TaxTMI Updates e-Newsletter
May 30,2022

Interim relief - access to GST portal - continuation of trading activities - maintenance of status quo

Interim relief - access to GST portal - continuation of trading activities - Direction to keep the GST site open to enable the petitioners to continue trading in respect of stocks held at the time of Ext.P3 order for a limited period. - HELD THAT: - The Court granted a limited interim direction requiring the 3rd/4th respondents to keep the GST site accessible so that the petitioners may carry on trading activities relating to the stocks in their possession as of the date of Ext.P3. The relief is time-bound and intended to preserve the petitioners' ability to conduct transactions pertaining to existing stock while further proceedings continue. The respondents were permitted to seek variation of this interim order if they consider it necessary.

Respondents directed to keep the GST site open for two weeks from today to enable continuation of trading in relation to stocks held at the time of Ext.P3; respondents may apply for variation of the interim order.

Final Conclusion: Interim direction granted: the GST portal shall remain accessible to the petitioners for two weeks to permit continuation of trading in respect of the stocks held at the time of Ext.P3; the respondents may seek variation of this order.

Exemption for renting of vehicles to State Transport Undertakings and Local Authorities - interpretation of "giving on hire" to include renting of vehicles - rectification under Section 102 - void ab-initio under Section 104 for suppression of material facts - eligibility for input tax credit on exempt supplies

Exemption for renting of vehicles to State Transport Undertakings and Local Authorities - interpretation of "giving on hire" to include renting of vehicles - Services supplied by the applicant to NMMT by supplying, operating and maintaining air conditioned electrically operated buses are taxable or exempt - HELD THAT: - The Authority reconsidered its earlier ruling in the light of CBIC Circular No. 164/20/2021-GST dated 06.10.2021 which clarifies that the expression "giving on hire" in Sr. No. 22 of Notification No. 12/2017 CT(R) includes renting of vehicles and that services of renting/giving on hire of such vehicles to State Transport Undertakings or Local Authorities are eligible for exemption. The Authority found that the circular is a material clarification issued prior to the earlier order and that the applicant did not dispute applicability of the circular on facts. The Authority concluded that the facts of the present case fall within the scope of the circular and that non consideration of the circular in the earlier order was a mistake requiring rectification; accordingly the supply is to be treated as exempt under the circular rather than taxable as held earlier. [Paras 5]

Answered in the negative; the service is an exempt supply in view of the CBIC circular interpreting Sr. No. 22 of Notification No. 12/2017 CT(R).

Rectification under Section 102 - void ab-initio under Section 104 for suppression of material facts - Whether the Authority could amend/withdraw its earlier advance ruling by invoking Sections 102 and 104 - HELD THAT: - The Authority applied Sections 102 and 104 after noting that the circular post dated or was not considered at the time of the earlier hearing and that non consideration of the circular constituted a mistake of law and a material event. The Authority observed that the applicant was given opportunity of fresh hearing and time to make submissions. On consideration of the submissions and the jurisdictional officer's contention, the Authority held that it was empowered to rectify the earlier order and modify answers given earlier in light of the circular, and proceeded to modify the ruling accordingly. [Paras 5]

The earlier ruling is amended under Sections 102 and 104 and answers modified in conformity with the CBIC circular.

Eligibility for input tax credit on exempt supplies - Whether the applicant is eligible to avail input tax credit for inputs used in supplying the services to NMMT - HELD THAT: - Having held that the core supply is an exempt supply as per the circular, the Authority concluded that the applicant is not entitled to avail input tax credit on inputs used for supplying those services. The Authority declined to answer classification and SAC/rate questions because the primary finding of exemption rendered those queries academic. [Paras 5]

Answered in the negative; the applicant is not eligible to claim input tax credit for the supplies in question because the supply is held to be exempt.

Final Conclusion: The Authority, exercising powers under Sections 102 and 104, recalled and amended its earlier advance ruling dated 22.12.2021 in light of CBIC Circular No. 164/20/2021 GST dated 06.10.2021: the services in question are held to be exempt (answer to question 1 negative), classification/rate question is not answered as academic, and entitlement to input tax credit is negatived.

Advance ruling - scope of advance ruling under Section 95 - exemption under Notification No. 12/2017-Central Tax (Rate) - definition of Government Entity / Governmental Authority (Notification No. 32/2017) - pure services - functions entrusted to a Municipality under Article 243W and to a Panchayat under Article 243G - renting of immovable property - reimbursement of utility charges - tax deduction at source (TDS) under Section 51

Advance ruling - scope of advance ruling under Section 95 - Whether PCSCL's status as Government, Local Authority, Governmental Authority or Government Entity can be answered in this advance ruling application. - HELD THAT: - The Authority examined whether the question concerning the characterisation of PCSCL as a government or local authority falls within the matters on which an advance ruling can be given. Section 95/97 contemplates rulings in relation to supply of goods or services being undertaken or proposed to be undertaken by the applicant. The question raised pertains to the status of the recipient (PCSCL) and not to the supply undertaken or proposed to be undertaken by the applicant. Consequently the question is not one contemplated by the advance ruling provisions and cannot be answered in this proceeding. [Paras 5]

Question not answered as it lies outside the scope of an advance ruling under Section 95.

Exemption under Notification No. 12/2017-Central Tax (Rate) - definition of Government Entity / Governmental Authority (Notification No. 32/2017) - Whether PCSCL is eligible to claim benefits as a Government/Local Authority/Governmental Authority/Government Entity under Notification No.12/2017 and thereby attract exemption. - HELD THAT: - The Authority considered whether Question 2 could be answered in an advance ruling. As with Question 1, this question concerns the status of the recipient (PCSCL) rather than a supply by the applicant, and thus falls outside the matters on which an advance ruling can be rendered under Section 95. Accordingly the Authority did not answer the question on entitlement to exemption under the notification in this proceeding. [Paras 5]

Question not answered as it is not within the scope of advance ruling provisions.

Pure services - renting of immovable property - exemption under Notification No. 12/2017-Central Tax (Rate) - functions entrusted to a Municipality under Article 243W - Whether renting of immovable property services provided by the applicant to PCSCL are exempt under Notification No.12/2017 and, if not, the applicable GST rate. - HELD THAT: - The Authority analysed the three cumulative requisites of Entry No.3, Chapter 99 of Notification No.12/2017: (i) the supply must be a pure service (which renting of immovable property is), (ii) the recipient must be the Central/State/Union territory/local authority or a Governmental Authority/Government Entity as defined, and (iii) the service must be by way of an activity in relation to a function entrusted to a Panchayat under Article 243G or to a Municipality under Article 243W. The Authority examined Notification No.32/2017's definitions and, on the material before it, accepted that PCSCL is a Government Entity for purposes of that definition. However, the Authority found that renting of immovable property is not an activity in relation to any function entrusted to a Municipality under Article 243W (or to a Panchayat under Article 243G), the Twelfth/Eleventh Schedules do not list renting of immovable property as such an activity, and therefore the third condition is not satisfied. Consequently the supply does not qualify for the exemption and is taxable. [Paras 5]

Renting of immovable property services supplied to PCSCL are not exempt under Notification No.12/2017 and are taxable at 18% GST.

Reimbursement of utility charges - Whether utility charges recovered from PCSCL are exempt under GST law and, if taxable, the applicable rate. - HELD THAT: - The applicant asserted that utility charges (e.g. electricity) collected from PCSCL are reimbursements of costs payable to third parties. The Authority noted that the applicant did not furnish detailed submissions or the relevant agreements evidencing the nature and manner of recovery of such charges. Given the incompleteness of material before it, the Authority declined to answer whether these recoveries are reimbursements (and therefore their tax character) or whether they are exempt or taxable. [Paras 5]

Question not answered due to absence of requisite details and documentary evidence.

Tax deduction at source (TDS) under Section 51 - Whether PCSCL is liable to deduct TDS under the GST provisions. - HELD THAT: - The Authority referred to the TDS provisions made operative under Section 51 read with the relevant notifications. The category of deductors under Notification No.33/2017 includes an authority or board or any other body established by any Government with 51% or more participation by way of equity or control. The Authority observed the operative dates and the implementing notification and applied the statutory scheme to the facts, concluding that payments by PCSCL in respect of renting of immovable property services fall within the TDS mechanism. [Paras 5]

PCSCL is liable to deduct TDS under the GST provisions in respect of payments for renting of immovable property services.

Final Conclusion: The Authority declined to answer the questions directed at the characterisation of PCSCL and its entitlement to exemption (Questions 1 and 2) as they fall outside the scope of advance ruling under Section 95. Renting of immovable property supplied to PCSCL is not covered by the exemption in Notification No.12/2017 and is taxable at 18% GST. The question on utility-charge reimbursements could not be answered for want of requisite details. PCSCL is required to deduct TDS under the GST provisions in respect of payments for renting of immovable property.

Principle of mutuality - Supply as defined in Section 7 of the CGST Act (including clause (aa) as amended) - Distinct person concept for associations and their members - Definition of business including provision of facilities by clubs/associations - Exemption under Notification No.12/2017-Central Tax (Rate) Entry 80 for training or coaching by charitable entities registered under section 12AA - Scope of exempt recreational activities - sports and arts vs. physical fitness/summer coaching

Supply as defined in Section 7 of the CGST Act (including clause (aa) as amended) - Distinct person concept for associations and their members - Definition of business including provision of facilities by clubs/associations - Principle of mutuality - Whether entrance/admission fees (forming part of corpus), annual subscription fees and annual maintenance fees collected from members are liable to GST. - HELD THAT: - The Authority examined the effect of the amendment to Section 7 of the CGST Act which inserted clause (aa) treating activities or transactions by a person, other than an individual, to their members or constituents (and vice versa) for consideration as 'supply' and clarifying that such persons and their members shall be deemed distinct persons. In view of the amendment and the legal definition of 'person' and 'business' (which expressly includes provision by a club/association of facilities or benefits to its members for a subscription or other consideration), fees collected from members constitute consideration for supply of services/goods by the association. Consequently, the principle of mutuality relied upon by the applicant, which previously supported non-taxability, does not apply after the statutory amendment; the receipts from members are within the scope of 'supply' and taxable under GST. [Paras 5]

Entrance/admission fees, annual subscription fees and annual maintenance fees collected from members are liable to GST.

Exemption under Notification No.12/2017-Central Tax (Rate) Entry 80 for training or coaching by charitable entities registered under section 12AA - Scope of exempt recreational activities - sports and arts vs. physical fitness/summer coaching - Whether fees collected for rendering training/coaching in specified recreational and sports activities are exempt under Entry No. 80 of Notification No.12/2017-CTR. - HELD THAT: - Entry No. 80 grants NIL rate to services by way of training or coaching in recreational activities relating to (a) arts or culture or (b) sports, when provided by charitable entities registered under section 12AA. The Authority found the applicant is registered under section 12AA and provides coaching in various activities. Applying the entry's description, coaching in Football, Basketball, Athletics, Cricket, Swimming and Karate qualify as 'sports' and Dance qualifies as 'arts', and thus these coaching services by the charitable association attract the NIL rate under Entry No. 80. However, 'physical fitness' training and the generic phrase 'summer coaching' do not fall within the description of sports or arts/culture in Entry No. 80 and therefore are not eligible for the exemption. [Paras 5]

Exemption under Entry No. 80 is available for training/coaching in Football, Basketball, Athletics, Cricket, Swimming, Karate and Dance; 'physical fitness' training and 'summer coaching' are not covered by that entry.

Final Conclusion: The Authority holds that fees collected from members (entrance/admission forming part of corpus, annual subscription and maintenance fees) are taxable as supply under the amended Section 7 of the CGST Act, and that coaching/training services by the registered charitable association attract the Entry No. 80 exemption only insofar as they relate to the specified sports and arts (Football, Basketball, Athletics, Cricket, Swimming, Karate and Dance), while 'physical fitness' and 'summer coaching' do not qualify for that exemption.

Reassessment under Section 147/148 - change of opinion - fresh tangible material - approval/sanction by Principal Commissioner of Income Tax - failure to disclose fully and truly

Reassessment under Section 147/148 - change of opinion - fresh tangible material - Validity of issuance of notice under Section 148/147 after expiry of four years where original assessment was completed after scrutiny. - HELD THAT: - The Court found that the Assessing Officer's file contained a detailed investigation report identifying beneficiaries of bogus long-term/short-term capital gains/losses relating to Financial Year 2012-13 and specifically identifying the petitioner as a beneficiary in trading of the scrip of Mahanivesh (India) Ltd. The report concluded that the scrip was a penny stock subject to price manipulation and pre-arranged or artificial transactions used to book bogus capital gains/losses. On this basis the Court held that there was 'fresh tangible material' justifying reopening of assessment and that the proceedings were not a mere change of opinion of the Assessing Officer; accordingly Kelvinator of India Ltd. (supra) was held inapplicable to the facts of the case. The Court therefore upheld the validity of initiating reassessment proceedings despite the lapse of four years and a prior scrutiny assessment. [Paras 5, 6]

Reopening of assessment for Assessment Year 2013-14 was valid because fresh tangible material was available and the case was not one of change of opinion.

Approval/sanction by Principal Commissioner of Income Tax - Whether prior approval/sanction for initiating proceedings under Section 147/148 was recorded and valid. - HELD THAT: - Although the reasons form did not bear the Principal Commissioner's signature or stamp, the Assessing Officer's file contained a photocopy of a note by the Principal Commissioner indicating agreement with the findings and reasoning and stating the case was fit for action under Section 147. The Court treated that note as constituting prior approval on the record and observed that the document had not been challenged as forged or fabricated. On that basis the Court concluded that requisite sanction was on record. [Paras 7, 8]

Prior approval/sanction by the Principal Commissioner of Income Tax was present on the file and sufficient for the purposes of initiating reassessment proceedings.

Final Conclusion: Writ petition challenging the notice and reassessment order for Assessment Year 2013-14 dismissed; the Court declined to interfere in writ jurisdiction while expressly leaving open all questions on the merits.

Violation of principles of natural justice for inadequate opportunity to reply - show cause notice under Section 148A(b) and order under Section 148A(d) - quashing of reassessment notice under Section 148 - annexure/records required to be served with notice

Violation of principles of natural justice for inadequate opportunity to reply - annexure/records required to be served with notice - show cause notice under Section 148A(b) and order under Section 148A(d) - quashing of reassessment notice under Section 148 - Whether the show cause notice, the order under Section 148A(d) and the reassessment notice for Assessment Year 2018-19 were vitiated by failure to furnish the correct annexure and by not giving the petitioner adequate opportunity to reply. - HELD THAT: - The Court found that the annexure accompanying the show cause notice dated 21st March, 2022 related to Assessment Year 2015-16 and not to Assessment Year 2018-19, and that the annexure prepared for AY 2018-19 was not served upon the petitioner due to technical glitches. The consequence was that the petitioner was not afforded the minimum statutory time to reply or the correct material upon which the proceedings for AY 2018-19 were based. The order under Section 148A(d) dated 27th March, 2022 also lacked factual correlation with the material actually set out in the show cause notice for AY 2018-19. In these circumstances the Court held that the principles of natural justice were violated and that the proceedings initiated for AY 2018-19 could not be sustained. The Court noted the respondents' affidavit withdrawing the earlier allegation of suppression and admitting the technical error in serving annexures, and accepted that the petitioner had responded and uploaded documents on 22nd March, 2022, but that the defective service of the correct annexure prejudiced the petitioner's ability to reply to the case made for AY 2018-19. [Paras 11, 12, 13, 14]

The show cause notice dated 21st March, 2022, the order dated 27th March, 2022 under Section 148A(d), and the notice dated 27th March, 2022 under Section 148 for Assessment Year 2018-19 are quashed on account of breach of natural justice; the revenue is at liberty to proceed further if law permits.

