TaxTMI Updates e-Newsletter
Jun 03,2022

Order under Section 129(3) of the U.P. GST Act, 2017 - seizure and provisional release mechanism under Section 67 of the Act - effect of Supreme Court order under Article 142 of the Constitution - rigidity of statutory limitation for first appeal and condonation - principle that no party to litigation shall be prejudiced by an act of Court - remand to appellate authority for fresh adjudication on merits - direction to issue fresh notices and compute limitation from service

Order under Section 129(3) of the U.P. GST Act, 2017 - rigidity of statutory limitation for first appeal and condonation - principle that no party to litigation shall be prejudiced by an act of Court - Appellate order dated 22.11.2021 which dismissed the first appeal as time-barred was set aside and the appeal remitted for fresh consideration on merits without objection to limitation. - HELD THAT: - The Court found that assessees who had filed writ petitions before the High Court lost the right of appeal in an ex parte manner when the Supreme Court, exercising Article 142, set aside earlier High Court interim orders disclosed in the State's compliance affidavit. The High Court held that it could not allow parties to be prejudiced by that circumstance and observed that the State would not raise limitation objections in view of the unique facts. Accordingly the appellate order dismissing the appeal as time-barred was set aside and the matter remitted to the appellate authority to decide the appeal afresh on merits without raising limitation objections. [Paras 18, 19, 21, 22]

Appellate order dated 22.11.2021 set aside; appeal to be decided afresh on merits by appellate authority without objection as to limitation.

Effect of Supreme Court order under Article 142 of the Constitution - remand to appellate authority for fresh adjudication on merits - Whether the appellate authority should be directed to proceed afresh and complete adjudication within a specified time-frame. - HELD THAT: - In view of the consequences of the Supreme Court's order and to prevent prejudice, the Court directed the appellate authority to decide the remitted appeal on merits within three months. The remand requires fresh adjudication without limitation objection so that the parties obtain substantive adjudication rather than remain remediless due to procedural consequence of orders passed by constitutional courts. [Paras 22]

Matter remitted to appellate authority to decide the appeal on merits within three months.

Direction to issue fresh notices and compute limitation from service - rigidity of statutory limitation for first appeal and condonation - Directions to the revenue authorities to notify other affected assessees and to permit filing of appeals without limitation objection, with limitation to be computed from service of the communication. - HELD THAT: - The Court directed jurisdictional revenue authorities to issue fresh notices to all remaining assessees affected by the Supreme Court order and to communicate a gist of this order so that each assessee may file an appeal within ninety days of receipt of that communication. The Court further directed that any appeal filed may disclose the date of service of the notice and that limitation be computed accordingly; appellate authorities are to be adequately informed so that they do not raise limitation objections in pending or future appeals by affected assessees. [Paras 23, 24, 25]

Revenue authorities to issue fresh notices and communicate this order; affected assessees may file appeals within ninety days of service and limitation to be computed from that date; appellate authorities to refrain from raising limitation objections.

Final Conclusion: Writ petition allowed. The appellate order dated 22.11.2021 is set aside and the appeal remitted for fresh adjudication on merits without limitation objection within three months; revenue authorities to issue fresh notices to all affected assessees, permit filing of appeals within ninety days of service of communication and ensure limitation is computed from that service.

Extension of time for completion of investigation - cooperation with investigation and attendance of accused/representative - pre-show-cause-notice post-search stage of inquiry - restriction of investigatory period to protect civil rights - time-bar under Section 74(10) of the GST Act

Extension of time for completion of investigation - restriction of investigatory period to protect civil rights - Grant of further time to the State to complete the inquiry/investigation beyond the eight weeks earlier fixed by the Court. - HELD THAT: - The Court declined to re-enter the merits of the underlying disputes but addressed solely the limited procedural question of the period required by the State to complete the investigation. Noting that the earlier restraint on time was imposed to protect civil rights while investigation remained pending, and that the matter is at a post-search and pre-show-cause-notice stage, the Court found that a further limited extension was appropriate. The State had undertaken that it would require three months; the Court granted a slightly longer period to avoid repeated applications and permitted four months for completion of the investigation. The Court emphasised that this direction does not curtail any statutory limitation applicable to adjudication where it may become relevant later. [Paras 16, 17]

Four months' period granted to the State to complete the investigation.

Pre-show-cause-notice post-search stage of inquiry - time-bar under Section 74(10) of the GST Act - Whether the Court should interpret or decide the applicability of the statutory time-bar under Section 74(10) of the GST Act at this stage. - HELD THAT: - The Court expressly refrained from interpreting Section 74(10) or entering into the merits of alleged breaches spanning from July 2017 to 2021 since the present proceedings were at a post-search but pre-show-cause-notice stage. It observed that the question of statutory limitation for adjudication might arise later and that no attempt was made to curtail any statutory period; accordingly, interpretation of the provision was unnecessary for the limited procedural determination before the Court. [Paras 16]

Court declined to interpret Section 74(10) and held that such interpretation was unnecessary at the present pre-SCN stage.

Cooperation with investigation and attendance of accused/representative - Whether the opponent's alleged non-cooperation and non-attendance justified further directions or adverse action by the Court. - HELD THAT: - The Court recorded that earlier directions had required cooperation and personal attendance of the director before the officer. It noted the opponent had sought interim relief in the Supreme Court and had been under protective orders for a period, and was subsequently arrested; the State informed the Court that the earlier prayer for compulsion was not being pressed as cooperation had effectively been secured. Given these circumstances and the changed position, the Court declined to pursue further coercive directions on that ground. [Paras 10, 15]

Court did not pursue further directions regarding non-cooperation, observing that the operative concern was now limited to the time for completing investigation.

Final Conclusion: The application is disposed of by granting the State four months to complete the investigation; the Court declined to adjudicate merits or interpret the statutory provision at this pre-SCN stage and recorded that coercive directions concerning alleged non-cooperation were not pressed.

Quashing of FIR under Section 482 Cr.P.C. - interference at investigation stage - cognizable offence and police investigation - no enquiry into genuineness of allegations at nascent stage - exceptional circumstances for quashing - absence and bona fides of accused (absconding)

Quashing of FIR under Section 482 Cr.P.C. - interference at investigation stage - no enquiry into genuineness of allegations at nascent stage - exceptional circumstances for quashing - Whether the FIR alleging registration obtained on the basis of forged documents and misuse of GST portal should be quashed at the investigation stage. - HELD THAT: - Applying the principles laid down in M/s Neeharika Infrastructure Pvt. Ltd. (supra), the Court held that courts should not thwart or stay investigation into cognizable offences and must not, at the nascent stage, embark upon enquiries into the reliability or genuineness of allegations in the FIR. Quashing is an exceptional remedy to be exercised sparingly and only where no cognizable offence is disclosed or non-interference would otherwise result in a miscarriage of justice. The petitioner's reliance on documents filed with the petition could not be used to substitute the investigatory process, and it was premature for the High Court to conclude that no case was made out when the investigation was ongoing. Consequently, the petition for quashing could not be entertained on the basis of the material placed before the Court at this stage. [Paras 7, 8]

Quashing petition dismissed insofar as it sought to quash the FIR on merits at the investigation stage.

Absence and bona fides of accused (absconding) - quashing of FIR under Section 482 Cr.P.C. - Whether the petitioner's failure to join investigation and his status after rejection of anticipatory bail affects entitlement to quash the FIR. - HELD THAT: - Relying on the principle in Virender Prasad Singh (supra), the Court observed that an accused who remains absent after anticipatory bail was rejected and who fails to avail alternative remedies exhibits lack of bona fides; such conduct disentitles the accused to equitable relief in the form of quashing. The petitioner's admitted non-appearance and the fact that investigation could not progress due to his absence weighed against entertaining the quashing petition, and the Court was required to be on guard against attempts to stall criminal proceedings. [Paras 5, 9]

Petitioner's absence and lack of bona fides militated against granting the quashing relief sought.

Final Conclusion: The petition under Section 482 Cr.P.C. seeking quashing of the FIR is dismissed; interference at the investigation stage is unwarranted in the absence of exceptional circumstances and where the petitioner has not joined investigation and lacks bona fides.

Faceless assessment - validity of notice under Section 148 and interplay with Section 149 - service of notice and assessee's duty to intimate change of address - territorial jurisdiction of Assessing Officer - status and authority of National Faceless Assessment Centre under Section 144B - personal hearing in faceless proceedings - availability of alternate statutory remedy and exercise of Article 226 jurisdiction

Validity of notice under Section 148 and interplay with Section 149 - The notice dated 27.03.2021 under Section 148 for A.Y. 2016-17 was validly issued within the period of limitation and vested jurisdiction in the Assessing Officer. - HELD THAT: - Relying on the statutory distinction between issuance and service of a reassessment notice, the Court applied the settled principle that issuance within the limitation period vests jurisdiction even though service is a condition precedent to making the assessment order. The impugned notice was digitally signed and uploaded on 27.03.2021; therefore the contention that the notice was time barred is rejected. The Court also observed that the petitioner had not filed returns under Section 139(1) or complied with the statutory filing obligations, giving rise to a deemed escapement under the Act, which further undermines the petitioner's challenge to the reopening. [Paras 54, 56, 58]

Notice under Section 148 dated 27.03.2021 is not beyond limitation and is validly issued.

Service of notice and assessee's duty to intimate change of address - service by uploading on e filing portal - Notice uploaded to the e filing portal and sent to the address reflected in the petitioner's PAN/portal constituted communication in accordance with the statutory scheme and the petitioner failed to establish non service or any mandatory change of address having been intimated. - HELD THAT: - The Court held that the address used for communication was one chosen by the petitioner on his portal and is reflected in PAN jurisdiction records. Under the statutory scheme the assessee bears the responsibility to intimate any change of address; no documentary proof of such intimation was placed before the Court. Disputed factual contentions about non service and change of address are matters for the authority below and cannot be decided in writ jurisdiction. [Paras 59, 60, 61]

Challenge to service and address is rejected; communication via portal and PAN address is effective and factual disputes to be ventilated before the assessing authority.

Territorial jurisdiction of Assessing Officer - The Assessing Officer who issued the notice had jurisdiction to do so and the petitioner's plea of lack of territorial jurisdiction is unfounded on the record before the Court. - HELD THAT: - The Court found that the petitioner had been dealing with the same Assessing Officer / circle for prior filings and the PAN records indicate Delhi jurisdiction. Accordingly, the contention that the AO or Principal CCIT (Delhi) lacked jurisdiction was rejected as lacking merit and presenting disputed factual questions inappropriate for adjudication in writ jurisdiction. [Paras 2, 29, 61]

Territorial jurisdiction objection is rejected.

Status and authority of National Faceless Assessment Centre under Section 144B - faceless assessment - The National Faceless Assessment Centre (NAFAC) is a valid mechanism established under Section 144B and related notifications; actions and communications through NAFAC do not render assessments void. - HELD THAT: - The Court explained that Section 144B and the faceless assessment scheme provide the procedure for faceless assessments and do not alter the substantive principles of assessment. Notifications and the statutory scheme empower the Board to set up units and enable Income tax Authorities to perform assessment functions within the faceless framework. The Court rejected the submission that NAFAC lacks authority and held that disposal of objections and framing of assessment is by the Assessing Officer within the faceless procedure. [Paras 40, 43, 44, 48, 49]

NAFAC and the faceless assessment procedure under Section 144B are constitutionally and statutorily valid for purposes of the proceedings impugned.

Personal hearing in faceless proceedings - The petitioner was offered an opportunity for personal hearing by video conferencing and the assessment proceeded after the petitioner did not avail the offered hearing; there is no established breach of the right to personal hearing warranting interference. - HELD THAT: - The Court noted the assessment record states that personal hearing through VC was granted and that the petitioner neither accepted VC nor availed the time extended for filing a reply. As the petitioner did not attend or respond within the time given, the Court found no ground to set aside the assessment on account of denial of hearing. Questions as to adequacy of notice for hearing and compliance with procedural directions are matters to be addressed before the statutory forums. [Paras 20, 30, 34]

No violation of personal hearing obligation is established; assessment cannot be set aside on this ground.

Availability of alternate statutory remedy and exercise of Article 226 jurisdiction - The High Court exercised discretion to refuse extraordinary intervention in respect of matters amenable to statutory remedy; writ relief is declined and petitioner directed to pursue statutory remedies. - HELD THAT: - Applying settled principles on exhaustion of alternate remedies, the Court observed that the Income Tax Act provides statutory avenues of appeal and objection and that writ jurisdiction should not circumvent those remedies except in cases of jurisdictional error, denial of natural justice, or challenge to vires. The Court found no exceptional circumstance warranting interference under Article 226 and directed the petitioner to raise disputed factual and substantive contentions before the authorities and appellate fora. [Paras 50, 51, 52, 53]

Writ petition is not entertained as a substitute for statutory remedies; petitioner must pursue the remedies under the Act.

Assessment of disputed amount as income versus advance - The question whether the sum accepted by the petitioner amounts to taxable income or is merely an advance/liability could not be decided in writ jurisdiction and is left to be adjudicated by the assessing authorities. - HELD THAT: - The Court declined to adjudicate the substantive taxability issue in exercise of writ jurisdiction, noting that the matter involves disputed questions of fact and law appropriate for determination by the income tax authorities and appellate mechanisms. The petitioner may raise these contentions before the assessment and appellate forums; the Court did not reach the merits of taxability. [Paras 7, 63, 64]

Substantive issue of taxability of the amount is not decided and should be considered by the assessing authority and appellate fora.

Final Conclusion: The writ petition is dismissed. The Court upholds issuance and validity of the notice dated 27.03.2021, finds NAFAC and faceless assessment procedure statutorily valid, rejects the territorial jurisdiction and service objections, and records that no denial of personal hearing has been established; substantive disputes as to taxability and other factual matters are to be agitated before the statutory authorities and appellate forums.

