TaxTMI Updates e-Newsletter
Jun 19,2021

Constitutional validity of provisions conferring cross-jurisdictional tax liability under the Integrated Goods and Services Tax Act - Validity of Section 8(2) of the Integrated Goods and Services Tax Act - Ultra vires challenge to Section 13(8)(b) of the Integrated Goods and Services Tax Act in relation to the Act itself - Alleged inconsistency of Section 13(8)(b) of the Integrated Goods and Services Tax Act with the charging provisions of the Central Goods and Services Tax Act

Constitutional validity of provisions conferring cross-jurisdictional tax liability under the Integrated Goods and Services Tax Act - Validity of Section 8(2) of the Integrated Goods and Services Tax Act - Neither Section 13(8)(b) nor Section 8(2) of the IGST Act are unconstitutional; both provisions are constitutionally valid and operative. - HELD THAT: - The Court, having considered the challenge (which was held to be similar to that in Writ Petition No.2031 of 2018), concluded that the constitutional objections raised against Section 13(8)(b) and Section 8(2) of the Integrated Goods and Services Tax Act do not sustain. The judgment recorded that both provisions are constitutionally valid and operative for all purposes, and the reasoning in the Court's contemporaneous judgment in the companion petition was adopted as dispositive. [Paras 2]

Challenge to constitutionality of Section 13(8)(b) and Section 8(2) of the IGST Act dismissed; both provisions upheld as constitutionally valid and operative.

Ultra vires challenge to Section 13(8)(b) of the Integrated Goods and Services Tax Act in relation to the Act itself - Alleged inconsistency of Section 13(8)(b) of the Integrated Goods and Services Tax Act with the charging provisions of the Central Goods and Services Tax Act - Section 13(8)(b) is not ultra vires the IGST Act and is not ultra vires Section 9 of the Central Goods and Services Tax Act; there is no intra-statutory incompatibility warranting invalidation. - HELD THAT: - On the question of vires, the Court found no basis to hold Section 13(8)(b) ultra vires either the Integrated Goods and Services Tax Act itself or inconsistent with the charging provisions of the Central Goods and Services Tax Act (Section 9). The Court adopted the determinations in the companion judgment, concluding that Section 13(8)(b) coexists with the other statutory charging provisions and does not transgress the statute's limits or the federal scheme. [Paras 2]

Ultra vires challenges to Section 13(8)(b) (both as against the IGST Act and in relation to Section 9 of the CGST Act) rejected.

Final Conclusion: The writ petition is dismissed for the reasons recorded in the Court's judgment in the companion matter; Sections 13(8)(b) and 8(2) of the IGST Act are upheld as constitutionally valid and not ultra vires, and there shall be no order as to costs.

Writ relief against detention and confiscation - interim relief by quashing confiscation notice - release on condition of payment of tax and penalty - opportunity to appeal under Section 107 of the Goods and Services Tax Act, 2017 - non-interference with pending confiscation proceedings

Writ relief against detention and confiscation - release on condition of payment of tax and penalty - interim relief by quashing confiscation notice - Petition for interim quashing of detention order, confiscation notice and related orders and for immediate release of goods and conveyance - HELD THAT: - The petitioner sought quashing of the detention order dated 19.04.2021, the notice for confiscation dated 19.04.2021 and related orders and sought direction for release of the truck and goods. The Court recorded that, by its order dated 05.05.2021, release had been directed on condition of payment of the full tax and fifty per cent of the penalty, and that the petitioner had complied with that order and the goods and conveyance had been released. Reliance was placed by respondents on earlier Coordinate Bench decisions. In view of the pending confiscation proceedings, the Court declined to entertain interference with the confiscation notice at the interlocutory stage, while expressly preserving the petitioner's statutory right to challenge any final confiscation order by filing an appeal as permitted under Section 107 of the Goods and Services Tax Act, 2017. The Court therefore disposed of the petition subject to these observations. [Paras 2, 4]

Interim relief in the form of quashing the detention and confiscation notice refused; release already effected on compliance with payment condition; petitioner permitted to challenge any final confiscation order by appeal under Section 107 of the GST Act.

Final Conclusion: The petition is disposed of. The Court declined to interfere at this stage with the notice for confiscation and related orders; the detained goods and conveyance were released upon compliance with the earlier order, and the petitioner retains the right to challenge any final confiscation order by filing an appeal as permissible under Section 107 of the Goods and Services Tax Act, 2017.

Writ under Article 226 - Refund of IGST on zero rated supplies - Mandate to decide representations expeditiously - No adjudication on merits; liberty to agitate after adverse decision

Mandate to decide representations expeditiously - Refund of IGST on zero rated supplies - Respondent to consider and decide the petitioner's pending representations seeking refund of IGST paid on exported goods (zero rated supplies). - HELD THAT: - The High Court directed respondent No.3, the Deputy Commissioner of Customs, Mundra (Katchh), to decide the representations filed by the petitioner (Annexures E and F) as expeditiously as possible and preferably within four weeks from receipt of the order. The Court expressly refrained from going into the merits of the claim for refund of IGST on the exported goods and limited its direction to the consideration and decision of the pending representations in accordance with law. The Court further clarified that if an adverse decision is taken on those representations, the petitioner would be at liberty to approach the Court in accordance with law. [Paras 2, 3]

The respondent is directed to decide the petitioner's pending representations on the IGST refund claim expeditiously, preferably within four weeks; the Court has not adjudicated the merits and liberty is reserved to the petitioner in case of an adverse decision.

Final Conclusion: Petition disposed of by directing the concerned Deputy Commissioner to decide the petitioner's pending representations for refund of IGST on zero rated supplies expeditiously (preferably within four weeks); merits not decided and liberty reserved to the petitioner if aggrieved by the outcome.

Anticipatory bail - Arrest as last option - Custodial interrogation - Personal liberty - Conditions of bail - Expeditious investigation - Verification of court orders by concerned authority

Anticipatory bail - Arrest as last option - Personal liberty - Grant of anticipatory bail to the applicant until cognizance is taken on the police report. - HELD THAT: - The Court, applying the established principle that arrest should be resorted to only where imperative and recognising the value of personal liberty, held that the applicant, who faces a registered case and apprehends arrest while investigation is pending, is entitled to anticipatory bail for a limited period. The Court noted that investigation is ongoing and no charge-sheet has been filed, and, without expressing any opinion on merits, relied upon the exceptions and reasoning considered by higher authority in pandemic-related precedents to grant relief. Considering the factual position that arrest can be effected without a fixed period after an FIR, the Court directed release on anticipatory bail in the event of arrest until cognizance under section 173(2) Cr.P.C. is taken by the competent Court.

Applicant to be released on anticipatory bail till cognizance is taken on the police report, subject to conditions.

Conditions of bail - Custodial interrogation - Imposition of specific conditions attached to the anticipatory bail order. - HELD THAT: - The Court specified conditions as essential safeguards for granting anticipatory bail: furnishing of personal bond with two sureties to the satisfaction of the Station House Officer/concerned Court; making oneself available for police interrogation; refraining from inducement, threat or promise to witnesses; not leaving India without prior permission and deposit of passport if held; filing and verification of a computer-generated copy of the order. The Court made clear that failure to comply with any condition would permit the Investigating Officer or Government Advocate to apply for cancellation of bail.

Anticipatory bail is subject to the enumerated conditions and non-compliance will entitle the State to seek cancellation.

Expeditious investigation - Verification of court orders by concerned authority - Directions to the Investigating Officer to conclude investigation expeditiously and to the applicant to produce a copy of the order for compliance verification. - HELD THAT: - The Court directed the Investigating Officer to conclude the pending investigation expeditiously and independently, without being prejudiced by the Court's observations in the anticipatory bail proceedings. The applicant was directed to furnish a computer-generated copy of the order downloaded from the High Court website to the S.S.P./S.P. within ten days if investigation is in progress; the concerned authority is to verify the authenticity of that computerized copy in writing and ensure compliance with the order.

Investigation to be concluded expeditiously; applicant to produce computerized copy of the order and concerned authority to verify and ensure compliance.

