 6, 8]

Winnings on unsold lottery tickets are incidental to the business of distribution and are to be treated as business receipts for computation; business loss determined after excluding such winnings is allowable for set off under section 71, and the net winnings (if any) are chargeable at the rate under section 115BB.

Allowability of expenditure against winnings and section 58(4) - Academic nature of issue once primary issues resolved - Whether the Commissioner was justified in directing the AO to examine allowability of expenses against the winnings under section 58(4). - HELD THAT: - The Tribunal found that once the primary questions were decided in favour of the assessee - namely that the winnings are incidental to business and business loss is allowable for set off - the contention regarding disallowance under section 58(4) became academic for A.Y.2014 15. The Tribunal therefore did not adjudicate the disallowance issue on merits and treated it as consequential/academic to the main findings. [Paras 9]

The question of allowability under section 58(4) is rendered academic in view of the decision on classification and set off; no separate adverse finding is made against the assessee.

Final Conclusion: The revision order passed by the Principal Commissioner under section 263 was quashed for lack of jurisdiction and prejudice to revenue; on merits the Tribunal held that winnings from unsold lottery tickets are incidental to the assessee's business and business loss is allowable for set off under section 71, with any net winnings liable to tax at the rate specified in section 115BB; the issue under section 58(4) was held academic. The assessee's appeal is allowed.

Comparability analysis in transfer pricing - exclusion of comparable companies - application of transactional net margin method (TNMM) - allocation of common/corporate expenses between eligible and non eligible units for deduction under section 10A - use of markup (cost plus 16%) to impute allocation for corporate services - admission of additional ground and deductibility under section 37(1) - prematurity of penalty proceedings under section 271(1)(c) - consequential nature of interest under sections 234B/234C/234D

Comparability analysis in transfer pricing - exclusion of comparable companies - application of transactional net margin method (TNMM) - Validity of exclusion or inclusion of specified comparable companies in benchmarking the assessee's international transactions under transfer pricing for AYs 2010-11 and 2011-12. - HELD THAT: - The Tribunal reviewed the transfer pricing comparability determinations made by the TPO/AO and the CIT(A). For AY 2010 11 the Tribunal upheld the CIT(A)'s exclusion of TSR Darshaw Ltd and Aptico Ltd from the final set of comparables. For AY 2011 12 the Tribunal upheld the CIT(A)'s exclusion of Eclerx Services Ltd and Media Research Users Council (MRUC) from the ITeS and market support service segments respectively, and confirmed exclusion of Aptico Ltd for that year as well. The Tribunal excluded MRUC on functional dissimilarity and not for profit character; it excluded Eclerx and Aptico following coordinate bench precedent and on functional/non size grounds. Conversely, the Tribunal directed exclusion of Accentia Technologies Ltd, Infosys BPO Ltd and TCS E Serve Ltd from the assessee's comparable set for AY 2011 12 (Infosys BPO and TCS E Serve being not comparable in view of significantly larger scale and brand advantages; Accentia excluded as final in earlier unchallenged proceedings). The Tribunal applied an editorial approach of following coordinate bench/earlier final decisions in the assessee's own cases where no change in functional analysis was demonstrated and relied on functional dissimilarity and size/scale/market position where relevant. The net effect: the CIT(A)'s directions to exclude the specific comparables identified were upheld and the AO/TPO was directed to proceed with the remaining comparable set as adjusted by the Tribunal.

Order of the CIT(A) excluding the identified comparables is upheld; specified other comparables are to be excluded as directed; the AO/TPO to proceed accordingly.

Allocation of common/corporate expenses between eligible and non eligible units for deduction under section 10A - use of markup (cost plus 16%) to impute allocation for corporate services - Proper method for allocating corporate/common expenses between the assessee's section 10A eligible unit and non eligible units for AYs 2010 11 and 2011 12. - HELD THAT: - The Tribunal found that the AO's application of a turnover based 'thumb rule' allocation was not justified in the absence of any detailed verification showing infirmity in the assessee's allocation (maintained through its ERP/SAP records). The Tribunal noted that in the subsequent year the CIT(A) had imputed a 16% markup (as per the assessee's APA) on corporate service costs to approximate the profit element and thereby reworked allocation between eligible and non eligible units. Observing that the units have different cost/revenue structures and that the assessee earned markups in related party international transactions, the Tribunal held that imputation of a 16% margin for allocation purposes is an appropriate methodology where the AO has not demonstrated any defect in the assessee's allocation. Consequently, the Tribunal set aside the AO/CIT(A) allocation orders for the year under consideration and directed the AO to recompute the allocation of corporate expenses between 10A and non 10A units for the relevant year by applying the 16% markup methodology (verifying the assessee's working as placed on record) and then to recalculate the resulting deduction and additions.

Lower authority orders are set aside on this issue and the AO is directed to recompute allocation between eligible and non eligible units using the 16% markup methodology, with verification of the assessee's working.

Admission of additional ground and deductibility under section 37(1) - Admissibility and merits of the assessee's additional ground claiming deduction under section 37(1) for education cess paid on income tax for the relevant years. - HELD THAT: - The Tribunal admitted the assessee's additional ground as purely legal and not requiring further fact finding. Relying on High Court precedents cited by the assessee, the Tribunal held that education cess paid on income tax is allowable as a deduction under section 37(1). The Tribunal directed the AO to examine and verify the calculation of education cess and grant deduction accordingly.

Additional ground admitted and allowed; matter remitted to the AO for verification of calculation and grant of deduction under section 37(1).

Prematurity of penalty proceedings under section 271(1)(c) - consequential nature of interest under sections 234B/234C/234D - Whether penalty proceedings under section 271(1)(c) and interest under sections 234B/234C/234D are to be sustained in the appeals. - HELD THAT: - The Tribunal recorded that challenges to initiation of penalty proceedings under section 271(1)(c) were premature at the appellate stage and accordingly dismissed those grounds. Interest claims under sections 234B/234C/234D were treated as consequential to the tax/deduction adjustments and therefore were dismissed at this stage as not requiring independent adjudication in the instant appeals.

Penalty related grounds dismissed as premature; interest related grounds dismissed as consequential.