Principles of natural justice - service of notice under Section 148A(b) and Section 148 - consideration of request for extension of time under Section 148A - validity of communications via official email and ITBA e-portal - quashing and remand for fresh adjudication

Principles of natural justice - service of notice under Section 148A(b) and Section 148 - ITBA e-portal closure - consideration of request for extension of time under Section 148A - Impugned order under Section 148A(d) and notice under Section 148 were passed in breach of principles of natural justice by closing the e-portal before the expiry of the reply period and without considering the petitioner's emailed request for extension. - HELD THAT: - The Court found that even on the Revenue's asserted service date (21st March 2022) the eight-day period would expire on 29th March 2022, and therefore the Assessing Officer could not lawfully have closed the ITBA e-portal on 26th March 2022. The Assessing Officer's own order referenced service by speed post received on 24th March 2022, reinforcing that the portal closure predated the expiry of the reply period. The petitioner, a non-resident whose Delhi address was cared for by domestic staff, sought extension by email on 27th March 2022; the Court held that communications sent to the Assessing Officer's official email are a valid mode of communication and cannot be disregarded as not qualifying as a request. Given the likely need for reasonable time to collate records for a non-resident assessee, the Assessing Officer ought to have considered the request for extension instead of passing the order in haste. The Court relied upon precedent of this Court emphasizing the assessee's right to adequate time to submit a reply and held that the impugned action amounted to gross violation of natural justice. [Paras 10, 11, 12, 13, 14]

Impugned order dated 31.03.2022 under Section 148A(d) and notice dated 31.03.2022 under Section 148 quashed for violation of natural justice; petitioner entitled to file reply.

Quashing and remand for fresh adjudication - direction to consider petitioner's reply and pass fresh reasoned order - facility to upload response on ITBA e-portal - Relief and procedural directions following quashing of the impugned order and notice. - HELD THAT: - The Court remanded the matter to the Assessing Officer for fresh determination, expressly leaving the merits open. The petitioner was granted a final two-week period to file his response to the Section 148A(b) notice; the Assessing Officer was directed to re-open the e-portal for two weeks to enable upload of the reply, to consider the petitioner's submission and to pass a fresh reasoned order under Section 148A(d) within eight weeks thereafter. The Court also permitted the Assessing Officer to issue a supplementary notice if clarification or specific response to information held by Revenue was required, and made clear that no further extension would be granted. [Paras 15]

Proceedings remanded; petitioner given two weeks to file reply on the e-portal, Assessing Officer to pass fresh reasoned order within eight weeks after considering the reply; merits left open.

Final Conclusion: Impugned order under Section 148A(d) and notice under Section 148 for AY 2015-16 quashed for breach of natural justice caused by premature closure of the ITBA e-portal and failure to consider the petitioner's emailed request for extension; matter remanded for fresh consideration in accordance with directions and timetable set out by the Court, with merits left open.

Right to adequate time to respond to notice under Section 148A(b) - duty of Assessing Officer to consider reply under Section 148A(c) - exclusion of period granted under Section 148A(b) in computation of limitation under the third proviso to Section 149 - remand for fresh consideration where statutory mandate not complied with

Duty of Assessing Officer to consider reply under Section 148A(c) - right to adequate time to respond to notice under Section 148A(b) - Whether the Assessing Officer violated the mandatory duty to consider the assessee's reply before passing an order under Section 148A(d) by closing the online portal and not taking on record the email reply dated 27th March, 2022. - HELD THAT: - The Court held that Section 148A(b) permits the Assessing Officer to provide up to thirty days for the assessee to respond and that such period (and any extension on application) is excluded when computing limitation under the third proviso to Section 149. The petitioner filed an adjournment request immediately and submitted its reply by email on 27th March, 2022 after the online portal was closed. The impugned order under Section 148A(d) was passed after receipt of that email. Because Section 148A(c) uses the imperative 'shall' to require the Assessing Officer to consider the assessee's reply before making an order under Section 148A(d), the Assessing Officer was required to take the emailed submission on record and consider it. Failure to do so amounted to non-compliance with the statutory mandate and vitiated the order. [Paras 4, 6, 7]

Finds that the Assessing Officer failed to comply with the mandatory duty under Section 148A(c) by not considering the petitioner's reply dated 27th March, 2022 and that the petitioner had a right to adequate time under Section 148A(b).

Remand for fresh consideration where statutory mandate not complied with - Remedial consequence of the Assessing Officer's failure to consider the reply and whether the impugned order and subsequent notice should be set aside. - HELD THAT: - Because the Assessing Officer proceeded to pass the order under Section 148A(d) and issue a notice under Section 148 without considering the reply that was on record, the Court set aside the impugned order and the notice. The matter was remitted to the Assessing Officer to take the submission dated 27th March, 2022 on record and to pass a reasoned order in accordance with law within eight weeks. The Court expressly declined to express any view on the merits of the underlying controversy and left the rights and contentions of the parties open. [Paras 8]

Impugned order dated 30th March, 2022 and notice dated 31st March, 2022 set aside; matter remitted for consideration of the on record submission and for issuance of a reasoned order within eight weeks; merits left open.

Final Conclusion: The writ petition is allowed to the extent that the order under Section 148A(d) and the notice under Section 148 are set aside for non compliance with the mandatory duty to consider the assessee's reply; the Assessing Officer is directed to take the emailed submission on record and pass a reasoned order in accordance with law within eight weeks, with merits reserved.

Quashing of criminal complaints - prematurity of criminal prosecution pending departmental adjudication - effect of appellate/tribunal order on parallel criminal prosecution - technical upholding of assessment (limitation) versus adjudication on merits - independence of adjudication and criminal proceedings - prima facie case required for trial on complaint - presumption under Section 278E of the Income Tax Act, 1961

Prematurity of criminal prosecution pending departmental adjudication - quashing of criminal complaints - Whether complaints are premature and liable to be quashed because departmental assessment/reassessment proceedings had not reached finality. - HELD THAT: - The Court examined whether pendency of departmental adjudication or reassessment proceedings precludes institution or continuation of criminal complaints. Reliance was placed on precedents which establish that there is no bar to launching criminal prosecution merely because adjudication proceedings are pending. The Court noted that prosecutions under the Income Tax Act can be initiated simultaneously with adjudication proceedings and that a mere expectation of success in departmental proceedings does not prevent the institution of criminal proceedings. Applying these principles to the uncontroverted averments in the complaints (non filing of returns, non payment of advance tax and assessed tax, and alleged suppression), the Court found that the complaints were not premature and that the question whether departmental proceedings ultimately succeed is not a ground to quash the complaints at this stage. [Paras 13, 15, 16, 17, 21]

Petitions seeking quashment on the ground of prematurity are rejected and the complaints are not quashed on that ground.

Effect of appellate/tribunal order on parallel criminal prosecution - technical upholding of assessment (limitation) versus adjudication on merits - independence of adjudication and criminal proceedings - Whether the Income Tax Appellate Tribunal's order setting aside assessments as time barred (limitation) operates as a bar to the criminal prosecutions and supports quashing the complaints. - HELD THAT: - The Court considered the ITAT common order which set aside assessments for assessment years 2002 03 to 2006 07 on the ground of limitation. The Court observed that the ITAT disposed those appeals solely on the technical ground of limitation and did not decide the merits of the substantive allegations (non filing, non payment, suppression). Drawing on settled authority, the Court reiterated that where an adjudicatory authority's exoneration is on technical or procedural grounds and not on merits, criminal prosecution may continue. The Court therefore held that the ITAT order being limited to limitation issues does not provide a basis to quash the criminal complaints which raise distinct, substantive allegations requiring trial. [Paras 18, 19]

The ITAT order set aside on limitation does not bar the criminal prosecutions, and quashment cannot be granted on that ground.

Prima facie case required for trial on complaint - presumption under Section 278E of the Income Tax Act, 1961 - quashing of criminal complaints - Whether, on the uncontroverted averments in the complaints, a prima facie case is made out to proceed to trial and whether the complaints ought to be quashed. - HELD THAT: - In determining whether to quash criminal proceedings, the Court applied the standard that uncontroverted averments in the complaint must be examined to see if an offence is disclosed. Having reviewed the allegations (failure to file returns within statutory time, failure to pay advance tax and assessed tax, concealment of income, and related statutory notices and proceedings), the Court concluded that the complainant had made out a prima facie case warranting trial. The Court further noted Section 278E of the Income Tax Act which permits the court to presume culpable mental state unless disproved by the accused, reinforcing that the matter should proceed to trial rather than be quashed at the threshold. [Paras 20, 21, 22]

On the facts pleaded, a prima facie case exists and the complaints are not liable to be quashed; the petitioner must face trial.

Final Conclusion: Criminal Original Petitions for quashing the complaints are dismissed; the criminal complaints shall proceed to trial and the connected miscellaneous petitions are closed.

Condonation of delay under Section 5 of the Limitation Act, 1963 - bonafide mistake - voluntary revised return - penalty under Section 271(1)(c) - Explanation 1(B) to Section 271(1) - disallowance under Section 94(7) (dividend stripping) - no substantial question of law

Condonation of delay under Section 5 of the Limitation Act, 1963 - Whether the delay of six days in filing the appeal should be condoned. - HELD THAT: - The application under Section 5 of the Limitation Act, 1963 was considered on the grounds set out in the condonation petition. For the reasons recorded in the application, the Court found it appropriate to exercise its discretion in favour of the applicant and condoned the delay of six days in filing the appeal. The application for condonation was disposed of accordingly.

Delay of six days in filing the appeal condoned; condonation application disposed of.

Voluntary revised return - bonafide mistake - penalty under Section 271(1)(c) - Explanation 1(B) to Section 271(1) - disallowance under Section 94(7) (dividend stripping) - no substantial question of law - Whether the Tribunal was correct in deleting the penalty imposed under Section 271(1)(c) for furnishing inaccurate particulars of income where the assessee filed a voluntary revised return disclosing the disallowance under Section 94(7). - HELD THAT: - The Tribunal examined the records and found that the assessee, on realizing an inadvertent clerical error in posting dividend entries (caused by voluminous transactions and a wrong date entry by book-keeping staff), promptly filed a revised computation and a voluntary revised return disclosing the disallowance under Section 94(7). The Tribunal accepted that the error was bonafide, that the revised return was filed at the first opportunity, and that the assessee paid the additional tax following assessment. The High Court reviewed the Tribunal's reasoning, noting that the finding of a bonafide mistake was based on documentary records and a plausible explanation of how the error occurred. The Court found the Tribunal's conclusion reasonable and not perverse, and observed that no substantial question of law arose from the facts as determined by the Tribunal. The Revenue's contention that the disclosure was not voluntary because it followed a notice was considered but rejected in light of the promptness of correction and the nature of the error. The Court therefore upheld the Tribunal's deletion of the penalty. [Paras 10, 13, 14, 15]

Tribunal's order deleting the penalty under Section 271(1)(c) upheld; appeal dismissed and no substantial question of law found.

Final Conclusion: The condonation application for six days' delay is allowed. On merits, the Tribunal's factual finding that the assessee committed a bonafide clerical error, filed a voluntary revised return disclosing the disallowance under Section 94(7) and paid the additional tax, was reasonable; the High Court declines to interfere with the Tribunal's deletion of the penalty under Section 271(1)(c) and dismisses the appeal.

Refund of recovery in excess of permitted pre-deposit pending appeal - pre-deposit policy under Office Memorandum dated 29.02.2016 and 31.07.2017 - coercive recovery during pendency of appeal - Section 220(6) of the Income-tax Act - interest on delayed refund

Refund of recovery in excess of permitted pre-deposit pending appeal - pre-deposit policy under Office Memorandum dated 29.02.2016 and 31.07.2017 - coercive recovery during pendency of appeal - Section 220(6) of the Income-tax Act - interest on delayed refund - Petitioner entitled to refund of amount recovered in excess of the permitted pre-deposit while appeal was pending; respondents may retain the prescribed pre-deposit till disposal of appeal. - HELD THAT: - The Court noted that the petitioner had filed an appeal against the assessment order and had itself deposited the prescribed pre-deposit equivalent to 20% of the demand in terms of the Office Memorandum dated 29.02.2016 and 31.07.2017. Notwithstanding the pending appeal and the pre-deposit, the Assessing Officer proceeded to initiate and complete coercive recovery of the entire demand. The respondents conceded that recovery exceeding the prescribed pre-deposit before disposal of the appeal was not appropriate. Applying the pre-deposit policy and having regard to Section 220(6) of the Income-tax Act, the Court directed refund of the excess amount recovered (being 80% of the demand already recovered) and permitted the respondents to retain the prescribed 20% pre-deposit until the appeal is decided. The Court further directed that the refund be made within 30 days and that interest be payable in the event of delay, the interest being recoverable from the erring officer/respondent if payment is delayed. [Paras 4, 5]

Refund of the excess amount recovered (being 80% of the demand) directed within 30 days; respondents entitled to retain 20% pre-deposit pending disposal of the appeal; interest payable on any delayed refund.

Final Conclusion: Writ petition disposed directing refund of the amount recovered in excess of the permitted pre-deposit; respondents may retain the prescribed pre-deposit until the appeal is decided and are liable to pay interest on any delayed refund.

Disallowance under Section 40(a)(ia) of the Income-tax Act - effect of depositing Tax Deducted at Source before the due date of filing return on Section 40(a)(ia) - disallowance under Section 14A read with Rule 8D of the Income Tax Rules - applicability of Section 14A where shares are held as stock in trade - precedential effect of coordinate bench and Supreme Court decisions on deletion of additions

Disallowance under Section 40(a)(ia) of the Income-tax Act - effect of depositing Tax Deducted at Source before the due date of filing return on Section 40(a)(ia) - Deletion of addition made under Section 40(a)(ia) where TDS was deposited by the assessee before the due date for filing the return. - HELD THAT: - The Tribunal found, on evidence on record, that the assessee had deducted and deposited the Tax Deducted at Source before the due date for filing the return under section 139(1). The High Court held that this factual finding was not displaced by the Revenue and is consonant with the law as interpreted by higher authorities. The Court referred to the Supreme Court's reasoning that the amended provision should be given equitable effect and that where TDS is deposited within the permissible time, disallowance under Section 40(a)(ia) is not warranted. In these circumstances no substantial question of law arises against the deletion of the addition. [Paras 12, 13, 14]

Tribunal's deletion of the disallowance under Section 40(a)(ia) upheld; no substantial question of law.

