TaxTMI Updates e-Newsletter
Jun 04,2022

Refund of voluntarily deposited amount - Voluntary deposit under Section 73(5) of the Central Goods and Services Tax Act, 2017 - Adjudication of demand and issuance of notice

Refund of voluntarily deposited amount - Voluntary deposit under Section 73(5) of the Central Goods and Services Tax Act, 2017 - Petition for direction to refund amount allegedly illegally collected after search - HELD THAT: - The petitioner sought mandamus for refund of a claimed amount collected after a search. The Court examined DRC-03 and the petitioner's voluntary statement dated 09.04.2021, which record that the petitioner voluntarily deposited Rs. 50,00,000/- and admitted liability to that extent. The receipt itself records the amount as voluntarily deposited under Section 73(5) of the CGST Act, 2017. In view of the admitted voluntary deposit and the documentary record, the Court found no ground at this stage to direct refund. The respondents are, however, directed to issue any requisite notice and proceed with adjudication of the demand on merits expeditiously.

No direction for immediate refund; petition dismissed subject to respondents issuing notice and adjudicating the demand.

Final Conclusion: Writ petition dismissed. The Court declined to direct refund because the deposit was recorded as voluntary under Section 73(5) CGST Act, 2017; respondents directed to issue notice and adjudicate the demand expeditiously.

Principles of natural justice - opportunity of hearing - show cause notice - appeal under Section 107 of the CGST/ SGST Act, 2017 - alternative remedy of appeal

Principles of natural justice - opportunity of hearing - show cause notice - Whether the impugned order under the CGST/SGST Act, 2017 was passed in breach of principles of natural justice for failure to afford an opportunity of hearing to the petitioner. - HELD THAT: - Court examined the impugned order and noted that the Proper Officer had issued a detailed show cause notice based on documentary evidence and recorded that the assessee appeared and specifically pressed points Nos.5, 7, 9 and 10 of the show cause notice. The impugned order records the petitioner's submissions on those points and gives reasons for rejecting them. The petitioner did not contend before the Court that he had pressed replies to all points of the show cause notice which were disregarded. On this factual foundation the Court found no demonstrated breach of the principles of natural justice in the conduct of the proceedings by the Proper Officer.

The plea of violation of principles of natural justice was rejected.

Appeal under Section 107 of the CGST/ SGST Act, 2017 - alternative remedy of appeal - Whether the writ petition is maintainable in view of the availability of an alternative statutory remedy of appeal. - HELD THAT: - Having found that the impugned order records presentation of the petitioner's submissions and their consideration, the Court observed that the petitioner has an alternative remedy of appeal under Section 107 of the CGST/SGST Act, 2017 in which questions of fact and law may be raised. In exercise of its supervisory jurisdiction the Court declined to entertain the writ petition where such an alternative remedy is available. The Court further directed that if the petitioner files the statutory appeal in compliance with the provisions, the appellate authority shall hear the appeal without being influenced by observations in the present order.

Writ petition dismissed on account of availability of the alternative remedy of appeal; appellate authority to hear the appeal afresh uninfluenced by this order.

Final Conclusion: Writ petition dismissed; alternative statutory remedy of appeal under Section 107 of the CGST/SGST Act, 2017 is available and the appellate authority shall hear any appeal filed in accordance with law without being influenced by observations made in this order.

Value representing supplier's margin where depreciation claimed under Section 32 of the Income-tax Act, 1961 - GST rate on supply of old and used motor vehicles (SUVs) - valuation exclusive of GST - treatment where input tax credit not availed under Section 17(5) of the CGST Act, 2017

Value representing supplier's margin where depreciation claimed under Section 32 of the Income-tax Act, 1961 - Value on which GST is to be charged when a registered person who has claimed depreciation sells an old and used car. - HELD THAT: - The Authority applied Explanation (i) to Notification 8/2018-CT(R) and held that where the supplier has claimed depreciation under Section 32 of the Income-tax Act, the value representing the supplier's margin is the difference between the consideration received for the supply and the depreciated value of the goods on the date of supply. The Explanation further provides that if such margin is negative, it shall be ignored. The applicant's factual position that depreciation was claimed under the Income-tax Act brings the sale within the scope of the Explanation, and thus the margin-based valuation formula governs the taxable value of the intended supply. [Paras 7, 8]

Value for the intended supply shall be the consideration received minus the depreciated value of the car as per Section 32 of the Income-tax Act; negative margin to be ignored.

GST rate on supply of old and used motor vehicles (SUVs) - Rate of GST leviable on sale of the used SUV by the registered person. - HELD THAT: - On the facts that the vehicle falls within entry at serial no. 3 of Notification 8/2018-CT(R) (old and used motor vehicles of engine capacity exceeding 1500 cc, popularly known as SUVs, including utility vehicles, with the Explanation regarding dimensions and clearance), the Authority applied the rate specified in the notification. Having classified the car within that entry, the applicable rate is 9% CGST and 9% SGST, totaling 18%. [Paras 7, 8]

GST rate leviable is 18% (9% CGST and 9% SGST).

Value representing supplier's margin where depreciation claimed under Section 32 of the Income-tax Act, 1961 - treatment where input tax credit not availed under Section 17(5) of the CGST Act, 2017 - Whether the value that represents the margin of the supplier can be taken as the taxable value and GST can be charged on such margin where ITC was not availed. - HELD THAT: - The Authority noted the applicant had not availed input tax credit and that the vehicle falls under the notification entry which prescribes margin-based valuation where depreciation has been claimed. Accordingly, the margin as computed under the Explanation (difference between consideration and depreciated value) constitutes the value on which GST is to be charged. The absence of ITC does not preclude application of the notification's valuation methodology where its conditions are met. [Paras 7, 8]

The margin (consideration minus depreciated value) may be taken as the taxable value and GST charged accordingly.

Valuation exclusive of GST - Whether the value representing the supplier's margin is inclusive or exclusive of GST. - HELD THAT: - Relying on Explanation (i) to Notification 8/2018-CT(R), the Authority clarified that the valuation representing the margin is to be taken exclusive of GST. The Explanation contemplates computation of the margin as a net difference between consideration and depreciated value; that net margin is the taxable base and is not to be treated as inclusive of the tax being levied on it. [Paras 8]

The value representing the supplier's margin is exclusive of GST.

Final Conclusion: Advance Ruling: for the intended sale of the used SUV (where depreciation was claimed), the taxable value is the consideration received less the depreciated value as per Section 32 of the Income-tax Act (negative margin ignored); GST is leviable at 18% (9% CGST + 9% SGST); and the margin-based valuation is to be taken exclusive of GST.

Show cause notice under Section 148A(b) - order under Section 148A(d) - notice under Section 148 - reopening of assessment - principles of natural justice - remand for fresh adjudication - reasoned order

Order under Section 148A(d) - notice under Section 148 - principles of natural justice - remand for fresh adjudication - reasoned order - Impugned order dated 31st March, 2022 under Section 148A(d) and notice dated 31st March, 2022 under Section 148 for AY 2018-19 were vitiated by lack of opportunity to file reply and were set aside and remanded to the Assessing Officer. - HELD THAT: - The High Court found that the petitioner had not been afforded a proper opportunity to file a reply to the show cause notice and that the order under Section 148A(d) was not a decision on merits. On the respondents' concession that the petitioner lacked the opportunity and that the order was not on merits, the court held that the appropriate course was to set aside the impugned order and notice and remit the matter to the Assessing Officer for fresh consideration. The petitioner was granted liberty to file additional objections to the show cause notice within a prescribed short period, and the Assessing Officer was directed to decide the matter by a reasoned order in accordance with law within a stipulated timeframe. The Court expressly refrained from adjudicating the merits of the controversy and left the parties' rights and contentions open.

Impugned order under Section 148A(d) and notice under Section 148 (dated 31-03-2022) set aside; matter remanded to Assessing Officer for fresh, reasoned decision; petitioner permitted to file additional reply within two weeks and AO to decide within eight weeks; rights left open.

Show cause notice under Section 148A(b) - reopening of assessment - Substantive contention that an IGST refund (a balance-sheet item) could not constitute 'income chargeable to tax having escaped assessment' under Section 147/first proviso to Section 148 was not decided by the Court and was remanded to the Assessing Officer for fresh consideration. - HELD THAT: - The petitioner contended that the IGST refund is a balance-sheet item and not a claim of income chargeable to tax which has escaped assessment, and hence that the show cause notice under Section 148A(b) and any reopening under Section 147/148 would be impermissible. The Court did not pronounce on this substantive legal contention; instead, because the procedural infirmity (lack of opportunity to reply and absence of a merits decision) was established, the Court remitted the contentious issues, including the legality of treating the IGST refund as escapement of income, to the Assessing Officer to be considered afresh after hearing the petitioner. The merits and legality of the reopening were therefore left to be decided by the AO in the remand proceedings.

Substantive question on whether the IGST refund constitutes escaped income under Section 147/first proviso to Section 148 remitted to the Assessing Officer for fresh adjudication; Court did not decide merits.

Final Conclusion: The impugned order under Section 148A(d) and the notice under Section 148 dated 31-03-2022 (AY 2018-19) were set aside and the matter remanded to the Assessing Officer for fresh, reasoned consideration; the petitioner may file additional objections within two weeks and the AO is directed to decide within eight weeks; the Court did not adjudicate the merits and left parties' rights open.

Rectification of certificates under Direct Tax Vivad Se Vishwas Act, 2020 - Right to opportunity of hearing - Challenge to pre-decisional notice - Judicial restraint in premature adjudication

Challenge to pre-decisional notice - Judicial restraint in premature adjudication - Right to opportunity of hearing - Ext.P12 notice issued to grant an opportunity of hearing is not susceptible to pre-emptive judicial interference and cannot be quashed before a decision is taken. - HELD THAT: - The Court held that Ext.P12 is merely a notice granting an opportunity of hearing to the petitioner pursuant to the petitioner's own applications (Ext.P10 and Ext.P11) seeking rectification of Form No.3. No final decision to cancel and reissue Form No.3 had been taken at the time of challenge. Interdicting the notice at the pre-decisional stage would amount to premature adjudication; all contentions available to the petitioner can be raised before the 2nd respondent at the hearing and, if aggrieved by any subsequent decision, appropriate remedies remain open. In these circumstances, judicial restraint is warranted and the challenge to Ext.P12 was not maintainable prior to the departmental decision. [Paras 5, 6]

Challenge to Ext.P12 dismissed; the notice is not to be quashed at this stage and the petitioner must be heard before any decision is taken.

Rectification of certificates under Direct Tax Vivad Se Vishwas Act, 2020 - Right to opportunity of hearing - The applications for rectification of Form No.3 (Ext.P10 and Ext.P11) must be considered afresh after granting the petitioner an opportunity of hearing; the matter is remitted to the 2nd respondent for expeditious decision. - HELD THAT: - Although the Court declined to quash the pre-decisional notice, it directed the 2nd respondent to proceed with the process of hearing and to consider Ext.P10 and Ext.P11 on merits. The Court required issuance of a fresh notice fixing a fresh date for hearing and mandated that appropriate orders on the rectification applications be passed after affording the petitioner an opportunity to be heard. The remand is for fresh consideration and decision by the 2nd respondent within a specified timeframe. [Paras 6]

Proceedings remitted to the 2nd respondent to issue a fresh hearing notice and decide Ext.P10 and Ext.P11 after hearing the petitioner, expeditiously and in any event within two months from receipt of the judgment.