Final Conclusion: Anticipatory bail granted to the applicant for a limited period until the competent Court takes cognizance of the police report, subject to specified conditions; Investigating Officer directed to complete the investigation expeditiously and the applicant to furnish a computer-generated copy of this order for verification and compliance.

Legislative competence under Article 246A and Article 269A - place of supply doctrine in GST - distinction between place of supply and nature of supply (inter State v. intra State) - specialia derogant generali (special provision for intermediary services) - extra territoriality and Article 245 - Article 286 restriction on State taxation of supplies outside the State and in course of import/export - reasonable classification and Article 14 - freedom to carry on trade under Article 19(1)(g) - charging provisions and scheme of IGST/CGST/MGST - double taxation objection

Legislative competence under Article 246A and Article 269A - place of supply doctrine in GST - distinction between place of supply and nature of supply (inter State v. intra State) - Validity of Section 13(8)(b) read with Section 8(2) of the IGST Act under Articles 246A, 269A, 286 and 245 of the Constitution and whether Parliament could stipulate place of supply for intermediary services as location of the supplier. - HELD THAT: - The Court held that the Constitution (101st) Amendment conferred on Parliament the power to legislate on goods and services tax and to formulate principles for determining place of supply. Article 246A and Article 269A(5) empower Parliament to determine when a supply is in the course of inter State trade or commerce and to lay down place of supply rules. Section 13(8)(b) (which specifies that for intermediary services the place of supply is the location of the supplier where supplier or recipient is outside India) flows from those powers and is a valid exercise of legislative competence. Section 8 (nature of supply) and Section 13 (place of supply) serve different purposes; an attempt to conflate them to show that Parliament has converted an inter State supply into an intra State supply is unfounded. The special provision for intermediary services is a specific rule (specialia) that operates notwithstanding the general rule for export of services. Consequently Section 13(8)(b) and Section 8(2) are intra vires Articles 246A, 269A and Article 286 read with Article 245 and form part of the scheme of the IGST Act. [Paras 103, 105, 106, 107, 119]

Section 13(8)(b) read with Section 8(2) is constitutionally valid and intra vires Articles 245, 246A, 269A and 286 and is a permissible exercise of Parliament's power to determine place of supply.

Extra territoriality and Article 245 - Whether Section 13(8)(b) effects an impermissible extra territorial legislation in breach of Article 245. - HELD THAT: - The Court found no extra territorial operation. Section 13(8)(b) prescribes place of supply; where the supplier is in India and the recipient outside India the provision results in the place of supply being the supplier's location within the taxable territory, and where supplier is outside India the place of supply would be outside India and not taxable here. The charging provisions operate within the taxable territory and Article 245(2) expressly permits parliamentary laws to have extra territorial operation subject to the Constitution; in any event the impugned provision does not amount to extra territorial taxation. [Paras 107, 119]

Section 13(8)(b) does not amount to impermissible extra territorial legislation and is not ultra vires Article 245.

Reasonable classification and Article 14 - specialia derogant generali (classification of intermediary services) - Whether Section 13(8)(b) is arbitrary, discriminatory or violative of Article 14. - HELD THAT: - Applying established tests for taxation statutes, the Court noted a presumption in favour of constitutionality and that fiscal laws enjoy wider latitude. Intermediary services are a distinct class (defined in Section 2(13)) and Section 13(8)(b) targets that class to prevent revenue leakage and to achieve legislative objectives (including a level playing field and policy goals). The classification is founded on an intelligible differentia with a rational nexus to the object of the statute; therefore the provision is not arbitrary or discriminatory. [Paras 110, 119]

Section 13(8)(b) does not violate Article 14.

Freedom to carry on trade under Article 19(1)(g) - Whether Section 13(8)(b) imposes an unreasonable restriction on the petitioner's right to carry on business under Article 19(1)(g). - HELD THAT: - The Court observed that imposition of tax pursuant to a valid law is not in itself an unreasonable restriction on trade. No factual material was shown to establish that the provision would unreasonably prevent the petitioner from carrying on business or cause closure of business. The measure is a legitimate fiscal regulation enacted within Parliament's competence under the Constitution. [Paras 111, 119]

Section 13(8)(b) does not infringe Article 19(1)(g).

Charging provisions and scheme of IGST/CGST/MGST - distinction between place of supply and charging section - Whether Section 13(8)(b) is ultra vires the charging provisions or scheme of the IGST Act, or ultra vires Section 9 of the CGST Act / corresponding MGST provision. - HELD THAT: - The Court held that Parliament, empowered by Article 269A(5), may determine place of supply rules; Section 13(8)(b) is part of that framework. The IGST charging section (Section 5) levies tax on inter State supplies; Section 13(8)(b) does not transmute an inter State supply into an intra State supply but prescribes the place of supply for specified services. Sections governing different fields (IGST v. CGST/MGST) operate independently; accordingly Section 13(8)(b) is not ultravires the charging provisions of the CGST/MGST Acts. [Paras 113, 114, 119]

Section 13(8)(b) is not ultra vires the charging section or the scheme of the IGST Act, nor ultra vires Section 9 of the CGST Act or corresponding State law.

Double taxation objection - Whether application of Section 13(8)(b) results in impermissible double taxation of the same commission or service. - HELD THAT: - The Court found two distinct taxable transactions: the intermediary's service to the overseas supplier and the overseas supplier's sale of goods to the Indian importer (subject to customs duty). Separate taxation of distinct transactions is permissible. The allegation that the foreign importing country would also tax the same commission is a matter of foreign law and not shown to give rise to impermissible double taxation; in any event IGST is not extra territorial and deductions or tax treatment abroad would depend on other jurisdictions. Thus no legal double taxation invalidates the provision. [Paras 115, 119]

The double taxation objection does not render Section 13(8)(b) invalid.

Final Conclusion: The petition challenging Section 13(8)(b) read with Section 8(2) of the IGST Act was dismissed. The Court held those provisions to be constitutionally valid, intra vires the IGST Act and not ultra vires Sections 9 of the CGST/MGST Acts; challenges under Articles 245, 246A, 269A, 286, 14 and 19(1)(g), charging scheme objections and double taxation contentions were rejected. No order as to costs.

Rectification of mistake apparent from the record - scope of Section 154 of the Income Tax Act - deduction under Section 36(1)(viia) limited to amount debited to provision for bad and doubtful debts account - maintainability of writ against a show cause/notice - judicial review under Article 226 limited to scrutiny of process and not adjudication on merits

Rectification of mistake apparent from the record - scope of Section 154 of the Income Tax Act - deduction under Section 36(1)(viia) limited to amount debited to provision for bad and doubtful debts account - Validity of issuance of notice under Section 154 seeking rectification of the assessment on the ground of a mistake apparent from the record relating to deduction under Section 36(1)(viia). - HELD THAT: - The Court held that Section 154 is confined to rectification of a mistake apparent from the record and cannot be used to re adjudge debatable questions of fact or law. Applying that principle to the present facts, the respondent identified a specific error - that deduction under Section 36(1)(viia) is limited to amounts debited to the provision for bad and doubtful debts account and cannot exceed the credit balance in that account - and described that mistake in the notice. The Court found that the competent authority has articulated the nature of the alleged mistake and has not indicated any intention to traverse disputed issues beyond rectification; therefore issuing a notice under Section 154 was within the statutory scope. The petitioner remains entitled to contest the claim and supply further material before the authority, and, if aggrieved by the final order, to pursue statutory remedies. [Paras 18, 19, 20, 21, 23]

The Section 154 notice was validly issued to rectify a mistake apparent from the record concerning the Section 36(1)(viia) deduction; the petitioner may defend the claim in the statutory proceedings and avail remedies thereafter.

Maintainability of writ against a show cause/notice - judicial review under Article 226 limited to scrutiny of process and not adjudication on merits - Whether the writ petition challenging the Section 154 notice was maintainable at this stage. - HELD THAT: - The Court reiterated settled principles that a writ against a show cause or notice is maintainable only in limited circumstances (e.g., absence of jurisdiction or mala fides) and that High Courts should not undertake a roving enquiry into merits. Here the respondent had not formed any final opinion, had given the petitioner an opportunity to reply (the petitioner had filed a written reply) and the authority was yet to decide. The challenge was therefore premature; the correct course is to allow the statutory process to proceed and, if necessary, to challenge the final order through the appropriate appellate remedies. [Paras 14, 15, 23, 24]

The writ petition was premature and not maintainable; it is dismissed with liberty to the petitioner to participate in the Section 154 proceedings and to pursue statutory appeals against any adverse final order.