Final Conclusion: The assessee's appeals for AY 2010 11 and 2011 12 are partly allowed: the Tribunal upheld the CIT(A)'s exclusion of specified comparables (and directed exclusion of certain others), disallowed turnover based reallocation in the absence of verification and remitted the issue of corporate expense allocation to the AO for recomputation using a 16% markup methodology, admitted and allowed the additional ground for deducting education cess under section 37(1) subject to AO verification, and dismissed grounds on penalty as premature and interest as consequential.

Revisionary jurisdiction under section 263 of the Income tax Act - borrowed satisfaction - possible and tenable view of the Assessing Officer - adequacy of enquiries by the Assessing Officer - Explanation 2(a) to section 263 of the Income tax Act - treatment of transfer to subsidiary under section 47(iv) - substitution of revenue's view in place of a possible view

Revisionary jurisdiction under section 263 of the Income tax Act - adequacy of enquiries by the Assessing Officer - possible and tenable view of the Assessing Officer - Whether the Principal Commissioner of Income Tax was justified in exercising revisionary jurisdiction under section 263 by holding the assessing officer's order to be erroneous and prejudicial without there being an incorrect assumption of fact or lack of adequate inquiry. - HELD THAT: - The Tribunal found on the material on record that the assessing officer had issued detailed notices, queried the assessee specifically on the long term capital loss, received and considered extensive written submissions and supporting workings, and had defended the assessment before the revenue audit party. The assessing officer thus conducted adequate enquiries and adopted one of the possible views on the allowability of the long term capital loss. Where an assessing officer has taken a possible view after adequate enquiry, the Principal Commissioner cannot substitute his own opinion by invoking section 263 merely because he prefers a different view. The Tribunal relied on earlier decisions of the Jurisdictional High Court and this Tribunal to hold that the assessing officer's order was not vitiated by any illegality or lack of enquiry and therefore was not amenable to revision under section 263. [Paras 8, 9, 11]

Revision under section 263 quashed because the assessing officer had carried out adequate enquiries and taken a possible tenable view; PCIT was not justified in invoking section 263 to substitute his view.

Borrowed satisfaction - Explanation 2(a) to section 263 of the Income tax Act - substitution of revenue's view in place of a possible view - Whether the revision order was vitiated by being based on audit objection (borrowed satisfaction) and whether Explanation 2(a) rendered the PCIT's action sustainable. - HELD THAT: - The Tribunal recorded that the revenue audit had raised an objection on the same issue and that the PCIT's show cause and revision order mirrored the audit party's objection. The assessing officer had already considered the audit note and responded to it, and there existed divergent views within the department. The PCIT's action was therefore held to be founded on borrowed satisfaction emanating from the audit objection rather than on an independent application of mind. The Tribunal also held that Explanation 2 was inapplicable because full enquiry had already been undertaken by the assessing officer during original assessment and the matter did not fall within the scope intended to be covered by Explanation 2. [Paras 8, 10, 11]

Revision order set aside as it was triggered by borrowed satisfaction (audit objection) and Explanation 2 to section 263 did not apply where adequate enquiry had already been made by the assessing officer.

Treatment of transfer to subsidiary under section 47(iv) - Whether the substantive contention on applicability of section 47(iv) to deny/not deny transfer treatment required adjudication in the revision proceedings. - HELD THAT: - The Tribunal observed that the assessing officer accepted the assessee's factual and legal position on the transaction (including that ABNL IT & ITES Ltd was not wholly owned on the relevant date as per assessee's case) and allowed the carry forward of the long term capital loss. Because the revision under section 263 was quashed on procedural and jurisdictional grounds, the Tribunal did not decide the merits of applicability of section 47(iv) and left substantive issues (including arguments under section 170(2) and the merits) open for adjudication if necessary in appropriate proceedings. [Paras 4, 12]

Merits on applicability of section 47(iv) and related contentions were not adjudicated and are left open since the revision order was quashed.

Final Conclusion: The Tribunal allowed the assessee's appeal for A.Y.2013 14, quashing the Principal Commissioner of Income Tax's revision order under section 263 because the assessing officer had carried out adequate enquiry and taken a possible tenable view, the revision was apparently based on borrowed satisfaction arising from an audit objection, and Explanation 2 to section 263 was held inapplicable on the facts; merits on the substantive tax issues were left open.

Validity of reassessment proceedings - Admission of additional evidence in appellate proceedings - Re-opening of assessment under notice u/s.148 after assessment under section 143(3) r.w.s.153A - Protective additions and their adjudication - Remand for de novo adjudication limited to legal issue

Admission of additional evidence in appellate proceedings - Validity of reassessment proceedings - Admissibility of five pages of additional documents filed before the Tribunal and remand to the Commissioner (Appeals) for adjudication of the legal challenge to the reopening under section 148. - HELD THAT: - The Tribunal admitted the five-page documentary material filed by the assessee for the first time before it because those documents went to the root of the legal challenge to the reopening. As the documents were not placed before the Commissioner (Appeals), the Tribunal considered it appropriate to remit the matter to the Commissioner (Appeals) for fresh consideration of the validity of the reassessment after taking these documents on record. The remand is confined to the legal issue challenging the validity of reopening and is ordered so that the Commissioner (Appeals) may decide that issue in accordance with law having regard to the newly admitted material. The Tribunal expressly permitted admission of the additional evidence and directed remand for de novo adjudication of the legal objection to reopening. [Paras 7, 8]

Additional evidence admitted; appeals remanded to the Commissioner (Appeals) for fresh consideration limited to the legal challenge to reassessment in light of the admitted evidence.

Protective additions and their adjudication - Remand for de novo adjudication limited to legal issue - Whether the Tribunal's remand affects the earlier merits conclusion of the Commissioner (Appeals) deleting the protective addition. - HELD THAT: - While remanding the legal issue of the validity of reopening, the Tribunal directed that the Commissioner (Appeals) should not deviate from the earlier stand taken by him on merits. The remand was ordered only for adjudication of the validity of reassessment by considering the newly admitted documents; the merits determination already given by the Commissioner (Appeals) deleting the protective addition was to remain undisturbed by the Commissioner (Appeals) while reconsidering the legal issue of reopening. [Paras 7, 8]

Remand made subject to direction that the Commissioner (Appeals) shall not alter his prior merits conclusion deleting the protective addition while reconsidering the legal validity of reopening.