Final Conclusion: Writ petition disposed of: challenge to the pre-decisional hearing notice (Ext.P12) rejected; respondent directed to issue a fresh hearing notice and decide the petitioner's rectification applications (Ext.P10 and Ext.P11) after hearing the petitioner, within two months.

Restriction on personal liberty under Section 230 of the Income Tax Act - personal liability under Section 179 of the Income Tax Act - quashment of travel ban where the tax liability forming its basis ceases to exist - effect of appellate order remitting assessment for fresh consideration

Restriction on personal liberty under Section 230 of the Income Tax Act - personal liability under Section 179 of the Income Tax Act - quashment of travel ban where the tax liability forming its basis ceases to exist - effect of appellate order remitting assessment for fresh consideration - Whether the order dated 19.07.2018 (Ext.P20) issued under Section 230 of the Income Tax Act, 1961 restraining the petitioner from leaving India could be sustained after the tax liabilities cited as its basis were erased or discharged. - HELD THAT: - The Court found that the tax liability asserted against the Company had been set aside by the Appellate Tribunal and the matter stood remitted to the assessing officer for fresh consideration; consequently, the Company could not at present be said to be liable to pay any tax that would justify restraints under Section 179 or a travel ban under Section 230. Independently, the individual tax liability of the petitioner, as modified in appeal, had been reduced and subsequently discharged by the petitioner. Both counsel conceded, and the Court recorded, that the individual component of the liability recited in Ext.P20 no longer subsisted. Since the impugned order under Section 230 rested on those two liabilities and both had ceased to operate as its basis-one by appellate setting aside and remand, the other by payment-the restrictive order could not be maintained.

Ext.P20 is quashed and the order dated 19.07.2018 issued under Section 230 of the Income Tax Act is set aside.

Final Conclusion: Writ petition allowed; the travel ban imposed by the 2nd respondent under Section 230 is quashed because the tax liabilities forming the basis of that order have been either remitted for fresh consideration by the appellate authority or discharged by the petitioner.

Revision under section 263 - allowance under section 54F - failure to make enquiry - erroneous and prejudicial to the interests of the revenue - investigative duty of the Assessing Officer

Revision under section 263 - allowance under section 54F - failure to make enquiry - investigative duty of the Assessing Officer - Validity of the Principal Commissioner of Income Tax's order under section 263 setting aside the assessment on ground that the Assessing Officer failed to make requisite enquiries regarding the assessee's claim under section 54F. - HELD THAT: - The Principal CIT found that the assessment order was silent on the assessee's claim of exemption under section 54F and that the Assessing Officer made no enquiry or findings on that integral aspect of the capital gains computation. The Tribunal noted that the addition under section 50C and the issue of applicability of section 54F are distinct matters and that absence of inquiry on section 54F in the assessment proceedings rendered the order vitiated. Reliance was placed on the principle that an Income-tax Officer is not merely a passive adjudicator but has an investigative duty to verify facts in a return when circumstances warrant further inquiry; failure to make such enquiries can make an order "erroneous" within the meaning of section 263 because the officer did not discharge the duty incumbent upon him. Given the absence of any recorded enquiry or determination on eligibility for exemption under section 54F in the assessment, the Tribunal found no infirmity in the Pr. CIT's conclusion that the assessment was erroneous and prejudicial and required reconsideration after proper enquiry and opportunity to the assessee. [Paras 11, 12, 13]

Order under section 263 setting aside the assessment for want of requisite enquiry into the claim under section 54F is upheld and the matter is remitted for fresh enquiry and speaking order after giving the assessee opportunity of hearing.

Final Conclusion: The Appellate Tribunal dismissed the assessee's appeal and upheld the Pr. CIT's order under section 263 for reassessment on the ground that the Assessing Officer failed to make necessary enquiries regarding the claim under section 54F for assessment year 2015-16.

Liability to explain nature and source of cash deposits under section 68 - Specified Bank Notes (SBN) deposits during demonetisation - effect of RBI notifications on deposit of demonetised notes - appointed day under the Specified Bank Notes (Cessation of Liability) Act, 2017 - irrelevance of alleged contravention of RBI instructions to invocation of section 68

Liability to explain nature and source of cash deposits under section 68 - Specified Bank Notes (SBN) deposits during demonetisation - effect of RBI notifications on deposit of demonetised notes - irrelevance of alleged contravention of RBI instructions to invocation of section 68 - Deletion of addition made under section 68 in respect of deposits of Specified Bank Notes collected from members during the demonetisation period. - HELD THAT: - The Tribunal found no dispute that the deposits represented collections from the society's members and that the transactions were recorded in the books of account. The assessee had explained the nature and source of the deposits as ordinary business collections (repayment of loans, pigmy collections etc.) and the Assessing Officer did not contend that the assessee failed to discharge the evidentiary burden under section 68. Relying on an identical decision in Bhageeratha Pattina Sahakara Sangha Niyamitha, the Tribunal held that mere contravention, if any, of RBI notifications relating to demonetised notes does not convert properly explained and recorded receipts into unexplained money for income tax purposes. The Tribunal also noted that the deposits were collected prior to the appointed day under the Specified Bank Notes (Cessation of Liability) Act, 2017, and therefore the contention based on prohibition after the appointed day did not sustain the section 68 addition. For these reasons the addition was set aside and the Assessing Officer was directed to delete the disallowance. [Paras 5, 6, 7]

Addition under section 68 in respect of the SBN deposits deleted; impugned disallowance set aside and Assessing Officer directed to delete the addition.

Final Conclusion: The appeal is allowed: the Tribunal deleted the addition made under section 68 in respect of Specified Bank Notes deposited by the assessee during the demonetisation period and directed the Assessing Officer to delete the disallowance; the separate jurisdictional contention was rendered academic and not adjudicated.

Diversion of income by overriding title - charge/mortgage created by the assessee - deductibility of amounts paid to discharge mortgage/debt in computation of capital gains - computation of capital gains on full value realised - rejection of books and estimation of income on best judgment basis - estimation of net profit percentage in absence of books

Diversion of income by overriding title - charge/mortgage created by the assessee - deductibility of amounts paid to discharge mortgage/debt in computation of capital gains - computation of capital gains on full value realised - Deductibility of the sum of Rs.3,80,00,000/- paid to Cosmos Cooperative Bank Ltd. from the sale consideration while computing short term capital gains on sale of factory premises and related assets. - HELD THAT: - The Tribunal held that the charge on the property was self created by the assessee when it mortgaged the asset to obtain business loans, and therefore the amount realised by the bank does not constitute diversion of income by an overriding title such that it would be excluded from the assessee's sale consideration. The authorities and judicial precedents relied upon by the Revenue were applied to conclude that expenditure to remove an encumbrance created by the assessee after acquisition is not deductible in computing capital gains and capital gain must be computed on the full price realised (subject to admissible deductions). The Tribunal distinguished the cases advanced by the assessee as not being directly on point and relied on precedents holding that amounts applied to discharge mortgage obligations created by the assessee are applications of income and not reductions of sale consideration. and were considered in support of this principle. On this basis the Commissioner (Appeals) was held to have correctly disallowed the claimed deduction and the assessment officer's computation was sustained. [Paras 5]

Claim for deduction of Rs.3,80,00,000/- from sale consideration disallowed; addition confirmed.

Rejection of books and estimation of income on best judgment basis - estimation of net profit percentage in absence of books - Validity of rejecting the assessee's book results and estimating net profit at 2.5% of turnover in the absence of production of books of account. - HELD THAT: - The Tribunal noted that the assessee failed to produce books of account at any stage before the assessing officer or the appellate authority. In such circumstances, authorities were justified in rejecting the declared book results and making an estimation under the relevant provisions on a best judgment basis. Having regard to comparable decisions permitting estimation where books are not produced, the Tribunal found the reduction of the estimate by the Commissioner (Appeals) to 2.5% of turnover to be reasonable and held there was no error in restricting net profit to that percentage in the facts of this case. [Paras 5]

Estimation of net profit at 2.5% of turnover upheld and addition confirmed.

Final Conclusion: Both pleaded grounds - disallowance of deduction claimed for amounts paid to discharge the mortgage and the rejection of book results with estimation of net profit at 2.5% - were upheld by the Tribunal; the assessee's appeal is dismissed.

Undisclosed income - penalty under section 271AAB - search under section 132 - self-contained penal code - requirement that undisclosed income be found during search - assessment proceedings

Undisclosed income - penalty under section 271AAB - search under section 132 - requirement that undisclosed income be found during search - Whether penalty under section 271AAB can be levied where the income alleged to be 'undisclosed income' was not found or unearthed in the course of the search but was discovered during subsequent assessment proceedings conducted as a consequence of that search. - HELD THAT: - The Tribunal held that section 271AAB constitutes a separate, self-contained penal code and its application is governed by the definition of "undisclosed income" contained in that section. The statutory definition contemplates income represented by money, entries or documents "found in the course of a search" and which was not recorded or disclosed before the date of search. Where no incriminating documents or admissions relating to the assessee were found during the search, and the alleged cash credits were identified only during assessment proceedings that were independent of any material seized or statements recorded in the search, the case does not fall within the four corners of the definition of "undisclosed income" for the purposes of section 271AAB. Consequently, initiation and imposition of penalty under section 271AAB in such circumstances does not satisfy the statutory mandate; while the additions may be relevant for assessment under provisions like section 68 or for levy of penalty under other provisions, they cannot form the basis for penalty under section 271AAB if they were not unearthed in the search itself. [Paras 5, 6]

Penalty imposed under section 271AAB quashed because the impugned income was not found/unearthed during the search but surfaced only during assessment proceedings.

Final Conclusion: The appeal is allowed; the penalty under section 271AAB set aside as the additions were not founded on undisclosed income discovered in the course of the search.

Binding nature of Authority for Advance Ruling - Advance ruling binding on applicant and transaction - Interpretation of section 245S - Maintainability of appeal where AAR ruling applies

Binding nature of Authority for Advance Ruling - Advance ruling binding on applicant and transaction - Interpretation of section 245S - Maintainability of appeal where AAR ruling applies - Whether appeals by the assessee against assessments framed following the AAR ruling are maintainable where the Assessing Officer has followed the Authority for Advance Ruling in the assessee's own case - HELD THAT: - The Tribunal held that the Assessing Officer acted in conformity with the ruling pronounced by the Authority for Advance Ruling and that such advance ruling is binding as between the applicant and the tax authorities in respect of the transaction for which the ruling was sought. The statutory scheme set out in section 245S was applied: the advance ruling is binding on (a) the applicant, (b) in respect of the transaction for which the ruling was sought, and (c) on the Principal Commissioner/Commissioner and subordinate income-tax authorities, unless there is a change in law or in facts on the basis of which the advance ruling was pronounced. The Tribunal found no allegation or material to show that the authorities below failed to follow the AAR ruling correctly, nor that the AAR order had been set aside by the High Court. In these circumstances the Tribunal agreed with the Revenue that the appeals against the assessments (which followed the AAR) were not maintainable and that there was no infirmity in the order of the Commissioner (Appeals) dismissing the appeals as redundant. [Paras 10, 11, 12]

Appeals dismissed as not maintainable; assessments upheld insofar as they adopt the AAR ruling.