Final Conclusion: The writ petition is allowed insofar as the notices and order relating to Assessment Year 2018-19 are quashed for failure to serve the correct annexure and denial of adequate opportunity to reply; the Revenue may take further steps if permissible by law and the petitioner may seek remedies in that event. The petition and pending applications are disposed of.

Reassessment under Section 147 - notice under Section 148 - reason to believe - prima facie material - full and true disclosure of material facts - error apparent on the face of the record - scope of review - reopening of assessment

Notice under Section 148 - reason to believe - prima facie material - reassessment under Section 147 - Validity of the notice issued under Section 148 and initiation of reassessment under Section 147 - HELD THAT: - The Court held that the Assessing Officer had recorded reasons to believe - after examination of the return, 26AS and original departmental records - that the assessee had not truly and fully disclosed material facts, with a discrepancy in receipts leading to income escaping assessment. The High Court confined itself to whether prima facie material existed for issuance of the Section 148 notice and expressly did not examine the sufficiency or correctness of that material, which are matters for the reassessment proceedings. The Court found there was prima facie material warranting issuance of the notice and that the reassessment was ordered on the basis of apprehended untruthfulness revealed after investigation. [Paras 4, 5, 12, 13, 19]

The notice under Section 148 and consequent reassessment proceedings were validly initiated as there was prima facie material before the Assessing Officer recording a reason to believe that income had escaped assessment.

Scope of review - error apparent on the face of the record - Whether the earlier judgment could be reopened in review on the grounds urged by the petitioner - HELD THAT: - Applying settled principles, the Court reiterated that review is confined to correcting an error apparent on the face of the record and cannot be a rehearing or substitute for appeal. An error that requires prolonged reasoning or where two opinions are possible does not qualify. The Court examined the petitioner's grounds and concluded that none disclosed a self evident error of the kind warranting review; entertaining the review would amount to reappraisal of evidence and merits rather than correction of an apparent error. [Paras 7, 8, 9, 11, 21]

No error apparent on the face of the record was shown; the review petition was dismissed.

Full and true disclosure of material facts - reopening of assessment - Applicability of cited precedents (including Raymond Woollen Mills Ltd., Phool Chand Bajrang Lal and Srikrishna) to the circumstances of reassessment - HELD THAT: - The Court held that the ratio in Raymond Woollen Mills - that at the stage of issuing a reassessment notice the court need only see if prima facie material exists and need not test sufficiency - is applicable and not case specific. Phool Chand Bajrang Lal was considered and understood to permit reassessment where fresh facts or information exposing untruthfulness come to light; the Court found the present case involved discovery of apprehended untruthfulness after investigation and therefore Phool Chand did not assist the petitioner. Reliance on Srikrishna (Pvt.) Ltd. was consistent with the principle that an assessee must make full and true disclosure, which the Assessing Officer found lacking on the material before him. [Paras 16, 17, 19]

The precedents relied on do not support the petitioner's case; the earlier decision applying the prima facie material test and finding reassessment initiation justified was correct.

Final Conclusion: The review application is dismissed for want of any error apparent on the face of the record; the High Court's earlier satisfaction that prima facie material existed for issuing the Section 148 notice and initiating reassessment under Section 147 is affirmed. No order as to costs.

Reopening of assessment under the proviso to Section 147 - failure to disclose fully and truly all material facts - reason to believe - jurisdiction to issue notice under Section 148 - duty to disclose primary facts - recording of reasons as prerequisite for sanction

Reopening of assessment under the proviso to Section 147 - jurisdiction to issue notice under Section 148 - reason to believe - Validity of the notice dated 31.03.2021 under Section 148 and the exercise of jurisdiction to reopen assessment beyond four years under the proviso to Section 147 for Assessment Year 2013-14. - HELD THAT: - The Court examined whether respondents had jurisdiction to reopen the assessment after four years by invoking the proviso to Section 147 on the ground that income had escaped assessment due to the assessee's failure to disclose fully and truly all material facts. Applying established precedents, the Court recalled that both (i) a reason to believe that income has escaped assessment and (ii) a reason to believe that such escapement resulted from non disclosure of material facts must coexist to confer jurisdiction for reopening beyond four years. The material on record (the returns, schedules to the balance sheet and the petitioner's reply to the Section 142(1) notice) showed disclosure of the number of Wipro shares, methodology of computation, face value per share and aggregate market value of quoted investments. The A.O.'s reasons for reopening merely asserted non disclosure of book/market value without identifying how any undisclosed primary fact was material or how its non disclosure was the proximate cause of escapement. The Court found these reasons factually incorrect and that the primary facts necessary for assessment had been disclosed and accepted in the original assessment, so the jurisdictional condition under the proviso to Section 147 was not satisfied. Consequently the notice and recorded reasons were quashed. [Paras 23, 24, 26, 28, 29]

Impugned notice dated 31.03.2021 and the reasons for reopening (Annexure-A and Annexure-M) are quashed for lack of jurisdiction to reopen under the proviso to Section 147.

Failure to disclose fully and truly all material facts - duty to disclose primary facts - recording of reasons as prerequisite for sanction - Whether the petitioner had discharged its duty to disclose primary facts necessary for assessment for Assessment Year 2013-14. - HELD THAT: - The Court considered the content of the petitioner's return and contemporaneous disclosures. The schedules and annexures to the return and the reply to the Section 142(1) notice identified the gifted Wipro shares by number, explained their derivation, stated face value per share and included the market value of quoted investments. The assessing authority had sought only donor particulars in the Section 142(1) notice and, after receiving full particulars, completed assessment accepting the return. On this basis the Court held that the petitioner had made full and true disclosure of primary facts; any omission to specify the market value of the gifted shares separately did not amount to non disclosure of material facts that would attract the proviso to Section 147, particularly where the market value was public and the aggregate disclosed figures sufficed to show value exceeded the statutory threshold relied upon by the Revenue. [Paras 19, 20, 21, 23, 24]

Petitioner had disclosed the primary facts necessary for assessment; there was no failure to disclose that could justify reopening beyond four years.

Final Conclusion: Writ petition partly allowed: the notice dated 31.03.2021 under Section 148 and the reasons recorded for reopening the assessment for Assessment Year 2013-14 are quashed for lack of jurisdiction under the proviso to Section 147; other contentions (including challenge to circulars and applicability of Section 56(2)(vii)(c)) were not adjudicated as the notice was found vitiated.

Principles of natural justice - right to cross-examination in assessment proceedings - invocation of Section 144 of the Income Tax Act - application of Section 50C and valuation under sale deeds - faceless assessment procedures and administrative circulars

Principles of natural justice - right to cross-examination in assessment proceedings - Whether the impugned assessment order was passed in violation of principles of natural justice by denying personal hearing and refusal to allow cross-examination of witnesses - HELD THAT: - The Court examined the record of proceedings on remand and the material relied upon by the department. It noted that statements of the petitioner's siblings and the buyer were either not relied upon by the department or, in the remand report, the siblings had stated they had relinquished rights in favour of the petitioner. The Court held that permitting cross-examination would not have served any useful purpose where the department did not base its conclusion on those oral statements and where the sale deed was the document speaking for itself. The judge further observed that the petitioner had earlier failed to participate in appellate proceedings and that the Tribunal had remitted the matter for fresh adjudication, which the Assessing Officer completed. Having considered these facts, the Court found no procedural infirmity amounting to a breach of natural justice in the completion of assessment on the record before the Assessing Officer. [Paras 16, 17]

No violation of principles of natural justice; denial of personal hearing/cross-examination did not vitiate the assessment order.

Application of Section 50C and valuation under sale deeds - Whether the value declared in the sale deed could be disregarded and guideline value under Section 50C applied irrespective of receipt of consideration by the assessee - HELD THAT: - The Court observed that for the purposes of taxation under Section 50C, the fact that a sale was effected is the operative consideration and that guideline value may be relevant where it exceeds the declared consideration. The Court emphasised that whether the petitioner actually received the declared amount was immaterial to the application of Section 50C; the document (sale deed) speaks for itself and the statutory valuation mechanism governs assessment. The Court rejected the contention that non-receipt of consideration by the petitioner negates the applicability of Section 50C. [Paras 17]

Section 50C applies; guideline value may govern valuation for tax purposes irrespective of the assessee's assertion of non-receipt of consideration.

Faceless assessment procedures and administrative circulars - invocation of Section 144 of the Income Tax Act - Whether the petitioner's contention for re-determination of value under Section 50C(2) and reliance on administrative circulars and faceless-assessment exemptions warranted setting aside the impugned order - HELD THAT: - The Court noted that the contention to re-determine value under Section 50C(2) was raised for the first time and viewed the attempt as delaying recovery of tax. It considered the relevance of departmental circulars and the scope of faceless-assessment exemptions but found those not determinative on the facts: the assessment had been completed pursuant to the Tribunal's remand and the department did not commit procedural irregularity in doing so. The Court found no merit in reliance on the circulars or in the plea that faceless-assessment exemption provisions altered the obligations in this remand context. [Paras 8, 18]

Request for re-determination under Section 50C(2) and reliance on circulars/faceless-assessment exemptions rejected as untenable and dilatory; impugned order upheld.

Final Conclusion: Writ petition dismissed for lack of merit; the assessment order is upheld. Liberty granted to the petitioner to file a statutory appeal within thirty days, which shall be numbered and decided on merits with opportunity of hearing and independent examination by the appellate authority.

Reopening of assessment beyond four years - failure to disclose fully and truly all material facts - escapement of income - suspicion not a ground for reopening - reassessment void-ab-initio

Reopening of assessment beyond four years - failure to disclose fully and truly all material facts - suspicion not a ground for reopening - reassessment void-ab-initio - Validity of notice issued under section 148 for reopening assessment beyond four years and whether requisite jurisdictional condition was satisfied - HELD THAT: - The Tribunal found that the assessment for A.Y.2012-13 was reopened after four years solely on information from the Investigation Wing alleging the assessee was a beneficiary of pre-arranged bogus long term capital gains. The Assessing Officer had not produced material to show failure by the assessee to disclose fully and truly all material facts; the assessee had declared the long term capital gains as exempt in the original return and the AO had earlier completed assessment under section 143(3). Reliance was placed on the legal principle that where reopening is sought after four years the proviso to section 147 requires material showing escapement of income due to failure to disclose material facts, and that mere suspicion or the desire to verify the genuineness of declared exempt income does not satisfy this jurisdictional condition. The Tribunal considered precedents relied on by the parties, including decisions of the jurisdictional High Court and Hon'ble Bombay High Court, and accepted the CIT(A)'s conclusion that reassessment had been initiated on suspicion without requisite material; accordingly the notice under section 148 and consequent reassessment proceedings were quashed as void-ab-initio. [Paras 6]

Notice under section 148 and reassessment proceedings quashed; CIT(A) order confirmed and revenue appeal dismissed.

Final Conclusion: The Tribunal confirmed the CIT(A)'s order quashing the reopening notice and reassessment as void-ab-initio for A.Y.2012-13, holding that the requisite jurisdictional condition of failure to disclose fully and truly all material facts was not satisfied and that suspicion alone cannot sustain reopening beyond four years; revenue's appeal dismissed and assessee's cross-objections rendered infructuous.

Validity of notice under section 153C - Scope of proceedings under section 153A vis-a -vis section 153C - Non-curability of jurisdictional defects by section 292BB - Assessment passed without jurisdiction void ab initio

Validity of notice under section 153C - Scope of proceedings under section 153A vis-a -vis section 153C - Assessment passed without jurisdiction void ab initio - Non-curability of jurisdictional defects by section 292BB - Whether the notice issued under section 153C and the consequent assessment under section 143(3) r.w.s. 153C are valid where the search was primarily conducted in the premises of another person and the assessee himself was subjected to search. - HELD THAT: - The Tribunal examined the statutory scheme applicable on completion of a search. Where the search is conducted in the premises of a person, proceedings in respect of that person must be initiated under section 153A. Proceedings under section 153C arise only when documents pertaining to a person other than the person searched are found and proceedings are to be initiated against that other person. In the present case the Assessing Officer issued notice under section 153C in respect of the assessee even though the search was in the residential premises of another person and the initiation ought to have been under section 153A. The Tribunal agreed with the CIT(A)'s conclusion that the Assessing Officer assumed jurisdiction under the wrong provision and that the notice under section 153C was therefore invalid. The Tribunal further held that such a jurisdictional defect in the notice is not cured by section 292BB even if the assessee participated in the assessment proceedings without objection, and that an assessment passed under an invalid jurisdictional notice is void ab initio. Applying these principles to the facts, the Tribunal sustained the CIT(A)'s legal finding that the notice under section 153C and the assessment under section 143(3) r.w.s. 153C were invalid, and dismissed the Revenue's challenge.

Notice under section 153C was invalid in the facts of the case; the assessment framed under section 143(3) r.w.s. 153C is void ab initio and section 292BB does not cure the jurisdictional defect.

Final Conclusion: The Revenue's appeal is dismissed and the assessee's cross-objection is allowed, upholding the CIT(A)'s decision that the notice under section 153C and the consequent assessment are void for want of jurisdiction.

Duty to dispose appeals on merit - Obligation under Section 251(1) and Explanation to Section 251(2) of the Income-tax Act - Power of CIT(A) not to dismiss appeal for non-prosecution - Requirement to afford reasonable opportunity of hearing

Duty to dispose appeals on merit - Power of CIT(A) not to dismiss appeal for non-prosecution - Requirement to afford reasonable opportunity of hearing - Legality of the CIT(Appeals) dismissing the assessee's appeal for non-prosecution instead of deciding it on merits and affording a hearing. - HELD THAT: - The Tribunal found that once an appeal is preferred before the CIT(A), the CIT(A) is statutorily obliged to apply his mind and dispose of the appeal on merits rather than summarily dismissing it for non-prosecution. The Tribunal relied on the statutory scheme embodied in Section 251(1) and the Explanation to Section 251(2) of the Income-tax Act to conclude that the CIT(A) must consider and decide all issues arising from the impugned order, whether or not raised by the appellant, and has no power to dismiss the appeal merely because the assessee did not participate in the appellate proceedings. The Tribunal noted that the CIT(A)'s summary dismissal amounted to a failure to exercise the adjudicatory duty and was inconsistent with the obligation to state points for determination and render decisions thereon. The Tribunal referred to the view of the jurisdictional High Court as reinforcing that the CIT(A) must dispose of the appeal on merits and cannot treat non-prosecution as a ground for summary dismissal. [Paras 4, 5]

CIT(A)'s order dismissing the appeal for non-prosecution was set aside and the matter remitted to the CIT(A) to be decided afresh on merits after affording the assessee a reasonable opportunity of hearing.

Final Conclusion: The Tribunal allowed the appeal for statistical purposes, set aside the CIT(Appeals) order of dismissal for non-prosecution and directed the CIT(A) to decide the appeal de novo on merits, granting the assessee a reasonable opportunity of hearing.

Allowability of employee's contribution to Provident Fund and ESIC - timing of payment for deduction under Section 36(1)(va) - Explanation to Section 36(1)(va) - prospective application of tax law amendments - application of Section 43B for determining due date - scope of adjustments under section 143(1)

Allowability of employee's contribution to Provident Fund and ESIC - timing of payment for deduction under Section 36(1)(va) - scope of adjustments under section 143(1) - Whether employees' contributions to PF and ESIC paid after the statutory due date but before filing of return under section 139(1) for AY 2018-19 are allowable and the disallowance made in processing u/s 143(1) is to be deleted. - HELD THAT: - The Tribunal found that the assessee deposited employees' contributions to PF and ESIC before filing the return under section 139(1) though after the statutory due date under the respective Acts. Relying on the reasoning in the Coordinate Bench decision in M/s Kalpesh Synthetics Pvt Ltd (quoted at length), the Tribunal held that reporting in the tax audit about payments beyond the statutory "due date" does not by itself justify disallowance in the limited scope of adjustments permissible under section 143(1). The explanation to Section 36(1)(va) defining "due date" does not make that date decisive for disallowance where payment was made before filing the return, and the adjustment effected in the processing stage was therefore vitiated in law. Applying those principles to the facts, the Tribunal set aside the CIT(A)'s confirmation of the addition and directed deletion of the disallowance. [Paras 6, 7, 8, 9]

The disallowance of employees' contributions to PF and ESIC made in processing under section 143(1) is deleted and the appeal is allowed on this ground.