Disallowance under Section 14A read with Rule 8D of the Income Tax Rules - Rule 8D(2)(ii) - nexus between borrowed funds and exempt income investments - precedential effect of earlier ITAT order in assessment year 2009-10 - Deletion of the disallowance computed under Rule 8D(2)(ii) on the ground that no nexus was established between borrowed funds and investments yielding exempt income. - HELD THAT: - CIT(A) and the Tribunal deleted the disallowance under Rule 8D(2)(ii) after noting that the Assessing Officer had not demonstrated any nexus between borrowed funds and the amounts invested in tax exempt instruments. The High Court observed that the Revenue did not dispute the factual basis relied upon (including coverage by the Tribunal's earlier order for AY 2009-10) and therefore no challenge could be maintained to the deletion. The Court accepted the factual and legal conclusion that, on the record, disallowance under Rule 8D(2)(ii) was not permissible. [Paras 15]

Deletion of the disallowance under Rule 8D(2)(ii) upheld.

Disallowance under Section 14A read with Rule 8D of the Income Tax Rules - applicability of Section 14A where shares are held as stock in trade - precedential effect of coordinate bench ITAT decision and Supreme Court authority - Validity of deletion of disallowance under Rule 8D(2)(iii) in respect of exempt income arising from shares held as stock in trade. - HELD THAT: - The Tribunal deleted the addition under Rule 8D(2)(iii) following a coordinate bench ITAT decision and relying on Supreme Court authority which held that where shares are held as stock in trade (as in the case of banks dealing in such shares), Section 14A does not apply and related expenditure need not be disallowed. The High Court observed that the assessee's shares were held as stock in trade and that the Revenue did not contest that factual position. Applying the binding precedents, the Court concluded that the Tribunal correctly deleted the disallowance under Rule 8D(2)(iii). [Paras 16, 17, 18, 19, 20]

Tribunal's deletion of the disallowance under Rule 8D(2)(iii) upheld.

Final Conclusion: In view of the factual findings and binding judicial precedents sustaining the Tribunal's deletions of the additions under Section 40(a)(ia) and Section 14A read with Rule 8D (both sub paragraphs), the Revenue's appeal is dismissed and the Tribunal's order is upheld.

Meaningful opportunity under Section 148A(b) - show cause notice prior to reassessment - principles of natural justice - purposive interpretation of statutory time-limits - remand for consideration of reply under Section 148A

Meaningful opportunity under Section 148A(b) - purposive interpretation of statutory time-limits - principles of natural justice - remand for consideration of reply under Section 148A - Legality of the order under Section 148A(d) rejecting the assessee's response and initiation of reassessment when the response was uploaded after the stipulated last date which fell on a public holiday followed by weekend. - HELD THAT: - The Court held that the assessing officer acted hastily and adopted an unduly narrow interpretation of the time-limit in Section 148A(b). The notice required a reply by 18th March, 2022, which was a public holiday; the following two days were non-working (Saturday and Sunday) and the assessee uploaded the reply online on 21st March, 2022. A purposive construction of the statutory scheme requires that the opportunity to reply be meaningful; the legislative scheme permits up to 30 days to respond and further extension on application. Filing the reply online after the last calendar day which was a holiday and non-working days should be treated in context of providing a reasonable opportunity, and in the circumstances the assessing officer improperly treated the absence of a response within the technical timeline as warranting rejection. The Court relied on the reasoning in Divya Capital (Delhi High Court) regarding the safeguards introduced by the amended reassessment scheme and the duty of the assessing officer to consider replies under Section 148A(c). The matter was therefore remanded to the assessing officer to take note of and meaningfully consider the reply dated 21st March, 2022 and proceed in accordance with law.

Order dated 23rd March, 2022 under Section 148A(d) and the notice dated 11th March, 2022 under Section 148 are quashed; matter remitted to the assessing officer to consider the assessee's reply of 21st March, 2022 and act in accordance with law.

Final Conclusion: The intra-court appeal is allowed; the impugned order under Section 148A(d) and the notice under Section 148 are quashed and the matter is remanded to the assessing officer for fresh consideration of the reply filed on 21st March, 2022 in a meaningful manner; no costs are imposed on the department/officer.

Addition of unaccounted brokerage - statement recorded under Section 131 - retraction of statement recorded under Section 131 - findings of fact by the Appellate Tribunal - substantial question of law

Addition of unaccounted brokerage - findings of fact by the Appellate Tribunal - Deletion of addition of unaccounted brokerage of Rs.68,00,000/- affirmed by the Appellate Tribunal was not a substantial question of law. - HELD THAT: - The Court examined the Tribunal's reasoning (noting its discussion from paragraph 4.4 to paragraph 11.9) and recorded that the Tribunal had made factual findings on the evidence relating to the claimed brokerage. Those findings of fact were within the domain of the Tribunal's appraisal of evidence. The High Court held that the controversy on the addition constituted questions of fact and appreciation of evidence and therefore did not raise any substantial question of law warranting interference.

Appeals with respect to the deletion of the addition of unaccounted brokerage were dismissed for lack of any substantial question of law impelling interference.

Statement recorded under Section 131 - retraction of statement recorded under Section 131 - findings of fact by the Appellate Tribunal - Addition of Rs.3,00,00,000/- based on the assessee's statement recorded under Section 131, which was later retracted, did not raise a substantial question of law after the Tribunal's factual findings were reviewed. - HELD THAT: - The Court reviewed the Tribunal's consideration of the statement recorded under Section 131 and the subsequent retraction (the Tribunal's reasoning being addressed from paragraph 17 onward) and concluded that the matter involved factual determinations about the reliability and effect of the statement and its retraction. Those determinations were left to the Tribunal's appreciation of evidence. Consequently, the High Court found no substantial question of law arising from the Tribunal's conclusions that would justify interference by this Court.

Appeals challenging the addition of Rs.3,00,00,000/- founded on the Section 131 statement were dismissed as raising no substantial question of law.

Final Conclusion: The High Court, after reviewing the Tribunal's factual findings on both the deletion of the brokerage addition and the addition based on the Section 131 statement (later retracted), held that neither issue raised any substantial question of law and accordingly dismissed the Revenue's appeals.

Deduction under section 10AA - SEZ unit exemption - Splitting up or reconstruction of business - Transfer of previously used plant and machinery - Separate legal entity and independent unit - Evidence versus suspicion (cogent material requirement)

Deduction under section 10AA - Splitting up or reconstruction of business - Transfer of previously used plant and machinery - Separate legal entity and independent unit - Evidence versus suspicion (cogent material requirement) - Whether the assessee was entitled to deduction under section 10AA for the claimed amounts for A.Y. 2011-12 and A.Y. 2012-13 despite common management and co-location with a related SEZ unit. - HELD THAT: - The Tribunal examined the statutory conditions for section 10AA entitlement: commencement of manufacture after 1-4-2006; undertaking not formed by splitting up or reconstruction of an existing business; and use of new plant and machinery not previously used. The material on record established that the assessee commenced operations after 1-4-2006, obtained requisite SEZ approvals, and operated from a separately constructed and separately authorized floor let to it by the sister company under a rent agreement. The assessee produced bills for additions to plant and machinery, evidence of fresh capital infusion, separate payroll entries showing employment of new staff, distinct raw material and supplier details, and technical differences in products and processes. The Assessing Officer's inference of a colourable device rested on comparative turnover movements and common persons of interest; the Tribunal held that such suspicion, without cogent material demonstrating transfer/diversion of assets or that one unit was merely a continuation of the other, cannot substitute for evidence. The Tribunal further noted that even if the units were treated as related, the statute provides for reduced relief (50%) which the Revenue had not examined. Applying these findings, the Tribunal concluded that the legal conditions for denial of section 10AA relief (splitting/reconstruction or transfer of used machinery) were not satisfied on the record, and that the AO's disallowance was therefore unsustainable. [Paras 11, 14]

The disallowances of deduction under section 10AA were deleted and the assessee's entitlement to the exemption for the stated assessment years was upheld; the Revenue's appeals are dismissed.

Final Conclusion: The Tribunal dismissed the Revenue's appeals for A.Y. 2011-12 and A.Y. 2012-13, upholding the CIT(A)'s deletion of the additions and allowing the deduction under section 10AA in accordance with law.

Deductibility of employee's contribution to PF/ESI if deposited before filing return - Interpretation of Section 36(1)(va) regarding timing of deposit - Prospective application of Finance Act, 2021 amendment to Section 36(1)(va) and Section 43B - Prima facie adjustments under section 143(1)(a)(iv) by CPC - Binding force of jurisdictional High Court decisions

Deductibility of employee's contribution to PF/ESI if deposited before filing return - Interpretation of Section 36(1)(va) regarding timing of deposit - Binding force of jurisdictional High Court decisions - Employees' contribution to PF/ESI paid after statutory due date but before filing return under section 139(1) is allowable as deduction and cannot be disallowed under section 36(1)(va) read with section 43B for the impugned assessment year. - HELD THAT: - The Tribunal found as an undisputed fact that the employees' contributions collected by the assessee were deposited before the due date for filing the return under section 139(1). Having regard to binding decisions of the jurisdictional Hon'ble Rajasthan High Court and subsequent consistent decisions, the Tribunal held that amounts paid after the statutory due date but before filing the return cannot be disallowed under section 43B read with section 36(1)(va). The Tribunal noted that, in view of the jurisdictional High Court's rulings, appellate authorities and assessing officers within the State must follow that view and that divergent decisions from other High Courts are not to be preferred over the jurisdictional precedent. Applying that principle to the admitted facts, the Tribunal directed deletion of the addition made by assessment processing/AO. [Paras 7, 8, 9]

Addition made in respect of delayed deposit of employees' contribution towards ESI/PF, though paid before filing of return, is deleted; deduction allowed.

Prospective application of Finance Act, 2021 amendment to Section 36(1)(va) and Section 43B - Amendments effected by the Finance Act, 2021 (explanation to Section 36(1)(va) and changes to Section 43B) apply prospectively from 1 April 2021 and do not affect the impugned assessment year. - HELD THAT: - The Tribunal observed the explanatory memorandum to the Finance Act, 2021 expressly states the amendments take effect from 1 April 2021 and apply to assessment year 2021-22 and subsequent years. In the absence of a clear legislative indication of retrospective operation and given that the impugned assessment year is 2019-20, the Tribunal held the amended provisions are not applicable to the case at hand and cannot be invoked to negate the assessee's entitlement for the said year. [Paras 8]

Finance Act, 2021 amendments are prospective and not applicable to AY 2019-20; cannot justify disallowance in the instant assessment year.

Final Conclusion: The Tribunal allowed the appeal, deleted the addition made in respect of employees' contribution to PF/ESI (paid before filing of return) for AY 2019-20, and directed that the disallowance sustained by the lower authority be set aside.

Rejection of books of accounts under Section 145(3) of the Income-tax Act - estimation of income in manner provided in Section 144 - separate assessment for each year - extrapolation of net profit rate from preceding years - requirement of specific defects or infirmities to justify rejection of accounts - use of Standard Operating Rate (SoR) as a comparative yardstick

Rejection of books of accounts under Section 145(3) of the Income-tax Act - extrapolation of net profit rate from preceding years - requirement of specific defects or infirmities to justify rejection of accounts - estimation of income in manner provided in Section 144 - separate assessment for each year - use of Standard Operating Rate (SoR) as a comparative yardstick - Validity of the Assessing Officer's rejection of the assessee's books of accounts for AY 2014-15 and estimation of income by applying a net profit rate of 10% of gross contract receipts based on the assessee's earlier voluntary declaration before the Settlement Commission. - HELD THAT: - The Tribunal examined whether the AO was justified in rejecting the assessee's book results for AY 2014-15 under the parameters of Section 145(3) and thereafter estimating income at 10% of gross receipts by extrapolating the net profit rate adopted by the assessee in preceding years before the Settlement Commission. The Court found on the record that the assessee had produced audited books, bills, vouchers and confirmations for AY 2014-15 which the AO had examined and cross verified, yet the assessment order contained no specific finding of defect, incompleteness or irregularity in those accounts. The Tribunal emphasised that Section 145(3) permits rejection of accounts only where the AO is satisfied as to incorrectness or incompleteness, and that existence of infirmities in prior years is a pre requisite to justify rejection; the AO must point to material defects in the year under consideration. The AO's sole basis - that the assessee had suo moto rejected books and accepted a 10% net profit rate for earlier years in Settlement Commission proceedings (and that the nature of business was unchanged) - was held to be an impermissible extrapolation. The Tribunal observed that admissions and incriminating documents related to the earlier period did not amount to cogent material showing the same malpractices in AY 2014-15; absent any contemporaneous evidence of bogus claims, inflated expenses or other defects in the impugned year, rejection of the books and estimation under Section 144 was unsustainable. The Tribunal also rejected reliance on the Standard Operating Rate (SoR) as a ground to fix a 10% profit margin, noting SoR merely estimates inputs and does not reliably establish a profit rate. Applying the principle that each assessment year is separate and must be decided on its own facts, and relying on authorities to the same effect, the Tribunal concurred with the CIT(A) that there was no material to justify rejection of accounts or adoption of the 10% net profit rate for AY 2014-15. [Paras 9, 11, 12, 13, 14]

The rejection of the books of accounts and the consequent estimation of income at 10% of gross contract receipts for AY 2014-15 were unjustified; the order of the CIT(Appeals) deleting the addition is upheld.