Final Conclusion: The Tribunal dismissed the assessee's appeals for AY 2010-11 and AY 2011-12, holding that the Assessing Officer correctly followed the AAR in the assessee's own case and that the advance ruling is binding on the applicant and the tax authorities under section 245S; no fault was found in the Commissioner (Appeals) order and no remand was directed.

Assessment/reassessment under section 153A linked to search/requisition - requirement of incriminating material to disturb completed assessments - addition under section 68 challenged for lack of nexus with search material - construction favouring the assessee where two reasonable interpretations exist

Assessment/reassessment under section 153A linked to search/requisition - requirement of incriminating material to disturb completed assessments - addition under section 68 challenged for lack of nexus with search material - Whether the Assessing Officer could make an addition of Rs. 70,00,000 under section 68 in assessment framed under section 153A for AY 2011-12 in absence of any incriminating material unearthed during the search. - HELD THAT: - The Tribunal accepted the assessee's submission that the AO's assessment order contains no reference to any incriminating material relating to the impugned transaction. Applying the line of authority summarized in Kabul Chawla and other High Court decisions and following the Coordinate Bench decision in Malabuilders, the Tribunal held that section 153A assessments are inextricably linked to material seized or requisitioned in the search; completed assessments can be reopened or disturbed under section 153A only on the basis of incriminating material found during the course of search or requisition, or other post-search material having nexus with the seized material. The Tribunal observed that although there are contrary High Court decisions, the Apex Court's principle that where two reasonable constructions exist the one favourable to the assessee should be adopted supports restricting interference with finalized assessments absent any incriminating material. Applying that principle to the facts, the Tribunal concluded that the AO had no jurisdiction to make the impugned addition under section 68 in the absence of any incriminating material connected to the search, and therefore set aside the CIT(A)'s confirmation and directed deletion of the addition. The Tribunal also held that, having allowed the legal ground, the merits of the addition become academic and need not be adjudicated. [Paras 5, 6]

Addition of Rs. 70,00,000 made under section 68 in assessment framed under section 153A for AY 2011-12 deleted for want of any incriminating material; appeal allowed.

Final Conclusion: The Tribunal allowed the appeal, set aside the CIT(A)'s order and directed the Assessing Officer to delete the addition of Rs. 70,00,000 made in the assessment for AY 2011-12 on the ground that no incriminating material was found in the search to justify disturbing the completed assessment.

Unexplained cash credit - assessment in the correct previous year / year of credit - best judgment assessment - admission of additional evidence and Rule 46A - Rule of Law / no tax without authority of law

Unexplained cash credit - assessment in the correct previous year / year of credit - best judgment assessment - Rule of Law / no tax without authority of law - Deletion of addition made u/s. 68 in A.Y. 2013-14 on share premium which the CIT(A) held related to earlier years; whether the addition in the assessment year was sustainable - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the share premium, though added as unexplained cash credit in the assessment order for A.Y. 2013-14, was shown in the assessee's earlier balance sheets and related to prior years (raised in earlier assessment years). Section 68 applies to sums found credited in the books for the previous year in which they are introduced; tax can be levied only in the year the credit is introduced. The CIT(A) relied on the assessee's accounts and judicial authorities and the CBDT standard procedure directing that credits be taxed in the year they appear in books. The Tribunal found that the AO, while making a best judgment assessment u/s. 144, failed to examine available audited accounts and thus erred in making the addition in the wrong year; such an assessment must be rational and based on material. Applying these principles, the Tribunal found no infirmity in the CIT(A)'s deletion of the addition and confirmed the appellate order. [Paras 9]

The addition of share premium as unexplained cash credit in A.Y. 2013-14 was deleted and the CIT(A)'s order allowing the assessee's appeal is confirmed.

Admission of additional evidence and Rule 46A - Whether the CIT(A) erred in admitting or relying on fresh/additional evidence without giving the Assessing Officer opportunity under Rule 46A - HELD THAT: - The Revenue alleged that the CIT(A) relied on fresh evidence without affording the AO opportunity for rebuttal as mandated by Rule 46A. The Tribunal examined the record and observed that the CIT(A)'s decision rested on re-appreciation of the assessee's balance-sheet entries from earlier years and on application of the CBDT guidance; the Revenue could not identify any specific additional evidence admitted by the CIT(A). In these circumstances the Tribunal found no breach of Rule 46A and no error in the appellate authority's approach or conclusion. [Paras 8, 9]

No violation of Rule 46A is found; the Revenue's ground on admission of fresh evidence is without substance and is dismissed.

Final Conclusion: Delay in filing the appeal was condoned. On merits the Tribunal dismissed the Revenue's appeal, confirming the CIT(A)'s deletion of the addition made u/s. 68 for A.Y. 2013-14 and rejecting the contention that Rule 46A was breached.

Disallowance under section 40(a)(ia) for failure to deduct TDS - assessee in default under section 201 for failure to deduct tax at source - benefit where deductee has declared income and paid tax - remand for fresh de-novo adjudication on verification of certificates

Disallowance under section 40(a)(ia) for failure to deduct TDS - assessee in default under section 201 for failure to deduct tax at source - Assessee failed to deduct tax at source and thereby contravened the provisions attracting disallowance under section 40(a)(ia) read with section 201. - HELD THAT: - The Tribunal recorded that the assessee did not deduct TDS on payments for cold storage and security services. The order notes that the statutory provisions relating to deduction at source were breached and that, on that factual basis, the disallowance under section 40(a)(ia) was prima facie attracted. This finding is reflected in the Court's reasons that the assessee had violated the provision under section 201 by not deducting TDS. The Tribunal nevertheless proceeded to consider whether the disallowance should nevertheless stand in view of proof that the payees had declared the amounts and paid tax thereon. [Paras 5]

Finding recorded that the assessee had not deducted TDS and that, on that fact, the provisions of section 201/section 40(a)(ia) were engaged.

Benefit where deductee has declared income and paid tax - remand for fresh de-novo adjudication on verification of certificates - Whether disallowance under section 40(a)(ia) should be sustained where the payees have declared the receipts and paid tax and the assessee has produced certificates to that effect. - HELD THAT: - The assessee produced certificates from the payees claiming that the amounts were accounted for in the payees' returns and tax was paid. The Tribunal noted precedent that disallowance under section 40(a)(ia) is not permissible if it is established that the deductee has paid tax on the amount. However, the Tribunal was unable, on the material before it, to verify the sanctity of the documents produced before the CIT(A). In view of this inability to verify the evidence and in order to secure a proper adjudication, the Tribunal set aside the matter to the CIT(A) for de-novo consideration of the evidence and directed that the assessee be given a reasonable opportunity to represent its case. [Paras 5]

Issue remitted to the CIT(A) for fresh de-novo adjudication with directions to verify the certificates and afford the assessee a reasonable opportunity of representation.

Final Conclusion: The appeal is allowed for statistical purposes and the matter is remitted to the learned CIT(A) for de-novo adjudication of the claim that the payees declared the receipts and paid tax; the CIT(A) is to verify the evidence and afford the assessee a reasonable opportunity to be heard.

Valid initiation of search - assessment under section 153A contingent on a valid search under section 132 - panchnama as evidence of conclusion of search - invalid search vitiates consequent assessment framed under special search provisions - time limit for completion of assessment under section 153B tied to last panchnama

Valid initiation of search - panchnama as evidence of conclusion of search - assessment under section 153A contingent on a valid search under section 132 - Whether the search conducted on 31/10/2009 was valid and whether the assessment framed under section 153A for AY 2009-10 is maintainable. - HELD THAT: - The Tribunal examined the material on record and the coordinate bench decision dealing with the same search proceedings. Although the warrant of authorisation bore the name of the assessee, no panchnama was prepared in the name of the assessee; the panchnama prepared was in the name of 'Manoj B. Punamia & Group', and no incriminating material linking the assessee to the searched premises was found. The Tribunal applied the settled principle that invocation of the special search assessment provisions depends on a valid search conducted against the person concerned and that the panchnama recording conclusion of search is the relevant document to establish execution and conclusion of such search. Citing precedent and statutory scheme, the Tribunal held that absence of a panchnama in the name of the assessee vitiates the search in relation to that assessee and, consequently, the jurisdiction under section 153A (and the time limit mechanism under section 153B) cannot be validly exercised. The coordinate bench decision on related assessment years was held to be binding and applicable; in view of that decision the assessment framed under section 153A for AY 2009-10 was declared invalid. [Paras 15, 16, 17]

Search in relation to the assessee was vitiated for want of panchnama in the name of the assessee; assessment framed under section 153A for AY 2009-10 is invalid and the appeals are allowed.

Final Conclusion: The Tribunal allowed the appeals for AY 2009-10, holding that because no valid search was conducted against the assessee (absence of panchnama in the assessee's name and no incriminating material linking the assessee to the searched premises), the assessment under section 153A is invalid and is quashed; other grounds became academic.

Computation of deduction under Section 91 - effective Indian rate of tax - effective rate of tax of the other country - doubly taxed income - use of net profit ratio to determine foreign taxable income - inclusion of surcharge and education cess within 'income-tax'

Effective Indian rate of tax - inclusion of surcharge and education cess within 'income-tax' - Whether the Indian rate of tax, for computing deduction under section 91, includes surcharge and education cess. - HELD THAT: - The expression 'Indian rate of tax' is defined by reference to the amount of Indian income-tax charged under the Act. The Tribunal followed the Supreme Court decision in CIT v. K. Srinivasan and held that 'income-tax' includes surcharge and educational cess. The assessing officer's computation excluding surcharge and cess (arriving at 18.50%) was therefore incorrect; the effective Indian rate must include surcharge and education cess, yielding 20.01% for the year under consideration. [Paras 15]

The Indian rate of tax for Section 91 purposes includes surcharge and education cess and is to be taken at 20.01% in the facts of this case.

Use of net profit ratio to determine foreign taxable income - computation of deduction under Section 91 - effective rate of tax of the other country - Whether 'other income' should be excluded when computing the net profit ratio used to determine the net (doubly taxed) income from Ghana and hence the effective rate of tax in Ghana. - HELD THAT: - The Tribunal analysed the character of the 'other income' and noted that those items arose in the course of the assessee's business and were accepted as part of business income for book profit computations under section 115JB. Excluding 'other income' from only the foreign leg when computing the net profit ratio but including it for the Indian rate produces an inconsistent comparison. In the interest of a correct and fair comparison of effective rates, 'other income' must be included in the computation of the net profit ratio used to estimate net income from Ghana. Applying that approach and the corrected Indian rate, the Tribunal found the assessing officer's restricted computation to be inappropriate and directed recomputation on the corrected basis. [Paras 14, 18]

'Other income' must be included in the net profit ratio used to compute net Ghana income and the effective rate in Ghana; recomputation of deduction under Section 91 is required on that basis.