Final Conclusion: The petition was dismissed: the High Court held that the Section 154 notice relating to the Section 36(1)(viia) deduction was issued within the scope of rectification for a mistake apparent from the record and that the writ challenging the notice was premature and not maintainable, leaving the petitioner free to contest the matter in the rectification proceedings and to avail statutory remedies thereafter.

Breach of principles of natural justice - request for adjournment - right to effectively contest a show cause notice - exercise of discretion by Assessing Officer - extension of limitation by CBDT

Breach of principles of natural justice - request for adjournment - extension of limitation by CBDT - right to effectively contest a show cause notice - Impugned assessment order dated 27.04.2021 was vitiated for breach of principles of natural justice by passing the order without dealing with the petitioner's request for adjournment. - HELD THAT: - The petitioner filed a response to the show cause notice-cum-draft assessment order dated 22.04.2021 and, on 26.04.2021, sought an adjournment on the grounds of a COVID-19 lockdown in Delhi and incapacity of his advisors. The Assessing Officer proceeded to pass the final assessment on 27.04.2021 without addressing that request. The Court accepted the factual assertions in the writ petition in view of the respondent's failure to file a counter-affidavit. Given that the Central Board of Direct Taxes had extended the time for passing assessment orders until 30.06.2021, the Assessing Officer could reasonably have accommodated the petitioner's request. By not doing so and by passing the assessment without dealing with the adjournment request, the petitioner's opportunity to effectively contest the show cause notice was compromised. Consequently, the assessment order could not be sustained and was set aside, while liberty was granted to the Assessing Officer to take further steps in accordance with law. [Paras 2, 3, 4]

Assessment order dated 27.04.2021 for AY 2018-2019 set aside for breach of natural justice; Assessing Officer granted liberty to proceed as per law.

Final Conclusion: The High Court set aside the assessment order dated 27.04.2021 relating to AY 2018-2019 on the ground that the Assessing Officer passed the order without dealing with the petitioner's adjournment request, thereby infringing principles of natural justice; the Assessing Officer may take further steps in accordance with law.

Computation of book profit under Section 115JB - Deduction of brought forward loss or unabsorbed depreciation 'as per books of accounts' under Explanation 1 to Section 115JB(2) Clause (iii) - Numerical determination of allowable brought forward loss/unabsorbed depreciation - Carry forward of losses - set off against subsequent years and effect on balance sheet reserves

Computation of book profit under Section 115JB - Deduction of brought forward loss or unabsorbed depreciation 'as per books of accounts' under Explanation 1 to Section 115JB(2) Clause (iii) - Numerical determination of allowable brought forward loss/unabsorbed depreciation - Whether any brought forward business loss or unabsorbed depreciation was available 'as per books of accounts' to be deducted from book profit for computing tax under Section 115JB for AY 2014-15. - HELD THAT: - Clause (iii) of Explanation 1 to Section 115JB(2) requires deduction of the lesser of brought forward loss or unabsorbed depreciation "as per books of accounts". The statutory test is thus a numerical determination of amounts remaining in the books from incorporation to the relevant assessment year. The Tribunal examined the assessee's book-profit history from AY 1999-00 to AY 2013-14 and the profit and loss account balance as at 01.04.2013. The earlier years' unabsorbed losses and depreciation were completely set off by subsequent years' book profits such that the P&L balance carried into the relevant year was a positive figure. On these facts there remained no brought forward business loss or unabsorbed depreciation reflected in the books to reduce the book profit for AY 2014-15. The Tribunal therefore held that no amount under Clause (iii) was available for deduction and that the Assessing Officer's computation under MAT should be restored. The Tribunal rejected the CIT(A)'s view that brought forward losses not yet set off could be treated as available despite being absorbed in the books, affirming that the decisive criterion is the position "as per books of accounts" for the period under consideration. [Paras 7, 8]

On the facts, there was no brought forward loss or unabsorbed depreciation remaining in the books to deduct from book profit for AY 2014-15; the Revenue's appeal is allowed and the AO's MAT computation restored.

Final Conclusion: The Tribunal allowed the Revenue's appeal, holding that Clause (iii) of Explanation 1 to Section 115JB permits deduction only of the amount of brought forward loss or unabsorbed depreciation that remains "as per books of accounts"; since the assessee's earlier losses had been absorbed and the P&L showed a positive balance carried into the relevant year, no such deduction was available and the AO's MAT determination stands restored.

Penalty under Sec. 271(1)(c) - disallowance under Sec. 40(a)(ia) - failure to deduct tax at source - quasi-criminal nature of penalty proceedings - genuineness of expenditure not doubted

Penalty under Sec. 271(1)(c) - disallowance under Sec. 40(a)(ia) - failure to deduct tax at source - genuineness of expenditure not doubted - Whether penalty under Sec. 271(1)(c) could be validly imposed where an expenditure (commission) was disallowed under Sec. 40(a)(ia) for failure to deduct TDS, although the genuineness of the expenditure was not questioned. - HELD THAT: - The Tribunal found that the commission expenditure was not held to be bogus or unsubstantiated; it was disallowed solely because tax was not deducted at source, rendering the expenditure liable to be disallowed under Sec. 40(a)(ia). Imposition of penalty under Sec. 271(1)(c) is a quasi criminal proceeding and, in the facts of the case, a simpliciter disallowance for a technical failure to deduct TDS did not justify levying penalty. Applying this principle and having regard to the Hon'ble Supreme Court's observation about the quasi criminal character of Sec. 271(1)(c) proceedings, the Tribunal concluded that the lower authorities erred in upholding the penalty solely on the basis of the disallowance made under Sec. 40(a)(ia). [Paras 8]

Penalty under Sec. 271(1)(c) quashed.

Penalty under Sec. 271(1)(c) - show cause notice - jurisdictional/charge specification - Validity of the show cause notice and the specification/striking off of the charge in the notice for initiating penalty proceedings. - HELD THAT: - The assessee contended that the show cause notice was defective because the AO did not strike off irrelevant defaults or clearly specify whether the charge related to concealment or furnishing inaccurate particulars. The Tribunal, having quashed the penalty on merits, refrained from adjudicating the challenge to the validity of the notice and the AO's assumption of jurisdiction, leaving those contentions open for consideration. [Paras 9]

Challenge to validity of the show cause notice/jurisdiction left open for consideration; not decided by the Tribunal.

Final Conclusion: The appeal is allowed by quashing the penalty imposed under Sec. 271(1)(c) insofar as it was predicated on the disallowance under Sec. 40(a)(ia) for non deduction of TDS; the question of validity of the show cause notice and specification of charge is left open.

Bogus purchases - addition on account of bogus purchases - onus of proving genuineness of transactions - re-opening of assessment - proportionate disallowance / profit element disallowance - 100% disallowance not sustainable

Bogus purchases - addition on account of bogus purchases - proportionate disallowance / profit element disallowance - onus of proving genuineness of transactions - Deletion of addition of Rs. 3,19,910 made by the AO on account of alleged bogus purchases was justified and the order of the CIT(A) upholding only the earlier 15% disallowance was sustainable. - HELD THAT: - The Tribunal upheld the CIT(A)'s finding that the AO's addition of the entire claimed purchases was not sustainable where a 15% disallowance had already been made in the original assessment. The assessee had produced purchase invoices, bank statement and VAT audit report and contended that part of the purchases related to fixed assets; the CIT(A) accepted these evidences and applied the principle that only the profit element embedded in alleged bogus purchases may be disallowed rather than treating the purchases as wholly non-genuine. The Tribunal observed that summary 100% disallowances are not sustainable on the touchstone of the Bombay High Court authority cited, and that the revenue's reliance on a later Supreme Court decision was addressed by the Bombay High Court in another decision, leading the Tribunal to conclude that the CIT(A)'s approach was reasonable. The Tribunal therefore upheld deletion of the additional disallowance and sustained the earlier 15% disallowance as adequate. [Paras 4, 6]

The CIT(A)'s deletion of the AO's addition and retention of the earlier 15% disallowance is upheld; the revenue's appeal is dismissed.