Final Conclusion: The department's appeal is dismissed; the Tribunal upholds the CIT(Appeals)'s deletion of the estimation and rejection of books for AY 2014-15.

Obligation to deduct TDS under section 194IA on transfer of immovable property - Penalty under section 271C for failure to deduct tax at source - Reasonable cause exemption under section 273B - Applicability of the maxim "ignorantia legis neminem excusat" in fiscal statutes - No prejudice to revenue where the transferor discloses income and pays tax

Obligation to deduct TDS under section 194IA on transfer of immovable property - Penalty under section 271C for failure to deduct tax at source - Reasonable cause exemption under section 273B - No prejudice to revenue where the transferor discloses income and pays tax - Applicability of the maxim "ignorantia legis neminem excusat" in fiscal statutes - Whether penalty under section 271C for non-deduction of TDS under section 194IA is sustainable where the assessee (an individual purchaser) failed to deduct TDS but the seller declared the capital gains and paid tax and the purchaser claimed ignorance of the provision as reasonable cause under section 273B. - HELD THAT: - The Tribunal found as an admitted fact that the assessee, an individual and proprietor of a medical agency who purchased a single plot of land, failed to deduct TDS at 1% under section 194IA on the purchase consideration. The AO levied penalty under section 271C equal to the amount of tax not deducted, which was confirmed by the CIT(A). However, the assessee established that the seller had furnished the return declaring capital gains and had paid the due tax, a fact not controverted by Revenue. The Tribunal noted that section 194IA was a non-recurring, relatively specialized TDS provision introduced by Finance Act, 2013 to widen the tax base and curb avoidance, and that many individual purchasers would not be routinely familiar with such provisions. While acknowledging the general rule that ignorance of law does not excuse, the Tribunal relied on authorities reflecting that there is no presumption that every person knows all statutory intricacies and that reasonableness of cause under section 273B is a question of fact. Applying these principles to the facts - single transaction, purchaser not engaged in real estate business, lack of prejudice to Revenue because the transferor paid tax, and absence of any cogent evidence of willful default - the Tribunal held that the assessee had demonstrated a reasonable cause under section 273B. Consequently, penalty under section 271C was not sustainable and was to be deleted. [Paras 6, 7]

Penalty levied under section 271C for failure to deduct TDS under section 194IA deleted as section 273B reasonable cause established; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal for ay:2016-17, deleted the penalty imposed under section 271C for failure to deduct TDS under section 194IA, holding that the assessee had proved reasonable cause under section 273B (single transaction by a non real estate individual and no prejudice to Revenue as the seller paid tax).

Deduction under section 80P(2)(c) for transactions with nominal members - deduction in respect of interest from deposits in co-operative banks - application of CBDT Circular No.37/2016 to TDS and NPA provisioning

Deduction under section 80P(2)(c) for transactions with nominal members - nominal members under the Maharashtra Cooperative Societies Act, 1960 - Whether deduction under section 80P(2)(c) was rightly denied on the ground that transactions were with nominal members - HELD THAT: - The Tribunal applied binding Supreme Court authority in Mavilayi Service Cooperative Bank Ltd. v. CIT and held that the question concerning transactions with nominal members is no longer res integra and must be decided against the Department. The Tribunal accepted that the legal position established by the Supreme Court governs the claim for deduction where the denial was founded on the characterization of members as nominal.

Assessee's claim on this point allowed; denial of deduction on account of transactions with nominal members set aside.

Deduction in respect of interest from deposits in co-operative banks - Whether interest income from deposits in co-operative banks is eligible for deduction under the provision relied on by the assessee - HELD THAT: - The Tribunal referred to precedents holding that interest received from deposits in cooperative banks is eligible for the deduction claimed (State Bank of India v. CIT and CIT v. Totagars Cooperative Sale Society) and concluded that this question favours the assessee. The Tribunal therefore ruled against the Department on this aspect of the deduction claim.

Assessee entitled to deduction in respect of interest from deposits in co-operative banks; denial set aside.

Application of CBDT Circular No.37/2016 to TDS and NPA provisioning - Whether TDS and NPA provisions debited to profit and loss account qualify for enhanced deduction in terms of CBDT Circular No.37/2016 - HELD THAT: - The Tribunal found that the applicability of CBDT Circular No.37/2016 to the amounts debited as TDS and as NPA provisioning (as claimed by the assessee) required fresh adjudication by the Assessing Officer in light of that Circular. Rather than decide the question on merits, the Tribunal remanded the issue for the Assessing Officer's fresh consideration and determination in accordance with the Circular.

Issue remitted to the Assessing Officer for fresh adjudication in light of CBDT Circular No.37/2016.

Final Conclusion: Appeal partly allowed: deductions denied on grounds of nominal membership and interest on cooperative bank deposits were allowed in favour of the assessee; the claim relating to TDS and NPA provisioning was remanded to the Assessing Officer for fresh consideration under CBDT Circular No.37/2016.

Deduction under section 80P - liberal construction of section 80P - benefit to members - claimant's burden to substantiate before assessing officer - additional evidence at appellate stage

Deduction under section 80P - benefit to members - liberal construction of section 80P - claimant's burden to substantiate before assessing officer - additional evidence at appellate stage - Validity of denial of section 80P deduction in respect of income from sale of organic manure to members - HELD THAT: - The assessment and the CIT(A) disallowed the claim under section 80P(2)(a)(iv) on the grounds that the bye laws did not expressly provide for supply of the organic manure, that the assessee did not respond to the AO's show cause call and that the supplies were made for profit rather than for the benefit of members. The Tribunal examined the factual matrix and found that the assessee, a milk cooperative, sold organic manure to its milk producing members to improve fodder quality and thereby enhance milk production, creating a direct nexus between the supplies and the cooperative activity for members' benefit. Applying the principle of liberal construction in favour of cooperative societies as recently expounded by the Supreme Court in Mavilayi Service Co operative Bank Ltd., the Tribunal held that the transactions fell within the scope of entitlement to deduction under section 80P. Although the CIT(A) treated appellate submissions as additional evidence because not furnished to the AO, the Tribunal did not uphold the denial on that procedural ground and instead allowed the deduction on merits based on the established nexus and applicable legal principle. [Paras 4, 5]

The denial of the section 80P deduction was overturned and the assessee's claim for deduction in respect of the income from sale of organic manure to members was allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the income from sale of organic manure to the cooperative's members qualified for deduction under section 80P by applying a liberal construction and recognising the direct benefit to members.

Provisional release of goods - bank guarantee for differential duty - bond for full/estimated value of goods - deposit by a third party at the behest of the importer - absence of an adjudication order

Provisional release of goods - bank guarantee for differential duty - bond for full/estimated value of goods - absence of an adjudication order - Release of the subject imported goods upon furnishing of specified securities. - HELD THAT: - The Court recorded that the petitioner had deposited Rs.1.5 crores, at least part of which concerned the subject imports, and that no adjudication order had been passed in respect of those imports. The deposit was made at the behest of the importer to enable release of the goods, and the conditions imposed by the impugned provisional-release order appeared onerous. The revenue, through its officer present in court, expressed no objection to the goods being released if the petitioner furnished a bank guarantee equivalent to the differential duty said to be due and executed a bond for the full/estimated value of the goods. On that consensual basis the Court directed release of the subject goods upon fulfilment of those conditions and disposed of the petition accordingly. [Paras 3, 5, 6, 7, 8]

Subject goods to be released forthwith upon the petitioner furnishing a bank guarantee for the differential duty and executing a bond for the full/estimated value of the goods.

Final Conclusion: The writ petition was disposed of by directing release of the subject goods upon the petitioner furnishing a bank guarantee for the differential duty and executing a bond for the full/estimated value; compliance to be placed on record and the matter listed for compliance.

Admissibility of confessional statement as corroborative evidence - corroboration by contemporaneous phone records and chain of circumstances - jurisdiction of adjudicating authority by statutory/board assignment and administrative notification - scope of review jurisdiction - requirement of certificate under Section 65B for electronic records in adjudication proceedings

Admissibility of confessional statement as corroborative evidence - corroboration by contemporaneous phone records and chain of circumstances - scope of review jurisdiction - Whether non-naming of the review applicants in the confessional statement of R. N. Zutshi warranted review of the judgments which had treated that statement as implicating the appellants. - HELD THAT: - The Court held that even if the confessional statement did not name the review applicants, that circumstance alone did not justify review of the judgment. The impugned findings were supported by independent and overwhelming material including call records showing numerous calls between the appellants and known participants in the smuggling racket, presence and role in clearance of consignments, corroborative statements of others and the overall chain of circumstances. The Court applied the principle that customs adjudication may be sustained on probabilities where the statutory authorities have established evasion on the cumulative evidence, and noted that the appellants failed to seek cross examination for years or offer convincing explanations for the phone contacts. Accordingly, the alleged infirmity in the confessional statement did not materially affect the final determination and was insufficient to warrant review. [Paras 5, 6, 7, 8]

Review on the ground that R. N. Zutshi had not named the applicants was rejected; the original findings stand because independent corroborative evidence sufficed to implicate the appellants.

Jurisdiction of adjudicating authority by statutory/board assignment and administrative notification - scope of review jurisdiction - Whether the adjudication order passed by Mr. Gurbans Singh was without jurisdiction because he was said to be Commissioner of Central Excise (Adjudication) and not Commissioner of Customs (Adjudication). - HELD THAT: - The Court examined the Notification No. 1/2003 Cus.(N.T.) which appointed Commissioners of Central Excise (Adjudication) at specified stations also as Commissioner of Customs (Adjudication) for cases assigned by the Board. It further relied on the respondents' affidavit stating that the file was transferred to the Commissioner of Customs (Adjudication) at the relevant office and that Mr. Gurbans Singh, while holding charge of Commissioner of Central Excise (Adjudication), was also vested with the powers and functioned as Commissioner of Customs (Adjudication). On that basis the Court concluded that Mr. Gurbans Singh had authority to adjudicate the show cause notice and that no jurisdictional defect was shown to vitiate the adjudication. [Paras 10, 11, 14, 15, 16]

Challenge to the jurisdiction of the adjudicating authority was dismissed; Mr. Gurbans Singh was duly authorized to adjudicate the matter.

Requirement of certificate under Section 65B for electronic records in adjudication proceedings - scope of review jurisdiction - Whether the absence of a certificate under Section 65B of the Evidence Act for records relied upon in adjudication vitiated the orders and warranted review. - HELD THAT: - The Court held that reliance on the Supreme Court decisions concerning Section 65B in regular evidence proceedings was misplaced in the context of these customs adjudication proceedings. It observed that strict rules of evidence do not apply in adjudication under the customs regime in the same manner and further that the contention regarding Section 65B fell outside the scope of a review petition. Consequently, the absence of such certification did not provide a ground for review in these proceedings. [Paras 17, 18]

Contention based on non production of a Section 65B certificate was rejected as misplaced and beyond the scope of review.

Final Conclusion: All review petitions were dismissed: the alleged non naming in the confessional statement did not materially affect the verdict in view of independent corroborative evidence; the adjudicator was held to have had jurisdiction by virtue of Board assignment and the notification; and challenges based on Section 65B were found misplaced and beyond review.

Rejection of declared assessable value based on Chartered Engineer report - transaction value and burden to prove actual transaction value - remand for redetermination of assessable value and penalty - absolute confiscation and redemption under Section 125 of the Customs Act, 1962 - liability to penalty under Section 112(a) of the Customs Act, 1962

Rejection of declared assessable value based on Chartered Engineer report - transaction value and burden to prove actual transaction value - remand for redetermination of assessable value and penalty - Declared assessable value was rejected by the adjudicating authority but the matter is remanded for fresh redetermination of value. - HELD THAT: - The Tribunal found that the adjudicating authority rejected the importer's declared value and enhanced it relying on a Chartered Engineer's report without proper application of mind. The Tribunal observed that rejection of declared value is permissible only where the importer fails to furnish documents evidencing the actual transaction value; here documentary evidence of original and subsequent purchase existed and the Chartered Engineer's report did not adequately take those into account and appeared speculative. A Chartered Engineer's certificate can justify rejection, but it must be considered along with the appellant's submissions and documentary evidence and the adjudicating authority's order must reflect proper appreciation of all material. For these reasons the Tribunal set aside the valuation finding and remanded the matter to the adjudicating authority to re-determine the assessable value after fresh consideration of the Chartered Engineer's report and the appellant's evidence. [Paras 4, 5]

Order rejecting the declared value is set aside and the issue is remanded to the original authority for fresh determination of assessable value.

Absolute confiscation and redemption under Section 125 of the Customs Act, 1962 - remand for redetermination of assessable value and penalty - Absolute confiscation of the imported car was set aside for reconsideration and the adjudicating authority was directed to examine the option of redemption. - HELD THAT: - The Tribunal noted that importation of the car was not prohibited and the only alleged violation related to non-fulfillment of the policy condition requiring one year possession abroad. That circumstance does not automatically mandate absolute confiscation. The Tribunal accepted the concession that the car could be liable to confiscation for breach of policy but held that the importer should, where appropriate, be given the option to redeem the goods by payment of a redemption fine under Section 125. The matter is remanded so the original authority may reconsider whether confiscation should be absolute or the goods may be redeemed and record its findings accordingly. [Paras 4, 5]

Absolute confiscation is set aside and the original authority is directed to reconsider confiscation versus redemption and, if appropriate, allow redemption.

Liability to penalty under Section 112(a) of the Customs Act, 1962 - remand for redetermination of assessable value and penalty - Liability to penalty and the quantum of penalty were not finally upheld and are remanded for fresh adjudication. - HELD THAT: - Because the Tribunal has remanded the core issues of assessable value and confiscation/redemption, it directed that the adjudicating authority shall also re-determine the importer's liability to penalty and its quantum in the remand proceedings. The Tribunal specifically instructed the original authority to take note of the cited precedents and to record its findings on penalty after reconsideration of the facts and valuation. [Paras 4, 5]

Penalty liability and quantum are left open and the matter is remanded for fresh determination by the adjudicating authority.