Final Conclusion: The Tribunal admitted the additional evidence and remitted the appeals to the Commissioner (Appeals) for de novo consideration of the legal challenge to reopening of assessment for A.Y.2008-09 in light of that evidence, while directing that the Commissioner (Appeals) shall not deviate from his earlier merits finding deleting the protective addition; appeals are allowed for statistical purposes subject to these directions.

Capital receipt - income from long term capital gains - computation of book profits under Section 115JB - separability of FSI/TDR from land - windfall gain by operation of law - no estoppel against the statute

Income from long term capital gains - separability of FSI/TDR from land - windfall gain by operation of law - The taxability of the sum received on sale of additional FSI as income from long term capital gains under the normal provisions of the Act. - HELD THAT: - The Tribunal found that the assessee sold land, building and additional FSI in a single transaction but had not incurred any cost to obtain the additional FSI; the additional FSI arose by change in Development Control Regulations and constituted a windfall gain by operation of law. Following the coordinate decisions of the Bombay High Court (including Kailash Jyoti No.2 CHS Ltd. and Sambhaji Nagar Co-op Housing Society Ltd.) and relevant Supreme Court authority, the Tribunal held that where no acquisition cost is incurred, the receipt attributable to such additional FSI/TDR is not chargeable as capital gain. Consequently the amount attributed to additional FSI could not be taxed as long term capital gains under the normal provisions. [Paras 5]

The sum of Rs. 4,76,25,000 received on sale of additional FSI is not exigible to tax as long term capital gains and is to be excluded under the normal provisions of the Act.

Computation of book profits under Section 115JB - capital receipt - no estoppel against the statute - Whether the same sum received on sale of additional FSI is includible in book profits for computation under Section 115JB. - HELD THAT: - The Tribunal admitted the additional ground as purely legal and noted that the receipt is a capital receipt not forming part of operational working results. It held that voluntary offer of a capital receipt in the return does not estop the assessee to seek exclusion; statutory computation governs. Relying on its own earlier coordinate decisions and persuasive High Court authority, the Tribunal concluded that a receipt which is not in the nature of income cannot be included in book profits under Section 115JB. [Paras 6]

The sum of Rs. 4,76,25,000 being a capital receipt is to be excluded while computing book profits under Section 115JB.

Computation of book profits under Section 115JB - capital receipt - Whether the provisions of Section 115JB apply to the assessee when no tax is payable under the normal provisions of the Act. - HELD THAT: - The Tribunal considered the legislative scheme and past orders in the assessee's own case, observing that Section 115JB is a self-contained code introduced to ensure taxation based on book profits where normal tax is nil or lower. Rejecting the submission that Section 115JB applies only when tax is payable under normal provisions, the Tribunal held that the purpose and non-obstante character of Section 115JB require its application as enacted; thus the contention that Section 115JB is inapplicable because normal tax is nil was rejected. [Paras 7]

The challenge to applicability of Section 115JB is rejected and the ground is dismissed.

Final Conclusion: Appeal partly allowed: the sum attributed to additional FSI is not taxable as long term capital gains and is to be excluded from computation of book profits under Section 115JB; the challenge to the applicability of Section 115JB is dismissed.

Maintainability of petition under section 73(4) by a depositor who is not a member - application of section 76(2) mutatis mutandis to deposits accepted from public - overriding effect of a notwithstanding clause in section 76 over section 73 - requirement of service on Regional Director and Registrar of Companies under Rule 73(6) of NCLT Rules, 2016 - establishment of default by company in repayment of deposits

Maintainability of petition under section 73(4) by a depositor who is not a member - application of section 76(2) mutatis mutandis to deposits accepted from public - overriding effect of a notwithstanding clause in section 76 over section 73 - Whether a depositor who is not a member of the company can maintain a petition under Section 73(4) of the Companies Act, 2013 in respect of a fixed deposit accepted by the company. - HELD THAT: - The Tribunal held that when deposits are accepted from the public the special regime under Section 76 is attracted and, by virtue of Section 76(2), the provisions of Chapter V (which includes Section 73(4)) apply mutatis mutandis to acceptance of deposits from public. Section 76 contains a 'notwithstanding' clause giving it overriding effect over Section 73. Therefore a non-member depositor from whom the company accepted deposits is entitled to file a petition under Section 73(4) as applied by Section 76(2). The contention that the petitioner is not a member and therefore the petition is not maintainable was rejected. [Paras 14, 15]

The petition is maintainable notwithstanding that the petitioner is not a member, since Section 76(2) makes the Chapter V provisions applicable to public deposits.

Requirement of service on Regional Director and Registrar of Companies under Rule 73(6) of NCLT Rules, 2016 - Whether the petitioner was obliged to serve a copy of the petition on the Regional Director and the Registrar of Companies under Rule 73(6) before the date of hearing. - HELD THAT: - Rule 73(6) of the NCLT Rules, 2016 mandates service on the Regional Director and Registrar of Companies only in respect of applications made under sub-section (2) of Section 76 and sub-section (2) of Section 74. The present petition was filed under Section 73(4) (and not under the specified sub-sections). Accordingly the procedural requirement of serving RD and ROC prior to hearing under Rule 73(6) is not attracted to this petition. [Paras 16]

No obligation to serve the RD and ROC under Rule 73(6) arose in the present petition filed under Section 73(4).

Establishment of default by company in repayment of deposits - Whether the petitioner succeeded in proving default by the company in repayment of the matured deposit and is entitled to relief. - HELD THAT: - The company did not provide a satisfactory explanation for non-payment and conceded it had assets sufficient to meet liabilities and that deposits would be refunded as per funds position. The petitioner produced the Fixed Deposit Receipt and evidence of partial payment of interest only, and pleaded repeated demands after maturity. On the material before it the Tribunal found that default in repayment was established. No order admitting a CIR process under the IBC was placed on record to invoke moratorium under Section 14(1) that would bar enforcement. Accordingly the Tribunal directed repayment with interest. [Paras 5, 17, 18, 19, 20]

Default in repayment was established and the respondent company was directed to pay the maturity amount with pendent lite and additional interest as ordered.

Final Conclusion: The Tribunal held that the petition under Section 73(4) is maintainable even though the depositor is not a member because Section 76(2) makes Chapter V applicable mutatis mutandis to public deposits; Rule 73(6) service on RD/ROC was not required for a petition under Section 73(4); the petitioner proved default and the company was directed to repay the matured deposits with pendent lite and additional interest.