Explanation to Section 36(1)(va) - prospective application of tax law amendments - application of Section 43B for determining due date - Whether the amendment and Explanation introduced by the Finance Act, 2021 (w.e.f. 1-4-2021) to Section 36(1)(va) apply to AY 2018-19. - HELD THAT: - The Tribunal observed that the Explanation (and Explanation 2 as introduced by Finance Act 2021) was effective from 1-4-2021 and was not part of the law applicable to the assessment year under consideration. The Court emphasised that an amendment which casts additional liability cannot be applied retrospectively to the assessee for AY 2018-19. While noting that questions about the interplay with Section 43B may arise in other contexts (e.g., under assessments beyond the limited scope of section 143(1)), the Tribunal concluded that the 2021 amendment does not apply to AY 2018-19 and therefore cannot support the disallowance in the instant proceeding. [Paras 7, 8]

The Finance Act, 2021 amendment to Section 36(1)(va) is not applicable to AY 2018-19; the amendment is prospective and cannot be invoked to sustain the disallowance.

Final Conclusion: The Tribunal allowed the appeal, held that employees' contributions to PF and ESIC paid before filing the return under section 139(1) for AY 2018-19 are allowable, found that the Finance Act, 2021 amendment to Section 36(1)(va) does not apply to AY 2018-19, set aside the CIT(A)'s order and directed deletion of the disallowance.

Deduction of tax at source - Section 271C penalty for failure to deduct TDS - Applicability of Section 194C to payments to development authority/Government - Payment to State Government treated as not liable to TDS - Reliance on administrative clarification and coordinate bench precedent

Section 271C penalty for failure to deduct TDS - Applicability of Section 194C to payments to development authority/Government - Payment to State Government treated as not liable to TDS - Cancellation of penalty under Section 271C imposed for non-deduction of TDS on External Development Charges paid to HUDA. - HELD THAT: - The Tribunal held that the payments of External Development Charges (EDC) made to HUDA were, in substance, payments to the State Government or its authorised agency for execution of external development works. The Directorate of Town and Country Planning, Haryana issued an administrative clarification stating that HSVP/HUDA acts as an executing agency for and on behalf of the State and that receipts on account of EDC are deposited with the State; consequently, no TDS is required to be deducted on such payments. The Tribunal further noted a coordinate-bench decision in identical facts which held that Section 194C is not applicable to payments made to agencies like HUDA on behalf of the State and that imposition of penalty under Section 271C is unsustainable where there is no default under Section 194C. In view of the administrative clarification and the consistent view of the coordinate bench, the Tribunal found that there was no failure to deduct TDS under Section 194C and therefore the penalty under Section 271C could not be sustained. [Paras 6, 8, 9]

Penalty under Section 271C imposed for non-deduction of TDS on EDC paid to HUDA is cancelled.

Final Conclusion: The appeal is allowed and the penalty imposed under Section 271C for alleged non-deduction of TDS on External Development Charges paid to HUDA is set aside, the Tribunal relying on the Departmental clarification that such payments are to the State and on a coordinate-bench decision holding Section 194C inapplicable in the facts.

Rectification under Section 154 - mistake apparent on the record - limited scope of rectification - prior period expenses as revenue expenditure - allowability of provision for leave encashment

Rectification under Section 154 - prior period expenses as revenue expenditure - mistake apparent on the record - Validity of invoking Section 154 to disallow claim of prior period expenses without examining factual matrix - HELD THAT: - The Tribunal held that Section 154 is confined to correcting a mistake apparent on the record and cannot be used to decide debatable questions of fact or law. Precedents recognise that prior period expenses may be allowable as revenue expenditure depending on the factual matrix; therefore mere assertion of a prior period claim does not permit its outright disallowance by rectification. The Assessing Officer's enhancement of income by invoking Section 154 to adjust the claim of prior period expenses was without jurisdiction and unsustainable, since the issue involved mixed questions of fact and law that required examination rather than summary rectification. [Paras 4, 5]

The rectification insofar as it disallowed the claimed prior period expenses is set aside and the action of the Assessing Officer reversed.

Rectification under Section 154 - allowability of provision for leave encashment - limited scope of rectification - Whether assessment could be enhanced by rectification to include provision for leave encashment contrary to then-prevailing High Court view - HELD THAT: - The Tribunal accepted that at the time of the rectification the relevant High Court had taken a view adverse to the provision's validity and that Section 154 does not permit the Assessing Officer to adopt a view inconsistent with the prevailing judicial position when making a rectification. The Assessing Officer could not, under the narrow remedy of rectification, enhance income by applying a contrary legal view; consequently the rectification to include the provision for leave encashment was unwarranted and liable to be reversed. [Paras 6, 7]

The rectification to include the provision for leave encashment is set aside and the assessee's position restored.

Final Conclusion: The appeal is allowed; both adjustments made by way of rectification under Section 154 (relating to claimed prior period expenses and provision for leave encashment) are reversed and the position of the assessee restored for AY 2012-13.

Nexus between notice u/s 153C and incriminating material - incriminating material - section 153C notice - application of Singhad Technical Education Society

Nexus between notice u/s 153C and incriminating material - incriminating material - section 153C notice - application of Singhad Technical Education Society - Whether the Assessing Officer had relied upon any incriminating material found during search to justify issuance of notice under section 153C and consequent additions for the assessment years 2011-12 and 2014-15. - HELD THAT: - The Tribunal examined the assessment orders and the appellate record and found that the impugned additions are devoid of any reference to incriminating material seized during the search. Applying the principle that issuance of a notice under section 153C must be founded on a nexus between the seized incriminating material and the income or assessment of the person on whom the notice is issued, the Tribunal held that the ratio of the Hon'ble Supreme Court in Singhad Technical Education Society squarely applies. Because the Assessing Officer did not point to any incriminating material linking the seizure to the assessee's income, the CIT(A)'s conclusion-that there was no incriminating material to sustain the section 153C notice and the additions-was upheld. The Tribunal therefore declined to interfere with the cancellation of the additions by the CIT(A). [Paras 7, 10, 11]

The Tribunal upheld the CIT(A)'s finding that no incriminating material was relied upon to issue notice under section 153C and sustained the cancellation of the additions for AYs 2011-12 and 2014-15.

Final Conclusion: The Revenue appeals are dismissed and the CIT(A)'s order cancelling the additions for Assessment Years 2011-12 and 2014-15 is confirmed.

Protective addition versus substantive addition - remand for fresh adjudication - search and seizure proceedings under Section 132 and consequential assessment under Section 153C - lifting the corporate veil - conduit/company used as a conduit - opportunity of being heard

Protective addition versus substantive addition - remand for fresh adjudication - conduit/company used as a conduit - opportunity of being heard - Whether the protective additions made at the hands of the assessee should be restored to the assessing officer for fresh adjudication in view of the decision in respect of the SVP Group entities, and the manner in which such fresh adjudication is to be conducted. - HELD THAT: - The Tribunal noted that the Assessing Officer made additions in the assessee's hands but treated the assessee as an existing entity and accepted the identity of investors while characterising the assessee as a conduit. The Commissioner (Appeals) had deleted substantive additions at the assessee's hands and directed that additions be made on a protective basis because substantive additions ought to be made against the real beneficiaries (the SVP Group flagship entities). Subsequent adjudication by a co-ordinate Bench of the Tribunal in appeals of the SVP Group entities resulted in partial relief to those entities, thereby altering the factual and legal matrix relevant to the protective additions directed by the CIT(A). In view of that changed scenario, the Tribunal held that it is necessary to examine to what extent the co-ordinate Bench's decision reduces or affects the substantive additions in the hands of the SVP Group entities corresponding to the protective additions made against the present assessee. Consequently the Tribunal restored the issues to the Assessing Officer for fresh adjudication, instructing the AO to analyse the co-ordinate Bench's order, determine whether substantive additions are still warranted against the assessee, and proceed accordingly. The Tribunal expressly directed that before passing any fresh order the Assessing Officer must extend a reasonable opportunity of being heard to the assessee. The appeals were allowed for statistical purposes to facilitate this remand. [Paras 9, 10]

Issues restored to the Assessing Officer for fresh adjudication in light of the co-ordinate Bench's decision; Assessing Officer to consider extent to which substantive additions corresponding to protective additions survive and, after affording reasonable opportunity of hearing to the assessee, proceed to determine and make additions if warranted; appeals allowed for statistical purposes.

Final Conclusion: In view of subsequent orders in appeals of the SVP Group entities, the Tribunal remanded the matters to the Assessing Officer for fresh adjudication on the protective additions made against the assessee, directing the AO to examine the co-ordinate Bench's findings, afford the assessee a reasonable hearing, and then decide whether and to what extent substantive additions are warranted; all appeals are allowed for statistical purposes.

Penalty under Section 271(1)(c) for furnishing inaccurate particulars of income - difference of opinion not amounting to concealment or furnishing inaccurate particulars - mere making of a claim which is not sustainable in law does not constitute furnishing inaccurate particulars - interest on surplus funds inextricably linked to setting up of a project treated as capital receipt - disallowance solely for non-deduction of TDS where genuineness of expenditure is not questioned does not attract penalty

Penalty under Section 271(1)(c) for furnishing inaccurate particulars of income - mere making of a claim which is not sustainable in law does not constitute furnishing inaccurate particulars - Deletion of penalty levied in respect of disallowance of social forestry expenses. - HELD THAT: - The Tribunal affirmed the CIT(A)'s finding that all particulars and accounts relating to the social forestry claim were disclosed to the Assessing Officer and that the disallowance arose from a difference of opinion and estimation. Applying the principle that mere assertion of a claim which may not be sustainable in law does not amount to furnishing inaccurate particulars, the Tribunal found no specific instance of concealment or inaccurate particulars to sustain penalty under Section 271(1)(c). The appellate findings in the assessee's earlier year and applicable judicial precedent were treated as covering the controversy. [Paras 19, 21]

Penalty deleted and CIT(A)'s deletion affirmed.

Penalty under Section 271(1)(c) for furnishing inaccurate particulars of income - difference of opinion not amounting to concealment or furnishing inaccurate particulars - Deletion of penalty levied in respect of reduction of deduction claimed under Section 80IA. - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the Assessing Officer did not point to any specific instance of concealment or inaccurate particulars; the disputed addition resulted from a change in the method of allocation of expenses between units and thus represented a permissible difference of opinion. Relying on the established ratio that such differences do not attract penalty, the Tribunal found no reason to interfere with the CIT(A)'s deletion of penalty. [Paras 20]

Penalty deleted and CIT(A)'s deletion affirmed.

Penalty under Section 271(1)(c) for furnishing inaccurate particulars of income - difference of opinion not amounting to concealment or furnishing inaccurate particulars - Deletion of penalty levied in respect of club expenses disallowance. - HELD THAT: - The Tribunal agreed with the CIT(A) that the disallowance was largely ad hoc and founded on differences of opinion as to what constituted a business purpose; the Assessing Officer had not demonstrated any concealment or inaccurate particulars. In these circumstances, and having regard to authoritative decisions treating such disputes as differing views, the imposition of penalty was held to be unsustainable. [Paras 21]

Penalty deleted and CIT(A)'s deletion affirmed.

Penalty under Section 271(1)(c) for furnishing inaccurate particulars of income - interest on surplus funds inextricably linked to setting up of a project treated as capital receipt - difference of opinion as not amounting to concealment or furnishing inaccurate particulars - Deletion of penalty levied in respect of interest income on deployment of FCCB funds credited to Capital Work in Progress (CWIP). - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the assessee had disclosed the accounting treatment in the notes to the audited accounts and had adopted one of the possible views under law regarding capitalisation of interest. Judicial authorities recognize that interest inextricably linked to project setup may be capital in nature; the accounting choice resulted in a timing or year of taxation dispute rather than concealment. As no specific instance of furnishing inaccurate particulars was found, penalty could not be sustained. [Paras 22]

Penalty deleted and CIT(A)'s deletion affirmed.

Penalty under Section 271(1)(c) for furnishing inaccurate particulars of income - disallowance solely for non-deduction of TDS where genuineness of expenditure is not questioned does not attract penalty - Deletion of penalty levied in respect of disallowance under Section 40(a)(ia) for non-deduction of tax at source. - HELD THAT: - The Tribunal concurred with the CIT(A) that the Assessing Officer's disallowance was made only because TDS was not deducted and did not impugn the genuineness or purpose of the expenditure. Where the factual position and submissions were disclosed and the assessee relied on a bona fide view of law, the absence of TDS alone could not be treated as furnishing inaccurate particulars or concealment to attract penalty. Relevant precedent supporting this approach was applied. [Paras 23]

Penalty deleted and CIT(A)'s deletion affirmed.

Final Conclusion: The Tribunal dismissed the Revenue's appeal, affirmed the CIT(A)'s deletions of penalty under Section 271(1)(c) on the contested additions/disallowances for AY 2012-13, and found no grounds to sustain penalty where disputes arose from differences of opinion, disclosed accounting treatment, or disallowance solely for non-deduction of TDS without any finding of concealment or inaccurate particulars.

Royalty - fees for included services - transponder charges / satellite transmission - Explanation 6 to section 9(1)(vi) - interpretation of DTAA in relation to domestic amendment - withholding obligation under section 195

Royalty - transponder charges / satellite transmission - fees for included services - Transponder charges paid to non-resident satellite service providers are not 'royalty' taxable in India under the relevant DTAAs or domestic law for the years in issue - HELD THAT: - The Tribunal examined whether payments for transponder services constituted 'royalty' or 'fees for included services' under the India-USA, India-UK and India-Malaysia DTAAs and whether such payments were taxable in India. The Tribunal applied binding precedents of the jurisdictional High Court and coordinate benches of the Tribunal, notably the decision in Neo Sports Broadcast Pvt. Ltd. which followed the decisions of the Delhi High Court in Asia Satellite Communication Company Ltd. and New Skies Satellite BV . Those authorities drew a distinction between transfer or use of proprietary rights and mere provision of transmission/transponder facilities, and concluded that transponder charges are not in the nature of 'royalty' under the treaty definitions. Having considered the near-identical treaty language in the three DTAAs and the binding judicial precedents, the Tribunal held that the transponder payments do not amount to royalty/fees taxable in India.

Payments for transponder services are not 'royalty' under the applicable DTAAs and thus not taxable in India for the assessment years before the Tribunal

Explanation 6 to section 9(1)(vi) - interpretation of DTAA in relation to domestic amendment - process - Explanation 6 to section 9(1)(vi) cannot be read into or used to alter the meaning of 'process' in international tax treaties for determining treaty taxation - HELD THAT: - The Tribunal accepted the legal principle, as articulated by the Delhi High Court and followed by the Bombay High Court in Neo Sports Broadcast Pvt. Ltd. , that a domestic statutory amendment - even if expressed to be clarificatory or retrospective - cannot be imported into an international treaty's meaning between sovereign states absent an amendment to the treaty itself. Consequently, the domestic Explanation 6 to section 9(1)(vi), which refers to 'process' and satellite transmission, could not be applied to widen the scope of 'royalty' under the DTAAs. The Tribunal therefore rejected the Assessing Officer's approach of importing the domestic definition of 'process' into the treaty provisions.