Doubly taxed income - computation of deduction under Section 91 - Whether the gross receipts from Ghana can be treated as the 'doubly taxed income' for allowance under Section 91 without accounting for expenses, or whether net income (after expenses) must be considered. - HELD THAT: - The Tribunal interpreted 'such doubly taxed income' to refer to the portion of the foreign receipts that is again subjected to Indian tax after allowing relevant expenses. The assessee's contention that gross receipts represent the doubly taxed income was rejected: the correct approach requires scrutiny of how much of the foreign receipts remain as net income subject to Indian tax. Although the assessee submitted details of Ghana-specific expenses, those details were not examined by the lower authorities; as an alternate and pragmatic approach the Tribunal accepted application of the net profit ratio (including 'other income' as directed above) to estimate net Ghana income and thereby compute the effective Ghanaian rate. Using that method and the corrected Indian rate the Tribunal allowed deduction to the extent of Rs.1,02,30,909 and directed recomputation accordingly. [Paras 12, 13, 16, 18]

Gross receipts from Ghana cannot be treated as the doubly taxed income without accounting for expenses; net income must be used, and the assessment is to be recomputed using the net profit ratio method (with 'other income' included) which yielded an allowable deduction of Rs.1,02,30,909 in the present order.

Final Conclusion: The Tribunal partially allowed the assessee's appeal for Assessment Year 2014-15: (i) the Indian rate of tax for Section 91 includes surcharge and education cess; (ii) 'other income' must be included when computing the net profit ratio used to estimate net foreign income and the effective foreign tax rate; and (iii) gross foreign receipts cannot be treated as the doubly taxed income without accounting for expenses. The AO is directed to recompute the deduction under Section 91 accordingly (the Tribunal computed and allowed Rs.1,02,30,909 in the order).

Reopening of assessment under section 147/148 - reasons to believe based on Annual Information Report and bank material - non-response to verification under section 133(6) and failure to file return - relevance to satisfaction for reassessment - treatment of unexplained bank cash deposits as income from undisclosed sources - admission of additional evidence and remand for fresh consideration by appellate authority

Reopening of assessment under section 147/148 - reasons to believe based on Annual Information Report and bank material - non-response to verification under section 133(6) and failure to file return - relevance to satisfaction for reassessment - Validity of initiation of reassessment proceedings under section 147/148 in respect of cash deposits shown in AIR - HELD THAT: - The Tribunal upheld the CIT(A)'s conclusion that the Assessing Officer had sufficient material and had applied his mind before recording satisfaction to issue notice under section 148. The AO was in possession of AIR showing cash deposits, had attempted verification under section 133(6) (to which the assessee did not respond), and obtained bank records corroborating the AIR. The Tribunal relied on authorities holding that where factual information is communicated and the assessee fails to respond, a prima facie satisfaction for reopening is permissible and the Court cannot, at the stage of examining validity, probe the sufficiency or correctness of the material. The assessee's belated challenge to jurisdiction and reliance on technical objections was rejected in view of the assessee's non-cooperation, lack of PAN and non-filing of return, which the Tribunal treated as factors justifying the reassessment initiation. [Paras 6]

Assessee's challenge to the validity of reassessment proceedings dismissed; reopening under section 147/148 upheld.

Treatment of unexplained bank cash deposits as income from undisclosed sources - admission of additional evidence and remand for fresh consideration by appellate authority - Dispute over additions made as unexplained cash deposits and remedy of remand for fresh consideration of evidence - HELD THAT: - On merits the Tribunal noted that the assessee had initially failed to explain the deposits and had provided partial sale deeds during assessment and further evidence before the CIT(A). The CIT(A) admitted one additional sale deed and allowed part relief but confirmed the balance addition. Observing the peculiar facts - the assessee being a retired army pensioner and the filing of affidavits and other documents suggesting sale proceeds - the Tribunal exercised discretion in the interest of substantial justice to afford the assessee one more opportunity. Consequently the Tribunal restored the appeal to the file of the CIT(A) for fresh adjudication on the addition after giving the assessee an opportunity to produce all documentary evidence; the CIT(A) was permitted to proceed ex parte if the assessee fails to comply. [Paras 6]

Addition remitted to the CIT(A) for de novo consideration of evidence and merits after affording opportunity to the assessee; appeal restored for this limited purpose.

Final Conclusion: Reassessment initiation for AY 2011-12 was upheld; on merits the Tribunal restored the appeal to the CIT(A) for fresh adjudication of the additions relating to unexplained cash deposits after affording the assessee an opportunity to produce all documentary evidence; appeal allowed partly for statistical purposes.

Revision under section 263 - Erroneous and prejudicial to the interests of revenue - Lack of adequate enquiry / want of application of mind - Finality of assessment and prohibition on second revision of examined issue - Genuineness, identity and creditworthiness of shareholders - Summons under section 131

Revision under section 263 - Lack of adequate enquiry / want of application of mind - Genuineness, identity and creditworthiness of shareholders - Finality of assessment and prohibition on second revision of examined issue - Summons under section 131 - Whether the second revisional order passed under section 263 impugning acceptance of share capital and share premium could be sustained where the Assessing Officer had conducted enquiries, recorded statements pursuant to summons and accepted the genuineness of transactions after verification. - HELD THAT: - The Tribunal found that the assessment for AY 2012-13 had earlier been set aside and remanded under section 263 with directions to the AO to examine books, bank accounts and the genuineness of source of funds. Pursuant to those directions the AO issued summons under section 131, recorded statements of directors of investor entities, and examined documentary evidence including income tax returns, audited financial statements, PAN, bank statements and allotment advices. After such verification the AO concluded that the identity, genuineness and creditworthiness of the investor entities were established and accepted the transactions. The revisional authority later issued a second section 263 notice alleging inadequate enquiry and directed a fresh reassessment. The Tribunal applied the settled test for exercise of revisional power under section 263 - there must be lack of enquiry or want of application of mind such that the order is erroneous and prejudicial to revenue - and held that where the AO had in fact made specific enquiries and reached a reasoned conclusion, mere disagreement by the revisional authority or a desire to examine the issue from another angle did not justify a second revision. Permitting a second revision in such circumstances would defeat finality of assessment. Consequently the second revisional order was quashed as not sustainable in law. [Paras 7]

The second revisional order under section 263 was quashed and the appeal allowed because the AO had conducted adequate enquiries and applied his mind before accepting the transactions as genuine.

Final Conclusion: The Tribunal allowed the assessee's appeal, quashed the revisional order dated 29.03.2019, and held that a second revision under section 263 was not sustainable where the Assessing Officer had made the requisite enquiries and accepted the genuineness, identity and creditworthiness of the shareholders.

Provisional release under Section 110A of the Customs Act, 1962 - power to review / functus officio - security conditions for provisional release: bond and bank guarantee - confiscation and seizure jurisdiction under Section 111(m) of the Customs Act, 1962 - doctrine of proportionality and reasonableness under Article 14

Power to review / functus officio - provisional release under Section 110A of the Customs Act, 1962 - Validity of withdrawal/review by the Commissioner of an earlier provisional release order dated 04.02.2022 - HELD THAT: - The Tribunal held that once a provisional release order under Section 110A was passed on 04.02.2022, the Office of the Commissioner of Customs had no statutory power under the Customs Act to review or withdraw that order. Reliance was placed on the principle that an adjudicating authority becomes functus officio once an order is made and that review power must be conferred by statute. The proper course for the department, if dissatisfied, was to challenge the provisional release order before the Tribunal rather than withdraw it administratively. [Paras 16, 17]

Order withdrawing the earlier provisional release was held to be without jurisdiction and bad in law.

Security conditions for provisional release: bond and bank guarantee - doctrine of proportionality and reasonableness under Article 14 - confiscation and seizure jurisdiction under Section 111(m) of the Customs Act, 1962 - Lawfulness and proportionality of imposing a bank guarantee equal to 15% of the value of goods as a condition for provisional release when the importer is willing to pay full duty - HELD THAT: - Applying settled precedent, the Tribunal found that imposing a bank guarantee based on a high percentage of the market value of goods is arbitrary and excessive where the importer has paid or is willing to pay the applicable duty and there is no prima facie case shown that justifies such onerous security. The Tribunal examined authorities holding that seizure and conditions for provisional release must be reasonable and proportionate, and that bank guarantees may properly be limited to differential duty rather than a percentage of the entire consignment value when no strong prima facie case for confiscation is shown. The Tribunal noted absence of reasons in the impugned order for changing the earlier condition (BG of 15% of duty payable) to BG of 15% of value, and recorded that the department had not demonstrated restrictions on import from the alleged country of origin nor proven importer's complicity. Balancing revenue protection and disproportionate interference with rights, the Tribunal modified the conditions for provisional release. [Paras 18, 19, 23, 24, 27]

Condition to furnish bank guarantee of 15% of the value of goods struck down as arbitrary and excessive; goods ordered released provisionally subject to executing a bond for full value and furnishing a bank guarantee of Rs. 1 Crore, and payment of customs duty.

Final Conclusion: The appeal is allowed: the Commissioner's withdrawal of the earlier provisional release order was without jurisdiction; the direction to furnish BG equal to 15% of the value of goods is held arbitrary and excessive; consignments are directed to be provisionally released on payment of duty, execution of a bond for full value and furnishing of a bank guarantee of Rs. 1 Crore.

Mandatory interest for delayed refund under Section 27A - limitation under Section 128 of the Customs Act - entitlement to refund of excess duty paid - mode of payment by duty credit scrips/licence

Mandatory interest for delayed refund under Section 27A - limitation under Section 128 of the Customs Act - Claim for interest on belated refunds rejected by Commissioner (Appeals) by reference to limitation under Section 128. - HELD THAT: - The Commissioner (Appeals) rejected the appellant's claim for interest on the refunded amounts by holding that the claim was barred by limitation under Section 128. The Tribunal found this approach to be misconceived. Section 27A mandates payment of interest where a refund is not granted within three months of receipt of the application, leaving no discretion to withhold interest on that ground. Consequently, the appellant is entitled to interest from the end of three months from the date of the refund application before the Adjudicating Authority up to the date of actual grant of refund in cash. The Tribunal therefore directed payment of interest and ordered the Adjudicating Authority to disburse the interest within 45 days of receipt/service of the Tribunal's order. [Paras 2, 5, 9]

The impugned rejection of interest on limitation grounds is set aside; interest is payable under Section 27A from the end of three months from the refund application date until payment, and the Adjudicating Authority is directed to disburse the interest within 45 days.

Final Conclusion: Appeals allowed; the appellant is entitled to interest on the belated refunds under Section 27A from the end of three months from the refund application until payment in cash, and the Adjudicating Authority is directed to disburse such interest within 45 days from receipt/service of this order.

Refund of excess duty - interest on delayed refund - mandatory interest under Section 27A - limitation under Section 128 of the Customs Act - mode of payment by licence/scrips

Limitation under Section 128 of the Customs Act - interest on delayed refund - Rejection of the claim for interest on the ground of limitation under Section 128 - HELD THAT: - The Commissioner (Appeals) rejected the appellant's claim for interest by treating the claim as barred by limitation under Section 128. The Tribunal found that this was a mis-conception. The claim for interest arises from the statutory entitlement to interest where a refund is not granted within three months of the refund application; it is not to be dealt with solely as an appeal-limitation question under Section 128. Consequently, the bar of limitation under Section 128 could not be applied to deny the statutory interest when the substantive refund claim was otherwise allowed or remitted for payment. [Paras 6, 9]

Claim for interest could not be rejected on the basis of limitation under Section 128; the rejection on that ground was set aside.