Restoration of name to Register of Companies - Strike off under Section 248 of the Companies Act, 2013 - Discretion under Section 252(1) of the Companies Act, 2013 - Just ground for restoration - Filing of outstanding statutory documents and payment of late fees - Conditional restoration subject to payment to Prime Minister's Relief Fund

Restoration of name to Register of Companies - Discretion under Section 252(1) of the Companies Act, 2013 - Just ground for restoration - Whether the name of the company struck off under Section 248 should be restored to the Register of Companies - HELD THAT: - The Tribunal examined whether the appellant-company was carrying on business or whether it was "just" to restore the company's name as contemplated by Section 252(1). Although the appellant did not furnish satisfactory evidence proving operation of the company at the time of striking off, the Tribunal found that restoration was nevertheless justified. The determinative considerations were the company's ownership of agricultural land enabling fulfilment of its main objects and the absence of objection by the Registrar of Companies so long as statutory filings and fees were made. The Income Tax Department's filings were noted. Exercising the discretionary power under Section 252(1), the Tribunal held that restoration is appropriate in the interest of stakeholders but subject to compliance with statutory filing obligations and payment conditions. [Paras 11, 12]

The appeal is allowed and the public notice striking off the company's name is set aside; the company's name is ordered restored to the Register of Companies subject to filing all outstanding statutory documents with requisite fees and additional charges, and subject to payment of Rs. 25,000 to the Prime Minister's Relief Fund.

Final Conclusion: The appeal succeeds: the order striking off the company's name is declared illegal and set aside; restoration to the Register is directed on compliance with filing of outstanding returns, payment of late and other applicable fees, and payment to the Prime Minister's Relief Fund.

Striking off during pendency of litigation - restoration of company name - discretion under Section 252(3) - conditional restoration subject to filing outstanding documents - costs for restoration - lifting of bank account freeze consequential to restoration

Striking off during pendency of litigation - Validity of Registrar of Companies' action in striking off the company's name while oppression and mismanagement litigation was pending. - HELD THAT: - The Tribunal found that the company's name was struck off on 29.10.2019 while proceedings concerning oppression and mismanagement were sub judice before the appropriate forum. Having regard to the pendency of those proceedings and the demonstrated management deadlock which impeded statutory filings, the RoC's action of striking off the name was not justified. The bench relied on established precedent and proportionality in protecting a company engaged in litigation from dissolution by administrative action where such dissolution would frustrate adjudicatory remedies. [Paras 11, 12, 13]

RoC was not justified in striking off the Appellant Company's name during the pendency of litigation.

Discretion under Section 252(3) - restoration of company name - Whether the Tribunal may exercise its power to restore the company's name under the statutory provision and the legal test for such restoration. - HELD THAT: - The Tribunal noted that Section 252(3) empowers it to restore the name of a company where it is carrying on business or it is otherwise just to do so. Applying that statutory discretion to the facts, and having regard to the Company's continuing operations and the need to enable it to defend pending litigation, the Tribunal concluded that restoration was warranted. The Court articulated the principle that restoration may be ordered to protect ongoing business and to prevent injustice to stakeholders where administrative striking off would be inequitable. [Paras 14, 15]

Tribunal may and should exercise its discretion under Section 252(3) to restore the company's name in the circumstances.

Conditional restoration subject to filing outstanding documents - costs for restoration - Terms and conditions upon which restoration is to be effected, including payment of costs and filing of outstanding statutory documents. - HELD THAT: - The Tribunal allowed the appeal subject to the Company paying specified costs to the Ministry of Corporate Affairs and the Prime Minister's Relief Fund within seven days and furnishing proof to the Registry. Restoration was made expressly conditional upon the Company filing all outstanding statutory documents for the defaulting years and completing formalities including payment of late fees or other charges leviable for late filing. Only upon such compliance would the name be restored as if not struck off. [Paras 16, 17]

Restoration ordered subject to payment of costs and completion of all outstanding filings and formalities; name to be restored thereafter.

Lifting of bank account freeze consequential to restoration - Effect of restoration on any freezing of the company's bank accounts. - HELD THAT: - The Tribunal directed that any freezing of the Company's bank accounts that was based solely on the striking off shall be set aside immediately so as to enable the Company to carry on business operations. Compliance by the RoC with this direction and all consequential effects were to follow within one week of the Company's completion of the required compliances for restoration. [Paras 18]

Direction issued to set aside bank account freeze consequential to restoration, to take effect upon required compliances.

Final Conclusion: Appeal allowed; the Tribunal restored the company's name in the RoC register as just and equitable under Section 252(3), subject to payment of costs and completion of all outstanding statutory filings and formalities, and directed consequential relief including lifting of any bank-account freeze.

Initiation of Corporate Insolvency Resolution Process under section 9 of the Insolvency and Bankruptcy Code, 2016 - demand notice under section 8 of the Insolvency and Bankruptcy Code, 2016 - operational debt - default and limitation - appointment of Interim Resolution Professional - moratorium under Section 14(1) of the Insolvency and Bankruptcy Code, 2016 - jurisdiction of the Adjudicating Authority - service of process and affidavit of service

Operational debt - demand notice under section 8 of the Insolvency and Bankruptcy Code, 2016 - default and limitation - service of process and affidavit of service - Whether the application under section 9 of the IBC by the operational creditor is maintainable and admits a default warranting initiation of the Corporate Insolvency Resolution Process against the corporate debtor. - HELD THAT: - The Tribunal found that the applicant and the corporate debtor had a contractual relationship for property management services and that invoices were raised for services rendered. A demand notice in Form 4 under section 8 was sent by speed post to the registered address and the tracking report shows delivery. The applicant filed an affidavit under section 9(3)(b) affirming that no notice of dispute was received from the corporate debtor. The last invoice dated 26.06.2019 and the terms of payment (ten days) establish the date of default on or before 06.07.2019; the application filed on 12.12.2019 was within the period of limitation. The corporate debtor did not contest the claim, did not appear and was proceeded with ex parte. On these facts the Tribunal concluded that the operational debt remained unpaid and uncontroverted, and that the requirements for admission of a section 9 application were satisfied. [Paras 6, 9, 10, 12]

The application under section 9 of the IBC is maintainable and is admitted; default in payment of the operational debt is established.