Re-opening of assessment - onus of proving genuineness of transactions - Whether the reopening and consequent enquiries sufficed to shift the onus to the assessee to prove genuineness, and whether non-production of parties warranted full additions. - HELD THAT: - The assessment was reopened on information from Sales Tax authorities and notices under relevant provisions were issued; the AO attempted to issue summons to the suppliers which returned unserved, and asked the assessee to produce the parties or supporting delivery/transportation documents. The assessee produced invoices, banking evidence and VAT audit report but not delivery challans. The Tribunal accepted the CIT(A)'s evaluation that on the materials before the authorities and the partial disallowance already made, the assessee's evidence was sufficient to avoid a 100% addition. The Tribunal therefore did not find the reopening or the AO's steps adequate to justify treating the entire purchases as bogus in the face of the evidence accepted on appeal. [Paras 3, 4, 6]

Reopening and inquiries did not, on the material placed before the authorities, justify full additions; the onus was not held to have been conclusively discharged against the assessee so as to warrant 100% disallowance.

100% disallowance not sustainable - Applicability of the revenue's reliance on the Supreme Court decision affirming 100% addition (N.K. Protein Ltd.) was rejected on facts and in view of intervening High Court consideration. - HELD THAT: - The revenue urged reliance on a Supreme Court decision said to confirm 100% additions in respect of bogus purchases. The Tribunal noted that the Bombay High Court has explained and distinguished that decision in subsequent authority and that summary 100% disallowance is not warranted on the facts of the present case where a prior 15% disallowance existed and the assessee had furnished certain supporting documents which the CIT(A) accepted. The Tribunal therefore rejected the revenue's submission and sustained the appellate order. [Paras 6]

The revenue's reliance on the Supreme Court decision for mandatory 100% addition was not accepted and did not warrant reversing the CIT(A)'s order.

Final Conclusion: The Tribunal finds the CIT(A)'s deletion of the AO's further addition and retention of the earlier 15% disallowance reasonable; the revenue's appeal is dismissed and the order of the CIT(A) is upheld.

Registration under section 12AA - exemption under section 11 - proviso to sub-section (2) of section 12A - appeal as continuation of assessment proceedings - remand for fresh consideration

Registration under section 12AA - exemption under section 11 - Whether the assessee was entitled to claim deduction/exemption under section 11 for AY 2013-14 in absence of production of the earlier registration certificate and whether the disallowance of expenses for want of production was sustainable. - HELD THAT: - The Tribunal examined the factual position that the assessee asserted long-standing registration (originally granted in 1974), that the original certificate was destroyed in floods, that returns for earlier assessment years had been accepted with exemption, that RTI replies and earlier assessment records had been placed before authorities and that fresh registration was subsequently granted (effective from 15.12.2017). The AO disallowed the claim solely for non-production of the certificate and the CIT(A) upheld that view. The Tribunal found that the claim was not considered on merits and that the revenue had not demonstrated cancellation of earlier registration; the assessee had also pursued obtaining records via RTI and obtained fresh registration. In view of these circumstances and the relevant precedents, the Tribunal concluded that the matter required fresh consideration by the Assessing Officer and therefore restored the appeal to the file of the AO for adjudication on merits after examining evidence and applying law. [Paras 10, 14]

The appeal is restored to the Assessing Officer for fresh consideration of the assessee's entitlement to exemption under section 11 for AY 2013-14; the AO to re-examine evidence of registration and expenses and decide in accordance with law.

Proviso to sub-section (2) of section 12A - appeal as continuation of assessment proceedings - Whether the Proviso to sub-section (2) of section 12A applies where registration is granted during the pendency of appellate proceedings and whether appellate proceedings/appeal before the Tribunal can be treated as continuation of assessment proceedings. - HELD THAT: - The Tribunal considered and relied upon the decision of the Hon'ble Gujarat High Court in Mayur Foundation and coordinate Tribunal decisions (including CCMP) which hold that proceedings before the Tribunal are continuation of assessment proceedings and that where registration is granted during pendency of appeal, the Proviso to section 12A(2) may be attracted. The Tribunal found the Revenue's objection - that the proviso is inapplicable because registration was granted later and that proceedings before the Tribunal are not proceedings before the assessing officer - to be untenable in light of those precedents. This reasoning formed part of the basis for remitting the matter to the AO for fresh adjudication in accordance with law and the cited authorities. [Paras 11, 12, 13, 14]

The Tribunal accepted that the Proviso to section 12A(2) and the principle that appeal proceedings are continuation of assessment proceedings are relevant and directed fresh consideration by the AO in light of the cited authorities.

Final Conclusion: The appeal is restored to the file of the Assessing Officer for fresh consideration of the assessee's claim to exemption and related disallowed expenses for AY 2013-14 in accordance with law and the precedents referred to; the appeal is allowed for statistical purposes.

Unexplained cash credit under section 68 - genuineness of transaction, identity of payer and creditworthiness - remand for fresh consideration - admission of additional evidence under Rule 29 of the ITAT Rules - principles of natural justice (right to opportunity to cross examine) - assessment under section 153C arising from search and seizure

Admission of additional evidence under Rule 29 of the ITAT Rules - principles of natural justice (right to opportunity to cross examine) - Admission of additional grounds and of the affidavit filed as additional evidence - HELD THAT: - The Tribunal admitted the additional grounds filed by the assessee for both assessment years because they went to the root of the matter and did not require verification of facts. The affidavit of Shri Shirish Chandrakant Shah produced under Rule 29 was also admitted, the Tribunal observing that the addition in both years had been made by placing reliance on the statement of that third party and therefore the affidavit was material to adjudication. [Paras 3]

Additional grounds and the affidavit under Rule 29 were admitted for adjudication.

Unexplained cash credit under section 68 - genuineness of transaction, identity of payer and creditworthiness - remand for fresh consideration - assessment under section 153C arising from search and seizure - Validity of additions treating share application money as unexplained cash credit and whether matter should be remitted to the Assessing Officer for fresh examination - HELD THAT: - The Tribunal noted that the Assessing Officer had treated receipts of share application money as unexplained cash credit relying primarily on statements and findings of the investigation wing arising from search proceedings under section 153C. Having considered the material placed before it and following the reasoning in a sister concern decision, the Tribunal held that the determinative aspects - identity of the payer, creditworthiness and genuineness of the transactions - were not clearly established on the record and had not been adequately examined in a speaking manner by the authorities below. In view of these deficiencies and the assessee's contention that it lacked opportunity to produce representatives of the investor companies for examination, the Tribunal exercised its remedial discretion to remit the issue to the Assessing Officer. The AO was directed to issue necessary notices, give the assessee adequate opportunity of being heard, properly examine the documents and financial statements produced and pass a speaking order dealing with identity, creditworthiness and genuineness of the transactions. [Paras 3]

The additions were remitted to the file of the Assessing Officer for fresh examination and adjudication on identity, creditworthiness and genuineness; appeals allowed for statistical purposes.

Final Conclusion: The Tribunal admitted the additional grounds and evidence and, finding that identity, creditworthiness and genuineness of the share application receipts were not satisfactorily examined by the authorities below, remitted the matters for fresh consideration by the Assessing Officer with directions to afford the assessee adequate opportunity of being heard; appeals disposed of for statistical purposes.

Notional rental value as income from house property - use of residential property for business purpose - verifiability of cash payments and adhoc disallowance - assessment adjustment by estimation where records are incomplete - allowability of depreciation on motor vehicles and burden of proof for business use

Notional rental value as income from house property - use of residential property for business purpose - Addition of Rs. 4,20,000 as notional rental income from a residential flat in Mumbai was sustained. - HELD THAT: - The Assessing Officer estimated notional rent for the Mumbai residential flat and treated it as income from house property after concluding the assessee had not offered any rental income and had two residential houses. The assessee contended the flat was used for business visits to avoid hotel expenses, but produced no documentary evidence to corroborate business use. The CIT(A) upheld the AO's estimate as reasonable having regard to the locality and standard of the flat. The Tribunal found the case-law relied upon by the assessee inapposite because that decision concerned a go-down used as business premises, whereas the present property is a residential flat in a residential area; the assessee failed to furnish supporting evidence, and therefore the estimate and resulting addition were affirmed. [Paras 6]

Addition on account of notional rent under the head 'income from house property' is affirmed; Ground No.1 dismissed.