Final Conclusion: The impugned order is set aside and the matters of assessable value, confiscation/redemption and penalty are remanded to the original authority for fresh adjudication in accordance with the Tribunal's observations; the remand proceedings are to be completed within three months of receipt of this order.

Restoration of company name - just and equitable - striking off from register for failure to file statutory returns - restoration under Section 252 of the Companies Act, 2013 - filing of outstanding statutory returns and payment of late fees - inadvertent non-compliance not mala fide - cost as condition of restoration

Restoration of company name - just and equitable - striking off from register for failure to file statutory returns - Restoration of the appellant company's name on the Register of Companies was justified on the ground that it was carrying on business / operative at the time of striking off and that restoration was just and equitable. - HELD THAT: - The Tribunal examined the material placed by the appellant, including undertakings to file audited financial statements for the period 2014-2018, bank statements, trial balance summaries showing debtors and creditors, and records of pending litigation affecting the company's operations. Applying the criterion in Section 252, the Tribunal found on the record that the company was carrying on business and was operative at the time its name was struck off, that the appeal was filed within the statutory period, and that no prejudice would be caused by restoration. The RoC raised no specific objection to restoration other than the statutory compliance that remained to be completed. The Tribunal treated the non-filing as inadvertent and not indicative of abandonment of business, so the circumstances made restoration just and equitable. [Paras 8, 9]

Impugned order striking off the company's name set aside and the company's name ordered restored to the register.

Filing of outstanding statutory returns and payment of late fees - inadvertent non-compliance not mala fide - cost as condition of restoration - Restoration was ordered subject to conditions: filing all outstanding documents, payment of applicable late fees or other charges, and payment of a cost to the Prime Minister's Relief/ Care Fund. - HELD THAT: - While concluding that the default in filing was inadvertent and not willful, the Tribunal made restoration conditional to ensure statutory compliance and to vindicate regulatory purpose. The appellant was directed to file all outstanding financial statements and annual returns and to pay any late filing fees or other charges leviable under law. As a further equitable condition and deterrent, the Tribunal imposed a monetary cost to be paid to the Prime Minister Care Fund prior to effecting restoration. These conditions were framed to balance the interest of the company and its stakeholders with the need for compliance with statutory filing obligations. [Paras 10, 11]

Restoration granted subject to filing all outstanding documents, payment of late fees/charges, and payment of cost of Rs. 1,00,000 to the Prime Minister Care Fund.

Final Conclusion: The appeal succeeds: the order striking off the name of M/s. Genesis Industrial Solution Private Limited is set aside and the company's name is restored on the Register of Companies, subject to filing all outstanding statutory returns, payment of applicable late fees or other charges, and payment of the directed cost to the Prime Minister Care Fund.

Oppression and mismanagement - Relief under Sections 241-242 of the Companies Act, 2013 - Pre-incorporation promises and agreements vis-a -vis relief under company law - Limitation / laches as a defence to relief under company law - Valuation and buy-out remedy in the interests of the company - Appointment of an independent valuer

Pre-incorporation promises and agreements vis-a -vis relief under company law - Oppression and mismanagement - Whether promises or understandings made between the parties prior to incorporation constitute 'oppression and mismanagement' under Sections 241-242 of the Companies Act, 2013. - HELD THAT: - The Tribunal held that complaints based solely on understandings or promises between parties made before incorporation cannot normally be treated as oppression or mismanagement under Sections 241-242. Reliance was placed on established precedent that the court will interfere under company law only where majority acts, after incorporation, contravene the articles/statute or make arbitrary use of majority powers causing or likely to cause financial loss or act in an unfair and improper manner. The Tribunal observed that the petitioner's grievance principally concerns pre-incorporation promises about conversion of an investment into equity, and not conduct of the Company after it commenced operations that would amount to oppressive or mismanaged acts within the statutory scheme. [Paras 27]

Pre-incorporation promises cannot, by themselves, be treated as oppression or mismanagement under Sections 241-242.

Valuation and buy-out remedy in the interests of the company - Appointment of an independent valuer - Relief under Sections 241-242 of the Companies Act, 2013 - What remedial measure, if any, should be directed in the interests of the company where a minority investor alleges non-fulfilment of promises about share allotment and a continuing dispute exists between parties. - HELD THAT: - Noting that the paramount concern under petitions under Sections 241-242 is the interest of the Company, the Tribunal declined to grant orders converting pre-incorporation promises into substantive reliefs such as rectification or compulsory allotment. Instead, having regard to the health and interests of the Company and the unresolved dispute, the Tribunal directed an equitable remedy: appointment of an independent valuer to determine the true and fair value of the Company's shares (taking into account the last three financial years) and gave the majority shareholder (Respondent No. 2) the first opportunity to purchase the petitioner's shares based on that valuation. The Tribunal retained the existing shareholding pattern till completion of that process and directed that the valuer's fee be paid by the Company. [Paras 28]

An independent valuation and a buy-out mechanism (first right to purchase by Respondent No. 2) ordered in the interests of the Company; shareholding to remain unchanged pending that process.

Establishment of contribution and characterization of allotment - Whether the petitioner in fact invested Rs. 1,50,00,000/- in the company and how that investment was reflected in company records. - HELD THAT: - On the basis of the accountant's report and books examined pursuant to the Tribunal's direction, it was found that the petitioner had invested the stated sum. The company's records showed that Rs. 1.5 crore received on 07.09.2010 was applied equally towards allotment of equity and preference shares (i.e., Rs. 75 lakhs each). The books also recorded entries recognizing transfer of 75,000 equity shares from the petitioner to the 2nd respondent and corresponding accounting entries. The Tribunal accepted that the petitioner made the investment but noted the absence of a formal agreement evidencing any promise to convert the entire sum into equity. [Paras 23, 24, 25]

Petitioner did invest Rs. 1,50,00,000/-, company records reflect allotment split between equity and preference and an accounting appropriation relating to the transfer of 75,000 equity shares; no formal agreement for full equity conversion was produced.

Final Conclusion: The Tribunal found that pre-incorporation promises alone do not constitute oppression or mismanagement under Sections 241-242; having established that the petitioner did invest the stated sum but no formal agreement for full equity conversion was produced, the Tribunal directed appointment of an independent valuer to determine fair value of shares and ordered a buy-out mechanism (first opportunity to Respondent No. 2) with the existing shareholding to remain unchanged until completion of valuation and sale process.

Restoration of company name - Discretion under Section 252 of the Companies Act, 2013 - Striking off for inactivity - Evidence of carrying on business - Filing of pending statutory documents as condition for restoration - Cost for restoration - Publication in Official Gazette - Registrar's power to take further action for other violations

Restoration of company name - Discretion under Section 252 of the Companies Act, 2013 - Striking off for inactivity - Evidence of carrying on business - Whether the Tribunal should restore the name of the company struck off by the Registrar of Companies. - HELD THAT: - The Tribunal exercised its discretionary power under Section 252 of the Companies Act, 2013 and, on satisfaction that restoration is just and equitable, directed restoration. The Registrar had struck off the company's name on the ground of alleged inactivity, but the petitioner produced income-tax returns, annual documents, trade receivables and bank statements to substantiate carrying on of business and contended it was not a shell company. The Registrar of Companies did not object to the restoration petition and stated that striking off had been done after compliance with Section 248 requirements. Balancing interests of stakeholders and the petitioner, the Tribunal was satisfied that restoration ought to be granted.

The petition for restoration of the company's name is allowed and the Registrar is directed to restore the company's status in the register as if the name had not been struck off.

Filing of pending statutory documents as condition for restoration - Cost for restoration - Publication in Official Gazette - Registrar's power to take further action for other violations - Terms and ancillary directions attached to the restoration order. - HELD THAT: - Restoration was made conditional: the petitioner must file all pending statutory documents including annual accounts and returns with prescribed and additional fees within 45 days of restoration; pay the specified cost for restoration by online payment; deliver a certified copy of the order to the Registrar within thirty days; and thereafter the Registrar shall publish the order in the Official Gazette. The Tribunal limited the order's scope to the violations that led to striking off and expressly preserved the Registrar's authority to initiate appropriate proceedings for any other violations or offences committed before or during the period the company's name remained struck off.

Restoration is subject to filing pending documents, payment of the directed cost, delivery of certified order to the Registrar and subsequent Gazette publication; the Registrar remains free to take lawful action for any other violations.

Final Conclusion: The Tribunal allowed the petition and directed restoration of the company's name on the register, subject to specified conditions including filing of pending statutory documents, payment of the directed cost, delivery of a certified copy to the Registrar and publication in the Official Gazette, while preserving the Registrar's right to take action for other violations.

Interim injunction / interim relief - preservation of status quo subject to final adjudication - final disposal by the adjudicatory tribunal - liberty to approach the tribunal during pendency - allegation of oppression and mismanagement

Interim injunction / interim relief - final disposal by the adjudicatory tribunal - preservation of status quo subject to final adjudication - liberty to approach the tribunal during pendency - Whether the Appellate Tribunal should grant interim relief when the National Company Law Tribunal has reserved and fixed dates for final disposal of the company petition. - HELD THAT: - The Appeal was filed seeking interim relief though the Company Petition before the Tribunal had been heard on interim applications and the learned Tribunal had reserved and subsequently proposed to finally decide the petition on a fixed date. The Appellate Tribunal noted that the learned Tribunal continued to hear the petition (with further dates fixed and arguments pending) and that both parties acknowledged the progress of the proceedings before the Tribunal. In these circumstances the Appellate Tribunal declined to interfere with the impugned order or to grant the interim relief sought. By consent of the parties the Appeal was disposed of with an express indication that any subsequent change in the shareholding of either party during the pendency of the Company Petition would be subject to the outcome of the proceedings before the Tribunal. The Tribunal also recorded that if any party is aggrieved by actions during pendency they remain at liberty to approach the National Company Law Tribunal, and it expected the learned Tribunal to take steps to dispose of the petition expeditiously.

Appeal dismissed without granting interim relief; appeal disposed with indication that subsequent change in shareholding during pendency is subject to the result of the Company Petition and parties have liberty to approach the Tribunal for grievances.

Final Conclusion: The Appellate Tribunal declined to grant interim relief and disposed of the appeal, directing that any change in shareholding during the pendency of the Company Petition shall be subject to the tribunal's final decision and leaving the parties free to seek appropriate relief before the National Company Law Tribunal, which was urged to proceed expeditiously.

Recall of interlocutory order - distinction between recall and review - inherent power under Rule 11 of the NCLT Rules, 2016 - jurisdiction to review orders deciding substantial issues - right to file the Reply

Recall of interlocutory order - inherent power under Rule 11 of the NCLT Rules, 2016 - right to file the Reply - Adjudicating Authority's jurisdiction to recall an order closing the right to file the Reply - HELD THAT: - The Tribunal held that there is a clear distinction between recalling an interlocutory order and reviewing an order on merits. Where the Adjudicating Authority has not adjudicated a substantial issue on merits but only closed the right to file a pleading as a procedural step, it may exercise its inherent power under Rule 11 of the NCLT Rules, 2016 to recall that order. The Tribunal relied on its earlier decision in CA (AT) (Ins) No. 271 of 2022 to support the proposition that acceptance of a Reply after closure of the right can be an exercise of inherent power to secure substantial justice and does not amount to a prohibited review on merits of a concluded adjudication. The Tribunal distinguished authorities where the Adjudicating Authority had decided substantive issues on merits and therefore lacked jurisdiction to review those decisions.

The Adjudicating Authority has jurisdiction to recall an order closing the right to file the Reply in cases where no substantial issue has been decided on merits and such recall can be exercised under Rule 11 of the NCLT Rules, 2016.

Recall of interlocutory order - distinction between recall and review - Remand for fresh consideration of the application for recall - HELD THAT: - Applying the principle that the Adjudicating Authority may recall a procedural closure of the right to file a Reply, the Tribunal found it appropriate to remit the matter to the Adjudicating Authority for fresh consideration on merits. The Tribunal observed that the impugned order dismissing the recall application on the ground that the Tribunal has no power to recall was not sustainable in the circumstances where the closure related to procedural opportunity rather than adjudication on substantive issues. The remand directs the Adjudicating Authority to examine the application in accordance with law and the distinction between recall and review.

Appeal allowed; the matter is remanded to the Adjudicating Authority to decide the recall application on merits in accordance with law.

Final Conclusion: Appeal allowed. The Tribunal held that the Adjudicating Authority may, under its inherent power (Rule 11, NCLT Rules, 2016), recall an order closing the right to file a Reply where no substantial issue has been decided on merits, and remitted the matter to the Adjudicating Authority for fresh consideration and decision in accordance with law.

Initiation of Corporate Insolvency Resolution Process on unpaid interest alone - interest as component of financial debt - definition of financial debt and its relation to debt and claim - abuse/malicious prosecution to realise only interest

Initiation of Corporate Insolvency Resolution Process on unpaid interest alone - interest as component of financial debt - definition of financial debt and its relation to debt and claim - abuse/malicious prosecution to realise only interest - Whether a CIRP can be initiated solely on the basis of unpaid interest when the entire principal amount has been discharged by the corporate debtor. - HELD THAT: - The Tribunal examined the statutory definitions: financial debt is a debt alongwith interest; debt is a liability or obligation in respect of a claim; and a claim includes a right to payment. From these definitions the Bench concluded that interest is not an independent debt but can form part of a financial debt only if the underlying debt exists. The Tribunal relied on the reasoning in S. S. Polymers v. Kanodia Technoplast Ltd., which treated applications pursued solely for recovery of interest after payment of principal as contrary to the object of the Code and as an abuse (malicious intent) impermissible under the legislation. Applying that principle, the Bench held that where the principal obligation has been discharged, an outstanding interest component standing alone cannot validly trigger the CIRP; initiation on that basis would be inconsistent with the statutory scheme and liable to be treated as an abuse of process. The Tribunal therefore dismissed the application which sought CIRP based only on unpaid interest after principal repayment. [Paras 13, 15, 16, 17]

CIRP cannot be initiated solely on unpaid interest where the entire principal has been discharged; the petition is dismissed.