Mandatory interest under Section 27A - refund of excess duty - mode of payment by licence/scrips - Entitlement to interest under Section 27A and the period for which interest is payable - HELD THAT: - Section 27A provides that where a refund is not granted within three months from receipt of the application, interest is payable from the date immediately after the expiry of three months until the date of refund. The Tribunal held that the appellant was entitled to interest from the end of three months from the date of the refund application before the Adjudicating Authority up to the date when the refund was granted in cash. The Tribunal noted that payment by debit to licence/scrips is a valid mode of payment and that the Department could not insist on a mode of payment not in existence; however, irrespective of mode, the statutory mandate to pay interest applied. The Adjudicating Authority was directed to disburse the interest within 45 days from service of the Tribunal's order. [Paras 7, 9]

Appellant entitled to interest under Section 27A from the end of three months after the refund application until grant of refund; Adjudicating Authority directed to pay the interest within 45 days.

Final Conclusion: The appeal was allowed: the Tribunal set aside the denial of interest based on Section 128 and directed payment of statutory interest under Section 27A from the end of three months after the refund application until grant of refund, to be disbursed within 45 days.

Claims filed after cut-off date - extinguishment of claims on approval of resolution plan by the Adjudicating Authority - information memorandum to disclose liabilities reflected in corporate debtor's records - homebuyers as financial creditors - duties of the resolution professional under Regulation 36 of the CIRP Regulations

Claims filed after cut-off date - Adjudicating Authority's rejection of applications seeking admission of belated claims filed by the appellants - HELD THAT: - The Tribunal noted that all appellants filed their claims after the timeline prescribed in Form-A and that the Resolution Plan had been prepared on the basis of the List of Creditors published by the Resolution Professional which did not include the appellants. Applying established precedents the Tribunal held that when a plan has been approved by the committee of creditors and is pending consideration for approval, acceptance of new claims at that stage would jeopardise the time bound CIRP process and therefore there was no ground to interfere with the Adjudicating Authority's rejection of the IAs. The Tribunal nevertheless observed that the circumstance of homebuyers often not receiving notice is common but, as law stands, late-filed claims cannot be admitted post the prescribed cut-off unless otherwise dealt with in the CIRP exercise. [Paras 13, 14, 15]

The rejection of the IAs seeking admission of belated claims is not interfered with.

Extinguishment of claims on approval of resolution plan by the Adjudicating Authority - Whether appellants' claims stood extinguished upon approval of the Resolution Plan by the Committee of Creditors - HELD THAT: - The Tribunal analysed Section 31 and relied on the Supreme Court's decision in Ghanashyam Mishra and Sons (as discussed in the judgment) to clarify the point of extinguishment. It held that claims are frozen and those not part of the resolution plan stand extinguished only upon approval of the resolution plan by the Adjudicating Authority. Approval by the CoC alone does not effect extinguishment; therefore the CoC's approval does not by itself extinguish claims of creditors not included in the plan. [Paras 16, 17, 18]

Claims are extinguished only when the Resolution Plan is approved by the Adjudicating Authority; CoC approval alone does not extinguish claims.

Information memorandum to disclose liabilities reflected in corporate debtor's records - duties of the resolution professional under Regulation 36 of the CIRP Regulations - homebuyers as financial creditors - Obligation of the Resolution Professional and the Resolution Applicant to account for homebuyers' liabilities reflected in the corporate debtor's records and consequent remedial steps - HELD THAT: - The Tribunal observed that Regulation 36 requires the information memorandum to set out assets and liabilities of the corporate debtor and that the term 'liabilities' is broad. Where allotment letters, payments and other records exist in the corporate debtor's books indicating liabilities to homebuyers (recognized as a class of financial creditors), those liabilities ought to have been collated and included in the information memorandum even if individual homebuyers did not file claims within the prescribed time. Failure to reflect such liabilities results in inequitable resolution. In view of these findings, rather than directing admission of belated claims, the Tribunal directed a remedial process: the Resolution Professional to furnish details from the corporate records to the Resolution Applicant; the Resolution Applicant to prepare an addendum to the Resolution Plan; the CoC to consider the addendum; and the Adjudicating Authority to consider the addendum and minutes of the CoC while deciding approval of the plan. Timelines were specified for each step to be completed. [Paras 23, 24, 25, 26, 27]

Resolution Professional must provide details of homebuyers' claims reflected in corporate records; Resolution Applicant shall prepare an addendum to the Resolution Plan for CoC consideration and the Adjudicating Authority shall consider the addendum while deciding approval of the plan, within the timelines directed by the Tribunal.

Final Conclusion: The appeals are disposed of. The Tribunal declined to interfere with the Adjudicating Authority's rejection of the belated IAs but clarified that extinguishment occurs only upon approval of the plan by the Adjudicating Authority. Finding that liabilities reflected in the corporate debtor's records ought to have been included in the information memorandum, the Tribunal directed a limited remedial process (production of homebuyers' details by the Resolution Professional, preparation of an addendum by the Resolution Applicant, CoC consideration and placement before the Adjudicating Authority) to be completed within specified timeframes; parties to bear their own costs.

Auction sale in liquidation - entitlement to detailed process memorandum and timeliness of request - abuse of process / unclean hands - rejection of IA for non-compliance with deposit direction - interference with liquidator's disposal actions

Entitlement to detailed process memorandum and timeliness of request - auction sale in liquidation - Whether the appellant was entitled to require the liquidator to provide the detailed process memorandum and to seek extension of the bid timeline after the dates fixed in the auction notice, and whether refusal to provide the memorandum entitled the appellant to set aside the completed auction. - HELD THAT: - The Tribunal accepted the liquidator's chronology and contemporaneous records showing the auction notice fixed inspection and EMD timelines, and that the appellant inspected the site before the last inspection date. The appellant's email seeking a 30 day extension and the detailed process memorandum was sent at 14:03 on the last day for submission of EMD and without depositing EMD. The Adjudicating Authority's rejection of that request was held to be justified by the timing and circumstances; the appellant had not complied with the auction conditions and could not, belatedly and without EMD, claim a right to stall or reverse a lawfully conducted auction. The Tribunal found no illegality in the liquidator declining the belated request and no basis to set aside the completed auction on that ground. [Paras 2, 3, 10, 11]

Request for the detailed process memorandum and extension, made belatedly and without EMD, did not entitle the appellant to overturn or delay the completed auction; the liquidator's refusal was not impermissible.

Abuse of process / unclean hands - rejection of IA for non-compliance with deposit direction - interference with liquidator's disposal actions - Whether the appellant's proceedings before the Adjudicating Authority and this Tribunal amounted to an abuse of process warranting dismissal of the appeal and whether interference with the Adjudicating Authority's order rejecting the IA was called for. - HELD THAT: - On the record the Tribunal found that the appellant repeatedly delayed, sent belated communications, and failed to comply with deposit directions of the Adjudicating Authority. The appellant's conduct - including inconsistencies in funding documentation and late attempts to challenge a concluded auction in which multiple bidders participated - was held to demonstrate lack of bona fides and an attempt to defeat the auction process. The Adjudicating Authority had afforded opportunities to the appellant to deposit the amount as stated, but the appellant did not comply. In these circumstances the Tribunal concluded there was no ground to interfere with the impugned order rejecting the IA and that the appeal was liable to be dismissed; although the matter warranted costs in principle, the Tribunal refrained from imposing them. [Paras 4, 5, 11, 12]

Appeal dismissed for abuse of process and non-compliance; no interference with the Adjudicating Authority's rejection of the IA, and no costs awarded (though costs were indicated as appropriate in principle).

Final Conclusion: The appeal was dismissed. The Tribunal found that the appellant's belated, EMD free requests did not entitle it to upset a lawfully conducted auction and that the appellant's conduct amounted to abuse of process; the Adjudicating Authority's order rejecting the IA was not interfered with, and no costs were imposed.

Pre-existing dispute under Section 8(2)(a) of the Insolvency and Bankruptcy Code, 2016 - undisputed operational debt - debt due and payable - requirements for initiation of CIRP by an operational creditor - plausible contention test in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. - input tax credit dispute affecting entitlement to payment

Pre-existing dispute under Section 8(2)(a) of the Insolvency and Bankruptcy Code, 2016 - undisputed operational debt - debt due and payable - plausible contention test in Mobilox Innovations Pvt. Ltd. v. Kirusa Software Pvt. Ltd. - input tax credit dispute affecting entitlement to payment - Whether the petition filed by the operational creditor under Section 9 of the Code for initiation of CIRP could be admitted in view of the Corporate Debtor's raised dispute concerning input tax credit and demand for bank guarantee. - HELD THAT: - The Tribunal affirmed the Adjudicating Authority's conclusion that the corporate debtor had raised a real and genuine dispute in reply to the demand notice concerning availability of input tax credit and the risk of disallowance if the supplier proved to be non-genuine. The court applied the Mobilox plausible-contention standard and held that the dispute was not a patently feeble or spurious contention but a bona fide grievance requiring further investigation. The Tribunal observed that the Code requires three pre conditions for admission under Section 9 - that the debt be due and payable, that there be a default, and that the debt be undisputed - and found that the corporate debtor's concerns about disallowance of input tax credit (and its request for a bank guarantee pending GST assessment) meant the debt could not be regarded as undisputed or fully due and payable in law at the admission stage. Consequently the application under Section 9 was correctly rejected as effecting an improper use of the Code as a recovery mechanism where a legitimate pre-existing dispute exists. [Paras 12, 13]

The appeal is dismissed; the Adjudicating Authority's rejection of the Section 9 petition on the ground of a pre-existing dispute is upheld.

Final Conclusion: The Tribunal dismissed the appeal and upheld the Adjudicating Authority's order rejecting the Section 9 application, holding that a real dispute regarding input tax credit and the request for a bank guarantee rendered the debt not undisputed or fully due and payable for the purpose of initiating CIRP.

Maintainability of petition under Section 9 of the Code after settlement - cause of action for initiation of corporate insolvency resolution process - withdrawal of earlier petition followed by fresh demand notice - intention to pay evidenced by attempted RTGS and demand draft - clean hands doctrine / mala fide initiation of CIR proceedings - NCLT not to be used as a recovery tool

Maintainability of petition under Section 9 of the Code after settlement - withdrawal of earlier petition followed by fresh demand notice - cause of action for initiation of corporate insolvency resolution process - The Section 9 application was not maintainable because no fresh cause of action had arisen after the parties had entered into a settlement and the earlier petition was withdrawn. - HELD THAT: - The Tribunal found that the parties had voluntarily entered into a settlement deed in April 2022 providing a structured payment schedule and modes of payment (cheque or RTGS), and the earlier Section 9 petition was withdrawn by the Operational Creditor pursuant to that settlement. The Tribunal recorded that the first instalment was due on 10.05.2022 and an RTGS attempt was made on 09.05.2022 which was returned because the beneficiary's account was closed. Given the agreed mechanism for payment and the existence of an attempted electronic remittance and a demand draft, the Tribunal concluded that the contractual settlement meant there was no fresh cause of action to initiate CIR proceedings immediately after withdrawal of the earlier petition. On this basis the Tribunal held the present Section 9 application to be not maintainable and liable to be rejected. [Paras 2, 5, 6, 7, 9]

Section 9 application rejected as not maintainable for want of a fresh cause of action.