Explanation 6 to section 9(1)(vi) does not affect the treaty meaning of 'process' and cannot be used to treat transponder charges as treaty royalty

Withholding obligation under section 195 - royalty - Assessee was not obliged to deduct tax at source under section 195 on the transponder payments for the years in issue - HELD THAT: - Section 195 obligation to withhold tax arises only if the payments are chargeable to tax in India. Having held that transponder charges are not 'royalty' or otherwise chargeable under the applicable DTAAs or domestic law for the assessment years under appeal, and relying on the Tribunal's and High Court's past rulings in the assessee's and analogous cases, the Tribunal concluded there was no liability on the assessee to deduct tax at source in respect of those payments.

No TDS under section 195 was required on the transponder service payments for the assessment years before the Tribunal

Final Conclusion: Following binding decisions of the jurisdictional High Court and coordinate Tribunal precedents, the Tribunal held that transponder charges paid to the non-resident satellite service providers do not constitute 'royalty' under the applicable DTAAs (and are not taxable in India) and that Explanation 6 to section 9(1)(vi) cannot be read into treaty provisions; accordingly the revenue's appeals were dismissed and no withholding under section 195 was required.

Jurisdiction of DRI officers to issue show cause notices under Section 28 of the Customs Act - Validity of CESTAT's remand of appeals to the original adjudicating authority - Keeping appeals pending and maintaining status quo pending decision of the Hon'ble Supreme Court

Validity of CESTAT's remand of appeals to the original adjudicating authority - Keeping appeals pending and maintaining status quo pending decision of the Hon'ble Supreme Court - Whether the order of the CESTAT remanding the appeals to the original adjudicating authority to decide the jurisdictional issue was correct, or whether the proper course was to set aside the remand and keep the appeals pending before the Tribunal awaiting the Supreme Court decision. - HELD THAT: - The High Court examined earlier decisions of this Court and concluded that the Tribunal's order setting aside the adjudicating authority's order and remanding the matter for fresh decision was not the appropriate remedy in the circumstances where the central question - the competency of DRI officers to issue show cause notices - was pending before the Hon'ble Supreme Court. Reliance was placed on the Court's subsequent decision in Commissioner of Customs, Tuticorin v. Sanket Praful Tolia, wherein identical Tribunal orders were set aside and the appeals were restored to the Tribunal to be kept pending till the Supreme Court decides the appeals arising out of Mangali Impex. The Court observed that keeping the appeals pending before the appellate forum and directing that no coercive action be taken protects the interests of both parties while awaiting the higher court's determination. In view of these precedents and the identical nature of the impugned orders, the Court allowed the Revenue's appeals, set aside the CESTAT order of remand to the adjudicating authority, and remanded the matters to the Tribunal with directions to keep the appeals pending and await the Supreme Court's decision, while prohibiting coercive action in the interim. The substantial questions of law were left open for decision by the higher court. [Paras 6, 7, 8]

Impugned CESTAT orders setting aside adjudicating authority's orders and remanding the matters were set aside; appeals restored to the Tribunal to be kept pending and to await the decision of the Hon'ble Supreme Court, with a direction that no coercive action be taken in the interim.

Final Conclusion: The Civil Miscellaneous Appeals are allowed; the CESTAT orders of remand are set aside and the matters are restored to the Tribunal to be kept pending pending the Supreme Court's decision on the competency of DRI officers to issue show cause notices, with a prohibition on coercive action; substantial questions of law left open.

Likelihood of continuation or recurrence of dumping and injury - sunset review / continuation of anti-dumping duty - duty extension under section 9A(5) of the Customs Tariff Act - Annexure II (vii) principles for threat of material injury - scope of product under consideration in sunset review - standing / maintainability of association to appeal

Standing / maintainability of association to appeal - Maintainability of the appeal filed by the Association of Man Made Fibre Industry of India against the designated authority's final findings and the Central Government notification. - HELD THAT: - The Tribunal held that the association which had initiated the sunset review investigation on behalf of the domestic industry and stated that Grasim Industries was the sole domestic producer was entitled to file the appeal. The association had submitted the application leading to the investigation and subsequently authorised the filing of the appeal; accordingly, the preliminary objection that the association was not a 'person aggrieved' was rejected and the appeal was held maintainable. [Paras 35]

Appeal by the association is maintainable.

Duty extension under section 9A(5) of the Customs Tariff Act - sunset review / continuation of anti-dumping duty - Whether continuation of anti dumping duty beyond five (and effectively beyond ten) years requires 'special circumstances' in addition to the statutory test. - HELD THAT: - The Tribunal rejected the submission that continuation beyond ten years requires special circumstances. It held that neither Article 11.3 of the 1994 Anti Dumping Agreement nor section 9A(5) of the Tariff Act conditions an extension on the existence of special circumstances; the statutory test for any extension (whether for a further five years or otherwise) is the same: the competent authority must be of the opinion that cessation of duty is likely to lead to continuation or recurrence of dumping and injury. [Paras 37]

No separate requirement of 'special circumstances' beyond the statutory likelihood test for extending anti dumping duties.

Likelihood of continuation or recurrence of dumping and injury - Annexure II (vii) principles for threat of material injury - sunset review / continuation of anti-dumping duty - scope of product under consideration in sunset review - Whether the designated authority's final findings adequately determined that cessation of anti dumping duty would not likely lead to continuation or recurrence of injury such as to warrant a further five year extension. - HELD THAT: - The Tribunal analysed the statutory framework (section 9A(5), rule 23 and Annexure II(vii)) and authorities on sunset reviews, noting that the exercise is prospective and requires examination of likelihood of recurrence of dumping and injury on revocation. The Tribunal found that although the designated authority recorded a conclusion of likelihood of continuation of dumping, it also found the likelihood of recurrence of injury 'not strong enough' to warrant continuation for a further five years. The Tribunal identified shortcomings in the likelihood analysis: reliance on a narrow set of participating exporters/producers rather than country wide capacity; apparent inconsistency between the disclosure statement (which recorded substantial country level surplus capacity) and final findings; insufficient examination of diversion risk from third country export prices and the effect of imports priced below the NIP; and rejection in final findings of evidence (Hawkins/Wood Mackenzie data) relied upon at disclosure without adequate explanation. Given these deficiencies, the Tribunal concluded that the designated authority must re examine whether cessation of the duty would likely lead to continuation or recurrence of injury warranting a five year extension, and accordingly remanded the matter for fresh consideration limited to that question. [Paras 63, 64, 67, 74, 82]

Final findings modified: designated authority to re examine and give fresh findings on whether cessation of duty would likely lead to continuation or recurrence of injury warranting a further five year imposition; remanded for that limited purpose.

Sunset review / continuation of anti-dumping duty - Disposition of related appeals filed by various associations and parties challenging the same final findings and related matters. - HELD THAT: - After considering the respective contentions, the Tribunal dismissed Anti Dumping Appeal Nos. 51832 of 2021, 51833 of 2021, 51834 of 2021, 51868 of 2021, 51869 of 2021, 51872 of 2021 and 50570 of 2022. The principal appeal by the Association of Man Made Fibre Industry (Anti Dumping Appeal No. 51490 of 2021) was allowed only to the limited extent of remanding the injury likelihood question to the designated authority as described above. [Paras 89]

Other listed appeals dismissed; principal appeal allowed only to the limited extent of remand for re examination on the injury likelihood for a five year extension.

Final Conclusion: The Tribunal held the association's appeal maintainable, rejected the requirement of any separate 'special circumstances' for extending duty beyond ten years, and concluded that the designated authority's likelihood analysis on recurrence of injury requires re examination. The matter is remanded to the designated authority to give fresh findings on whether cessation of anti dumping duty would likely lead to continuation or recurrence of injury warranting a further five year imposition; several other related appeals were dismissed.

Penalty for improper importation - penalty for use of false and incorrect material - scope and effect of settlement commission order - onus of proof under Section 123 - judicial moderation of quantum of penalty

Penalty for improper importation - onus of proof under Section 123 - Liability of the appellants to penalties under Section 112(a) (and where invoked, Section 114AA) for their role in the improper importation that led to confiscation of the yacht. - HELD THAT: - The Settlement Commission's final order and the admitted facts establish that the transaction involved an attempt to improperly import the yacht which was ultimately confiscated. The Tribunal treated the entire set of notices as part of a single transaction and examined the individual roles of the appellants in assisting that importation. Several appellants admitted the acts attributed to them (acting as agents, declaring cargo as transshipment, following instructions), and therefore the initial burden to establish proper importation under Section 123 remained unmet by those notices. Given the admissions and the Settlement Commission's findings as to the improper importation, the adjudicating authority has made out the case for invoking penalties on the appellants under Section 112(a) (and Section 114AA where applicable). The court rejected the contention that the Settlement Commission's order immunised non applicant co noticees, noting the Commission's order expressly applied only to applicants/co applicants before it. [Paras 4]

Penalty liability under Section 112(a) (and Section 114AA where invoked) is sustained against the appellants for their respective roles in the improper importation.

Scope and effect of settlement commission order - Whether the Settlement Commission's order in favour of certain applicants operates to absolve other co noticees who did not apply before the Settlement Commission. - HELD THAT: - The Settlement Commission's order was expressly limited to the applicants and co applicants who had approached it. The order grants immunities and prescribes penalties only in respect of those parties; it does not extend to other co noticees who were not parties to the settlement. Consequently, the appellants who did not seek settlement remained subject to departmental proceedings and possible penalties. [Paras 2, 4]

The Settlement Commission's findings and immunities do not operate in favour of non applicant co noticees; those appellants remain liable to independent adjudication.

Judicial moderation of quantum of penalty - Appropriateness and quantum of the penalties imposed by the adjudicating authority. - HELD THAT: - Although the Tribunal found revenue had established liability for penalties, it observed that the adjudicating authority did not furnish reasons determining the differential quantum imposed on each appellant. By reference to the Settlement Commission's own imposition of modest penalties on certain co applicants (reflecting limited or no personal benefit), and recognising that many appellants were agents or service providers who did not directly benefit from duty evasion, the Tribunal held the penalties originally imposed were excessive. Exercising its power to moderate, the Tribunal reduced the penalty levied on each appellant to 15% of the amount originally imposed by the adjudicating authority. [Paras 4]

Quantum of penalty modified: each appellant's penalty is reduced to 15% of the amount imposed by the adjudicating authority.

Final Conclusion: Appeals partially allowed. Liability for penalties under Section 112(a) (and Section 114AA where invoked) sustained against the appellants for their roles in the improper importation, but the quantum of penalty imposed by the adjudicating authority is reduced to 15% of the originally imposed amount; the Settlement Commission's order does not protect non applicant co noticees.

Classification of air conditioners under tariff headings - Interpretation and application of the General Rules for the Interpretation of Import Tariff (GIR) - Meaning and scope of 'split system' versus 'reversible heat pump' in Chapter 84 - Rule 2(a) and Section Note 4 to Section XVI - articles presented unassembled and essential character - Classification of parts versus complete machines - Admissibility of notification-based BCD exemptions - RSP (MRP) based valuation for countervailing duty under proviso to Section 3(2) - Extended period of limitation under Section 28(1)/28(4) for collusion, wilful mis-statement or suppression - Confiscation and redemption fine under Sections 111 and 125 - consequences of classification/valuation findings - Penalties under Sections 112(a), 114A and 114AA - requirement of specific finding of false/incorrect material

Classification of air conditioners under tariff headings - Meaning and scope of 'split system' versus 'reversible heat pump' in Chapter 84 - Interpretation and application of the General Rules for the Interpretation of Import Tariff (GIR) - Room air conditioners of the split/ductless type (including models MSH GE, MSZ EF, MSZ HJ) are correctly classifiable under CTH 84151010 (split system) and not to be reclassified by the adjudicating authority under CTH 841581 (reversible heat pumps). - HELD THAT: - Tribunal examined the structure of heading 8415 and the HSN Explanatory Notes at the six digit (HSN) level and applied the GIRs. It held that the adjudicating authority erred in elevating an eight digit sub division (as in other jurisdictions) to exclude the split/ductless description that squarely falls within sub heading 8415.10 at the comparable HSN six digit level. The Tribunal followed precedents of this bench (Daikin; International Aircon) reasoning that the phraseology of the residuary sub headings (incorporating a 'refrigerating unit' and 'valve for reversal') cannot be read so as to erase or restrict the clear scope of the 'split system' description at sub heading 8415.10. Where the goods satisfy the specific description of 'split system' (ductless, one indoor + one outdoor unit), that heading must be preferred under GIR 3(a). The adjudicating authority's reliance on eight digit expansions in other tariffs (e.g., US) to deny application of the six digit HSN description was held to be untenable. [Paras 4]

Classification of the specified RAC models under CTH 84151010 as declared by the appellants is upheld; reclassification to CTH 841581 by the adjudicating authority is set aside.

Rule 2(a) and Section Note 4 to Section XVI - articles presented unassembled and essential character - Classification of parts versus complete machines - CMVRF components imported and presented together as a set (single consignment/Bill of Entry) for a specific project are classifiable as complete air conditioning machines (not as parts); components imported separately over time and presented as parts are classifiable as parts under CTH 84159000. - HELD THAT: - Tribunal analysed the pre and post May 2013 import practices and Section Note 4 to Section XVI together with GIR Rule 2(a). It held that where indoor and outdoor units are presented together (even unassembled) intended to contribute to a clearly defined function, they constitute a whole and are classifiable under the heading appropriate to that function (e.g., split air conditioner). Conversely, where identical components are imported and presented separately across different Bills of Entry and declared as parts, they cannot be treated as a complete machine at the time of import and must be classified as parts. The Tribunal applied Supreme Court authority (Sony India and earlier decisions) distinguishing assemblies brought in one consignment from parts brought separately and endorsed different treatment for pre May 2013 (in some cases imported as sets) and post May 2013 imports (imported as parts). [Paras 4, 6]

CMVRF imported as a set on a single Bill of Entry (pre May 2013 practice where so presented) are to be classified as complete machines; CMVRF components imported separately and presented as parts are classifiable as parts under CTH 84159000. Adjudicating authority's blanket classification of all such imports as complete units is set aside for post 2013 imports presented as parts.

Admissibility of notification-based BCD exemptions - Classification of air conditioners under tariff headings - Benefit of Notification No.85/2004 Cus (SI.No.49: CTH 841510) and Notification No.46/2011 Cus (ASEAN) as claimed by the appellants is admissible where the goods are correctly classifiable under CTH 84151010/84151090 (as held by the Tribunal). - HELD THAT: - Because the Tribunal restored the appellants' classification of RAC and certain CMVRF (when presented as complete split systems) under CTH 841510, it held that the statutory notifications tied to that tariff description are available to the importers subject to the usual origin/condition requirements. The adjudicating authority's conclusion denying notifications on the basis of its reclassification to 841581/841582 was displaced by the Tribunal's classification findings. The Tribunal nonetheless observed that claims under other notifications (e.g., notification No.12/2012 relating to certain metal headings) remain governed by the tariff under which the goods are actually classifiable. [Paras 4, 6]

Exemption benefits under Notification No.85/2004 Cus and Notification No.46/2011 Cus are held admissible to the appellants insofar as their imports fall under CTH 841510 as determined by the Tribunal.