Appointment of Interim Resolution Professional - deposit to meet IRP expenses - moratorium under Section 14(1) of the Insolvency and Bankruptcy Code, 2016 - jurisdiction of the Adjudicating Authority - Consequential measures on admission - appointment of an Interim Resolution Professional, direction to deposit funds for IRP expenses, and invocation of moratorium. - HELD THAT: - Having admitted the section 9 application, the Tribunal appointed a named Insolvency Resolution Professional as IRP subject to the IRP's consent and regulatory disclosures. The operational creditor was directed to deposit an advance to meet IRP expenses, subject to later adjustment by the Committee of Creditors. The admission triggered the moratorium in terms of Section 14(1) of the Code, with applicable provisions of Sections 14(2) to 14(4) to operate during the moratorium. The Tribunal noted that the corporate debtor's registered office is within the territorial jurisdiction of this Bench and directed communication of the order to relevant parties and authorities. [Paras 11, 13, 14, 15, 16]

An IRP is appointed subject to consent and disclosures; the operational creditor must deposit funds to meet IRP expenses; and the moratorium under Section 14(1) is declared to follow from admission.

Final Conclusion: The section 9 application filed by the operational creditor is admitted: the Tribunal found an uncontroverted operational debt and default within limitation, appointed an Interim Resolution Professional subject to statutory formalities, directed deposit for IRP expenses, and declared the moratorium under the Code; the order is to be communicated to the parties, IBBI and ROC.

Effect of sale certificate as completion of sale - delivery of physical vacant possession - post-facto demand for interest and TDS not maintainable - liquidator's remedy to seek refund from Income Tax Department

Effect of sale certificate as completion of sale - post-facto demand for interest and TDS not maintainable - Whether the liquidator could, after issuing the sale certificate on receipt of the full sale consideration, demand interest and TDS from the auction purchaser. - HELD THAT: - The Tribunal found on the record that the Applicant had paid the entire sale consideration and that the Liquidator issued the Sale Certificate after acknowledging receipt. The Sale Certificate expressly records receipt of the total sum and contains clear undertakings regarding transfer of assets and delivery of title deeds and possession. In view of the Sale Certificate and Schedule I of the Liquidation Process Regulations, execution of the sale certificate signifies completion of the sale upon full payment. Consequently a post-execution claim by the Liquidator for interest and for TDS from the purchaser is not maintainable. The Liquidator remains at liberty to pursue a refund or adjustment with the Income Tax Department if any TDS has been deposited on account of the transaction. [Paras 10]

The demand for interest and for TDS made by the Liquidator after issuance of the Sale Certificate is not maintainable; the Liquidator may seek refund from the Income Tax Department.

Delivery of physical vacant possession - effect of sale certificate as completion of sale - Whether the Liquidator must hand over peaceful physical possession of the corporate debtor's assets to the Applicant after issuance of the Sale Certificate. - HELD THAT: - The Sale Certificate expressly states that original title deeds and actual physical vacant possession of the entire block of assets were delivered to the purchaser at the time of execution, without reservations or limitations. Given that the Sale Certificate was issued after full payment, the Tribunal directed that the Liquidator comply with the obligations under the Sale Certificate and Schedule I by handing over possession of the assets to the Applicant. Any refusal to hand over possession on the ground of post-facto claims is inconsistent with the Sale Certificate and the liquidation regulations. [Paras 10]

The Liquidator is directed to hand over peaceful physical possession of the Corporate Debtor's assets to the Applicant in accordance with the Sale Certificate and Schedule I.

Final Conclusion: Application disposed of: post-execution demands for interest and TDS by the Liquidator set aside as not maintainable; Liquidator may apply to the Income Tax Department for any refund and is directed to hand over possession of the assets to the Applicant as per the Sale Certificate and Schedule I.

Substitution of assignee in pending proceedings - assignment under SARFAESI and transfer of rights - continuation and prosecution of proceedings by assignee - permission under Section 60(5)(c) of the IBC and Rule 11 of the NCLT Rules

Substitution of assignee in pending proceedings - continuation and prosecution of proceedings by assignee - assignment under SARFAESI and transfer of rights - Application to substitute Assets Care and Reconstruction Enterprise Ltd. in place of the original Financial Creditor and to permit the Applicant to continue prosecuting the proceedings as assignee was allowed. - HELD THAT: - The Tribunal accepted the Assignment Agreement dated 4 March 2021 (effective on receipt of purchase consideration on 10 March 2021) by which the loan assets and attendant rights in the facility were assigned to the Applicant as trustee. In view of the assignment effected in terms of Section 5 of the SARFAESI Act the Applicant is deemed to have acquired the rights of the Financial Creditor, including the right to recover amounts under the facility and guarantee and to be substituted in pending recovery proceedings. The Respondent No. 1 (original Financial Creditor) recorded no objection to substitution, and the Petitioning debtors raised no objection to the substitution. Having considered the pleadings and the lack of prejudice to the guarantors, the Tribunal exercised its power under Section 60(5)(c) of the IBC read with Rule 11 of the NCLT Rules to allow substitution and permit the assignee to continue prosecution of the proceedings in place of the original Financial Creditor. [Paras 3, 5, 6]

I.A. No. 107 of 2021 is allowed; the Applicant is substituted in place of the Financial Creditor and permitted to continue prosecuting the proceedings against the personal guarantors.

Final Conclusion: The Tribunal permitted substitution of the assignee (Assets Care and Reconstruction Enterprise Ltd.) for the original Financial Creditor and allowed the assignee to continue the instant proceedings against the personal guarantors; no order as to costs.

Mandatory 330 days outer limit for completion of CIRP including time taken in legal proceedings - extension of CIRP period in exceptional circumstances - exclusion of lockdown period from CIRP timeline - exclusion of time lost due to judicial intervention from CIRP timeline - liquidation as last resort

Exclusion of time lost due to judicial intervention from CIRP timeline - extension of CIRP period in exceptional circumstances - Whether the time consumed due to pendency of I.A. No. 4208 of 2020 should be excluded from the 330-day CIRP period. - HELD THAT: - The Tribunal found that the pendency of I.A. 4208 of 2020 and the resultant change of Resolution Professional constituted circumstances warranting exclusion of the period spent in judicial intervention. Relying on the Supreme Court's declaration that Adjudicating Authorities/Tribunals may, in exceptional cases, permit completion beyond 330 days where the delay is attributable to factors not ascribable to the parties and where completing CIRP is in stakeholders' interest, the Tribunal held that the judicial delay here was such an exceptional circumstance. Consequently the Tribunal set aside the Adjudicating Authority's rejection of the claim for exclusion of this period and directed that a total of 92 days lost due to the pendency of I.A. 4208 of 2020 be excluded from the 330-day computation. [Paras 11, 12]

92 days attributable to the pendency of I.A. 4208 of 2020 are excluded from the CIRP period.