Intention to pay evidenced by attempted RTGS and demand draft - clean hands doctrine / mala fide initiation of CIR proceedings - NCLT not to be used as a recovery tool - The Operational Creditor had not come with clean hands and the petition was filed with an improper motive, warranting rejection of the application. - HELD THAT: - The Tribunal evaluated the conduct of parties and the evidence placed on record, including the bank communication showing return of RTGS due to the beneficiary account being closed and a demand draft dated 10.05.2022 in the name of the Operational Creditor. The Tribunal observed that the Corporate Debtor had manifested intent to make payment in terms of the settlement and that the Operational Creditor had earlier withdrawn its petition. Considering these circumstances, the Tribunal found that allowing the application would amount to permitting misuse of the insolvency mechanism as a mere recovery measure. Applying the principle that parties invoking CIRP must come with clean hands and that NCLT should not be used as a recovery tool, the Tribunal concluded the Operational Creditor's conduct was improper and the petition was liable to be dismissed. [Paras 6, 7, 8, 9]

Application dismissed on account of the Operational Creditor not coming with clean hands and improper use of CIRP mechanism.

Final Conclusion: The Section 9 application was rejected for lack of a fresh cause of action following a settlement and withdrawal of the earlier petition; additionally the Operational Creditor was held not to have come with clean hands and the petition was dismissed, with no order as to costs.

Maintainability of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - threshold limit for initiation of Corporate Insolvency Resolution Process - retrospective application of statute - date of filing versus date of default/demand notice for determining applicability of threshold - notification of Ministry of Corporate Affairs dated 24.03.2020

Maintainability of an application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - threshold limit for initiation of Corporate Insolvency Resolution Process - notification of Ministry of Corporate Affairs dated 24.03.2020 - The petition under Section 9 filed on 09.09.2021 is not maintainable because the claimed debt does not meet the threshold of Rs. 1 crore made applicable by the MCA notification dated 24.03.2020 for applications filed on or after that date. - HELD THAT: - The Tribunal examined applicability of the MCA notification dated 24.03.2020 which fixed the monetary threshold for filing applications under Sections 7 and 9 of the Code at Rs. 1 crore for applications filed on or after 24.03.2020. The Tribunal applied the principle that a statute or amendment will be given retrospective effect only if the statute explicitly provides for such retrospective operation; the notification was held to operate prospectively from 24.03.2020 but is applicable to applications filed on or after that date even if the underlying debt arose earlier. As the present Section 9 application was filed on 09.09.2021, the Rs. 1 crore threshold governed its maintainability. The claimed operational debt of Rs. 82,13,604/- therefore falls short of the prescribed threshold and the petition could not be admitted. [Paras 5, 6]

Application under Section 9 dismissed as not maintainable for failure to meet the Rs. 1 crore threshold prescribed by the MCA notification of 24.03.2020.

Date of filing versus date of default/demand notice for determining applicability of threshold - retrospective application of statute - For determining applicability of the Rs. 1 crore threshold, the relevant date is the date of filing of the Section 9 application and not the date of default or the date of the demand notice. - HELD THAT: - The Tribunal emphasised that the intent of the notification was to protect companies from initiation of CIRP owing to COVID-19 related difficulties and that applicability is governed by the date on which the application is filed. Consequently, even where the debt arose prior to 24.03.2020 or a demand notice was sent earlier, an application filed on or after 24.03.2020 must satisfy the revised threshold. The Tribunal therefore held that the filing date (09.09.2021) is decisive and the earlier dates of default or demand notice are immaterial for that purpose. [Paras 5, 6]

Date of filing governs applicability of the threshold; earlier date of default or demand notice is immaterial.

Final Conclusion: The Section 9 application filed on 09.09.2021 was dismissed as not maintainable because the claimed operational debt did not meet the Rs. 1 crore threshold prescribed by the MCA notification dated 24.03.2020; the date of filing, not the date of default or demand notice, determines applicability of that threshold.

Maintainability of a section 9 application under the Insolvency and Bankruptcy Code - threshold limit for initiation of Corporate Insolvency Resolution Process - applicability of a statutory notification increasing the monetary threshold - relevance of date of filing versus date of default/demand for applicability of notification - prospective operation of statutory amendments and notifications

Maintainability of a section 9 application under the Insolvency and Bankruptcy Code - threshold limit for initiation of Corporate Insolvency Resolution Process - date of filing versus date of default/demand for applicability of notification - Whether the Section 9 application filed on 17.08.2020 seeking initiation of CIRP for a claimed operational debt of Rs. 17,85,396/- is maintainable in view of the MCA notification dated 24.03.2020 raising the threshold to Rs. 1 crore. - HELD THAT: - The Tribunal examined the effect of the MCA notification dated 24.03.2020 which raised the minimum threshold for filing applications under Sections 7 and 9 to Rs. 1 crore. Relying on precedent that retrospective application of a statute requires an explicit provision, the Tribunal held that the notification unambiguously sets the threshold at Rs. 1 crore for applications filed on or after 24.03.2020, even if the underlying debt or default pre-dates the notification. The determinative point is the date of filing of the application and not the date of default or the date of the demand notice. Applying this principle to the facts, the Section 9 petition filed on 17.08.2020 falls within the period after the notification and therefore the enhanced threshold applies. Since the claimed debt does not meet the Rs. 1 crore threshold, the petition is not maintainable and cannot be admitted. [Paras 6, 7]

The Section 9 application filed on 17.08.2020 is not maintainable as the enhanced threshold of Rs. 1 crore under the MCA notification dated 24.03.2020 applies to applications filed on or after that date; the petition is dismissed.

Final Conclusion: The petition under Section 9 is dismissed as not maintainable because the application was filed after the MCA notification dated 24.03.2020 which raised the monetary threshold to Rs. 1 crore and the claimed debt falls below that threshold.

Application under section 9 of the Insolvency and Bankruptcy Code, 2016 - Corporate Insolvency Resolution Process - pre-existing dispute - maintainability of section 9 petition - plausible contention requiring further investigation

Pre-existing dispute - plausible contention requiring further investigation - maintainability of section 9 petition - There existed a pre-existing dispute between the operational creditor and the corporate debtor, rendering the section 9 petition not maintainable. - HELD THAT: - The adjudicating bench examined correspondence and emails exchanged between the parties dated 09.05.2017, 12.05.2017, 22.05.2017, 24.05.2017, 23.06.2017, 01.07.2017, 04.07.2017, 06.07.2017 and 25.07.2017 in which the corporate debtor raised complaints concerning quantity and quality (including shortages and defects) of material supplied. Applying the principle that, at the admission stage, the authority need only be satisfied that a plausible factual dispute exists and that it is not a patently feeble, hypothetical or illusory contention, the Bench found the objections raised were genuine and required further investigation. On that basis the Bench concluded the dispute was pre-existing and therefore the section 9 application for initiation of Corporate Insolvency Resolution Process was not maintainable. [Paras 6, 7, 8]

The petition under section 9 is dismissed for want of maintainability on account of a pre-existing dispute; no order as to costs.

Final Conclusion: The National Company Law Tribunal dismissed the section 9 petition filed by the operational creditor for initiation of Corporate Insolvency Resolution Process, holding that a pre-existing dispute between the parties existed and the petition was not maintainable.

Locus standi to claim refund by person who bore the burden of tax - refund under section 11B of the Central Excise Act as applied to service tax - exemption on service (end use exemption) versus exemption on service provider - relevant date for limitation under section 11B - tax collected without authority of law and entitlement to restitution

Locus standi to claim refund by person who bore the burden of tax - exemption on service (end use exemption) versus exemption on service provider - The appellant (recipient who paid tax to the provider) is entitled to claim refund of tax charged in invoices where the service was exempt in the hands of the recipient. - HELD THAT: - The Tribunal held that the exemption operates in relation to the service and not the provider; tax is levied on the taxable event (service) and not on a particular person. A person who has borne the burden of tax is not precluded from invoking section 11B for restitution merely because the tax was collected and deposited by the provider. The invoice does not amount to an assessment or self assessment by the proper officer and, therefore, absence of an assessment against the claimant does not oust his right to claim refund. The first appellate authority erred in denying the claim on the basis that the provider (a legal person) could not claim exemption and that the recipient lacked locus, and in failing to appreciate that the appellant had produced CA certificate, challans and a disclaimer from the provider evidencing collection and deposit of tax; that evidence was not displaced by the authorities. The Tribunal concluded the appellant's locus to claim refund was wrongly assailed and the claim merits disposal on merits in view of the exemption and proof of payment. [Paras 9, 17]

Appellant has locus to claim refund and the denial on grounds of lack of locus was erroneous.

Refund under section 11B of the Central Excise Act as applied to service tax - tax collected without authority of law and entitlement to restitution - Section 11B affords a remedy to a person who has borne the burden of tax and is not confined to the person assessed or to successful challenge to an assessment; refund can be claimed where tax was levied or collected without authority of law. - HELD THAT: - The Tribunal distinguished the Supreme Court's decision in ITC Ltd. (concerning the interplay with assessment/self assessment and appeals) on its facts and limited scope. That decision dealt with the remedy available where self assessment/reassessment procedures are engaged and does not operate to deny to a person who has borne and paid tax the statutory remedy of section 11B when tax was charged without authority. An invoice or receipt by a provider is not equivalent to an assessment order and therefore the remedy of refund under section 11B is available to the ultimate consumer who paid an exempted service tax. Consequently, the first appellate authority's reliance on the proposition that section 11B is only available after successful challenge to an assessment was inapt in these circumstances. [Paras 11, 13, 15]

Section 11B remedy is available to the person who bore the burden of the tax where tax has been collected without authority of law; the first appellate authority's contrary conclusion was unsustainable.

Relevant date for limitation under section 11B - bar of limitation for refund claims - The limitation defence was not properly adjudicated by the lower authorities; four of the five invoices are within time, and the finding rejecting the claim as time barred in respect of the invoice dated 20 February 2014 is unsupported because the appropriate 'relevant date' was not ascertained. - HELD THAT: - The Tribunal observed that the original authority failed to determine the correct 'relevant date' under section 11B for the purpose of limitation and applied the statutory starting points incorrectly. As a result, the finding on limitation is faulty. Further, where tax was collected without authority, the decision of the Bombay High Court in Parijat Construction supports the proposition that such tax cannot be retained by invoking the 'relevant date' to defeat restitution. On the material before the Tribunal (certificates, challans and disclaimer), four invoices clearly pass the limitation test; the sole invoice for 20 February 2014 could not be sustained as barred because the authorities did not apply the statutory starting points to fix the relevant date. [Paras 4, 18]

Limitation was not a valid bar to the refund claim in respect of four invoices; the finding on limitation for the 20 February 2014 invoice is unsustainable for want of determination of the correct relevant date.