RSP (MRP) based valuation for countervailing duty under proviso to Section 3(2) - Assessment on RSP basis and re-quantification of demand - Countervailing duty (CVD) on the impugned air conditioning goods is subject to RSP/MRP based assessment under the proviso to Section 3(2) and Section 4A framework; the quantum of demand based on such RSP assessment was not quantified by the Tribunal and is remitted to the adjudicating authority for re quantification. - HELD THAT: - Tribunal accepted that the goods were covered by notifications and Legal Metrology provisions triggering RSP based valuation for CVD. The appellants' counsel ultimately conceded liability to RSP based assessment; Tribunal held that the adjudicating authority's re determination of declared value for CVD under the proviso to Section 3(2) and Section 4A is legally sustainable. However, because the adjudicating authority's quantification was made on the basis of its reclassification (which the Tribunal has altered) and because the RSP re quantification was not separately computed in the appeal, the Tribunal remanded the matter for fresh computation of differential CVD on RSP basis and directed reassessment limited to quantification issues. [Paras 4, 6]

RSP (MRP) based assessment for CVD is applicable; matter remanded to original authority for re quantification of demand on RSP basis.

Extended period of limitation under Section 28(1)/28(4) for collusion, wilful mis-statement or suppression - Mis declaration of RSP and invocation of extended period - Tribunal upheld the adjudicating authority's conclusion that invocation of the extended period (proviso to Section 28(1)/28(4)) was justified on the record in respect of mis declaration/non declaration of RSP and related findings of mis statement/suppression for the period under inquiry. - HELD THAT: - Tribunal reviewed the adjudicating authority's factual findings regarding inconsistent declarations (e.g., addition of 'not for retail sale', divergent practices across ports, failure to declare RSP post notification amendment) and the documentary record uncovered during investigation. It found sufficient material to support a conclusion of mis declaration/non declaration relevant to valuation for CVD and held that invocation of the extended five year limitation was sustainable to the extent of those findings. This issue, however, was bifurcated from classification and valuation quantification which were remitted. [Paras 4, 6]

Extended period of limitation under Section 28 proviso is invokable on the facts found concerning mis declaration of RSP and related conduct.

Confiscation and redemption fine under Sections 111 and 125 - consequences of classification/valuation findings - Penalties under Sections 112(a), 114A and 114AA - requirement of specific finding of false/incorrect material - Tribunal set aside the adjudicating authority's orders of confiscation and the penalties imposed under Sections 114A and 114AA insofar as they flowed from the classification/notification issues determined in appellants' favour; penalties on individuals and the Customs Brokers were also set aside for lack of specific findings tying them to wilful false/incorrect declarations. Confiscation and redemption fines may be reconsidered only after re determination of quantification on remand. - HELD THAT: - Because the Tribunal reversed the adjudicating authority's substantive reclassification and allowed notification benefits, it held that confiscation orders and associated redemption fines could not be sustained as they were predicated on the earlier adverse classification. The Tribunal further emphasised statutory requirements for imposing penalties under Sections 114A/114AA - there must be an explicit finding of knowingly or intentionally using false/incorrect material; the adjudicating authority had mechanically imposed such penalties without the necessary individualised findings, hence those penalties were set aside. The Tribunal left open reassessment of confiscation/fines if re quantification on remand establishes liability warranting such action. [Paras 4, 7]

Confiscation, redemption fine and penalties (Sections 112(a), 114A, 114AA) set aside to the extent they rest on the reversed classification/admissibility findings or lack specific individualised findings; adjudicating authority to reconsider confiscation/redemption only after remand quantification.

Final Conclusion: Tribunal allowed the appellants' classification of specified RAC and certain CMVRF imports as declared (CTH 84151010/84151090 where appropriate), held that notification exemptions claimed by the appellants are admissible accordingly, confirmed applicability of RSP/MRP based valuation for CVD but remitted the matter to the adjudicating authority for re quantification of differential duty on RSP basis; it upheld invocation of the extended limitation period for mis declaration of RSP, set aside confiscation and several penalties that were predicated on the reversed classification or lacked specific findings, and directed the original authority to complete remand proceedings within three months.

Right to re-export under Rule 131(3) of the Drugs and Cosmetics Rules, 1945 - Prohibition of import without CDSCO registration - Application of statutory procedure under a special enactment vis-a -vis confiscation under the Customs Act, 1962 - Confiscation and redemption powers under the Customs Act, 1962 - Penalty under Sections 112(a), 114A and 114AA of the Customs Act, 1962 - Liability of Customs House Agent (CHA) and requirement of due diligence

Right to re-export under Rule 131(3) of the Drugs and Cosmetics Rules, 1945 - Prohibition of import without CDSCO registration - Confiscation and redemption powers under the Customs Act, 1962 - Whether the importer's request to re-export imported cosmetics lacking CDSCO registration should have been allowed instead of directing absolute confiscation. - HELD THAT: - The Tribunal found that imported cosmetics not supported by a CDSCO registration certificate are prohibited under the Drugs and Cosmetics Act and Rules, and therefore liable to confiscation. However, Rule 131(3) of the Drugs and Cosmetics Rules, 1945 prescribes a statutory procedure which requires the Collector of Customs to communicate the laboratory report to the importer and afford the importer the option, within two months, either to re-export the goods to the country of origin or to hand them over to the Central Government for destruction. In the absence of any contrary provision in the Customs Act shown to apply, that statutory right to seek re-export cannot be overlooked. The Tribunal held that the adjudicating authority failed to follow the procedure under Rule 131(3) and wrongly directed absolute confiscation of 2,19,435 pieces; accordingly the confiscation order was set aside and re-export was allowed. The Tribunal also allowed re-export of the remaining 35,712 pieces (which had CDSCO certificate), observing that the request for re-export renders the question of mis-declaration immaterial for disposal in accordance with law. [Paras 11, 13, 15, 16]

Order of absolute confiscation set aside; re-export of 2,19,435 pieces and of 35,712 pieces permitted following Rule 131(3) of the Drugs and Cosmetics Rules, 1945.

Penalty under Sections 112(a), 114A and 114AA of the Customs Act, 1962 - Effect of electing re-export on penalties and fines - Whether the fines and penalties imposed on the appellants should be sustained where re-export is permitted. - HELD THAT: - The Tribunal noted that the appellants had sought re-export and had suffered consequential losses (charges, demurrage etc.). In view of allowing re-export under the statutory procedure, the Tribunal found no justification to maintain the fine and penalties imposed by the adjudicating authority. Consequently, the fine and penalties imposed on the corporate appellant and on the individual appellants were set aside. [Paras 16, 17]

Fine and penalties imposed on all appellants set aside.

Liability of Customs House Agent (CHA) and requirement of due diligence - Whether the power of attorney holder/CHA (Shri Sandip Tandekar) was liable for penalty for non-exercise of due diligence. - HELD THAT: - On the material before it, the Tribunal found that the allegation of non-exercise of due diligence against the CHA was not made out. No evidence was shown to establish that the CHA had knowledge of mis-declaration or undervaluation or lack of CDSCO registration. Accordingly, the penalty imposed on the CHA was unjustified and was set aside. [Paras 6, 17, 18]

Penalties on the CHA and individual appellants set aside; allegation of lack of due diligence against the CHA not established.

Final Conclusion: The appeals are allowed: the order of absolute confiscation is set aside and re-export of the imported cosmetics (2,19,435 pieces and 35,712 pieces) is permitted under Rule 131(3) of the Drugs and Cosmetics Rules, 1945; the fine and penalties imposed on the corporate and individual appellants (including the CHA) are set aside as unjustified.

Re testing of samples as trade facilitation - reliance on laboratory test report for classification - denial of re test contrary to Board Circular No.30/2017 Cus. - classification/misdeclaration attracting confiscation under the Customs Act - remand for re determination after re test - redemption of confiscated goods on payment of redemption fine

Re testing of samples as trade facilitation - denial of re test contrary to Board Circular No.30/2017 Cus. - reliance on laboratory test report for classification - classification/misdeclaration attracting confiscation under the Customs Act - Whether the adjudication on classification, valuation and consequent confiscation/penalties could be finally decided without acceding to the appellant's request for re testing of the seized sample. - HELD THAT: - The Bench examined the procedural guidance in Board Circular No.30/2017 Cus. which treats the facility of re testing as a trade facilitation measure that should generally not be denied and requires denial to be occasional and on reasonable grounds recorded in writing. The original test reported the consignments as kerosene (SKO) and the importer requested re test within the prescribed period; the request was refused by the adjudicating authority without adequate reasoning contrary to the expectation in the Circular. Given that the classification and valuation hinge on the results of laboratory tests, and in view of the Circular's mandate that re test requests ordinarily be entertained (and, if granted, the competent authority must consider the re test results), the Tribunal found it inappropriate to adjudicate the merits of classification, valuation, confiscation and penalties without first permitting the re test. The Tribunal therefore set aside the impugned appellate conclusions to the extent they rest on the first test alone and remanded the matter to the adjudicating authority to decide afresh after conducting the re test; all substantive issues were left open for reconsideration post re testing. The Tribunal also directed expedition by requiring finalisation within three months of receipt of the remand. [Paras 4, 5]

Appeal allowed in part; matter remanded to the adjudicating authority for fresh adjudication after permitting and considering the re test of samples, with all substantive issues kept open and to be finalised within three months.

Final Conclusion: The Tribunal allowed the appeal in part by setting aside the final adjudication to the extent it was based solely on the first laboratory report, ordered that the importer's request for re test be acceded to, remanded the case to the adjudicating authority for fresh determination after the re test, and kept all issues including classification, valuation, confiscation and penalties open for decision within three months.

Retrospective amendment of Letter of Permission - broad banding / clarificatory amendment to Letter of Permission - use of duty free inputs by a 100% EOU for manufacture and export - non recovery of duty where inputs are used in manufacture of exported excisable products - exclusive domain of DGFT to examine NFE and LOP compliance - technical lapse doctrine

Retrospective amendment of Letter of Permission - broad banding / clarificatory amendment to Letter of Permission - Amendment to the Letter of Permission dated 15.05.2006 operates as a clarificatory modification applicable to the unit with effect from its production commencement and thereby covers the disputed items manufactured prior to the amendment date. - HELD THAT: - The Tribunal accepted the Commissioner (Appeals)'s conclusion that the amended LOP of 15.05.2006, issued by the Development Commissioner, expressly notes that the unit commenced production w.e.f. 18.01.2004 and records approval for broad banding of the items (Dry syrup, Suspension & Injection). The amendment is a modification of the earlier LOP and functions as a clarificatory amendment to include those forms of pharmaceutical formulations within the earlier permission; consequently the amended LOP is held to be effective in relation to the unit's production from 18.01.2004. The Tribunal relied on analogous precedents where post factum amendments by the Development Commissioner were treated as clarificatory and such approvals overruled departmental objections that they applied only prospectively. [Paras 4]

Amendment of 15.05.2006 is a clarificatory modification of the LOP and is effective in favour of the unit from 18.01.2004.

Use of duty free inputs by a 100% EOU for manufacture and export - non recovery of duty where inputs are used in manufacture of exported excisable products - technical lapse doctrine - No duty can be recovered where duty free inputs were used in manufacture of goods that were exported, and omission to specify a particular form of a pharmaceutical formulation in the original LOP was a technical lapse which did not warrant denial of exemption. - HELD THAT: - The Tribunal recorded that there was no dispute the imported duty free inputs were used in manufacture and that finished goods (injections and suspensions) were exported. The adjudicating authority itself had noted that inputs imported during March 2005 to April 2006 were used to manufacture goods exported after May 2006. Given that the finished products fall within the same tariff classification of medicaments irrespective of physical form, the Tribunal agreed with the Commissioner (Appeals) that non inclusion of the specific form in the original LOP was a technical lapse capable of being condoned. In absence of any finding or evidence that LOP terms as to quantities/values were violated, or that export obligations were unfulfilled, the department's demand for duty was not sustainable. [Paras 4]

Demand of duty by Revenue is not sustainable; omission in LOP was a technical lapse and the benefit of exemption survives where inputs were used in manufacture of exported goods.

Exclusive domain of DGFT to examine NFE and LOP compliance - Compliance with conditions of the LOP, including achievement of Net Foreign Exchange (NFE), is to be examined by the issuing authority (DGFT/Development Commissioner) and is not a matter for Customs/Central Excise to decide in these proceedings. - HELD THAT: - The Tribunal observed that the question of whether NFE targets under the LOP were achieved is a matter for DGFT which issued the LOP, and Customs/Central Excise authorities cannot substitute their view on interpretation or enforcement of EXIM policy. There was no case shown that DGFT had initiated any action or found non achievement of NFE in the present matter; consequently Customs' interference on this ground was inappropriate. [Paras 4]

Whether LOP conditions such as NFE were met is for DGFT to examine; Customs cannot independently deny exemption on that ground in absence of DGFT findings.

Final Conclusion: Revenue's appeals are dismissed on merits: the amended LOP of 15.05.2006 operates as a clarificatory modification effective from the unit's production commencement; duty free inputs used in manufacture of exported medicaments could not be subjected to recovery where export obligations were met; and questions regarding compliance with LOP conditions (including NFE) fall within the domain of DGFT. Appeals dismissed.

Regular bail - maintainability of successive bail application before the High Court - embargo under section 212(6) of the Companies Act - parity with co-accused's bail orders - completion of investigation and cooperation with investigating agency as a ground for bail - conditions of bail including deposit of passport and prohibition on tampering with evidence

Maintainability of successive bail application before the High Court - Second/ successive bail application moved directly before the High Court is maintainable and entertainable on merits. - HELD THAT: - The Court held that although the present application was technically a second bail petition before the High Court, that fact alone did not render it not maintainable. The High Court may entertain and decide the subsequent bail application on merits. The reasoning noted the procedural history including earlier orders, interim bail granted by the Apex Court and withdrawal of the SLP with liberty to approach this Court or the trial court, and concluded that the present petition could be considered afresh.

Second bail application is maintainable and the High Court may decide it on merits.

Embargo under section 212(6) of the Companies Act - parity with co-accused's bail orders - The statutory embargo in section 212(6) of the Companies Act does not ipso facto bar the High Court from granting bail in the circumstances of this case. - HELD THAT: - The Court examined the earlier rejection of bail which had rested solely on the provision of section 212(6). It observed that co-accused with identical or similar roles had been granted bail by the Apex Court and coordinate benches, and that parity in treatment with similarly placed accused was a material consideration. In light of those developments and the specific facts of the case, the Court concluded that the earlier embargo-based rejection did not preclude reconsideration and grant of bail by this Court.

Statutory embargo under section 212(6) is not an absolute bar to granting bail in this case; parity with co-accused was a relevant factor favouring grant of bail.

Regular bail - completion of investigation and cooperation with investigating agency as a ground for bail - conditions of bail including deposit of passport and prohibition on tampering with evidence - The applicant is entitled to regular bail subject to specified conditions. - HELD THAT: - On the merits the Court noted that investigation was completed, complaint and cognizance had been taken, the applicant had cooperated with the investigating agency, had not misused interim liberty, and there was no material showing breach of interim-bail conditions. The Court also took into account that trial had commenced but was not likely to conclude at an early date and that several co-accused had been granted bail. Balancing these factors, the Court concluded that regular bail ought to be granted. The grant was made subject to furnishing of personal bond and two sureties to the satisfaction of the trial court and on conditions intended to protect the integrity of the trial process, including prohibitions on tampering with evidence, intimidating witnesses, committing similar offences, requirement to appear before the trial court, deposit of passport and seeking prior permission before leaving the country.

Bail is allowed on furnishing bonds and sureties and subject to enumerated conditions; no surrender directed while interim bail subsists and directions given regarding execution of fresh bonds if required.

Final Conclusion: The High Court allowed the applicant Rahul Kothari's bail application and directed his release on furnishing personal bond and two sureties to the satisfaction of the trial court, subject to conditions (including non-tampering with evidence, non-intimidation of witnesses, attendance at trial, prohibition on committing similar offences, deposit of passport and prior permission to travel abroad); the petition was held maintainable and the statutory embargo under section 212(6) did not preclude grant of bail in the facts of the case.