Exclusion of lockdown period from CIRP timeline - mandatory 330 days outer limit for completion of CIRP including time taken in legal proceedings - Whether the period of nationwide/state lockdown should be excluded from the 330-day CIRP period and, if so, the quantum of days to be excluded. - HELD THAT: - The Tribunal observed that the COVID-19 pandemic and the consequent lockdowns constituted exceptional circumstances affecting the conduct of CIRP and that prior orders of this Tribunal had excluded lockdown periods for purposes of Section 12 computation. The Adjudicating Authority had excluded only 97 days (25.03.2020 to 30.06.2020) but the Tribunal concluded that the lockdown-related disruption extended to 31.08.2020. Applying the established practice and the exceptional-circumstances rationale, the Tribunal modified the impugned order to exclude a total of 160 days (25.03.2020 to 31.08.2020) from the CIRP period. [Paras 11, 12]

160 days (25.03.2020 to 31.08.2020) lost on account of lockdown are excluded from the CIRP period.

Mandatory 330 days outer limit for completion of CIRP including time taken in legal proceedings - extension of CIRP period in exceptional circumstances - Whether the time spent in filing the present Appeal should be excluded from the CIRP computation. - HELD THAT: - The Tribunal expressly excluded the period spent in filing the present Appeal from the CIRP computation. Having already excluded lockdown days and days lost due to judicial intervention, the Tribunal further directed that the time from 12.04.2021 to 04.05.2021 (the period spent in prosecuting this Appeal) be excluded, thereby recognizing that procedural steps in appellate proceedings can be excluded when calculating the effective CIRP timeline under the exceptional-circumstances approach applied. [Paras 12]

Time from 12.04.2021 to 04.05.2021 spent in filing the Appeal is excluded from the CIRP period.

Final Conclusion: The Appeal is allowed in part: the adjudicating authority's order is set aside and modified to exclude 92 days for judicial intervention (I.A. 4208 of 2020), 160 days for the COVID-19 lockdown (25.03.2020 to 31.08.2020), and the period spent filing this Appeal (12.04.2021 to 04.05.2021) from the 330-day CIRP computation; Appeal disposed of with no order as to costs.

Contract manufacturing - Manpower recruitment or supply agency service - Finality of Tribunal order / precedent

Contract manufacturing - Manpower recruitment or supply agency service - Finality of Tribunal order / precedent - Activity of the appellant in converting raw material into soap and detergent at the principal's factory is manufacture and does not amount to provision of manpower recruitment or supply agency service; prior Tribunal decision on identical facts is binding and applies. - HELD THAT: - The Tribunal examined whether the appellant's operations-conversion of raw materials into soaps and detergents at the premises and using materials, plant and machinery of M/s Nirma Ltd.-constituted a service classifiable as manpower recruitment or supply agency service. The Tribunal relied on its earlier final order dated 18.10.2019 in which, on identical facts for the period June 2005 to June 2010, it held that the arrangements were contract manufacturing and not manpower supply. That earlier order was not successfully assailed on merits before the High Court and attained finality. There being no change in facts or law, the Tribunal applied the same reasoning and concluded that demand under manpower recruitment/supply could not be sustained. In view of the prior binding decision, the impugned orders setting aside the adjudicating authority's drop of demand were held unsustainable and were set aside.

Impugned orders set aside; appeals allowed as the activity is contract manufacturing and not manpower recruitment/supply service, following the Tribunal's earlier final order.

Final Conclusion: The Tribunal allowed the appeals, setting aside the orders of the Commissioner (Appeals), holding that the appellant's contract manufacturing at the principal's factory amounts to manufacture and not to manpower recruitment or supply agency service, and applying its earlier final decision on identical facts.

Fixation of special rate under Notification No.20/2008 Central Excise - consideration of representations for fixation of rate - recovery of refunded excise duty by issuance of demand notice - stay on coercive action pending disposal of representations

Fixation of special rate under Notification No.20/2008 Central Excise - consideration of representations for fixation of rate - Petitioner's applications for fixation of special rate for the specified financial years were directed to be considered by the Principal Commissioner in accordance with law. - HELD THAT: - The petitioner averred that it fulfilled the conditions of Notification No.20/2008 and had submitted multiple representations for fixation of a special rate for the financial years 2011-12 to 2014-15 which remained unaddressed. The Court noted that the authority had not considered those applications and, having regard to the pending representations and earlier judicial treatment of a similar grievance, directed respondent No.2 to consider the applications on their merits and in accordance with law. The direction mandates fresh consideration by the competent authority rather than adjudicating the merits itself. [Paras 8]

Respondent No.2 to consider the petitioner's applications for fixation of special rate for the financial years 2011-12 to 2014-15 in accordance with law.

Stay on coercive action pending disposal of representations - recovery of refunded excise duty by issuance of demand notice - No coercive action shall be taken pursuant to the demand notice dated 22.03.2021 until the representations for fixation of the special rate are disposed of. - HELD THAT: - The petitioner sought an interlocutory protection against enforcement of the demand notice seeking recovery of refunded excise duty; reliance was placed on an earlier order of this Court granting interim protection in a similar matter. The respondents did not press a strong objection. In the circumstances the Court restrained coercive measures under the impugned demand notice until the authority completes consideration of the pending representations, thereby preserving the petitioner's position during administrative determination. [Paras 8]

No coercive action to be taken pursuant to the demand notice dated 22.03.2021 until the pending representations are considered and disposed of.

Final Conclusion: Writ petition disposed of by directing the Principal Commissioner, Central Goods & Service Tax, Guwahati to consider the petitioner's applications for fixation of special rate for financial years 2011-12 to 2014-15 in accordance with law, and ordering that no coercive action shall be taken under the demand notice dated 22.03.2021 pending such consideration.