Final Conclusion: The application under Section 7 of the IBC, 2016 is dismissed: unpaid interest alone, after full repayment of principal, does not sustain initiation of the Corporate Insolvency Resolution Process.

Definition of Corporate Person under the Insolvency and Bankruptcy Code - maintainability of a petition under section 7 of the Insolvency and Bankruptcy Code against a sole proprietorship - privity of contract between financial creditor and corporate debtor - Corporate Insolvency Resolution Process - inter-corporate deposit as the underlying transaction

Definition of Corporate Person under the Insolvency and Bankruptcy Code - maintainability of a petition under section 7 of the Insolvency and Bankruptcy Code against a sole proprietorship - Whether the petition under section 7 of the Code was maintainable where the alleged borrower was a sole proprietorship and not a corporate person. - HELD THAT: - The Tribunal examined the statutory definition of Corporate Person and the Preamble of the Code and held that proprietorship concerns do not fall within the definition of a corporate person for the purposes of the Code. The admitted material showed the loan/ICD was advanced to a sole proprietorship concern (Bulbulitala Cold Storage) and not to the named corporate debtor. Because the borrower was not a corporate person, the petition invoking the Corporate Insolvency Resolution Process against the named corporate debtor was not maintainable. The Tribunal therefore concluded that the transaction did not fall within the scope of the Code's definition of Corporate Person and dismissed the petition on that ground. [Paras 7, 8]

Petition under section 7 not maintainable insofar as the alleged borrower was a sole proprietorship and not a corporate person; petition dismissed.

Privity of contract between financial creditor and corporate debtor - inter-corporate deposit as the underlying transaction - Whether proceedings could be initiated against the named corporate debtor in the absence of privity of contract between the financial creditor and that corporate debtor. - HELD THAT: - The Tribunal found on the record that the financial creditor had no privity of contract with the named corporate debtor in respect of the inter-corporate deposit; the ledger and bank entries indicated the transaction and receipts related to the sole proprietorship. In the absence of contractual privity with the corporate debtor, the financial creditor could not maintain insolvency proceedings against that corporate debtor. The Tribunal also relied on a coordinate bench decision dismissing a similar petition for lack of privity of contract to reinforce the conclusion that proceedings could not be sustained. [Paras 8, 9, 10]

Proceedings against the named corporate debtor could not be initiated in absence of privity of contract; petition dismissed.

Final Conclusion: The petition under section 7 of the Code was dismissed: the alleged borrower was a sole proprietorship not a corporate person under the Code and the financial creditor lacked privity of contract with the named corporate debtor, rendering the petition not maintainable.

Voluntary liquidation - Dissolution of corporate person - Exercise of powers under Section 59(7) of the Insolvency and Bankruptcy Code, 2016 - Declaration of solvency and special resolution for voluntary liquidation - Public announcement and claims process in voluntary liquidation - Distribution to shareholders on completion of liquidation - Liquidator's duty to intimate statutory authorities - Preservation of liquidation records

Voluntary liquidation - Declaration of solvency and special resolution for voluntary liquidation - Public announcement and claims process in voluntary liquidation - Distribution to shareholders on completion of liquidation - Whether the Corporate Person validly underwent voluntary liquidation and the petition for its dissolution should be allowed. - HELD THAT: - The Tribunal found that the Board of Directors approved a declaration of solvency with audited financial statements and, by a special resolution in an Extraordinary General Meeting, resolved to liquidate the company and appointed a registered Insolvency Professional as Liquidator. The Liquidator made the statutory public announcement inviting claims, notified the Insolvency and Bankruptcy Board of India and the Registrar of Companies, and reported that no claims were received and there were no secured or unsecured creditors. The Liquidator completed realisation and distribution of assets to shareholders, submitted preliminary and final reports and closed the bank account. On these facts the Tribunal concluded that the corporate person had been completely wound up and its assets fully liquidated, satisfying the conditions for voluntary liquidation and dissolution. [Paras 6, 7, 8, 9, 10]

The Company Petition for voluntary liquidation is allowed and the Corporate Person is declared dissolved with immediate effect.

Exercise of powers under Section 59(7) of the Insolvency and Bankruptcy Code, 2016 - Liquidator's duty to intimate statutory authorities - Directions to the Liquidator to intimate the dissolution to regulatory authorities and other statutory authorities. - HELD THAT: - Relying on the power vested in the Adjudicating Authority under Section 59(7) of the Code, the Tribunal directed the Liquidator to forward a copy of the dissolution order within 14 days to the Registrar of Companies, Hyderabad for appropriate entries on the MCA website and to the Insolvency and Bankruptcy Board of India. The Tribunal further directed that copies of the order be sent to all statutory authorities connected with the affairs of the Corporate Person to effect requisite administrative and statutory compliance. [Paras 11]

The Liquidator is directed to forward the order to the Registrar of Companies, IBBI and all statutory authorities as specified.

Preservation of liquidation records - Liquidator's duty to preserve records post-dissolution - Requirement for preservation of liquidation records after dissolution. - HELD THAT: - The Tribunal directed the Liquidator to preserve either a physical or electronic copy of the report, registers and books of account referred to in the relevant Regulations for a period of at least eight years after dissolution, and permitted preservation either with the Liquidator or with an information utility. This obligation was imposed to secure availability of the liquidation records post-dissolution. [Paras 11]

The Liquidator must preserve the specified records for at least eight years after dissolution.

Final Conclusion: The petition for voluntary liquidation filed by the Corporate Person is allowed; Meda Hospitals Private Limited is dissolved with immediate effect and the Liquidator is directed to intimate the Registrar of Companies, IBBI and other statutory authorities and to preserve liquidation records for at least eight years.

Default of financial debt - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - limitation and exclusion of period by Supreme Court in Suo Motu Writ Petition (C) 3 of 2020 - appointment of Interim Resolution Professional - public announcement and moratorium on admission

Default of financial debt - admission under Section 7 of the Insolvency and Bankruptcy Code, 2016 - Innoventive test for admission - Application under Section 7 was admissible and must be admitted as default had occurred. - HELD THAT: - The Tribunal found, on the basis of the documents placed by the financial creditor and absence of any representation by the corporate debtor, that the financial debt had remained unpaid with date of default being 13.10.2018. Relying on the standard that the adjudicating authority must be satisfied that a default has occurred and applying settled principles that the court need only examine records or evidence produced by the financial creditor, the Tribunal held the petition complete and fit for admission under Section 7. The Tribunal also noted the absence of any defect requiring rectification and that the application was filed in the prescribed proforma under the Rules. Consequently, the petition was admitted and CIRP ordered to be initiated against the corporate debtor. [Paras 9, 10, 12]

Petition under Section 7 admitted as default stood established and CIRP ordered.

Limitation and exclusion of period by Supreme Court in Suo Motu Writ Petition (C) 3 of 2020 - Application was within the period of limitation as extended by the Supreme Court's order excluding the period from 15.03.2020 to 28.02.2022. - HELD THAT: - Although the date of default was 13.10.2018 and the ordinary limitation would have expired on 12.10.2021, the Tribunal accepted the petitioner's reliance on the Supreme Court's order in the cognizance for extension of limitation (Suo Motu W.P. (C) 3 of 2020) which excluded the period from 15.03.2020 to 28.02.2022 for computing limitation and made available the balance period or a minimum of 90 days from 01.03.2022 as applicable. Applying that exclusion, the Tribunal held that the petition was filed within the extended limitation period and thus maintainable. [Paras 6, 7, 11]

Petition held to be within limitation by application of the Supreme Court's exclusion order.

Appointment of Interim Resolution Professional - compliance with Section 7(3)(b) and Rule 9(1) - Proposed Interim Resolution Professional satisfies statutory requirements and is appointed. - HELD THAT: - The Tribunal considered the written communication and disclosures of the proposed IRP, including declaration of no disciplinary proceedings, registration particulars and other required disclosures under the IBBI regulations and Rule 9(1). Finding that the proposed person fulfilled the requirements of Section 7(3)(b) and related regulations, the Tribunal appointed Mr. Gautam Singhal as Interim Resolution Professional for the corporate debtor. [Paras 13]

Proposed IRP approved and appointed as Interim Resolution Professional.

Public announcement and moratorium on admission - directions incidental to admission - Consequential directions regarding public announcement, moratorium and interim funding were issued and must be complied with. - HELD THAT: - On admission of the Section 7 application, the Tribunal directed the IRP to make the public announcement immediately (interpreted as within three days), invoked the moratorium under Section 14(1) with consequential application of Sections 14(2)-(3), and ordered the financial creditor to deposit an amount to meet IRP's initial expenses subject to adjustment by the Committee of Creditors. The Tribunal also directed communication of the order to the parties, the IRP and the Registrar of Companies for updating records. These directions were treated as necessary incidental steps to initiate the CIRP and to enable the IRP to perform statutory functions. [Paras 14, 15, 16, 17]

IRP to make public announcement, moratorium to operate, petitioner to deposit interim expenses and registry/ROC to be informed.

Final Conclusion: The Tribunal admitted the Section 7 petition on finding of default and maintainability within the extended limitation, appointed the proposed Interim Resolution Professional who satisfied statutory requirements, and issued consequential directions including public announcement, commencement of moratorium and interim funding to enable initiation of the CIRP.

Territorial jurisdiction - Section 60(1) of the Insolvency and Bankruptcy Code, 2016 - power to transfer under Rule 16 of NCLT Rules - transfer of proceedings by the President of NCLT

Territorial jurisdiction - Section 60(1) of the Insolvency and Bankruptcy Code, 2016 - This Tribunal lacks territorial jurisdiction to adjudicate the petition because the registered office of the corporate debtor is located outside the territorial jurisdiction of the Jaipur Bench. - HELD THAT: - The Tribunal examined the territorial prescription in Section 60(1) of the IBC, 2016, which vests adjudicatory authority in the NCLT Bench having jurisdiction over the place where the corporate debtor's registered office is situated. The respondent raised a preliminary objection that the corporate debtor's registered office is in New Delhi, placing jurisdiction with the New Delhi Bench. The petitioner relied on the location of work and an office in Rajasthan but chose not to file a written reply and limited submissions to oral argument. Having regard to the clear territorial prescription of Section 60(1), the Jaipur Bench concluded it could not entertain further prosecution of the petition and that the objection to maintainability was appropriate and relevant. The application raising the jurisdictional objection was therefore allowed and disposed of. [Paras 1, 2, 4]

IA No. 135/JPR/2022 allowed; the Jaipur Bench has no jurisdiction to continue the matter under Section 60(1) of the IBC, 2016.

Power to transfer under Rule 16 of NCLT Rules - transfer of proceedings by the President of NCLT - Whether the petition should be transferred to the NCLT, New Delhi Bench and the procedural mechanism to effect such transfer. - HELD THAT: - The Tribunal noted that return for fresh filing before the New Delhi Bench would inconvenience the petitioner and observed that Rule 16 of the NCLT Rules vests the power to transfer cases in the President of the NCLT. To avoid delay and inconvenience, the Registry was directed to transfer the matter to the NCLT, New Delhi, but only subject to the prior concurrence and approval of the President of the NCLT (and any other directions as may be given). The direction thus contemplates an administrative transfer under Rule 16 rather than adjudication on merits by the Jaipur Bench. [Paras 3, 5]

Registry directed to transfer the matter to NCLT, New Delhi, subject to the prior concurrence and approval of the President of the NCLT and any other directions.

Final Conclusion: The Tribunal held that it lacks territorial jurisdiction under Section 60(1) of the IBC, 2016 and allowed IA No. 135/JPR/2022; the Registry is directed to effect transfer of the proceedings to the NCLT, New Delhi, subject to the prior concurrence and approval of the President of the NCLT.

Operational debt - default - documentary evidence (invoices, delivery challans, ledger) - limitation - acknowledgement of debt under Section 18 of the Limitation Act - admission under section 9 of the Insolvency and Bankruptcy Code, 2016 - moratorium - appointment of Interim Resolution Professional

Operational debt - default - documentary evidence (invoices, delivery challans, ledger) - Existence of an operational debt due and payable by the Corporate Debtor and default thereon - HELD THAT: - The Adjudicating Authority examined the invoices, delivery challans and the ledger account and found that they disclose supplies of garments to the Corporate Debtor with the Corporate Debtor's TIN and payment of GST on the supplies. The Corporate Debtor did not specifically deny receipt of these documents in reply to the demand notice and its ledger account was not disputed. The Tribunal also noted the Corporate Debtor's earlier pleadings before the Hon'ble High Court of Calcutta which referred to a cheque handed over in respect of goods procured. On these materials the Authority was satisfied that an operational debt of Rs. 24,75,740 was due and payable and that the Corporate Debtor had defaulted in repayment. [Paras 10, 13]

Operational debt established and default proved; petition under section 9 made out.

Limitation - acknowledgement of debt under Section 18 of the Limitation Act - Whether the claim under section 9 was barred by limitation - HELD THAT: - The Authority found that the last consignment was delivered on 26.02.2016 and that a cheque (No. 345098) dated 24.02.2016 was issued in partial discharge of the operational debt. Further, the Corporate Debtor's averment in proceedings before the Hon'ble High Court of Calcutta acknowledging that a cheque had been handed over in respect of goods procured was treated as an acknowledgement of debt within the meaning of Section 18 of the Limitation Act. Relying on these facts and relevant precedent cited by the Operational Creditor, the Tribunal held that a fresh three-year period of limitation accrued from the date of acknowledgement and that the section 9 application was not time-barred. [Paras 11, 12]

Claim under section 9 is not barred by limitation; application is within time.