Unpublished Price Sensitive Information - Insider trading prohibition under Regulation 4 of the PIT Regulations - Onus and presumption of motivation for trades where insider possessed UPSI - Proviso to Regulation 4 - circumstances permitting an insider to prove innocence - Use of sale proceeds / infusion of funds as an exonerating circumstance - Model Code of Conduct and pre-clearance obligation under Regulation 9 of the PIT Regulations

Unpublished Price Sensitive Information - Ordinarily includes financial results - Whether the quarterly financial results for the quarter ended September 2017 constituted unpublished price sensitive information (UPSI). - HELD THAT: - The Tribunal accepted the WTM's finding that the company's net loss rose substantially from Rs. 6.62 crores in the quarter ended June 2017 to Rs. 166.80 crores in the quarter ended September 2017 - a material and substantial change. Given that financial results are expressly listed as ordinarily included within UPSI and the exceptional magnitude of the loss increase, the financial results for the quarter ended September 2017 were held to be UPSI in the possession of the appellants during the relevant period. [Paras 10, 11]

The financial results for the quarter ended September 2017 were UPSI.

Insider trading prohibition under Regulation 4 of the PIT Regulations - Onus and presumption of motivation for trades - Proviso to Regulation 4 - circumstances to prove innocence - Use of sale proceeds as exonerating circumstance - Whether the appellants' sale of shares during the UPSI period violated Regulation 4(1) of the PIT Regulations, or whether they discharged the burden under the proviso to Regulation 4(1) by demonstrating permissible circumstances. - HELD THAT: - Regulation 4(1) establishes a presumption that trades made while in possession of UPSI were motivated by that information, but the proviso permits an insider to prove innocence by demonstrating circumstances (the list is illustrative, not exhaustive). The appellants explained that severe business distress and imminent repayment of a short-term loan compelled sale of their unencumbered shares in October-December 2017, and that the entire sale proceeds were re-infused into the company as working capital to avoid downgrading to a non-performing asset. The Tribunal found that this explanation fell within the scope of the proviso and other permissible circumstances, that the WTM erred in rejecting utilization of proceeds as an exonerating circumstance, and that relevant precedents where sales to infuse funds were held exculpatory applied. The Tribunal also observed that the disclosure of financial results on November 29, 2017 did not materially change the market price on November 30, 2017, undermining the contention that the sales were aimed at avoiding further losses. [Paras 13, 14, 16, 17, 18]

The appellants discharged their burden under the proviso to Regulation 4(1); their trades do not amount to insider trading under Regulation 4(1).

Model Code of Conduct and pre-clearance obligation under Regulation 9 - Relief from debarment, impounding and penalty - Whether the impugned WTM order debaring the appellants, directing deposit of alleged avoided losses with interest and imposing penalties could be sustained in view of the findings on Regulation 4(1). - HELD THAT: - The Tribunal, having concluded that the appellants successfully rebutted the presumption under Regulation 4(1), held that the foundational finding of insider trading could not be sustained. Consequential reliefs and sanctions premised on the finding of insider trading therefore could not stand. The Tribunal quashed the impugned order in its entirety, ordered refund of any amounts deposited pursuant to earlier directions along with accrued interest and allowed the appeal. [Paras 1, 19]

The impugned order is quashed; the appeal is allowed and amounts deposited shall be refunded with interest.

Final Conclusion: The Tribunal held that (i) the company's quarterly financial results for September 2017 were UPSI, (ii) the appellants nonetheless demonstrated permissible circumstances under the proviso to Regulation 4(1) by showing urgent need to raise funds and reinfusion of sale proceeds into the company, thereby rebutting the presumption of insider trading, and (iii) the WTM order debaring the appellants and directing impounding/penalties was quashed and amounts deposited are to be refunded with interest.

Unpublished price sensitive information - trading while in possession of unpublished price sensitive information - presumption of motivation where insider trades while in possession of UPSI - proviso to Regulation 4(1) of the PIT Regulations, 2015 - insider and connected person

Trading while in possession of unpublished price sensitive information - proviso to Regulation 4(1) of the PIT Regulations, 2015 - Whether the appellants traded while in possession of unpublished price sensitive information. - HELD THAT: - The Tribunal accepted the concession that appellant no.1 is an insider and appellant no.2 a connected person, and confined the dispute to whether they traded when in possession of UPSI. Applying the three ingredients of Regulation 4(1) (insider, possession of UPSI and trading), the Tribunal found that the appellants had discharged the onus under the proviso to Regulation 4(1) by showing absence of UPSI at the time of the trades. The finding of the WTM that the appellants were in possession of UPSI was rejected on the basis that no meeting of the managing committee ever took place, there was no evidence that the appellants knew of the IIL resolutions or notices, and statements recorded during investigation indicated that the deal was not known to others before March 2017. Consequently, the presumption of motivation did not sustain the finding of insider trading against the appellants. [Paras 14, 15, 20, 21, 22]

The appellants were not in possession of UPSI when they traded; the finding of insider trading is quashed.

Unpublished price sensitive information - When the UPSI regarding the proposed acquisition/purchase crystallized for the purposes of the PIT Regulations. - HELD THAT: - The Tribunal examined the chronology relied upon by the WTM and held that the discussions on January 24, 2017 related to a loan request and did not amount to a crystallized proposal to purchase ILPL. The EGM of IIL on March 1, 2017 authorizing investment/purchase capacity was the first occasion on which an acquisition became a concrete corporate decision. Therefore, the Tribunal concluded that, if any UPSI arose in the matter, it could only have started from March 1, 2017 and continued until execution of the definitive agreement on March 14, 2017; the WTM's conclusion that UPSI began on January 24, 2017 was unsupported by the record and unsustainable. [Paras 10, 16, 18, 22]

The UPSI, if any, arose from March 1, 2017 (and not January 24, 2017) up to March 14, 2017.

Unpublished price sensitive information - information in public domain - Whether the July 15, 2016 disclosure constituted UPSI or was already in the public domain. - HELD THAT: - The Tribunal agreed with the WTM's factual observation that the July 15, 2016 resolution was only a general or 'in-principle' information and not a crystallized transaction. It held that the July 15, 2016 information was in the public domain and did not qualify as UPSI because it lacked an identified purchaser, ascertained consideration or finalized terms. Consequently, trades executed between July 15, 2016 and March 1, 2017 could not be impugned on the basis of UPSI. [Paras 11, 17, 19, 22]

The July 15, 2016 information was in the public domain and did not constitute UPSI.

Final Conclusion: The impugned SEBI orders-disgorgement, market access restrictions and penalties-are quashed on the grounds that the appellants were not shown to have traded in possession of UPSI; appeals allowed with no order as to costs.

Pre-existing dispute under Section 9 of the Insolvency and Bankruptcy Code - Service of Section 8 demand notice - Acceptance and consumption of goods and estoppel - Contractual scope and quality dispute regarding supply of Biomass Fuel - Application of the Mobilox Innovations ratio

Pre-existing dispute under Section 9 of the Insolvency and Bankruptcy Code - Application of the Mobilox Innovations ratio - Whether a plausible pre-existing dispute existed which required rejection of the Section 9 application. - HELD THAT: - Applying the test in Mobilox Innovations, the Tribunal examined whether the appellant's contentions constituted a real dispute or were patently feeble. The record shows ledger confirmations and correspondence dated 01.04.2016 and 01.05.2016 acknowledging the amounts claimed for supply of Biomass Fuel including Cane Trash and Cotton Stalk. The appellant accepted and consumed the supplies over time and did not return the fuel or invoke contractual cancellation rights. The Tribunal found the defence about quality and type of fuel to be a belated contention lacking substantial evidence and characterised it as a patently feeble argument rather than a plausible dispute requiring further investigation. [Paras 6, 7]

The defence does not constitute a pre-existing dispute; the Section 9 application was rightly admitted.

Service of Section 8 demand notice - Whether the Section 8 demand notice was properly served on the Corporate Debtor. - HELD THAT: - The Tribunal considered the postal record which showed Article Consignment No. RM 121958348IN dated 23/02/2018 delivered on 03/03/2018 at 'Shingvetukai BO'. The registered office address of the corporate debtor as per the MCA records is located at Village Shingwetukai, and therefore delivery at 'Shingvetukai BO' corresponded to the registered address. Given this documentary postal evidence and the corporate debtor's subsequent detailed reply filed before the Adjudicating Authority, the contention of non-delivery was held to be unsustainable. [Paras 9]

The Section 8 demand notice was delivered at the corporate debtor's registered address and service was valid.

Contractual scope and quality dispute regarding supply of Biomass Fuel - Acceptance and consumption of goods and estoppel - Whether supply of Cotton Stalk instead of only Cane Trash amounted to a contractual dispute barring admission. - HELD THAT: - The Fuel Supply Agreement defined 'Fuel' as various types of biomass listed in Schedule 3, which expressly included both Cotton Stalk and Cane Trash with specified moisture contents. The FSA did not limit supply exclusively to Cane Trash. The agreement provided for rates to be agreed as per mutual discussions and yearly plans; it did not prohibit supply of Cotton Stalk for lack of a pre-fixed rate. The appellant neither returned the fuel nor invoked the contract's cancellation clause when supplies were accepted and consumed. The Tribunal therefore treated the later legal notices asserting non-conformity as afterthoughts and held that the alleged quality/type dispute was unsupported and insufficient to defeat the Section 9 petition. [Paras 4, 6, 7, 8]

There was no sustainable contractual dispute about the type or quality of fuel that would bar admission of the petition.

Final Conclusion: The Tribunal held that the admitted ledger confirmations and acceptance of supplies, together with valid service of the Section 8 notice and the contractual scope of 'Biomass Fuel', rendered the appellant's disputed contentions patently feeble; applying the Mobilox Innovations test, the appeal was dismissed and the admission under Section 9 was upheld.

Public announcement of corporate insolvency resolution process - compliance with Regulation 6(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - publication in newspapers with wide circulation at the location of the registered office and principal office and other locations where the corporate debtor conducts material business operations - publication on corporate debtor and Board websites - binding effect of an approved resolution plan - extinguishment of claims on approval of the resolution plan

Public announcement of corporate insolvency resolution process - compliance with Regulation 6(1) of the Insolvency and Bankruptcy Board of India (Insolvency Resolution Process for Corporate Persons) Regulations, 2016 - publication in newspapers with wide circulation at the location of the registered office and principal office and other locations where the corporate debtor conducts material business operations - publication on corporate debtor and Board websites - Validity of the public announcement made by the Interim Resolution Professional under Section 15 read with Regulation 6(1) of the 2016 Regulations. - HELD THAT: - Regulation 6(2)(b)(i) requires publication in one English and one regional language newspaper with wide circulation at the location of the registered office and principal office of the corporate debtor and at any other location where, in the opinion of the Interim Resolution Professional (IRP), the corporate debtor conducts material business operations. The IRP published the public announcement in English and regional newspapers at locations including Kolkata, Guwahati, Shillong and Itanagar and also uploaded the announcement on the corporate debtor's website and the Board's website. The statutory requirement does not extend to publishing at every place where the corporate debtor receives goods or services; it requires publication at the registered and principal office locations and at other locations where the IRP, in his opinion, considers the corporate debtor conducts material business operations. The IRP's publications and online postings satisfy Regulation 6(2)(b)(i)-(iii) and Section 15, and therefore the publication was in compliance with the statutory scheme. [Paras 12, 14]

The public announcement made by the IRP complied with Section 15 and Regulation 6(1) of the 2016 Regulations and was valid; there was no obligation to publish specifically at the places in Maharashtra where the appellant carried on business.

Binding effect of an approved resolution plan - extinguishment of claims on approval of the resolution plan - Whether the appellant, having not filed a claim before the IRP and having its claim fall outside the approved resolution plan, can challenge the approval of the resolution plan. - HELD THAT: - The appellant did not file any claim before the IRP within the statutory period and filed its claim long after the last date for submission. The Supreme Court's law, as applied by the Tribunal, establishes that once a resolution plan is duly approved by the adjudicating authority, claims not provided for in the plan stand extinguished and the plan is binding on the corporate debtor and all creditors. Consequently, a person whose claim is not part of the approved plan and who did not participate in the CIRP by filing a claim has no locus to challenge the approval of the resolution plan. Applying that principle to the facts, the appellant cannot challenge the approval order having failed to file a claim within the insolvency resolution process. [Paras 13, 14]

The appellant, having not filed a claim during the CIRP and whose claim is not part of the approved resolution plan, cannot challenge the approval; the claim stands extinguished on approval of the plan.

Final Conclusion: The Tribunal found the IRP's public announcement to be in compliance with Section 15 and Regulation 6 of the 2016 Regulations and held that the appellant, who did not file a claim during the CIRP and whose claim is not included in the approved resolution plan, has no locus to challenge the plan; the appeal is dismissed.

Maintainability of a company petition under section 7 - financial debt under the Code - corporate guarantee as financial debt - pledge as collateral security - implied indemnity obligation - abuse of insolvency process / collusive filing

Maintainability of a company petition under section 7 - financial debt under the Code - corporate guarantee as financial debt - pledge as collateral security - abuse of insolvency process / collusive filing - Whether the company petition under section 7 is maintainable as a claim for financial debt or is vitiated by collusive or improper purpose. - HELD THAT: - The Tribunal noted the primary defence that the claim did not constitute a financial debt. It observed authorities recognising corporate guarantees as financial debt but proceeded to examine the material facts. The record showed encashment of fixed deposits pledged as collateral with the bank, absence of any communication from the Financial Creditor to the Corporate Debtor after invocation of guarantees, and lack of documentary proof of any personal guarantee by the allegedly interested director in the charge particulars. The master data continued to list the director said to have resigned and common directorships were found among corporate guarantors. The Tribunal found these anomalies and the surrounding circumstances indicated that the petition was filed for purposes other than resolution of the corporate insolvency (suggesting collusion/abuse of process). On that basis the Tribunal declined to enter into detailed adjudication of the plea concerning the director's resignation and, finding the petition tainted by improper purpose, dismissed the company petition while leaving parties to remedies under other laws. [Paras 31, 32, 33, 34, 35]

Company Petition dismissed as being filed for purposes other than resolving the Corporate Debtor's insolvency; parties left to other remedies.

Final Conclusion: The Tribunal dismissed the section 7 company petition on the ground that the proceedings were instituted for purposes other than insolvency resolution (indications of collusion/abuse of the Code), and declined to grant relief under the Code while leaving parties to pursue remedies available under other laws.

Liquidation under section 33(2) of the Insolvency and Bankruptcy Code, 2016 - failure of approval of resolution plan by the Committee of Creditors - appointment of liquidator under section 34(4)(c) of the Insolvency and Bankruptcy Code, 2016 - liquidation process under Chapter III of the Code - cessation of powers of board of directors on liquidation - public notice of liquidation - restriction on institution of suits against the corporate debtor during liquidation - filing of liquidation order with the Registrar of Companies

Failure of approval of resolution plan by the Committee of Creditors - liquidation under section 33(2) of the Insolvency and Bankruptcy Code, 2016 - Liquidation of the Corporate Debtor was to be ordered where no resolution plan was approved by the CoC and the CIRP period had expired. - HELD THAT: - The Tribunal recorded that, although resolution plans were received, none was approved by the Committee of Creditors and the period of Corporate Insolvency Resolution Process had expired. The CoC passed a resolution with 100% voting share for liquidation. In view of the absence of an approved resolution plan and expiry of the CIRP, the Tribunal concluded there was no alternative but to order liquidation of the Corporate Debtor and allowed the application filed by the Resolution Professional for liquidation in terms of the Code. [Paras 11, 17, 18]

Application by the Resolution Professional allowed and the Corporate Debtor ordered to be liquidated in terms of section 33(2) of the Code.