Deemed removal - physical removal - CENVAT credit reversal - lease-back transaction - binding precedent of High Court - CBEC Circular - writ jurisdiction where proceedings are without jurisdiction

Deemed removal - physical removal - CENVAT credit reversal - lease-back transaction - Whether reversal of CENVAT credit and levy of excise on capital goods is justified where plant and machinery were sold to a financer and leased back but remained installed in the factory premises - HELD THAT: - The Court held that the Central Excise levy contemplated removal in the sense of physical shifting of goods from one place to another; mere arrangements of sale and subsequent lease-back where the capital goods remained installed in the same premises do not amount to removal attracting excise levy. The adjudicating authority erred in invoking a deeming fiction of removal to justify reversal of CENVAT credit in circumstances where no invoice-covered physical removal from the factory had occurred. The Court relied on the principle that Rule 3(5) of the Cenvat Credit Rules operates when inputs or capital goods are removed as such from the factory and that the factual matrix here did not satisfy that condition. In view of the above, the impugned order confirming reversal of credit was unsustainable and was quashed, with the matter remitted for fresh decision in accordance with binding precedent and administrative instructions. [Paras 4, 5, 6, 9]

Impugned order reversing CENVAT credit on the ground of deemed removal quashed; matter remitted to respondent for fresh decision bearing in mind the binding High Court view and CBEC Circular.

Binding precedent of High Court - CBEC Circular - writ jurisdiction where proceedings are without jurisdiction - Whether the writ petition was maintainable notwithstanding the availability of an alternative remedy because the adjudicating authority disregarded binding High Court precedent and administrative circular - HELD THAT: - The Court observed that the adjudicating authority had ignored earlier directions of this Court and the Division Bench decision which the Department had accepted by issuing Circular No.1063/2/2018-CX. Where an authority proceeds contrary to a binding decision of the High Court, such proceedings can be treated as without jurisdiction and the writ Court may entertain relief without insisting on exhaustion of alternative remedies. Applying these principles, the Court entertained the writ and granted relief by quashing the impugned order and remitting the matter for reconsideration in conformity with the binding view and the CBEC Circular. [Paras 7, 9]

Writ petition entertained and allowed; impugned order quashed and matter remitted with direction to decide afresh in light of the binding High Court decision and CBEC Circular.

Final Conclusion: The writ petition is allowed: the order confirming reversal of CENVAT credit is quashed and the matter is remitted to the respondent to decide afresh in accordance with the Division Bench view of this High Court and Circular No.1063/2/2018-CX; no costs.

Writ petition for quashing notice - Abuse of process of court - Interim stay and stalling of proceedings - Opportunity of hearing - Direction to complete assessment - Remand for fresh assessment - Compliance with section 5 of the Tamil Nadu Value Added Tax Act, 2006 and Rule 8(5)(d) of the Tamil Nadu Value Added Rules, 2007

Writ petition for quashing notice - Abuse of process of court - Interim stay and stalling of proceedings - Whether the writ petition challenging the notice dated 31.12.2015 is maintainable and liable to be quashed - HELD THAT: - The Court found that the petitioner had earlier been granted relief setting aside the assessment order dated 27.02.2009 and remitting the matter for fresh consideration. The impugned notice dated 31.12.2015 invited objections in relation to the assessment and the petitioner in fact responded by seeking time to locate records, yet filed the present writ petition thereafter and obtained interim protection. The Court concluded that the petition was instituted with a mischievous intention to stall assessment proceedings and thus amounted to an abuse of the process of the Court. In view of the clear context and content of the notice, and the petitioner's conduct in obtaining an interim stay and seeking repeated adjournments, the writ petition was liable to be dismissed as frivolous. [Paras 6]

Writ petition dismissed as frivolous and an abuse of process; challenge to the notice denied.

Direction to complete assessment - Opportunity of hearing - Remand for fresh assessment - Compliance with section 5 of the Tamil Nadu Value Added Tax Act, 2006 and Rule 8(5)(d) of the Tamil Nadu Value Added Rules, 2007 - Relief and directions following dismissal, including timeline for completion of assessment and for filing of petitioner's reply - HELD THAT: - Having dismissed the writ petition, the Court directed that assessment proceedings pursuant to its earlier order of remand dated 22.04.2009 be completed by the respondent within a stipulated period. The petitioner was granted one last opportunity to file any reply or additional representation within a limited time-frame. The directions seek completion of the fresh assessment in accordance with the remand while preserving the petitioner's right to make submissions within the prescribed period. [Paras 7]

Respondent directed to complete assessment within 60 days; petitioner permitted to file reply/additional representation within 30 days.

Final Conclusion: The writ petition challenging the notice was dismissed as frivolous and an abuse of process; the assessing authority is directed to complete the remanded assessment for 2008-2009 within 60 days, and the petitioner is afforded 30 days to file any reply or additional representation.

Entry Tax on inter-state purchase of motor vehicles for sale - challenge to validity of departmental circular - justiciability of abstract challenge to administrative action - effect of GST in rendering pre-GST circulars infructuous

Challenge to validity of departmental circular - justiciability of abstract challenge to administrative action - effect of GST in rendering pre-GST circulars infructuous - Whether the Court should adjudicate the correctness of the impugned Circular dated 09.07.2002 in a petition challenging its validity in the abstract. - HELD THAT: - The petitioner sought a declaration that the impugned circular mandating payment of Entry Tax on purchase of motor vehicles from outside the State for sale in Tamil Nadu is void. The Court noted that the circular was issued on 09.07.2002 but the challenge was mounted only in August 2015. The Assistant Commissioner stated that with the introduction of the GST regime the circular has become infructuous; nevertheless the circular may remain relevant insofar as assessments completed prior to 01.07.2017 are concerned. No specific assessment order or concrete grievance demonstrating that the petitioner's rights were affected by application of the circular was placed before the Court. In these circumstances the Court declined to decide the abstract controversy on the merits, observed that a petitioner whose rights have been affected by an assessment applying the circular may challenge it, and closed the writ petitions without adjudicating the validity of the circular. [Paras 2, 3]

Writ petitions closed as the challenge was abstract; right left open to assessees to contest the circular where an assessment order applying it affects their rights.

Final Conclusion: The High Court declined to adjudicate the abstract challenge to the 09.07.2002 circular, noting its diminished relevance after introduction of GST and the absence of any specific affected assessment; petitions closed while preserving the right to challenge the circular in proceedings where an assessment applying it has adversely affected the assessee.