Administrative fairness and natural justice in appellate adjudication - The first appellate authority acted outside the scope of issues before it by introducing and deciding locus standi without placing the appellant on notice; that procedural error vitiated the impugned order. - HELD THAT: - The Tribunal found that the first appellate authority, having been confronted with submissions on limitation and correlation of tax paid and refund claimed, shifted to a new ground-locus standi-which was neither the foundation of the original order nor served on the appellant as an objection for which he could be heard. Such directional deflection to a fresh ground at the appellate stage without notice violates principles of natural justice. Given the absence of show cause proceedings by the original authority and the procedural infirmities in the appellate disposal, remand was unnecessary and the appeal could be disposed of on the materials and submissions before the Tribunal. [Paras 3, 6, 16]

Impugned appellate order was procedurally flawed for deciding an unserved ground and accordingly could not be sustained.

Final Conclusion: Impugned order set aside and appeal allowed: the appellant is entitled to refund on the proved invoices (four invoices clearly within time; the limitation finding in respect of the 20 February 2014 invoice is unsustainable), the denial based on lack of locus was erroneous and the matter is disposed in favour of the appellant.

Refund under Rule 5 of Cenvat Credit Rules - limitation for refund claims - date of filing versus date of defect removal - disbursement of refund with interest under Section 11BB

Refund under Rule 5 of Cenvat Credit Rules - limitation for refund claims - date of filing versus date of defect removal - disbursement of refund with interest under Section 11BB - Whether the refund claim filed on 30.03.2017 for the period January, 2016 to March, 2016 was time barred because defects were removed on 04.09.2017. - HELD THAT: - The Tribunal found that the appellant originally filed the refund claim on 30.03.2017 and thereafter responded to a deficiency memo by removing the defects on 04.09.2017. The adjudicating authority and the Commissioner (Appeals) treated the date of defect removal as the effective date of filing and rejected the claim as beyond the one year period. The Tribunal held that, on the facts of the case, the original date of filing (30.03.2017) governs for limitation purposes and the subsequent removal of defects does not operate to substitute or postpone the date of filing. Consequently the refund claim was held to have been filed within the prescribed period. The Tribunal directed that the adjudicating authority disburse the refund along with interest as provided under Section 11BB, and gave a timeline of 45 days for disbursement from receipt of the order. [Paras 8]

Appeal allowed; the refund claim dated 30.03.2017 is within limitation, the impugned order is set aside, and the adjudicating authority is directed to disburse the refund with interest under Section 11BB within 45 days.

Final Conclusion: The Tribunal allowed the appeal, held that the original filing date (30.03.2017) governs for limitation and ordered disbursement of the refund for January, 2016 to March, 2016 with interest under Section 11BB within 45 days.

Service of order - presumption of service on despatch - proof of delivery - service by speed post/registered post with acknowledgement - limitation for filing appeal - ex-parte order - remand for fresh hearing

Service of order - presumption of service on despatch - proof of delivery - limitation for filing appeal - ex-parte order - remand for fresh hearing - Whether the Commissioner (Appeals) rightly dismissed the appeal as time-barred on the basis that the order-in-original was served by virtue of its despatch by speed post. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) erred in drawing a presumption of service merely from the fact of despatch of the order-in-original by speed post. The law does not permit presumption of service on despatch alone; the Revenue must place proof of delivery on record. The order-in-original was passed ex-parte despite the appellant having filed a written representation, and there was no evidence of personal service or an acknowledgement proving receipt. In these circumstances the dismissal of the appeal as barred by limitation, premised on assumed service from despatch, was unsustainable. The appropriate remedy is to set aside the impugned order and remit the matter to the Range Superintendent for hearing the appellant and passing a reasoned order in accordance with law. [Paras 7, 8]

Impugned order set aside; appeal allowed by way of remand to the Range Superintendent to hear the appellant and pass a reasoned order in accordance with law.

Final Conclusion: The Tribunal allowed the appeal by setting aside the Commissioner (Appeals) finding of limitation based on presumed service by despatch, and remanded the matter to the Range Superintendent for fresh hearing and a reasoned decision.

Consideration Fee/Pratiphal Shulk on excess transit loss - levy of Excise duty on imported excisable articles - regulatory power to require passes and impose regulatory import/transport fees - import across the customs frontier - wider/contexual construction of 'import' for regulatory provisions - enforceability of bond entered for transport under Form FL-22 / PD-15 - applicability of Distillery Rules/Paragraph 814 (permissible transit wastage) to consignments transported to a distillery

Levy of Excise duty on imported excisable articles - import across the customs frontier - Whether the State could levy Excise duty under the Uttar Pradesh Excise Act, 1910 on HSMS imported into India after payment of Customs duty - HELD THAT: - The Court held that, read with Entry 51 List II and the definitions in Section 3 and Section 28 of the Act, the State cannot impose Excise duty under the Act on an excisable article that has been imported into India and was liable to Customs duty on importation; that embargo applies to the imported article cleared for home consumption but does not prevent State regulation of subsequent manufacture from that article. The Court therefore found that no Excise duty under the Act could be levied on the HSMS in their imported condition. This conclusion is based on the statutory scheme and the proviso to Section 28(1) read with Section 12(2). [Paras 33, 34, 36]

No Excise duty under the Uttar Pradesh Excise Act could be levied on the HSMS as such after they were imported into India and cleared for home consumption.

Consideration Fee/Pratiphal Shulk on excess transit loss - regulatory power to require passes and impose regulatory import/transport fees - wider/contexual construction of 'import' for regulatory provisions - Whether the State could, as a regulatory measure, impose Consideration Fee/Pratiphal Shulk on excess loss of HSMS suffered during transportation within Uttar Pradesh after customs clearance - HELD THAT: - The Court distinguished levy (Excise duty) from regulatory imposts and held that Sections 15 and 16 (passes) and the rules in Chapter VIII of the Excise Manual are regulatory in nature and valid. Although the goods were imported and exempt from Excise duty when cleared for home consumption, the State could by regulatory law require accounting for quantities while transported within the State and impose a fee for excess transit loss to protect revenue. To preserve the regulatory scheme, the Court permitted a contextual, wider reading of the word 'import' in the Manual and related rules so as to cover consignments imported into India and transported within the State. Consequently, the levy of Consideration Fee on excess transit loss was within the regulatory competence of the State and sustainable. [Paras 53, 54, 55, 60, 71]

Consideration Fee/Pratiphal Shulk on excess transit loss during transportation within the State could be lawfully imposed as a regulatory fee under the Act and Excise Manual.

Applicability of Distillery Rules/Paragraph 814 (permissible transit wastage) to consignments transported to a distillery - enforceability of bond entered for transport under Form FL-22 / PD-15 - Whether the rules prescribing permissible transit wastage and the procedure in the Excise Manual apply only to dispatches from distilleries and not to consignments transported to a distillery (i.e. whether the impugned levy was inapplicable because consignments were 'to' and not 'from' a distillery) - HELD THAT: - The Court rejected the contention that the regulatory rules apply only to dispatches made from a distillery. Paragraphs of the Excise Manual and the Distillery Rules were read together with Sections 15-16, and it was held that all transportation of liquor within the State is within the regulatory sweep. The petitioner had applied for and obtained Passes (Form FL-22) and transported the consignments under bond; the bond liability to account for short-delivery or excess loss is enforceable. Consequently, the regulatory limits of permissible wastage (Rule 5 / Paragraph 814) and the mechanism for realisation of consideration fee apply to the transactions in question. [Paras 68, 70, 71, 74, 75]

The Distillery Rules and the Excise Manual apply to consignments transported to a distillery under pass/bond; the regulatory fixation of permissible wastage and enforcement of liability under bond are applicable and enforceable.

Final Conclusion: The writ petition is dismissed. The State's recovery of the Consideration Fee/Pratiphal Shulk on excess transit loss of the imported HSMS, imposed under the State's regulatory scheme and pursuant to the Passes and bond, is upheld; no Excise duty could be levied on HSMS in their imported condition, but the regulatory fee for excess transit loss within the State is sustainable.

Second sale exemption - Works contract - Re-opening of assessment - Circulars/clarifications of the Commissioner - Verification of tax-sufferance at earlier stage - Opportunity of hearing and fresh adjudication

Second sale exemption - Works contract - Verification of tax-sufferance at earlier stage - Circulars/clarifications of the Commissioner - Whether the appellant's purchases and subsequent sales of pre-recorded audio cassettes qualify as taxed first sales or as second sales exempt from tax, and whether the transaction between the appellant and cassette manufacturers should be treated as works contract or sale. - HELD THAT: - The High Court did not adjudicate the substantive question of whether the transactions are works contracts or taxable first sales, nor decide the validity of the impugned circular. Instead, the Court set aside the assessment orders and directed a fresh consideration by the Assessing Officer. The appellant was directed to furnish all relevant documents supporting the claim that earlier-stage purchases had already suffered tax. The Assessing Officer was directed to consider those materials in the light of the Commissioner's clarifications/circulars, afford the appellant an opportunity of hearing, and pass fresh orders on merits and in accordance with law within the stipulated time frame. The Court recorded the respondents' concession to consider the materials if produced. [Paras 7, 8]

Assessment set aside and matter remitted to the Assessing Officer for verification of earlier-stage tax sufferance and fresh adjudication in light of relevant circulars after affording opportunity of hearing; appellant to produce documents within four weeks and Assessing Officer to decide within a further four weeks.

Final Conclusion: The writ appeal is disposed by setting aside the impugned assessment and remitting the matter to the Assessing Officer to re-do the assessment after verification of purchases and consideration of the Commissioner's circulars, on merits and in accordance with law, subject to the procedural timetable directed by the Court; no costs.

Taxability of cylinder delivery, handling and rental charges - transfer of right to use goods as a species of sale - composite nature of goods where container and contents constitute a single good - binding effect of Supreme Court decision in State of Orissa v. Asiatic Gases Ltd. on identical questions

Taxability of cylinder delivery, handling and rental charges - transfer of right to use goods as a species of sale - composite nature of goods where container and contents constitute a single good - Cylinder delivery, handling and rental/over retention charges are liable to sales tax. - HELD THAT: - The Court applied the ratio of the Honourable Supreme Court in State of Orissa v. Asiatic Gases Ltd. and held that cylinders together with their gaseous contents constitute a composite good; the container is integral to the commodity and property in the gas cannot pass without the container. When filled cylinders are loaned to customers and charges are levied for over retention or for rental/delivery/handling, the transaction amounts to a transfer of the right to use the goods for consideration. Sectional definitions treating 'sale' to include transfer of the right to use goods support treating such charges as taxable. Consequently, delivery/handling and cylinder holding/rental charges are within the taxable ambit and the Tribunal's confirmation of tax on those charges was correct. [Paras 10, 11]

Tribunal's confirmation that the delivery, handling and rental/holding charges are taxable is affirmed.

Final Conclusion: Writ petitions dismissed; the High Court declines to interfere with the Tribunal's order upholding tax liability on cylinder delivery, handling and rental/over retention charges for the assessment years specified.