Admission under section 9 of the Insolvency and Bankruptcy Code, 2016 - moratorium - appointment of Interim Resolution Professional - Relief to be granted on admission of the section 9 petition - HELD THAT: - Having found that an operational debt existed and that default was established and not time-barred, the Tribunal proceeded to admit the petition under section 9 of the IBC. Consequential directions were issued declaring moratorium for the purposes of section 14 of the Code, directing public announcement of CIRP, and appointing an Interim Resolution Professional in accordance with the IBBI Regulations. The Authority directed payment of prescribed initial expenses to the IRP and ancillary compliances including filing of Form-2 and informing the IRP. [Paras 13, 14, 15]

Section 9 petition admitted; moratorium declared and Interim Resolution Professional appointed; CIRP directed to commence.

Final Conclusion: The Tribunal held that the Operational Creditor established an operational debt and default which was not barred by limitation (acknowledgement amounting to fresh limitation), admitted the petition under section 9 of the IBC, declared moratorium and appointed an Interim Resolution Professional to commence the Corporate Insolvency Resolution Process.

Liquidation of corporate debtor - corporate insolvency resolution process (CIRP) expiry - committee of creditors' decision to liquidate - no resolution plan received - appointment of liquidator - powers of board cease on liquidation - liquidator to initiate liquidation process under Chapter III - public notice of liquidation - prohibition on suits during liquidation subject to limited liberty to liquidator - notice of discharge to officers, employees and workmen upon liquidation - filing of liquidation order with Registrar of Companies

Liquidation of corporate debtor - no resolution plan received - committee of creditors' decision to liquidate - corporate insolvency resolution process (CIRP) expiry - Order for liquidation of Dulichand Auto Sales Private Limited - HELD THAT: - The Resolution Professional reported that no resolution plan was received and placed before the Committee of Creditors at its 7th meeting held on 16/04/2022, which approved liquidation by 93% voting share. The 180 days CIRP period was to expire on 16/05/2022. On the basis that no alternative resolution plan exists and the CIRP period is ending, the Adjudicating Authority directed that the Corporate Debtor be liquidated, allowing the IA filed by the Resolution Professional and ordering liquidation in terms of the Code.

IA(IBC)/384(KB) 2022 allowed and the Corporate Debtor ordered to be liquidated.

Appointment of liquidator - liquidator to initiate liquidation process under Chapter III - powers of board cease on liquidation - public notice of liquidation - prohibition on suits during liquidation subject to limited liberty to liquidator - notice of discharge to officers, employees and workmen upon liquidation - filing of liquidation order with Registrar of Companies - Appointment of Liquidator and directions governing the liquidation process - HELD THAT: - The Adjudicating Authority appointed the Resolution Professional, subject to possession of a valid Authorisation for Assignment from his Insolvency Professional Agency, as Liquidator. The Liquidator was directed to commence the liquidation process under the Code and applicable liquidation regulations, issue public notice in the same newspapers earlier used, and assume the powers of the Board of Directors and key managerial personnel which shall cease. The order records that, subject to the Code's provisions relating to suits, no suit or proceeding shall be instituted by or against the Corporate Debtor except that the Liquidator may institute proceedings on behalf of the Corporate Debtor with prior approval of the Adjudicating Authority. The liquidation order was to operate as a notice of discharge to officers, employees and workmen except where business is continued by the Liquidator, and a copy of the order was to be filed with the Registrar of Companies, West Bengal, Kolkata.

Mr. Jai Narayan Gupta appointed as Liquidator (subject to AFA); Liquidator directed to initiate liquidation with attendant notices, cessation of board powers, restrictions on suits, discharge notice to employees, and filing of the order with the Registrar of Companies.

Final Conclusion: The Tribunal allowed the liquidation application: Dulichand Auto Sales Private Limited is ordered to be liquidated for want of any resolution plan before the expiry of the CIRP period, and the Resolution Professional is appointed as Liquidator (subject to requisite authorisation) with directions to carry out the liquidation process and comply with statutory and procedural formalities.

Revival and applicability of the twin conditions in Section 45(1) of the PMLA - interaction between amended Section 45(1) of PMLA and bail jurisdiction under Section 439 Cr.P.C. - admissibility and evidentiary value of statement under Section 50 of PMLA - prima facie satisfaction for refusal of bail in socio-economic/economic offences

Revival and applicability of the twin conditions in Section 45(1) of the PMLA - interaction between amended Section 45(1) of PMLA and bail jurisdiction under Section 439 Cr.P.C. - Whether the 2018 amendment to Section 45(1) of PMLA reinstates the twin conditions for grant of bail and thereby requires an accused charged under PMLA to satisfy those conditions in addition to the general principles under Section 439 Cr.P.C. - HELD THAT: - The court examined the effect of the 2018 substitution in Section 45(1) which replaced the earlier reference to offences under Part A of the Schedule with the words "under this Act". The judgment holds that the defect identified by the Apex Court in Nikesh Tarachand Shah - namely, that the twin conditions had no nexus with an offence of money laundering because they depended on predicate offences in Part A - has been cured by the amendment. In consequence, the twin conditions as amended are referrable and operative when adjudicating bail applications in PMLA matters. The court further observed that Section 65 makes Cr.P.C. applicable only insofar as not inconsistent with PMLA and Section 71 gives PMLA overriding effect; accordingly, the twin conditions in Section 45(1) operate in addition to limitations under Section 439 Cr.P.C. The court noted subsequent judicial treatment post amendment (including the application of Section 45 principles in later decisions) and concluded that an accused seeking bail under PMLA must satisfy the rigours of the twin conditions as well as general bail principles. [Paras 12, 14, 15]

The 2018 amendment to Section 45(1) restored the applicability of the twin conditions to bail applications in PMLA cases, and courts must apply those conditions in addition to Section 439 Cr.P.C.

Admissibility and evidentiary value of statement under Section 50 of PMLA - prima facie satisfaction for refusal of bail in socio-economic/economic offences - Whether, on the materials on record (including the petitioner's statement under Section 50 of PMLA and bank records), the petitioner should be released on regular bail. - HELD THAT: - The court treated the petitioner's statement under Section 50 of PMLA as admissible material which can be used for consideration of bail, drawing analogy to statements under customs provisions and relevant authorities. The materials - including the Section 50 statement admitting investment and appointment as pin stockist, and the bank transaction records indicating substantial transactions through the petitioner's company and receipt of commission - prima facie connect the petitioner to receipt and layering of proceeds of the alleged scheduled offence. Having regard to the stage of investigation, the ongoing nature of probe, the absence of satisfaction that there are reasonable grounds to believe the petitioner is not guilty (as required by the twin condition), and the gravity and socio economic character of the alleged offence, the court found it was not possible at this stage to grant bail. The court emphasised these findings are limited to the bail application and do not express any final view on merits. [Paras 16, 17, 18]

Bail is refused; the petitioner cannot be released on bail at this stage.

Final Conclusion: The court holds that the 2018 amendment to Section 45(1) of PMLA renders the twin conditions applicable to bail applications in PMLA matters (in addition to Section 439 Cr.P.C.), and on the materials before it - including the petitioner's Section 50 statement and bank records giving prima facie link to proceeds of the alleged scheme - the petitioner is not entitled to regular bail; the bail application is dismissed.

Failure to consider administrative circulars - remand for fresh consideration - opportunity of personal hearing - statutory appellate remedy

Failure to consider administrative circulars - statutory appellate remedy - Whether the order in original confirming classification of the appellant's production of oil as "mining service" could be sustained notwithstanding that subsequent Ministry of Finance circulars were not considered, and whether the High Court should have relegated the appellant to statutory appellate remedy. - HELD THAT: - The Court recorded that after personal hearing the adjudicating authority delayed passing the order in original for about two years during which two Ministry of Finance circulars favorable to the appellant were issued but were not referred to in the impugned order. The learned Judge below had directed the appellant to pursue the statutory appeal remedy before the CESTAT without adjudicating the writ on merits because factual aspects required consideration. This Court found some bonafide in the appellant's contention that the circulars applied and were not considered by the adjudicating authority. Although a statutory appeal remains an available remedy and is a fact finding forum, the Court held that in the circumstances it was appropriate to permit the appellant an opportunity to place documentary evidence and have the adjudicating authority reconsider the matter rather than confine the appellant solely to the appellate route. [Paras 8]

The Court accepted that the circulars were not considered and, while recognising the availability of a statutory appeal, directed remedial action by remanding the matter to the adjudicating authority for fresh consideration with an opportunity to the appellant to produce evidence.

Remand for fresh consideration - opportunity of personal hearing - Remedial direction to be issued to the first respondent and the form of further proceedings. - HELD THAT: - In view of the failure to consider the subsequent circulars and the delay in passing the order in original, the Court set aside both the order in original dated 29.05.2019 and the High Court order dated 12.11.2019 which had directed pursuit of the statutory appeal. The matter was remanded to the first respondent to afford a fresh personal hearing to the appellant on the specified date and time, permitting the appellant to produce all documentary evidence in support of its plea. The adjudicating authority was directed to pass appropriate orders thereafter on merits and on the available materials within four weeks of the hearing date, failing which the authority may proceed to decide on the record. [Paras 9]

Both impugned orders set aside; matter remanded to the first respondent for fresh consideration after personal hearing on the specified date, with direction to decide on merits within four weeks thereafter.

Final Conclusion: Writ appeal allowed to the extent of setting aside the impugned orders and remanding the matter to the adjudicating authority for fresh consideration after affording a personal hearing to the appellant and permitting production of documentary evidence; adjudicating authority to decide on merits within four weeks of the hearing. No costs.

Levy of service tax on reimbursed expenses - valuation for service tax as gross amount charged for such service - scope and mandate of Section 67(1) - value limited to consideration for services actually provided - Rule 5 of the Valuation Rules exceeding the mandate of Section 67

Levy of service tax on reimbursed expenses - valuation for service tax as gross amount charged for such service - scope and mandate of Section 67(1) - value limited to consideration for services actually provided - Whether amounts recovered as reimbursement of out-of-pocket expenses formed part of the taxable value and were exigible to service tax. - HELD THAT: - The Tribunal applied the ratio of the Supreme Court in Union of India v. Intercontinental Consultant and Technocrats which held that valuation for service tax must be the gross amount charged by the service provider for the taxable service, i.e., the consideration qua rendering of that service, and not other amounts not calculated for providing such taxable service. Although subordinate rules (Rule 5) included reimbursable expenses within gross value, the Court found that such a rule went beyond the mandate of Section 67(1). Consequently, reimbursed expenses that are not consideration for the service itself cannot be subjected to service tax. The Tribunal accepted this principle and held that the Commissioner (Appeals) was not justified in sustaining demand of service tax on the reimbursed expenses claimed by the appellant. [Paras 8, 9, 10, 11]

Demand of service tax on amounts recovered as reimbursements of conveyance, travelling and mobile expenses set aside; appeal allowed.

Final Conclusion: The order of the Commissioner (Appeals) confirming service tax on reimbursed out-of-pocket expenses is set aside; appeal allowed in view of the Supreme Court's interpretation that taxable value is limited to consideration for the service and does not include such reimbursements.

Classification of services - Cargo Handling Service - Mining Service - Transport of goods by road service - definition of "mines" under the Mines Act, 1952 - service tax liability

Cargo Handling Service - Transport of goods by road service - classification of services - Whether activities of loading, transportation and unloading of coal for the period 01.04.2007 to 30.05.2007 amounted to "cargo handling service" or were classifiable otherwise. - HELD THAT: - The Tribunal held that the Supreme Court has directly addressed the nature of identical activities and held that transportation of coal from pit-heads to railway sidings is more appropriately classifiable as "transport of goods by road service" and does not involve a service "in relation to" mining as contemplated by the definition of "mining service." Applying that authority, the activities in question for the period 01.04.2007 to 30.05.2007 cannot be sustained as taxable under the head "Cargo Handling Service." The Commissioner (Appeals) was therefore not justified in upholding liability under "Cargo Handling Service" for that period. [Paras 14]

Liability under "Cargo Handling Service" for 01.04.2007 to 30.05.2007 rejected; activities held to fall under "transport of goods by road service."

Mining Service - definition of "mines" under the Mines Act, 1952 - classification of services - Whether activities of loading, transportation and unloading of coal from 01.06.2007 onwards amounted to "mining service." - HELD THAT: - The Tribunal found that the Commissioner (Appeals)'s conclusion that these activities constituted "mining service" from 01.06.2007 was contrary to the Supreme Court's conclusion in Singh Transporters, which rejected treating such transportation within mining service and held the definition of "mines" in the Mines Act does not create the requisite nexus to classify the activity as a service "in relation to" mining. On that basis the Commissioner (Appeals) was not justified in treating the appellant's services as "Mining Service" w.e.f. 01.06.2007. [Paras 13]

Liability under "Mining Service" from 01.06.2007 onwards cannot be sustained; activities not held to be "mining service."

Final Conclusion: The impugned order of the Commissioner (Appeals) is set aside; appeal allowed on merits as the activities were not chargeable as "Cargo Handling Service" for 01.04.2007 to 30.05.2007 nor as "Mining Service" from 01.06.2007 onwards, and the demand sustained by the authorities is accordingly vacated.