Appointment of liquidator under section 34(4)(c) of the Insolvency and Bankruptcy Code, 2016 - Authorisation for Assignment (AFA) requirement under regulation 7A - The Resolution Professional who consented was appointed as Liquidator subject to possession of a valid Authorisation for Assignment (AFA). - HELD THAT: - The Tribunal noted the Resolution Professional had given written consent to act as Liquidator and accordingly appointed him as Liquidator under the Code, while making the appointment subject to his possession of a valid Authorisation for Assignment issued by his Insolvency Professional Agency, in terms of the applicable regulation. [Paras 15, 18]

Mr. Shyamal Kumar Bhattacharjee appointed as Liquidator, subject to possession of a valid AFA.

Liquidation process under Chapter III of the Code - cessation of powers of board of directors on liquidation - public notice of liquidation - restriction on institution of suits against the corporate debtor during liquidation - Directions were issued for carrying out the liquidation process, vesting of powers in the Liquidator, publication of notice, and restriction on suits. - HELD THAT: - The Tribunal directed the appointed Liquidator to initiate the liquidation process in accordance with Chapter III of the Code and applicable Liquidation Process Regulations. It ordered publication of a public notice in the same newspapers earlier used, declared that all powers of the Board of Directors and key managerial personnel shall cease and vest in the Liquidator, required the corporate personnel to cooperate with the Liquidator, and recorded that no suit or other legal proceeding shall be instituted by or against the Corporate Debtor except as permitted by the Code and with prior approval of the Adjudicating Authority. [Paras 18]

Liquidator to initiate liquidation proceedings; board powers to cease and vest in the Liquidator; public notice to be issued; restriction on suits during liquidation as per the Code.

Filing of liquidation order with the Registrar of Companies - The Liquidator was directed to file a copy of the liquidation order with the Registrar of Companies. - HELD THAT: - The Tribunal directed that, in terms of the Code, the Liquidator shall file a copy of the liquidation order with the Registrar of Companies within whose jurisdiction the Corporate Debtor is registered, and that the Registry shall forward a copy of the Order to that Registrar. [Paras 18]

Liquidator to file a copy of the liquidation order with the Registrar of Companies, and the Registry to forward a copy to the Registrar.

Final Conclusion: The Tribunal allowed the Resolution Professional's application and ordered liquidation of Purple Advertising Services Private Limited because no resolution plan was approved by the CoC and the CIRP period had expired; the consenting Resolution Professional was appointed as Liquidator subject to possession of a valid AFA, and directions were issued for initiation of the liquidation process, publication of notice, cessation of board powers, restriction on suits, and filing of the order with the Registrar of Companies.

Liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' approval for liquidation - Appointment of Liquidator and entitlement to remuneration as approved by CoC - Vesting of management powers in the Liquidator and discharge of officers/employees - Bar on suits and legal proceedings subject to Section 52

Liquidation under Section 33(1) of the Insolvency and Bankruptcy Code, 2016 - Committee of Creditors' approval for liquidation - Liquidation of S.K.P.J. Investment & Finance Pvt. Ltd. is to be ordered following expiry of the CIRP period and approval of the Committee of Creditors. - HELD THAT: - The Adjudicating Authority recorded that the Corporate Insolvency Resolution Process was initiated and the Resolution Professional conducted CoC meetings. No resolution plan was submitted within the maximum CIRP period and the CoC, constituted of the sole financial creditor, resolved in its third meeting to liquidate the corporate debtor pursuant to the provisions of the Code. In view of the absence of an approved resolution plan before expiry of the CIRP period and the CoC's resolution, the Authority exercised the powers under Section 33(1) and its sub-clauses to order liquidation.

Liquidation of the corporate debtor is ordered under Section 33(1) of the IBC.

Appointment of Liquidator and entitlement to remuneration as approved by CoC - Appointment of Mr. Atiuttam Prasad Singh as Liquidator and fixation of his remuneration as resolved by the CoC. - HELD THAT: - The CoC in its resolution appointed the Resolution Professional as Liquidator and fixed consolidated remuneration and out-of-pocket expenses to form part of the liquidation cost. The Authority affirmed that appointment and directed the Liquidator to issue the public announcement and to carry out liquidation in accordance with Chapter III, Part II of the Code and applicable regulations.

Mr. Atiuttam Prasad Singh is appointed Liquidator and is entitled to the fees and expenses as approved by the CoC.

Vesting of management powers in the Liquidator and discharge of officers/employees - Bar on suits and legal proceedings subject to Section 52 - Consequential directions regarding cessation of powers of board and management, discharge of employees, bar on suits and communication to ROC are to be given effect to during liquidation. - HELD THAT: - The Authority ordered that all powers of directors and KMP shall cease and vest in the Liquidator who shall exercise duties under the specified sections of the Code and applicable liquidation regulations. The order operates as a notice of discharge to officers, employees and workmen, except where business continues under the Liquidator. Subject to Section 52, no suit or other legal proceedings shall be instituted by or against the corporate debtor except with prior approval of the Authority or as permitted by statute; the order also directs communication of the liquidation to the Registrar of Companies and other concerned offices for information and compliance.

Powers of management stand vested in the Liquidator; employees are deemed discharged as stated; suits barred subject to Section 52; registry to inform ROC and other concerned authorities.

Final Conclusion: IA-1998/2022 in CP (IB)-2906/ND/2019 is allowed; the corporate debtor is ordered into liquidation, the Resolution Professional is appointed Liquidator with fees as approved by the CoC, and consequential directions for conducting the liquidation are issued.

Initiation of Corporate Insolvency Resolution Process - existence of default under the Insolvency & Bankruptcy Code, 2016 - service of demand notice under section 8 of the IBC, 2016 - acknowledgement of debt by issuance of cheques - appointment of Interim Resolution Professional and powers of IRP - declaration of moratorium under section 14 of the IBC, 2016 - prospective operation of executive notification raising minimum default threshold

Existence of default under the Insolvency & Bankruptcy Code, 2016 - acknowledgement of debt by issuance of cheques - Operational Creditor has proved default by the Corporate Debtor entitling initiation of CIRP under section 9 of the IBC, 2016. - HELD THAT: - The Tribunal found on the pleadings and documents that goods were supplied as evidenced by the invoices annexed to the petition and that the corporate debtor had issued cheques in an apparent acknowledgment of debt which were dishonoured on presentation. There was no material on record showing a pre-existing dispute prior to issuance of the statutory notice under section 8. The bank statement and ledger particulars attached to the petition supported the conclusion that payment default had occurred and was continuing, thereby satisfying the condition precedent for filing under section 9.

Petition under section 9 held maintainable on the ground of established default; operational creditor entitled to seek initiation of CIRP.

Service of demand notice under section 8 of the IBC, 2016 - initiation of Corporate Insolvency Resolution Process - Demand notice requirement under section 8 was satisfied so as to admit the application and initiate CIRP. - HELD THAT: - The Tribunal recorded that the demand notice dated 29.09.2018 was sent and, though initial physical delivery remained unclaimed, it was also emailed to the corporate debtor at addresses obtained from the Ministry of Corporate Affairs and the usual email used for communications. In the absence of evidence of delivery failure or of a pre-existing dispute, the Tribunal accepted that the statutory notice requirement for initiating the section 9 petition was met and proceeded to admit the petition.

Statutory demand notice treated as effectively served; requirement under section 8 satisfied and petition admitted.

Appointment of Interim Resolution Professional and powers of IRP - declaration of moratorium under section 14 of the IBC, 2016 - Interim Resolution Professional appointed and moratorium declared on admission of the petition. - HELD THAT: - On admission of the section 9 petition, the Tribunal appointed the insolvency professional proposed by the applicant as Interim Resolution Professional and directed him to take charge, make the public announcement, call for claims and comply with the Code. Concurrently, the Tribunal declared the moratorium under section 14, specifying the prohibitions on institution or continuation of suits, transfer or disposition of assets, actions to enforce security interests and recovery of property in possession of the corporate debtor, with an exception for uninterrupted supply of essential goods or services as governed by the Code.

IRP appointed and moratorium imposed for the duration of CIRP; IRP to perform statutory duties and stakeholders to cooperate.

Prospective operation of executive notification raising minimum default threshold - Notification issued later raising the minimum default threshold was not applicable to the present petition filed earlier. - HELD THAT: - The Tribunal observed that the impugned notification by the Central Government enhancing the minimum amount of default to one crore was issued on 24 March 2020, whereas the default and filing of the petition occurred much earlier. Noting the general principle that such executive notifications operate prospectively unless expressly stated otherwise, the Tribunal held that the notification did not affect the maintainability of the petition filed prior to its issuance.

Notification raising minimum default threshold held prospective and inapplicable to the admitted petition.

Final Conclusion: The section 9 petition by the operational creditor was admitted: default was held to be established on the basis of supplies, dishonoured cheques and absence of a pre-existing dispute; the proposed Interim Resolution Professional was appointed and moratorium declared; and a subsequently issued notification raising the minimum default threshold was held prospective and inapplicable to the present case.

Operational debt - default - pre-existing dispute - proof of delivery and delivery challans - admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - moratorium - appointment of Interim Resolution Professional

Operational debt - default - pre-existing dispute - proof of delivery and delivery challans - Documentary evidence establishes an operational debt and that the Corporate Debtor defaulted in payment. - HELD THAT: - The Authority found that purchase orders and delivery invoices were acknowledged by the Corporate Debtor and that delivery challans bore receipts indicating goods were received in good condition. The ledger maintained by the Operational Creditor showing payments received and outstanding balance was not controverted by the Corporate Debtor, which did not produce material to show payment of the claimed amounts. The Corporate Debtor first raised objections only after service of the Demand Notice (Form 3), and its allegation that seals and signatures on some invoices were forged was rejected as baseless. In light of the undisputed delivery acknowledgements and the absence of proof of payment, the existence of an operational debt and default by the Corporate Debtor was held to be established. [Paras 11, 12, 13]

Operational debt and default established; petition under Section 9 of the IBC admitted and CIRP initiation warranted.

Admission under Section 9 of the Insolvency and Bankruptcy Code, 2016 - moratorium - appointment of Interim Resolution Professional - Consequential reliefs following admission: declaration of moratorium and appointment of Interim Resolution Professional. - HELD THAT: - Having admitted the petition under Section 9, the Authority declared moratorium in terms of the Code, prohibited institution or continuation of suits and dispositions of assets, preserved supply of essential goods/services, and directed public announcement of CIRP initiation. The Authority also appointed the proposed Interim Resolution Professional after noting compliance with the applicable insolvency professional regulation (Regulation 7A) and the validity of his Form 2/authorization on record. [Paras 13]

Moratorium declared and the proposed Interim Resolution Professional appointed; public announcement and administrative directions ordered.

Final Conclusion: The petition under Section 9 of the Insolvency and Bankruptcy Code, 2016 is admitted; the Corporate Debtor is placed under the Corporate Insolvency Resolution Process, moratorium is declared, the Interim Resolution Professional is appointed, and consequential public announcement and registry notification directions are issued.

Classification of composite contracts as Works Contract Service - construction of Single Point Mooring (SPM) system as part of a port - exemption for construction of port and allied works under exemption notifications - reverse charge mechanism for services received from providers located outside India - restriction on utilisation of cenvat credit prior to payment and Rule 3(4) of Cenvat Credit Rules - compensatory nature of interest and double recovery of interest - non-inclusion of free supplies by the principal in the gross value of composite works contract

Construction of Single Point Mooring (SPM) system as part of a port - classification of composite contracts as Works Contract Service - exemption for construction of port and allied works under exemption notifications - Classification of the appellant's SPM installation contract with RPTL and entitlement to exemption for construction of port - HELD THAT: - The Tribunal examined the nature and scope of the SPM works (design, engineering, supply of materials, subsea trenching, pipeline laying, installation of PLEM and buoy, commissioning) and held that SPM systems are part of, or an extension of, a port. The contract involved supply of materials by the appellant together with skilled labour and technical services, rendering it a composite contract classifiable as Works Contract Service (and prior to 01.06.2007 at least as CICS). The Tribunal noted governmental notifications recognizing SPMs as landing places within Sikka Port and took judicial notice of planning documents and the Gujarat notifications. On that basis the appellant was held entitled to the benefit of the exemption notifications applicable to construction of port/other port in relation to the contested period, and the Revenue's demand was dismissed. [Paras 33, 34, 35]

The SPM contract is a composite works contract and SPM is part of the port; the appellant is entitled to exemption for construction of port and the Revenue appeal is dismissed.

Reverse charge mechanism for services received from providers located outside India - exemption for construction of port and allied works under exemption notifications - Liability under reverse charge for services received from overseas sub-contractors in respect of the RPTL port work - HELD THAT: - Because the main activity (construction of the port/SPM) was held to be an exempt activity, the Tribunal held that services procured by the appellant from overseas sub-contractors for execution of those exempt works (site formation, excavation, ECIS or other related heads) are also covered by the exemption notifications; accordingly the proposed demands under RCM for such overseas supplies were not sustainble and the Revenue appeal in that respect was dismissed. [Paras 34, 35]

Services from overseas sub-contractors in respect of the exempt port/SPM work are exempt; the Revenue's demand under RCM is dismissed.

Restriction on utilisation of cenvat credit prior to payment and Rule 3(4) of Cenvat Credit Rules - compensatory nature of interest and double recovery of interest - Whether the appellant is liable to interest and penalty for alleged excess utilisation of cenvat credit where interest on delayed RCM payment was already deposited - HELD THAT: - The Tribunal accepted that the appellant had deposited the service tax due under RCM along with applicable interest under Section 75 for delayed payment. It held that the interest so paid is compensatory and regularises the position; to demand interest and penalty again for alleged premature utilisation of cenvat credit would amount to double recovery of interest for the same default. Relying on the principle that once interest/compensation is paid the credit position is regularised, the Tribunal set aside the second demand for tax and interest arising from alleged excess utilisation. [Paras 42]

Demand of interest and related tax/penalty for alleged excess utilisation of cenvat credit is set aside as impermissible double recovery.

Non-inclusion of free supplies by the principal in the gross value of composite works contract - Whether value of free supplies received from the customer (Cairn Energy) is includible in taxable value for service tax - HELD THAT: - Applying the Supreme Court authority relied upon by the appellant, the Tribunal held that in a composite works contract the free issue or supply of materials by the principal should not be clubbed into the gross value for determining service tax liability. On that basis the Tribunal allowed the appellant's challenge to the inclusion of free supplies in the taxable value and set aside the demand in respect thereof. [Paras 43]

Demand for service tax by including value of free supplies in taxable value is set aside in favour of the appellant.

Final Conclusion: The Tribunal dismissed the Revenue appeal and allowed the appellant's appeal: the SPM works were held to be part of the port and exempt as composite works contract for the contested period; related supplies from overseas sub contractors were held exempt; the demand for additional interest/penalty for alleged premature cenvat utilisation was set aside as double recovery; and the inclusion of free supplies in the taxable value was disallowed, with consequential relief to the appellant.