Right to fair trial including the accused's right to adduce defence evidence - Obligation to issue process for defence witnesses under Section 243(2) Cr.P.C. - Permissible refusal of process only if application is for vexation, delay or to defeat the ends of justice and such grounds to be recorded - Applicability of Section 243 Cr.P.C. to proceedings under the Negotiable Instruments Act - Trial court's duty to afford reasonable opportunity to summon defence witnesses rather than straight refusal for lack of particulars

Right to fair trial including the accused's right to adduce defence evidence - Obligation to issue process for defence witnesses under Section 243(2) Cr.P.C. - Permissible refusal of process only if application is for vexation, delay or to defeat the ends of justice and such grounds to be recorded - Validity of the trial Court's and Sessions Judge's refusal to issue process / further adjournment for defence witnesses and whether such refusal deprived the accused of the right to a fair trial. - HELD THAT: - The Court found that Section 243(2) Cr.P.C. applies to trials under the N.I. Act and that an accused, having entered upon defence, is ordinarily entitled to seek issuance of process to secure attendance of defence witnesses. Refusal to issue process is permissible only if the application is shown to be for vexation, delay, or to defeat the ends of justice and such reasons must be recorded. The trial Court rejected the accused's application mainly on grounds of incomplete particulars and the contention that in a complaint case parties must produce their own witnesses; the Sessions Judge affirmed those conclusions. Applying the principles laid down by the Apex Court in Kalyani Baskar and T. Nagappa, the High Court held that the reasons recorded by the trial Court and accepted by the Sessions Judge were not adequate to deny the accused the valuable right to adduce defence evidence. The Court observed that if particulars were insufficient, the appropriate course was to direct the accused to furnish proper particulars rather than refuse summons outright, and that no finding was recorded that the application was made for vexation or delay. [Paras 21, 25, 27]

Orders of the trial Court and of the Sessions Judge refusing to issue process / further opportunity to examine defence witnesses were set aside as resulting in denial of the accused's right to a fair defence.

Trial court's duty to afford reasonable opportunity to summon defence witnesses rather than straight refusal for lack of particulars - Applicability of Section 243 Cr.P.C. to proceedings under the Negotiable Instruments Act - Remedial direction for disposal of the accused's application for issuance of summons to defence witnesses. - HELD THAT: - The High Court directed that the accused shall appear before the trial Court within three weeks and file a fresh petition containing a fresh list of defence witnesses with complete postal addresses. The trial Court was directed to hear the parties and decide the petition in accordance with law, guided by the Apex Court authorities cited, and to record reasons if it refuses issuance of process on the statutory grounds of vexation, delay or defeating the ends of justice. Thus the matter of issuing process to defence witnesses was remitted for fresh consideration and decision in accordance with the legal principles identified in the judgment. [Paras 28, 29]

Accused to file fresh petition with complete particulars; trial Court to decide that petition in accordance with law after hearing the parties; matter remitted for fresh consideration.

Final Conclusion: The orders of the trial Court and the Sessions Judge refusing to issue process / further opportunity for defence witnesses were set aside. The accused is directed to file a fresh petition with complete particulars within three weeks; the trial Court shall decide the petition in accordance with law and the authorities relied upon. The criminal revision petition is disposed of and the LCR is to be sent down.

Wilful defaulter - Master Circular on identification and procedure for declaring wilful defaulters - Compliance with procedural safeguards and principles of natural justice - Service of committee orders and right to representation - Requirement of reasoned orders and application of mind - Judicial pronouncement in State Bank of India v. M/s. Jah Developers Pvt. Ltd. and Ors.

Wilful defaulter - Master Circular on identification and procedure for declaring wilful defaulters - Service of committee orders and right to representation - Judicial pronouncement in State Bank of India v. M/s. Jah Developers Pvt. Ltd. and Ors. - Validity of the declaration of the petitioners as wilful defaulters in light of the RBI Master Circular and the Supreme Court's directions regarding communication of committee orders and opportunity to represent. - HELD THAT: - The Court examined the Master Circular (2013/2015) and the Supreme Court's decision in State Bank of India v. M/s. Jah Developers Pvt. Ltd. and Ors., which require that the identification committee's order (COE) must be given to the borrower as soon as it is made so that the borrower may represent to the Review Committee, and that the Review Committee must pass a reasoned order which is then served on the borrower. The bank admitted that the COE order (Ext.R4(d)) was not served on the petitioners and that only a branch communication (Ext.P19) giving a gist was provided. The Court held that communicating the gist through a branch officer does not satisfy the mandate of giving the COE order to the borrower and thus the procedure for declaring wilful default was not complied with. The Court further recorded that the COE's order exhibited lack of application of mind and did not independently consider the explanations filed by the petitioners; the Review Committee likewise failed to independently assess the COE order or to note the absence of service. Given the drastic consequences of a wilful-defaulter declaration and the safeguards embedded in the Master Circular and reinforced by the Supreme Court, the procedural lapses and failure to consider representations rendered the impugned communications legally unsustainable. [Paras 17, 18, 19, 20, 21]

Ext.P19 and Ext.P21 (the communications declaring the petitioners wilful defaulters) are quashed for non-compliance with the Master Circular and the Supreme Court's directions; the declarations are set aside.

Requirement of reasoned orders and application of mind - Compliance with procedural safeguards and principles of natural justice - Whether the bank's defective process precluded fresh consideration and what relief should follow. - HELD THAT: - Having quashed the impugned declarations for procedural infirmity and lack of application of mind, the Court declined to adjudicate the broader question of the validity of the Master Circular itself. The Court afforded the bank liberty to reconsider the matter afresh, if warranted, but only after issuing fresh notices and acting in accordance with the Master Circular and the procedural safeguards recognized by the Supreme Court, including serving the COE order, permitting full representation to the Review Committee and passing reasoned orders. [Paras 22]

The writ petition is allowed by quashing the impugned communications; the 4th respondent may re-examine the case afresh after issuing fresh notices and complying with the prescribed procedure.

Final Conclusion: The Court quashed the bank's communications declaring the petitioners as wilful defaulters for failure to serve the COE order, lack of independent consideration of petitioners' explanations and non-compliance with the RBI Master Circular and the Supreme Court's directions; the bank is permitted to re-consider the matter afresh after issuing fresh notices and complying with mandated procedural safeguards.

Legislative competence - Entry 13 of List III (civil procedure, limitation and arbitration) - Article 254(2) - Presidential assent validating repugnant State law - Article 253 - legislation for giving effect to international agreements - pith and substance doctrine - separation of powers / encroachment upon judicial power - awards made "Rule of Court" - nature of judicial power - per incuriam

Legislative competence - Entry 13 of List III (civil procedure, limitation and arbitration) - Article 254(2) - Presidential assent validating repugnant State law - pith and substance doctrine - Validity of the Kerala State Act as within State legislative competence and effect of Presidential assent - HELD THAT: - The Court held that the subject matter of the State Act is arbitration and is referable in pith and substance to Entry 13 of List III. State legislatures may legislate on that entry and, having reserved the Act for the President and obtained his assent, the State Act prevails within Kerala notwithstanding any repugnancy with earlier Central enactments. Given receipt of Presidential assent under Article 254(2), further inquiry into repugnancy with the 1940 Act or the 1996 Act was unnecessary. [Paras 62, 66, 68, 127]

The State Act is in pith and substance referable to Entry 13 of List III and is within the State Legislature's competence; having received Presidential assent under Article 254(2) it prevails in Kerala.

Awards made "Rule of Court" - nature of judicial power - separation of powers / encroachment upon judicial power - Whether the State Act unlawfully encroaches upon judicial power by annulling awards made rule of court - HELD THAT: - The Court examined the statutory scheme under the 1940 Act (notably Sections 15, 16 and 17) and authorities on the character of judicial functions. It concluded that courts exercise judicial power when deciding whether to pronounce judgment in terms of an award, remit, modify or set aside awards; making an award a "Rule of Court" is not a mere formality. Applying the tests in State of Tamil Nadu v. State of Kerala, the Court found the State Act's legislative prescriptions targeted awards already made rule of court and interfered with judicial functions and finality of judicial proceedings. That interference amounted to a transgression of separation of powers and warranted invalidation of the State Act on that ground. [Paras 100, 107, 121, 122, 127]

The State Act, having the effect of annulling awards which had become "Rule of Court", encroaches upon the judicial power of the State and is unconstitutional.

Per incuriam - awards made "Rule of Court" - nature of judicial power - Treatment of the earlier decision in G.C. Kanungo regarding the non judicial character of courts' action making awards "Rule of Court" - HELD THAT: - The Court held that the finding in G.C. Kanungo that courts' judgments and decrees making awards "Rule of Court" are not an exercise of judicial power is per incuriam. That earlier view failed to account for the provisions of the 1940 Act (Sections 15, 16, 17) and overlooked Constitution Bench authorities distinguishing judicial from administrative functions. The present Court treated those aspects as determinative and contrary to the earlier pronouncement. [Paras 107, 112, 127]

The finding in G.C. Kanungo that passing judgments to make arbitration awards "Rule of Court" is not an exercise of judicial power is per incuriam.

Final Conclusion: The State Act is, in pith and substance, an enactment on arbitration within Entry 13 of List III and - having received Presidential assent under Article 254(2) - would otherwise prevail in Kerala; however, the Act is unconstitutional because it intrudes upon the judicial power by annulling awards that had become "Rule of Court", and the earlier contrary view in G.C. Kanungo regarding the non judicial character of such court action is per incuriam.

Revival of twin conditions in Section 45 of the PMLA by Amendment Act 13 of 2018 - reasonable grounds to believe commission of money laundering - likelihood of appellant committing offence if released on bail - application of Section 45(1) rigour in bail proceedings under the PMLA - economic offences and stringent approach to bail

Revival of twin conditions in Section 45 of the PMLA by Amendment Act 13 of 2018 - application of Section 45(1) rigour in bail proceedings under the PMLA - The amended provisions of Section 45(1) of the PMLA effected by Amendment Act 13 of 2018 revived the twin conditions and are applicable while considering bail under the PMLA. - HELD THAT: - The Court held that Section 45 had previously been declared unconstitutional by the Supreme Court in Nikesh Tarachand Shah, but Parliament cured the defect by Amendment Act 13 of 2018. Consequently the twin conditions in Section 45(1) stood revived and the rigours of Section 45 are to be applied when considering bail in offences under the PMLA. The Court relied on the legislative validation principle that a competent retrospective amendment which removes the substratum of a judgment is a valid legislative exercise, and noted that the amended provision has not been stayed by the Supreme Court and therefore is to be treated as operative for bail determination.

Section 45(1), as amended by Act 13 of 2018, is operative and its twin conditions are to be applied in the bail consideration under the PMLA.

Reasonable grounds to believe commission of money laundering - likelihood of appellant committing offence if released on bail - economic offences and stringent approach to bail - There are reasonable grounds to believe that the applicant committed the offence of money laundering and that he is likely to commit an offence if enlarged on bail; accordingly bail is refused. - HELD THAT: - On the materials placed before it, including the investigation linking the applicant to an unlawful association, alleged extortion/levy collection and attachment of proceeds and vehicles, the Court found reasonable ground for believing the applicant guilty of money laundering. Having applied the revived rigour of Section 45(1) and taken into account the gravity of economic offences and risk of reoffending, the Court concluded that bail is not permissible. The Court specifically recorded that the applicant is likely to commit an offence if released and therefore declined to enlarge him on bail.

Bail is refused as there are reasonable grounds to believe the applicant guilty of money laundering and he is likely to commit an offence if released.

Final Conclusion: The Court held that the Amendment Act 13 of 2018 revived the twin conditions of Section 45(1) of the PMLA and, applying those rigours to the material on record, found reasonable grounds to believe the applicant guilty of money laundering and likely to reoffend; the bail application was refused.