Verifiability of cash payments and adhoc disallowance - assessment adjustment by estimation where records are incomplete - Ad hoc disallowance of cash expenditures was sustained at 10% of cash payments. - HELD THAT: - The AO disallowed 20% of cash expenses because detailed corroborative records were not produced and many payments were in cash; the CIT(A) reduced the disallowance to 10% after considering past practice and the assessee's improved net profit in the year under consideration. The Tribunal held that the CIT(A)'s reduction represented a reasonable exercise of discretion on the facts - balancing the assessee's operational explanation about transient labour and customary cash payments against the absence of verifiable supporting details - and therefore affirmed the 10% disallowance. [Paras 9]

Disallowance of cash expenditure sustained at 10%; Ground No.2 dismissed.

Allowability of depreciation on motor vehicles and burden of proof for business use - Depreciation claimed on three motor vehicles was examined and allowed in part: depreciation on two vehicles allowed, on one vehicle disallowed. - HELD THAT: - The assessee claimed depreciation on three cars, arguing business use for each. The Revenue pointed to absence of log books, corroborative evidence and absence of salary entries or staffing details to support the claim that a vehicle was exclusively for office use. The Tribunal accepted the Revenue's finding that one vehicle's claimed exclusive office use was not proved, but found the explanations for the other two vehicles (intra-city business travel and frequent inter-city travel for business) to be reasonable and plausible. Consequently the Tribunal directed the Assessing Officer to allow depreciation on two vehicles and disallow it in respect of the third. [Paras 12]

Ground No.3 partly allowed: depreciation allowed for two vehicles; disallowed for one vehicle.

Final Conclusion: The appeal is partly allowed: the addition on account of notional rent and the 10% adhoc disallowance of cash expenses are affirmed, while depreciation is allowed for two motor vehicles and disallowed for one, resulting in a partial allowance of the appeal.

Exercise of revisional power under section 263 of the Income tax Act - Erroneous and prejudicial to the interest of the Revenue - Genuineness, identity and creditworthiness of share application money and share premium - Validity of reassessment order and effect on revision under section 263 - Principle of merger not applicable to an order passed under section 263

Exercise of revisional power under section 263 of the Income tax Act - Erroneous and prejudicial to the interest of the Revenue - Whether the order of the Principal Commissioner of Income Tax passed under section 263 was valid in view of alleged failure by the Assessing Officer to examine certain transactions and whether the twin conditions of section 263 were satisfied. - HELD THAT: - The Tribunal found that the Assessing Officer did not examine or record any enquiry regarding receipt of share application money and share premium from three specified companies and there was no reference to those transactions in the assessment order. The Principal CIT issued a show cause and concluded that the assessment order was passed without required enquiries and verifications, rendering it erroneous and prejudicial to the revenue. The Tribunal rejected the assessee's contention that an invalid reassessment would preclude exercise of revisional power under section 263, noting the factual distinction from authorities relied upon by the assessee and holding that the principle of merger does not apply to an order under section 263. Applying the statutory test, the Tribunal held that the twin conditions for invoking section 263 were fulfilled and therefore affirmed the revisional order directing the AO to recompute income after making appropriate enquiries and providing opportunity of hearing. [Paras 10, 12]

Affirmed the order of the Principal Commissioner under section 263; the assessment order was held to be erroneous and prejudicial to the interest of the Revenue and the revision was valid.

Genuineness, identity and creditworthiness of share application money and share premium - Validity of reassessment order and effect on revision under section 263 - Whether the transactions relating to share capital, share premium and share application money from specified entities were examined by the Assessing Officer and whether the assessee established genuineness to resist revision. - HELD THAT: - On the materials before it, the Tribunal found that the assessee failed to produce any material showing that the AO had examined the identity, creditworthiness or genuineness of the transactions in question during assessment proceedings. The assessee did not make substantive submissions on the merits before the Tribunal, relying instead on arguments about invalidity of reassessment and precedents distinguishable on facts. The Tribunal therefore accepted the Principal CIT's conclusion that the AO's failure to examine these aspects made the assessment order prejudicial to revenue and warranted recomputation after appropriate verification. [Paras 7, 10, 12]

Held that the AO did not examine the genuineness, identity or creditworthiness of the said share transactions; directed reassessment in conformity with the revisional order.

Final Conclusion: The Tribunal dismissed the assessee's appeal and upheld the Principal CIT's order under section 263 for AY 2010-11, holding that the assessment order was erroneous and prejudicial to the revenue for lack of examination of specified share transactions and directing recomputation after verification and hearing.

Unexplained cash credit - application of section 68 of the Income-tax Act - unexplained expenditure - application of section 69C of the Income-tax Act - estimation of income (assessment by inference) - estimates based on surmises and conjectures are impermissible - onus to prove transactions as bogus

Unexplained cash credit - application of section 68 of the Income-tax Act - agent receipts and transmission to principal - Deletion of addition of Rs. 1,90,30,400 made as unexplained cash credit under section 68. - HELD THAT: - The Tribunal accepted the findings of the CIT(A) that the amounts deposited into the assessee's bank account were sale proceeds of the mill and were transmitted to the mill through banking channels; the assessee acted as an agent/underwriter and had placed before the authorities the details of source of deposits. The Assessing Officer's conclusion that deposits prior to formal appointment showed a device to cloak black money was not found to be supported by infirm evidence sufficient to displace the explanation offered. In view of the CIT(A)'s appraisal of facts and absence of legal infirmity, the Tribunal declined to interfere and dismissed the Revenue's appeal on this issue. [Paras 12]

Addition under section 68 deleted; Revenue's ground dismissed.

Unexplained expenditure - application of section 69C of the Income-tax Act - burden of proving bogusness - surmises and conjectures not sufficient for additions - Deletion of addition of Rs. 1,75,32,049 treated as unexplained expenditure under section 69C. - HELD THAT: - Although the development agreements assigned responsibilities to the assessee, the Assessing Officer failed to produce evidence demonstrating that the assessee actually incurred the development expenditures or that the sums were unexplained. The Tribunal relied on established principles that additions cannot be based on suspicion, surmise or conjecture and that the onus to prove transactions as bogus lies on the party asserting it. Finding no cogent evidence to support the AO's disallowance, the Tribunal approved the CIT(A)'s deletion of the addition. [Paras 20]

Addition under section 69C deleted; Revenue's ground dismissed.

Estimation of income (assessment by inference) - estimates based on surmises and conjectures are impermissible - principle of human probability - Deletion of addition of Rs. 12,50,000 assessed as estimated fees/commission for underwriting services. - HELD THAT: - The Assessing Officer estimated a notional commission applying a percentage on payments to the mill on the premise that a prudent businessman would have earned some commission; however, there was no evidence that the assessee received any commission in cash, cheque or unrecorded entries. The Tribunal found the AO's addition to be founded on conjecture and upheld the CIT(A)'s deletion of the estimated income. [Paras 27]

Estimated addition deleted; Revenue's ground dismissed.

Final Conclusion: All three appeals filed by the Revenue for AY 2004-05 to 2006-07 are dismissed; the Tribunal upholds the CIT(A)'s deletions of the additions made by the Assessing Officer on the grounds that the AO's conclusions were based on surmise and lacking evidentiary support.

Business expenditure - vehicle hire charges - ad hoc disallowance of expenses - burden of proof - consistent acceptance in earlier and subsequent years

Business expenditure - vehicle hire charges - ad hoc disallowance of expenses - burden of proof - Whether the ad hoc disallowance of a portion of vehicle hire expenses by the Assessing Officer was justified. - HELD THAT: - The Tribunal accepted the appellate finding that the Assessing Officer disallowed 20% of the vehicle hire charges on an ad hoc basis without identifying specific defects or incidents showing the expenditure was not for business purposes. The Commissioner (Appeals) found that the assessee, a public sector undertaking, had consistently claimed and had acceptance of similar vehicle hire charges in earlier and subsequent years and that sufficient documents were furnished during assessment proceedings to support the claim. The Revenue did not demonstrate any error in those findings or point to material showing failure of the assessee to discharge the burden of proof. In these circumstances the Tribunal found no reason to interfere with the deletion of the addition by the Commissioner (Appeals).