Presumption under Section 139 of the Negotiable Instruments Act - presumption of consideration under Section 118 of the Negotiable Instruments Act - proof of execution and delivery of cheque - reverse onus on accused upon admission of signature - rebuttal of statutory presumption by accused - conviction under Section 138 of the Negotiable Instruments Act - sentence and compensation under Section 357(1) Cr.P.C.

Proof of execution and delivery of cheque - presumption under Section 139 of the Negotiable Instruments Act - Whether the complainant proved execution, signing and delivery of Ext.P3 cheque and whether the presumption under Section 139 of the N.I. Act accordingly arose. - HELD THAT: - The Court found that PW1 and PW2, together with Exts.P9 (ledger extract), P14 (delivery challan) and P15 (invoice), satisfactorily established the transaction and that the cheque (Ext.P3) was signed and handed over by the accused. The accused did not dispute his signature on Ext.P3. Although amounts in Exts.P3, P9 and P15 did not exactly tally, the ledger showed that the total due as on the date exceeded the cheque amount and PW1 explained that Ext.P3 was issued towards part of the outstanding balance. On these findings the statutory presumption under Section 139 arose once execution, signature and delivery were proved. [Paras 8, 11]

Execution, signature and delivery of Ext.P3 cheque were proved and the presumption under Section 139 of the N.I. Act arose.

Reverse onus on accused upon admission of signature - rebuttal of statutory presumption by accused - Whether the accused discharged the burden to rebut the presumption that the cheque was issued for consideration or in discharge of liability. - HELD THAT: - The accused asserted that a signed blank cheque had been left as security and was subsequently misused, but he did not dispute the signature and adduced no evidence to substantiate the defence. There was no reply to the legal notice and no cogent material probabilising the defence. As the signature was admitted and the complainant proved execution and delivery, the reverse onus shifted to the accused, who failed to discharge it. Consequently the presumption under Section 139 remained unrebutted. [Paras 11, 12]

The accused failed to rebut the statutory presumption; the reverse onus remained un-displaced.

Conviction under Section 138 of the Negotiable Instruments Act - sentence and compensation under Section 357(1) Cr.P.C. - Whether the acquittal recorded by the trial Court was unsustainable and whether the accused should be convicted and sentenced for the offence under Section 138 N.I. Act. - HELD THAT: - Having held that execution, signature and delivery of the cheque were proved and that the accused did not rebut the presumption, the High Court concluded that the trial Court had ignored material evidence and misappreciated the prosecution case. Relying on established principles that an acquittal founded on such failure of appreciation warrants interference, the Court set aside the acquittal, convicted the accused for the offence punishable under Section 138 of the N.I. Act and imposed sentence with a fine, directing that any fine realised be paid to the complainant as compensation under Section 357(1) Cr.P.C. [Paras 12]

Impugned acquittal set aside; accused convicted under Section 138 N.I. Act and sentenced, with fine to be paid to the complainant as compensation under Section 357(1) Cr.P.C.

Final Conclusion: The High Court allowed the appeal, set aside the trial Court's acquittal, held that execution, signature and delivery of the cheque were proved and that the accused failed to rebut the statutory presumption under Section 139 of the N.I. Act, convicted the accused for the offence under Section 138 and sentenced him with a fine payable to the complainant as compensation under Section 357(1) Cr.P.C.

Quashing of criminal proceedings - Compounding of offence under Section 138 of the Negotiable Instruments Act - Inherent powers under Section 482 Cr.P.C. read with Section 147 of the Negotiable Instruments Act - Discharge on payment/full compensation - Compensation payable to State Legal Services Authority as condition for compounding - Summary trial procedure in proceedings under Chapter XVII of the Negotiable Instruments Act

Quashing of criminal proceedings - Compounding of offence under Section 138 of the Negotiable Instruments Act - Inherent powers under Section 482 Cr.P.C. read with Section 147 of the Negotiable Instruments Act - Discharge on payment/full compensation - Proceedings under Section 138 of the Negotiable Instruments Act were quashed on the ground of compromise and satisfaction of liability. - HELD THAT: - The Court found on record that the accused had met the liability and the complainant, by affidavit on 23.4.2021, stated he had received full and final payment. Relying on the established jurisprudence that offences under Section 138 are primarily compensatory and may be closed where the complainant has been duly compensated, the High Court exercised its inherent jurisdiction under Section 482 Cr.P.C., read with Section 147 of the Negotiable Instruments Act, to compound the offence and quash the proceedings. The Court applied the principles laid down by the Supreme Court that Section 138 proceedings cannot be equated with ordinary penal offences, that discharge or closure is permissible where compensation is paid or the complainant does not wish to proceed, and that the summary trial scheme permits disposal where punitive aspects need not be pursued after satisfaction of the compensatory element. Having regard to these considerations and the recorded compromise, continuation of the trial was held to serve no useful purpose and compounding was ordered. [Paras 3, 8, 9, 11, 13]

Proceedings under Section 138 were quashed and the petitioner was acquitted, the case before the Trial Court being closed on account of the compromise.

Compensation payable to State Legal Services Authority as condition for compounding - Discharge on payment/full compensation - Compounding was made subject to payment of the prescribed compounding fee to the Himachal Pradesh State Legal Services Authority and deposit conditions were imposed. - HELD THAT: - In accordance with the settled position that where the entire cheque amount is paid the complainant cannot object to compromise and that a specified percentage is payable to the State Legal Services Authority, the Court directed payment of the compounding amount at the rate of 5% to the HP State Legal Services Authority. The deposit of that amount within the time stipulated was made a condition for sustaining the compounding order, with the consequence that failure to deposit would recall the compounding and render the petition liable to be listed on merits. The Court also left open the limited discretionary remedy of seeking extension in extraordinary circumstances. [Paras 7, 12]

Accused to deposit the compounding fee of 5% with the HP Legal Services Authority by the date specified; failure to do so will recall the compounding order and restore the petition for hearing on merits.

Final Conclusion: The petition was allowed: the Section 138 proceedings were quashed and the petitioner acquitted pursuant to the recorded compromise, subject to payment of the directed compounding fee to the Himachal Pradesh State Legal Services Authority within the time fixed, failing which the order of compounding shall stand recalled.