Denial of refund of accumulated CENVAT credit and bar on re-credit - Monetization of accumulated credit for exporters - Recovery of wrongly availed credit under rule 14 of CENVAT Credit Rules, 2004 - Non-availability of recovery power under rule 5 of CENVAT Credit Rules, 2004 - Remand for fresh consideration by first appellate authority

Recovery of wrongly availed credit under rule 14 of CENVAT Credit Rules, 2004 - Non-availability of recovery power under rule 5 of CENVAT Credit Rules, 2004 - Monetization of accumulated credit for exporters - Scope of rule 5 vis-a -vis rule 14 regarding denial or recovery of accumulated CENVAT credit claimed in refund applications by exporters. - HELD THAT: - The Tribunal held that recovery proceedings in accordance with rule 14 are the sole statutory mechanism for denial and recovery of credit wrongly availed; rule 5, which governs sanction of refund/monetization for exporters, does not provide for recovery of non-monetized credit and, when refund is denied, the credit remains retained rather than being recoverable under rule 5. This conclusion follows from the scheme of CENVAT Credit Rules, 2004, including the general provisions of rule 3 and the self-contained re-determination envisaged in rule 6 which is enforceable through rule 14. Consequently, denial of monetization under rule 5 cannot be treated as authority to effectuate recovery of credit except by following the procedure in rule 14. [Paras 7]

Rule 14 is the exclusive recovery mechanism for wrongly availed credit; rule 5 does not permit recovery of non-monetized credit and denial of refund under rule 5 does not automatically authorize barring re-credit.

Denial of refund of accumulated CENVAT credit and bar on re-credit - Remand for fresh consideration by first appellate authority - Whether the matters of denial of refund and the concomitant bar on re-credit require fresh consideration in light of binding Tribunal decisions and additional documentary evidence now available. - HELD THAT: - The Tribunal found that the appellant had not raised the statutory-competence point before the first appellate authority and now places before the Tribunal binding decisions and additional documents which may affect entitlement. As the first appellate authority has not had the opportunity to apply those decisions or examine the newly produced documentary evidence in the context of the denial and the bar on re-credit, the appropriate course is to remit the issue for fresh adjudication by the first appellate authority limited to the portions for which documentary support under notification no. 27/2012-CE (NT) dated 30th June 2012 is presented. The Tribunal accordingly directed reconsideration of the denial of refund and the bar on re-credit of the specified portion. [Paras 8]

Matter remanded to the first appellate authority for fresh determination of the grounds of appeal relating to denial of refund and bar on re-credit, in light of the Tribunal decisions and any documentary evidence now produced.

Final Conclusion: Appeals allowed by way of remand: the Tribunal clarified that rule 14 is the exclusive recovery mechanism for wrongly availed credit and remitted the disputed denial of refund and the bar on re-credit for fresh consideration by the first appellate authority in respect of the portion supported by documentary evidence.

Production of original documents - sufficiency of documentary evidence - reliance on departmental verification report - reassessment of demand in light of documents on record - remand for fresh consideration

Production of original documents - sufficiency of documentary evidence - reliance on departmental verification report - Whether the confirmation of the demand solely on the ground of non-production of original documents was sustainable and whether the documents on record require fresh adjudication. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) confirmed the demands only because the appellant allegedly failed to produce original documents. On perusal of the record the Tribunal observed that documents, including the Department's own verification report, were already on file and therefore the appellate finding that no documents were produced was incorrect. However, the Tribunal did not decide on the merits whether those documents relate to the specific invoices and amounts mentioned in the Show Cause Notice or whether they are sufficient to falsify the allegations. It held that such factual and documentary nexus and the sufficiency of the evidence can only be examined and finally determined by the adjudicating authority below. Accordingly, the matter was remanded to the Commissioner (Appeals) for reconsideration of the demands in the light of the documents produced and the verification report, with liberty to the appellant to file any additional documents and a direction to decide the matter within four months of receipt of the record. [Paras 6, 7]

Findings that no documents were produced are held to be wrong; matter remanded to Commissioner (Appeals) to verify whether the documents on record (and any additional documents filed) correspond to the invoices and amounts in the Show Cause Notice and are sufficient to determine liability, to be decided within four months.

Final Conclusion: Appeal allowed by way of remand; adjudicating authority below directed to reconsider the demands in light of documents on record and the verification report, with liberty to the appellant to furnish further documents and to decide the matter within four months.

Clandestine clearance - penalty under Rule 26 for acquiring, possessing or dealing in non-duty paid goods - liability of co-appellants dependent on establishment of clandestine removal by manufacturer - consequential setting aside of penalties upon quashing of demand against manufacturer

Clandestine clearance - penalty under Rule 26 for acquiring, possessing or dealing in non-duty paid goods - liability of co-appellants dependent on establishment of clandestine removal by manufacturer - Whether the penalty imposed under Rule 26 on the distributors for alleged acquisition/possession of clandestinely cleared cigarettes survives where the finding of clandestine manufacture and removal against the manufacturer has been set aside by this Tribunal. - HELD THAT: - The appellants are petty distributors alleged to have purchased and possessed cigarettes clandestinely cleared by the manufacturer. The Tribunal in a connected appeal against the same original order has held that there was no evidence to establish manufacture and clandestine removal by the manufacturer and set aside the demand and penalties against the manufacturer and other appellants. Given that the co-appellants' alleged wrongdoing was premised on the manufacturer's clandestine clearance, the cause of action against these distributors did not survive once the Tribunal quashed the finding of clandestine removal. On that basis the Tribunal set aside the impugned order insofar as it imposed penalty on these appellants and allowed their appeals with consequential benefits. [Paras 5]

Impugned order and the penalty imposed on the appellants under Rule 26 are set aside and the appeals are allowed with consequential benefits.

Final Conclusion: The Tribunal allowed the appeals and set aside the penalties imposed on the distributors under Rule 26, holding that once the finding of clandestine manufacture and removal against the manufacturer was quashed in the connected proceedings, the cause of action against these co-appellants did not survive; appeals disposed of with consequential benefits.

Precedent bindingness of Division Bench order in identical facts - requirement of a reasoned order under Section 35A(3) - remand for a speaking order and further inquiry - setting aside adjudication and grant of consequential benefits - relevance of ISO certification to adjudication

Precedent bindingness of Division Bench order in identical facts - requirement of a reasoned order under Section 35A(3) - remand for a speaking order and further inquiry - Whether the impugned adjudication order should be set aside in view of the Division Bench precedent in the appellant's own case and whether the remand by the Commissioner (Appeals) for a speaking order was sustainable. - HELD THAT: - The Tribunal found that the factual and legal controversy in the present appeal is squarely covered by the earlier Division Bench Final Order No.51429/2019 dated 15.04.2019 in the appellant's own case, which had set aside a similar adjudication under comparable facts. The appellant contended that the Commissioner (Appeals) ought to have passed a reasoned order on merits as contemplated by Section 35A(3), instead of merely remanding the matter to the adjudicating authority for a speaking order and further inquiry or tests. Having regard to the governing precedent of the Division Bench and the similarity of facts, the Tribunal accepted the appellant's position and held that the impugned order could not stand. The Tribunal therefore allowed the appeal and set aside the adjudication order rather than endorsing the remand for fresh inquiry.

The appeal is allowed; the impugned order is set aside in view of the Division Bench precedent and the appellant is entitled to consequential benefits.

Relevance of ISO certification to adjudication - Whether the finding that the appellant is an ISO certified company affected the outcome of the adjudication. - HELD THAT: - The Tribunal noted that the lower authority's factual finding regarding ISO certification was urged as erroneous by the appellant. However, the Tribunal's decision rested on the binding precedent in the appellant's favour; accordingly, any contested factual finding about ISO certification did not prevent the Tribunal from allowing the appeal. The determinative legal position derived from the Division Bench order rendered the disputed factual point immaterial to the final outcome.

The appellant's challenge to the factual finding on ISO certification did not preclude allowing the appeal in view of controlling precedent.

Final Conclusion: In view of a binding Division Bench precedent in the appellant's own case, the Tribunal allowed the appeal, set aside the impugned adjudication and directed that the appellant be given consequential benefits; the remand ordered below was not sustained.

Kerala Legal Benefit Fund levy - prospective operation of amendment - pre-deposit requirement for filing appeal - personal bond in lieu of sureties

Kerala Legal Benefit Fund levy - prospective operation of amendment - Extent of amount payable to the Kerala Legal Benefit Fund as pre-condition for numbering the appeal - HELD THAT: - The Court noted that the statute was amended on 07.04.2016 to mandate payment of 1% of the disputed tax to the Kerala Legal Benefit Fund, but held, following its earlier decision in O.P.(Tax) No.2/2017, that the amendment operates prospectively. Consequently, for the assessment year in question the petitioner is not required to pay the post amendment rate in full. The Court directed that remittance of 0.5% of the disputed tax to the Kerala Legal Benefit Fund is sufficient as a pre condition for proceeding with the appeal. [Paras 5]

Petitioner required to remit 0.5% of the disputed tax to the Kerala Legal Benefit Fund as the pre deposit for numbering the appeal.

Pre-deposit requirement for filing appeal - personal bond in lieu of sureties - Conditions on which the appellate authority must number and entertain the appeal - HELD THAT: - The Court directed that, upon payment of 0.5% of the disputed tax (if not already paid) within four weeks and on furnishing a personal bond without sureties undertaking to pay the balance due to the Kerala Legal Benefit Fund if the appeal fails, the appellate authority shall number the appeal and proceed to consider it on merits in accordance with law. The direction makes the numbering contingent on the specified limited payment and provision of the personal bond. [Paras 6]

On payment of 0.5% and furnishing a personal bond without sureties, the appellate authority shall number the appeal and decide it on merits.

Final Conclusion: Writ petition disposed: petitioner permitted to have the appeal numbered and heard on merits on payment of 0.5% of the disputed tax to the Kerala Legal Benefit Fund within four weeks and on furnishing a personal bond without sureties to cover the balance, in accordance with the Court's view that the amendment to require 1% operates prospectively.

Section 138 of the Negotiable Instruments Act - proviso to Section 142(b) of the Negotiable Instruments Act - condonation of delay - cognizance of offence - right to hearing before condonation - substantive nature of proviso - remand for fresh consideration

Section 138 of the Negotiable Instruments Act - proviso to Section 142(b) of the Negotiable Instruments Act - condonation of delay - cognizance of offence - substantive nature of proviso - Validity of taking cognizance and proceeding with trial when complaint under Section 138 was filed after the statutory thirty-day period without a prior application for condonation of delay under the proviso to Section 142(b). - HELD THAT: - The Court held that when a complaint under Section 138 is filed beyond the thirty-day period prescribed by clause (b) of Section 142(1), the proviso requires the complainant to satisfy the Court that there was sufficient cause for the delay. That proviso is substantive in nature and cannot be bypassed. To avail the proviso, the complainant must file an application for condonation of delay explaining sufficient reasons; the court must issue notice of that application along with a copy of the complaint to the accused and decide the condonation application after hearing the parties. Cognizance ought not to be taken and trial proceeded with without exhausting this stage. Accordingly, the trial court erred in taking cognizance and proceeding with trial where the complaint had been filed ten days beyond the statutory period without any condonation application or specific order condoning the delay (finding that essential requirements of Section 138/Section 142(b) were not complied with). [Paras 13, 14, 17, 19, 20]

The taking of cognizance and continuation of trial was improper where the complaint was filed beyond the prescribed period without a condonation application and without giving the accused the mandated opportunity to be heard; the essential requirements of Section 138/Section 142(b) were not complied with.

Right to hearing before condonation - remand for fresh consideration - Appropriate remedy where cognizance was taken and the accused acquitted despite non-compliance with the condonation procedure. - HELD THAT: - Having found that the trial court wrongly took cognizance and proceeded without the statutorily required condonation process and hearing, the High Court set aside the trial court's judgment of acquittal. The matter was remitted to the trial court for fresh proceedings in accordance with the law: the trial court is to fix a date within two weeks, the complainant must take appropriate steps (including filing and pursuing any condonation application), and the trial court shall proceed after giving the accused an opportunity of being heard on the condonation question and thereafter decide further proceedings as per law. [Paras 20, 21]

Impugned judgment of acquittal is set aside and the matter is remitted to the trial court to proceed afresh, with the trial court to decide any condonation application after hearing the parties and then proceed in accordance with law.

Final Conclusion: The High Court held that the proviso to Section 142(b) is substantive and mandates filing of an application for condonation of delay and hearing of the accused before cognizance is taken where a Section 138 complaint is filed after the thirty-day period; the acquittal recorded by the trial court is set aside and the matter is remitted for fresh proceedings consistent with these legal principles.

Expeditious trial under Section 143(3) of the Negotiable Instruments Act - Criminal complaint under Section 138 of the Negotiable Instruments Act - Direction to trial court to conclude trial within six months - Effect of COVID-19 on judicial timelines - Constitution Bench direction in Re: Expeditious Trial of Cases under Section 138

Expeditious trial under Section 143(3) of the Negotiable Instruments Act - Criminal complaint under Section 138 of the Negotiable Instruments Act - Direction to trial court to conclude trial within six months - Effect of COVID-19 on judicial timelines - Constitution Bench direction in Re: Expeditious Trial of Cases under Section 138 - Direction to the trial court to expedite and endeavour to conclude the Section 138 complaint within six months from production of certified copy of this order. - HELD THAT: - The complaint under Section 138 of the Negotiable Instruments Act has been pending since September 2019. While the court noted the intervening COVID-19 pandemic as a cause for delay, Section 143(3) of the Negotiable Instruments Act requires that trials under the Act be conducted as expeditiously as possible and that the trial court shall make all endeavours to conclude trial within six months from the date of filing. The Constitution Bench direction in Re: Expeditious Trial of Cases under Section 138 also mandates expedition of such proceedings. Balancing the factual delay with the statutory and judicial mandate for prompt disposal, the High Court directed the trial court to expedite the proceedings and to make all endeavours to decide the complaint within six months from the date on which a certified copy of the High Court's order is produced to the trial court.

The trial court is directed to expedite the proceedings in Complaint Case No. 13996 of 2020 and to endeavour to decide the complaint within six months from production of a certified copy of this order.

Final Conclusion: The petition is disposed of with a direction to the trial court to expedite and, as far as possible, conclude the Section 138 complaint within six months from the date of production of a certified copy of this order; COVID-19 is noted as a cause of past delay but does not displace the statutory and judicial mandate for expedition.