Addition made by the Assessing Officer disallowing part of vehicle hire expenses deleted by the Commissioner (Appeals) is upheld; Revenue's appeal dismissed.

Final Conclusion: The appeal filed by the Revenue against deletion of the ad hoc disallowance of vehicle hire expenses is dismissed and the order of the Commissioner (Appeals) is affirmed.

Levy of IGST on imported oxygen concentrators - importation of goods as gifts for personal use - vires under Articles 14 and 21 of the Constitution - judicial interference with policy decisions of the executive - stay of operation of a High Court judgment

Stay of operation of a High Court judgment - levy of IGST on imported oxygen concentrators - vires under Articles 14 and 21 of the Constitution - judicial interference with policy decisions of the executive - Stay granted on the operation of the High Court of Delhi's judgment dated 21 May 2021 holding the levy of IGST on imported oxygen concentrators (imported as gifts for personal use) unconstitutional. - HELD THAT: - The Bench observed that arguable questions are raised and that the High Court's order engages considerations of policy. The Attorney General informed the Court of recent executive action before the GST Council, including constitution of a Group of Ministers to review relief for COVID-19 related items. Having noted these aspects and the existence of arguable legal and policy questions, the Court granted an interim stay on the operation of the impugned High Court judgment until the next date of listing. [Paras 3, 4, 7]

Operation of the High Court's order dated 21 May 2021 is stayed until the next date of listing.

Issuance of notice - returnable period - dasti service - Interim procedural directions issued: notice to be issued and the matter made returnable in four weeks; dasti service permitted. - HELD THAT: - The Court directed that issue be noticed and listed after four weeks for further hearing, and expressly permitted dasti service in addition to ordinary modes of service. [Paras 5, 6]

Notice issued, returnable in four weeks; dasti service permitted.

Final Conclusion: The Supreme Court has stayed the operation of the Delhi High Court's judgment of 21 May 2021 (which struck down the levy of IGST on imported oxygen concentrators as violative of Articles 14 and 21), issued notice returnable in four weeks, and permitted dasti service; interim relief to remain in force until the next listing.

Right to fair adjudication - production and preservation of best evidence (CCTV) - adverse inference under Section 114 Illustration (g) of the Evidence Act - limited remand of adjudication for re-export or clearance on payment of duty - confiscation where manner of import is patently fraudulent - passports - issuance not barred by pendency of criminal case at FIR stage

Right to fair adjudication - production and preservation of best evidence (CCTV) - adverse inference under Section 114 Illustration (g) of the Evidence Act - Failure to preserve and produce airport CCTV footage amounted to prejudice to the petitioners' right to fair adjudication and warranted an adverse inference. - HELD THAT: - The Court held that a noticee's entitlement to a fair adjudication under Articles 14 and 21 includes access to documents in official custody that bear on the defence. The precise point of interception (whether before crossing the customs barrier or when exiting the green channel) was determinative of the defence and could have been resolved only by production of the CCTV footage. The airport authority, being part of the State, had a duty to preserve such best evidence when a large smuggling operation was uncovered and when detainees specifically requested verification. The footage was not secured and had been erased, and DRI's plea that it was not in their control could not absolve the duty to have preserved it. Applying the principle in Section 114 Illustration (g) of the Evidence Act, the Court drew an adverse inference against the respondents for withholding the best evidence, observing that the non-production prejudiced the petitioners' ability to defend themselves. [Paras 11, 12]

Adverse inference drawn against the respondents for non-preservation/non-production of CCTV; petitioners' defence held to have been prejudiced.

Limited remand of adjudication for re-export or clearance on payment of duty - confiscation where manner of import is patently fraudulent - passports - issuance not barred by pendency of criminal case at FIR stage - Adjudication proceedings were restricted and remitted for limited determination; petitioners were permitted to seek duplicate passports notwithstanding pendency of FIR-stage criminal proceedings. - HELD THAT: - Because the Court found that the petitioners' defence had been prejudiced by non-production of the CCTV, it held that continuation of full adjudication to determine guilt would be unfair. The adjudicating authority was directed to confine its consideration to whether the seized goods could be re-exported or cleared on payment of applicable duties, and to pass final orders within four weeks after receipt of this order, giving the petitioners an opportunity to be heard in person or via video conferencing. The Court noted the established principle that where importation is patently fraudulent (for example, concealing gold in the body), confiscation is appropriate, but that such issues must now be considered within the limited remit directed. Separately, the Court held that pendency of a criminal case at the FIR stage is not a ground to deny issuance or renewal of passports and permitted the petitioners to apply for duplicate passports subject to usual formalities. [Paras 13, 14]

Adjudication remitted for limited determination within four weeks on re-export or clearance on payment of duty; petitioners permitted to apply for duplicate passports and jurisdictional passport authority directed to issue them subject to usual formalities.

Final Conclusion: The petitions were disposed by directing an adverse inference for non-preservation/non-production of CCTV footage, restricting the pending adjudication to decide only re-export or clearance on payment of duty within four weeks, and permitting the petitioners to apply for duplicate passports despite FIR-stage criminal proceedings; no costs.

Evidence by statements - opportunity of cross-examination - remand for fresh decision - onus of proving knowledge - seizure of undeclared goods - penalty imposition

Evidence by statements - opportunity of cross-examination - onus of proving knowledge - penalty imposition - Whether the penalty imposed on the appellants could be sustained where the case rested primarily on recorded statements and the appellants were not granted opportunity to cross-examine the declarants. - HELD THAT: - The Tribunal found that the prosecution's case was founded principally on contemporaneous statements recorded during investigation and that no independent primary evidence was produced to establish that the appellants knew of the concealed cigarettes recovered from the container. The three appellants had denied knowledge of the transaction and of the presence of cigarettes. The adjudicating authority did not permit cross-examination of the witnesses whose statements formed the primary evidence. The Bench held that where the determinative proof of culpability rests on such statements, it is of paramount importance that those statements be subjected to testing by cross-examination; absent that opportunity, reliance on the untested statements is unsafe. For these reasons the impugned order sustaining the penalty could not stand and the matter required fresh adjudication after affording the appellants the opportunity to cross-examine the witnesses whose statements were relied upon. [Paras 4, 5, 6]

Impugned order set aside and matter remanded to the original adjudicating authority for fresh decision after granting the appellants opportunity of cross-examination.

Final Conclusion: Appeals allowed by remand: penalty order quashed and matter remitted for fresh adjudication after giving the appellants an opportunity to cross-examine the witnesses whose statements constituted the primary evidence.

Oral agreement enforceability against a company - Contracts on behalf of a company - Board's sanction to be required for certain contracts in which particular directors are interested - prior approval of the Central Government where paid-up capital not less than one crore - voidable at the option of the Board - limitation - Article 52 (arrears of rent)

Oral agreement enforceability against a company - Contracts on behalf of a company - Board's sanction to be required for certain contracts in which particular directors are interested - prior approval of the Central Government where paid-up capital not less than one crore - voidable at the option of the Board - Whether the oral agreement between the appellant and the respondent company could bind the company in view of the requirements of Section 46 read with Section 297 of the Companies Act, 1956. - HELD THAT: - The Court held that Section 46 must be read with Section 297. Where a director (or his relative) contracts with the company for supply of goods/services and the company has paid-up capital not less than one crore, prior approval of the Central Government and the consent of the Board are required. Absent those conditions, a contract falling within Section 297 cannot be held binding on the company. The evidence showed that the well belonged to the appellant and that the managing director was the appellant's brother; the requisite Board consent and Central Government approval were not obtained. Consequently an oral contract of this nature, which attracted Section 297, could not bind the company and the question of avoidance did not arise. The First Appellate Court's finding of breach of Section 297 was upheld. [Paras 10]

The oral agreement did not bind the respondent company in the absence of Board consent and required Central Government approval; the contract was ineffective under Section 297.