Statutory obligation - sovereign/public authority activities not taxable - compulsory levy - maintenance, management or repair service 94service tax liability - acceptance of High Court decision by the Board

Statutory obligation - sovereign/public authority activities not taxable - compulsory levy - maintenance, management or repair service 94service tax liability - Whether service charges collected by MIDC for providing and maintaining amenities (roads, water supply, street lighting, drainage etc.) are liable to service tax under the category of maintenance, management or repair service or are not taxable because they are statutory obligations discharged by a public authority. - HELD THAT: - The Tribunal applied the reasoning of the Hon 8ble Bombay High Court in Maharashtra Industrial Development Corporation, which examined the Board 7s circular dated 18 December 2006 and held that activities undertaken by sovereign or public authorities pursuant to statutory obligations are in the nature of a compulsory levy and do not constitute a taxable service. The Court analysed the MID Act, noting Section 14 which entrusts MIDC with establishing, managing and maintaining industrial estates and the defined meaning of "amenity" to include roads, water, street lighting and drainage. Precedent of the Apex Court was relied on to establish that MIDC functions as a wing of the State and discharges sovereign functions. As MIDC 7s provision and maintenance of amenities flow from its statutory functions, the service charges collected for such activities are in the nature of compulsory levy used to discharge statutory obligations and therefore do not attract service tax. The Board 7s acceptance of the High Court 7s decision (letter F No. 276/203/2017-CX.8A dated 15.02.2018) further reinforces that the issue is conclusively covered in favour of MIDC. Consequently the Tribunal found the impugned orders unsustainable.

Service tax demand set aside; appeals allowed.

Final Conclusion: The Tribunal allowed the appeals, holding that the service charges collected by MIDC for providing and maintaining statutory amenities are compulsory levies imposed in discharge of statutory obligations by a public authority and therefore not exigible to service tax; the impugned orders are set aside.

Reversal under Rule 6(3)(i) of the CENVAT Credit Rules, 2004 for exempted goods - non-excisable agricultural products - effect of clarificatory Circular dated 25.04.2016 - binding judicial precedent and stare decisis

Reversal under Rule 6(3)(i) of the CENVAT Credit Rules, 2004 for exempted goods - non-excisable agricultural products - effect of clarificatory Circular dated 25.04.2016 - binding judicial precedent and stare decisis - Applicability of Rule 6(3)(i) and the Departmental circular to Bagasse and Press Mud, which are non-excisable by-products, for the period February, 2016 to June, 2017. - HELD THAT: - The Tribunal applied existing judicial precedent, including the decision of the Hon'ble Allahabad High Court (which struck down the amended Rule 6 and quashed the Revenue's Circular dated 25.04.2016) and earlier Supreme Court authority relied upon in those decisions, to conclude that Bagasse and Press Mud are non-excisable agricultural products. Consequently, the obligation to reverse credit at the rate prescribed by Rule 6(3)(i) does not apply to such non-excisable by-products even for the post-amendment period relied upon by the Department. The Tribunal noted consistency in the line of authorities (including this Bench's decisions) that the insertions and the clarificatory circular do not have the effect of bringing Bagasse within the ambit of Rule 6(3)(i), and followed those precedents in allowing the appeal. [Paras 5, 6, 7]

The demand under Rule 6(3)(i) in respect of Bagasse and Press Mud for the period February, 2016 to June, 2017 is not sustainable; the appellate order is set aside and the appeal is allowed.

Final Conclusion: Appeal allowed; the order-in-appeal confirming demand under Rule 6(3)(i) in respect of Bagasse and Press Mud for February, 2016 to June, 2017 is set aside following controlling judicial precedents that treat these by-products as non-excisable and outside the scope of the reversal obligation under the amended rule and circular.

Extended period of limitation under Section 11A of the Central Excise Act - de-bonding of 100% EOU and duty liability on de-bonding - "No Dues Certificate" issued by jurisdictional Central Excise authority - entitlement to concessional DTA clearance under Notification No.23/2003-CE read with Para 6.8 of FTP - requirement to inform the Development Commissioner / Board before confirming duty demands on EOUs (CBEC Circular) - suppression, mis-statement or fraud as precondition for invoking extended limitation

Extended period of limitation under Section 11A of the Central Excise Act - "No Dues Certificate" issued by jurisdictional Central Excise authority - requirement to inform the Development Commissioner / Board before confirming duty demands on EOUs (CBEC Circular) - suppression, mis-statement or fraud as precondition for invoking extended limitation - Whether the extended period of limitation was invocable for demanding duty on de-bonding when a "No Dues Certificate" had been issued and the Development Commissioner had granted final de-bonding. - HELD THAT: - The Tribunal held that the jurisdictional officers had examined and verified the appellant's declarations and issued a consolidated "No Dues Certificate", and on that basis the Development Commissioner issued the final de-bonding order. Revenue did not demonstrate that the "No Dues Certificate" was obtained by suppression, mis-statement, fraud or connivance such as would justify invocation of the extended limitation. The Court relied on the Board's Circular directing that customs/ excise authorities should inform the Development Commissioner and obtain his determination before confirming duty demands on EOUs, and on precedents where demands raised after de-bonding without referral to the Development Commissioner were held time barred. In these circumstances the ingredients for invoking the extended period under Section 11A were not present; accordingly the demand is time barred and cannot be sustained. As the decision on limitation disposes of the matter, the Tribunal did not decide the departmental contentions on merits. [Paras 4]

Extended period of limitation under Section 11A is not invocable; the demand raised after de-bonding (despite issuance of "No Dues Certificate" and Final Debonding Order) is time barred and cannot be sustained.

Final Conclusion: The appeal is allowed: the Department's demand based on the show cause notice is time barred because the extended period under Section 11A is not attracted in view of the verified "No Dues Certificate" and Final Debonding Order and failure of the revenue to show suppression or to refer the matter to the Development Commissioner; merits were not adjudicated.

Interpretation of Rule 6(4) of the Cenvat Credit Rules, 2004 - admissibility of Cenvat credit on capital goods subsequently used for dutiable production - retrospective application of amendment to Rule 6(4) (Notification No. 13/2016-CE(NT) dated 01.03.2016) - extended period of limitation under proviso to Section 11A of the Central Excise Act, 1944 - penalty and confiscation for wrongful availment of Cenvat credit - relevance of intention or capability to manufacture dutiable goods at time of receipt

Interpretation of Rule 6(4) of the Cenvat Credit Rules, 2004 - admissibility of Cenvat credit on capital goods subsequently used for dutiable production - retrospective application of amendment to Rule 6(4) (Notification No. 13/2016-CE(NT) dated 01.03.2016) - Admissibility of Cenvat credit on capital goods and related input services received when finished goods were conditionally exempt at receipt but subsequently used for manufacture and clearance on payment of duty within the period prescribed by the amended rule. - HELD THAT: - The Tribunal held that Rule 6(4) is prohibitory only where capital goods are used exclusively in manufacture of exempted goods at the relevant time. The substituted Rule 6(4) (Notification No.13/2016) limits denial of credit to capital goods used exclusively for exempted goods for two years from commencement of commercial production (or from installation if received after commencement). The facts as recorded by the Commissioner admitted use of the disputed capital goods for manufacture and clearance of dutiable goods within two years of commercial operation. Applying the amended rule retrospectively as supported by precedents relied upon in the judgment, the Tribunal concluded that credit could not be denied where capital goods were utilised for dutiable clearances within the two year window. In view of this construction and the admitted facts of subsequent use for dutiable production within the prescribed period, the impugned denial of Cenvat credit was not sustainable.

Cenvat credit on the disputed capital goods and input services is admissible; the demand based on denial of such credit is set aside.

Extended period of limitation under proviso to Section 11A of the Central Excise Act, 1944 - penalty and confiscation for wrongful availment of Cenvat credit - requirement of suppression or wilful misstatement to invoke extended period - Whether invocation of extended limitation period, imposition of penalties and order of confiscation (with fine in lieu) by the Commissioner were sustainable. - HELD THAT: - The Tribunal examined the Commissioner's reliance on alleged deliberate mis declaration, misclassification and suppression to invoke the extended period and to sustain penalties and confiscation. Having found that the primary demand for credit could not be sustained on merits (because of retrospective applicability of the amended Rule 6(4) and admitted use of capital goods for dutiable production within the prescribed period), the consequential measures of extended period, penalty and confiscation could not be sustained. The Tribunal also reviewed authorities on the standard for invoking extended limitation (suppression or wilful misstatement) and noted that, on the facts as decided, the department's case did not survive when the substantive demand itself was disallowed.

Invocation of extended limitation, the penalty and confiscation orders are not sustainable and are set aside.

Final Conclusion: Appeal allowed. The Tribunal set aside the demand for wrongful Cenvat credit, interest, penalties and confiscation (with consequential orders) and allowed the appellant's challenge in light of the interpretation and retrospective application of the amended Rule 6(4) and the admitted subsequent use of the capital goods for dutiable clearances within the prescribed period.

Fifth proviso to Section 11(3) of the KVAT Act - Explanation VII to Section 2(lii) of the KVAT Act - definition of "turnover" in the Act - input tax credit - deemed turnover - assessment under the Act - interpretation of a proviso in context

Fifth proviso to Section 11(3) of the KVAT Act - Explanation VII to Section 2(lii) of the KVAT Act - definition of "turnover" in the Act - input tax credit - deemed turnover - assessment under the Act - Whether the operation of Explanation VII to Section 2(lii) to treat post sale credit notes/discounts as turnover is precluded by the latter limb of the Fifth proviso to Section 11(3) in cases where the supplier has paid tax on the invoice and does not claim refund or adjustment of input tax. - HELD THAT: - The Full Bench held that the definition of 'turnover' in Section 2(lii) (including Explanation VII) applies only 'unless the context otherwise requires'. The amended Fifth proviso to Section 11(3) (effective from 01.04.2005) contains a second limb which excludes from reckoning for assessment those credit notes that do not affect the input tax credit already availed of and amounts received as reimbursement of expenses. A proviso must be read in its context and, where the proviso carves out exceptions, the exception operates to take certain cases out of the general enacting part. Applying ordinary principles of construction, the Court concluded that where (i) tax was paid by the manufacturer/supplier on the invoice price and (ii) the supplier does not claim refund or adjustment of input tax, the credit notes or discounts received subsequently by the dealer (which do not affect input tax credit) cannot be treated as taxable turnover by invoking Explanation VII. Reading Explanation VII to extend turnover for assessment in such cases would contradict the clear legislative exception embodied in the latter limb of the Fifth proviso and would undermine the scheme of input tax credit under Section 11(3). Accordingly, the Revenue's approach to include such credit notes in dealers' turnover for assessment is impermissible in those circumstances. [Paras 7, 8, 9, 10]

Credit notes/discounts that do not affect the input tax credit already availed of and where the supplier has paid tax on the invoice and does not seek refund/adjustment are not to be reckoned as taxable turnover under Explanation VII for the purpose of assessment, by virtue of the second limb of the Fifth proviso to Section 11(3).

Final Conclusion: The Full Bench answered the framed question in favour of the dealers: Explanation VII to Section 2(lii) cannot be invoked to include post sale credit notes/discounts in taxable turnover for assessment where those credit notes do not affect input tax already availed and the supplier has paid tax on the invoice without claiming adjustment; matters are remitted to the Single Bench for further proceedings consistent with this view.

Quashing of summoning order under the inherent jurisdiction of the High Court (Section 482 Cr.P.C.) - Summoning and discharge in prosecution under the Negotiable Instruments Act for dishonour of cheque - Liability of the signatory of a cheque under the Negotiable Instruments Act - Defence of resignation/cessation of directorship as a matter to be proved at trial - Defence of lost/stolen cheques and requirement of trial for verification - Scope of interference by High Court - perversity/no material to overturn trial court order

Scope of interference by High Court - perversity/no material to overturn trial court order - Quashing of summoning order under the inherent jurisdiction of the High Court (Section 482 Cr.P.C.) - Whether the High Court should interfere with the trial court's order refusing discharge of the accused. - HELD THAT: - The Court confined its review to whether the trial court's conclusions were perverse, misplaced or based on no material because a coordinate bench had earlier permitted these grounds to be urged before the trial court. The impugned order was found to be a well-reasoned one and the authorities relied upon by the petitioner were considered by the trial court. There is no error in the trial court's factual recording or application of law that would warrant upsetting its refusal to discharge the petitioner. Consequently, the High Court declined to exercise its inherent jurisdiction to quash the order. [Paras 6, 7, 10]

The petition under Section 482 Cr.P.C. seeking quashing of the order refusing discharge is dismissed for want of perversity or absence of material to interfere.

Liability of the signatory of a cheque under the Negotiable Instruments Act - Summoning and discharge in prosecution under the Negotiable Instruments Act for dishonour of cheque - Whether absence of specific averments against the petitioner in the complaint warranted discharge. - HELD THAT: - The trial court referred to the complaint (para 4) which averred that the post-dated cheque issued towards consultancy fees was signed by the accused (the petitioner). The trial court applied the law that the signatory of a cheque can be made responsible under the statute. The High Court found no error in the trial court's recording of the factual position or in its application of the legal principle concerning liability of the signatory. [Paras 7]

The trial court correctly declined discharge on the ground that the complaint contained averments connecting the petitioner as the signatory; no discharge on this basis.

Defence of resignation/cessation of directorship as a matter to be proved at trial - Defence of lost/stolen cheques and requirement of trial for verification - Whether the petitioner's contentions about prior resignation/cessation of directorship and that the cheques were lost/stolen were grounds for discharge without trial. - HELD THAT: - The trial court held, and the High Court agreed, that assertions regarding resignation not having effect on records and the claim of lost/stolen cheques are defenses which require evidence and can only be properly adjudicated in the course of trial. The petitioner may adduce evidence (including cross-examination of bank officials) to establish that cheques were reported lost and that the resignation was effective in company/ROC records. These factual contentions were therefore left for trial; they were not finally determined in favour of the petitioner by the High Court. [Paras 8, 9]

Contentions about resignation/cessation and lost/stolen cheques are factual defenses remitted to trial for proof; no discharge on these grounds at the pre-trial stage.

Final Conclusion: The High Court dismissed the petition under Section 482 Cr.P.C., holding that the trial court's refusal to discharge the petitioner was neither perverse nor without material; issues as to resignation/cessation of directorship and lost/stolen cheques remain defenses to be adjudicated at trial.

Inherent jurisdiction to extend time for compliance with appellate settlement - Setting aside sentence on terms of amicable settlement - Enforcement of compromise in criminal proceedings arising from dishonour of negotiable instrument - Compensation for delay in compliance with judicially recorded settlement

Inherent jurisdiction to extend time for compliance with appellate settlement - Setting aside sentence on terms of amicable settlement - Petition for extension of time to deposit the balance amount as per the settlement recorded in the appellate order was allowed. - HELD THAT: - The appellant's appeal had been allowed by the Appellate Court on the basis of an amicable settlement, on the condition that the balance amount specified in the settlement be paid by a stipulated date, failing which the appeal would be deemed dismissed and sentence would revive. The petitioner failed to deposit the balance by the stipulated date due to financial difficulty and illness. The High Court, exercising its inherent jurisdiction under the Code of Criminal Procedure, found that the non-deposit was not intentional and that extending time would serve the interests of justice. Consequently, the Court extended the time for deposit to a specific later date and directed release of the deposited amount to the respondent upon receipt of bank details, thereby giving effect to the appellate settlement while preserving the Appellate Court's order conditionality. [Paras 7, 8]

Extension of time to deposit the balance amount granted and deposited amount ordered to be released to the respondent.

Compensation for delay in compliance with judicially recorded settlement - Claim for compensation by the respondent for the delay in deposit was rejected. - HELD THAT: - The respondent sought compensation for the delay caused in payment. The Court observed that the delay was not substantial and that the petitioner had a plausible explanation (financial crisis and medical treatment). In the peculiar facts of the case the Court declined to direct any additional payment as compensation, exercising discretion in the interest of justice. [Paras 7]

No compensation ordered for the delay in deposit.

Final Conclusion: The petition under Section 482 CrPC was allowed by extending the time to deposit the balance amount as per the appellate settlement; the Court declined to order additional compensation for the delay and directed that the already deposited amount be released to the respondent on submission of bank details.