Limitation - Article 52 (arrears of rent) - Whether the suit for recovery of charges for lifting water was barred by limitation under Article 52 of the Limitation Act. - HELD THAT: - The Appellate Court found and the High Court accepted that Article 52 prescribes a three-year period for claiming arrears of rent. The plaintiff's notice dated 31.01.1996 showed a claim for arrears; the suit was filed in 1999 and thus after the three-year period from the date the arrears became due. The plaintiff's contention that earlier suits by the defendant operated as a stay or suspension of limitation was rejected because no stay preventing filing of the plaintiff's suit was shown. Therefore the suit was time-barred under Article 52. [Paras 11]

The suit was barred by limitation under Article 52 and thus not maintainable.

Final Conclusion: Both substantial questions of law were answered against the appellant: the oral agreement could not bind the company for want of Board consent and required Central Government approval under Section 297, and the suit was barred by limitation under Article 52. The first Appellate Court's judgment and decree are confirmed and the second appeal is dismissed.

Restoration of company struck off from register - duty to file annual returns and financial statements - power of Registrar of Companies to strike off for non-compliance - restoration subject to compliance and payment of fees and costs - publication of restoration order in the Official Gazette

Restoration of company struck off from register - power of Registrar of Companies to strike off for non-compliance - Restoration of the name of M/s. Cricket Archive Private Limited on the Register of Companies. - HELD THAT: - The Tribunal, on consideration of the pleadings and documents filed by the petitioner and the ROC's counter-affidavit, found that notwithstanding defaults in filing statutory returns, the materials placed before it warranted allowing the company application for restoration. The Tribunal directed the ROC to restore the company to its original status as if its name had not been struck off, thereby exercising its remedial power to set aside the striking off in the circumstances shown by the petitioner. [Paras 5]

Application CA/602/2020 allowed and ROC directed to restore the company's name on the Register of Companies.

Duty to file annual returns and financial statements - restoration subject to compliance and payment of fees and costs - Conditions and compliances to be satisfied by the company upon restoration. - HELD THAT: - The Tribunal conditioned the restoration on the company filing all pending statutory documents, including annual returns, financial statements and Income Tax returns from 2016-2017 onwards, and on payment of prescribed fees/late fees/additional fees as decided by the ROC. The petitioner was directed to ensure personal compliance and to pay a specified cost via the MCA online portal as precondition to restoration being affected.

Restoration permitted subject to filing of pending statutory documents, payment of prescribed fees/late fees and the specified cost, and personal assurance of compliance by the petitioner.

Publication of restoration order in the Official Gazette - power of Registrar of Companies to take further action for other violations - Administrative steps and reservation as to other actions by the ROC. - HELD THAT: - The Tribunal directed that, upon delivery of a certified copy of the order and compliance with the directions, the ROC shall publish the order in the Official Gazette. The Tribunal clarified that the order is confined to violations leading to striking off and does not preclude the ROC from initiating or continuing appropriate actions under law for any other violations or offences committed by the company prior to or during the strike-off period.

ROC to publish the order in the Official Gazette after compliance; order confined to striking-off violations and without prejudice to other actions by the ROC.

Final Conclusion: The Tribunal allowed the company application and ordered restoration of M/s. Cricket Archive Private Limited to the Register of Companies, subject to filing of all pending statutory documents from 2016-2017 onwards, payment of prescribed fees/late fees and the specified cost, compliance by the petitioner, and publication of the order in the Official Gazette; the order is without prejudice to other actions the ROC may take for separate violations.

Commercial decision of the Committee of Creditors - replacement of Interim Resolution Professional by Resolution Professional under Section 22 - maintainability of application filed by a member of the CoC for appointment of RP - effect of pendency of challenges to constitution of CoC on past decisions - forwarding the name of proposed RP to the IBBI for confirmation

Maintainability of application filed by a member of the CoC for appointment of RP - commercial decision of the Committee of Creditors - Application by a Financial Creditor who is a member of the CoC to move the Adjudicating Authority for appointment of a proposed RP pursuant to a CoC resolution is maintainable and is not susceptible to interference where the CoC has deliberately authorised a member to file the application. - HELD THAT: - The Tribunal observed that the resolution passed at the 5th CoC meeting dated 04.05.2021 expressly authorised any financial creditor who is a member of the CoC to file the necessary application before the Adjudicating Authority. The CoC having applied its mind and passed the resolution with the requisite voting strength, the commercial decision thus taken by the CoC brooks no interference by the Adjudicating Authority. Consequently, a member of the CoC is competent to file the application authorised by the CoC and the preliminary objection to maintainability was rejected. [Paras 17, 19]

The application filed by the Financial Creditor (member of the CoC) for replacement of the IRP pursuant to the CoC resolution is maintainable and was allowed on that ground.

Replacement of Interim Resolution Professional by Resolution Professional under Section 22 - forwarding the name of proposed RP to the IBBI for confirmation - The CoC's resolution to replace the IRP with the proposed RP having more than the requisite 66% voting share was upheld and the name of the proposed RP was directed to be forwarded to the IBBI for confirmation; where IBBI stated no objection, the requirement under Section 22(4) was treated as satisfied. - HELD THAT: - Having noted that the Homebuyers class voted in favour amounting to 68.87% and that the requirement of more than 66% was met, the Tribunal held that the CoC's decision to appoint Mr. Ayyagari Viswanadha Sarma as Resolution Professional must be given effect. The IBBI's counsel expressly stated that IBBI had no objection and that no disciplinary proceedings were pending against the proposed RP; in view of that statement, the procedural step of forwarding for confirmation under Section 22(4) was addressed by noting the absence of objection and the Tribunal directed that the name be forwarded and the proposed RP shall act as RP forthwith, with the outgoing IRP handing over records and obtaining due discharge. [Paras 7, 23]

The CoC's appointment of the proposed RP was given effect and the Tribunal directed forwarding of his name to the IBBI; the proposed RP shall act as the RP and the IRP shall hand over records.

Effect of pendency of challenges to constitution of CoC on past decisions - commercial decision of the Committee of Creditors - Pending applications challenging the composition or voting share of the CoC do not preclude the Adjudicating Authority from allowing a CoC-approved change of IRP to RP; any change in CoC constitution, if later accepted, will have prospective effect and will not invalidate past decisions taken in the CIRP. - HELD THAT: - The Tribunal rejected the submission that the pendency of applications challenging computation of claims and voting shares should stay the present application. It recorded that such grievances can be examined by the incoming RP under the Code and Regulations if required. The Tribunal further observed that, in order to preserve the seamless nature of the CIRP, any modification to the CoC constitution arising from subsequent adjudication will operate prospectively and will not affect decisions already taken by the CoC in the CIRP, having regard to the relevant IBBI regulations. [Paras 21, 22]

The pendency of challenges to CoC constitution does not prevent allowing the CoC's decision to replace the IRP; any alteration to CoC composition will apply prospectively and can be examined by the incoming RP.

Final Conclusion: The Tribunal allowed the application and directed that the CoC-nominated Mr. Ayyagari Viswanadha Sarma shall act as the Resolution Professional in place of the Interim Resolution Professional, the outgoing IRP to hand over records and obtain discharge, the name to be forwarded to the IBBI (which stated no objection), and held that the CoC decision was binding notwithstanding pending challenges to CoC composition which, if upheld later, would have prospective effect.

Exclusion of time from CIRP period - corporate insolvency resolution process (CIRP) timeframe - lockdown exclusion under IBBI Regulation 40(c) - extension of CIRP - urgent listing of interlocutory application

Exclusion of time from CIRP period - extension of CIRP - Application for exclusion of the period from 31/07/2020 to 31/08/2020 from the total CIRP period allowed. - HELD THAT: - The Resolution Professional sought specific exclusion of the period 31/07/2020 to 31/08/2020 from the CIRP timeframe on account of disruptions caused by the COVID-19 pandemic and associated lockdown measures. The Tribunal, noting earlier orders and the need to enable evolution of a better resolution plan in the interest of the CIRP, allowed IA No. 228/CB/2020 and accordingly excluded the stated period from the CIRP computation. The relief sought for urgent listing and exclusion for the stated month was granted as part of the application.

IA No. 228/CB/2020 allowed and the period 31/07/2020 to 31/08/2020 excluded from the CIRP period.

Lockdown exclusion under IBBI Regulation 40(c) - corporate insolvency resolution process (CIRP) timeframe - Recognition that time lost due to lockdown from 25/03/2020 is excluded from calculation of the CIRP timeframe under IBBI Regulation 40(c). - HELD THAT: - The Tribunal recorded that IBBI has inserted Regulation 40(c), which provides for exclusion of time lost due to lockdown in computing the CIRP period. On that basis, the Tribunal treated the period from 25/03/2020 up to the date of the application (29/09/2020) as excluded from the 270-day CIRP computation (180+90), and proceeded accordingly in allowing the exclusion sought in the present application.

The period from 25/03/2020 to 29/09/2020 is excluded from the CIRP timeframe pursuant to IBBI Regulation 40(c).

Urgent listing of interlocutory application - Application IA No. 277/CB/2020, being identical to IA No. 228/CB/2020, was closed. - HELD THAT: - The Tribunal observed that IA No. 277/CB/2020 connected with the same proceedings sought reliefs identical to those in IA No. 228/CB/2020. As the present IA addressed those reliefs, the duplicate IA was closed to avoid multiplicity of proceedings.

IA No. 277/CB/2020 is closed as the reliefs are the same as in IA No. 228/CB/2020.

Final Conclusion: The application by the Resolution Professional is allowed: the period 31/07/2020 to 31/08/2020 is excluded from the CIRP period; the Tribunal recognised exclusion of lockdown-affected time from 25/03/2020 to 29/09/2020 under IBBI Regulation 40(c); and the duplicate IA No. 277/CB/2020 is closed.

Withdrawal under Section 12A and Regulation 30A - Verification of claims under Regulation 13(1) - Duty of the Interim Resolution Professional to verify claims and constitute Committee of Creditors - Constitution of Committee of Creditors and 90% voting share requirement - Inherent power of Adjudicating Authority under Rule 11 of NCLT Rules

Withdrawal under Section 12A and Regulation 30A - Verification of claims under Regulation 13(1) - Duty of the Interim Resolution Professional to verify claims and constitute Committee of Creditors - Constitution of Committee of Creditors and 90% voting share requirement - Validity of application for withdrawal filed under Section 12A read with Regulation 30A where claims had been received but not verified and the CoC was not constituted. - HELD THAT: - The Tribunal held that Section 12A permits withdrawal only where the application is filed by the applicant on whose petition CIRP was initiated and, where applicable, approved by ninety per cent voting share of the Committee of Creditors; Regulation 30A permits filing before constitution of the CoC through the IRP but contemplates compliance with the timelines therein. Regulation 13(1) requires the IRP to verify every claim within seven days from the last date of receipt and prepare the list of creditors, and a claim by a financial creditor received before Form FA may render constitution of the CoC necessary. In the present case the IRP received six claims, including a substantial claim by a financial creditor, prior to submission of Form FA but did not verify the claims and deferred verification awaiting settlement; he filed the withdrawal application under Regulation 30A(1)(a) and submitted it to the Adjudicating Authority within three days of Form FA. The Tribunal found no explanation for deferring verification when the financial creditor's claim was received earlier, observed that the IRP should have verified the claim and, if found genuine, constituted the CoC (or rejected the claim if not genuine) before seeking withdrawal under Section 12A/Regulation 30A. For these reasons the application under Section 12A read with Regulation 30A was rejected as not being in accordance with the statutory scheme and the duties cast on the IRP. [Paras 29, 30, 31, 32, 33]

Application for withdrawal under Section 12A read with Regulation 30A rejected; IRP directed to verify claims and act in accordance with law.

Inherent power of Adjudicating Authority under Rule 11 of NCLT Rules - Distinction between applications under Rule 11 and under Section 12A/Regulation 30A - Whether reliance on the Supreme Court and NCLAT decisions permitting withdrawal under Rule 11 precluded application of Section 12A/Regulation 30A where Form FA and Form A procedures under the Regulations were invoked. - HELD THAT: - The Tribunal acknowledged the precedents (Swiss Ribbon and NCLAT decisions) which permit the Adjudicating Authority to deal with withdrawal applications under its inherent powers under Rule 11 before constitution of the CoC. However, it noted that the present application was made under Section 12A and Regulation 30A (statutory regime for withdrawal) and not under Rule 11; consequently the statutory requirements of Section 12A and Regulation 30A (including verification of claims and the role of the IRP in submitting Form FA) were to be followed. The Tribunal therefore did not permit the applicant to rely on Rule 11 precedents to circumvent the obligations under the Code and Regulations where claims had already been received and not verified. [Paras 17, 18, 19, 29]

Precedents on Rule 11 acknowledged but inapplicable to validate the Section 12A/Regulation 30A withdrawal in the facts of this case; statutory procedure under Section 12A/Regulation 30A must be followed.

Final Conclusion: The application for withdrawal filed under Section 12A read with Regulation 30A was dismissed because the IRP received claims (including from a financial creditor) prior to Form FA but did not verify them or constitute the CoC; the IRP is directed to verify the claims and proceed in accordance with the Code and Regulations, and the applicant may move a fresh application in accordance with law.

Operational debt - default under the Insolvency and Bankruptcy Code - service of demand notice - limitation for Section 9 application - pre-existing dispute and arbitration clause not a bar to Section 9 - admission of debt as determinative evidence - completeness and maintainability of Section 9 application under the Rules - jurisdiction of the Adjudicating Authority - appointment of Interim Resolution Professional and moratorium

Operational debt - default under the Insolvency and Bankruptcy Code - admission of debt as determinative evidence - Existence of an operational debt and default of amount greater than the statutory threshold. - HELD THAT: - On the record the applicant supplied goods for which invoices were raised between March 2015 and December 2016 and payment remained unpaid. The corporate debtor, in its reply (para 20), expressly admitted a liability after adjustment of credit notes, leaving a balance payable exceeding the threshold of one lakh. The minutes and emails contemporaneously record the outstanding and a payment plan. Applying the statutory scheme and the principle in Innoventive Industries Ltd. that the Code is triggered when a debt of one lakh or more becomes due and unpaid, the Tribunal found that default is established and the debt qualifies as an operational debt. [Paras 7, 16]

The Tribunal held that an operational debt and default existed and was established on the material on record, warranting initiation of CIRP.

Service of demand notice - completeness and maintainability of Section 9 application under the Rules - Validity of service of the Section 8 demand notice and consequent maintainability of the Section 9 application. - HELD THAT: - The demand notice was sent to the registered office as per MCA records and returned with endorsement 'refused to accept'. The Tribunal treated such refusal as effective service in law, relying on established precedents that service at the registered address followed by refusal to accept suffices. The application was filed in the prescribed Form (Rule 6) and the Tribunal found it to be complete and maintainable. [Paras 6, 15, 16]

Service was held valid and the Section 9 application was found complete and maintainable.

Limitation for Section 9 application - Whether the Section 9 application was barred by limitation. - HELD THAT: - Although invoices span earlier dates, the Tribunal examined the timeline of demand (16.09.2017) and filing (21.05.2019) and, applying relevant NCLAT authority, concluded that the petition was within limitation. The bench explicitly recorded that the matter is within limitation and relied on precedent holding that notices within limitation and admissions/reckoning of accounts may negate the time-bar. [Paras 13]

The Tribunal held the Section 9 application was not barred by limitation.

Pre-existing dispute and arbitration clause not a bar to Section 9 - Whether the existence of a claimed pre-existing dispute and an arbitration clause barred admission of the Section 9 petition. - HELD THAT: - The corporate debtor pleaded disputes concerning credit notes, quality of goods and an arbitration agreement. The Tribunal examined the material and found that the corporate debtor had admitted a substantial balance in its reply and in contemporaneous communications, and that the disputes raised related to earlier periods and did not constitute a pre-existing bona fide dispute which would preclude admission. Consequently, the arbitration clause did not operate to defeat the Section 9 petition on the facts before the Tribunal. [Paras 9, 16]

The Tribunal held that the pleaded disputes and arbitration clause did not bar admission of the Section 9 application.

Jurisdiction of the Adjudicating Authority - Competence of the Tribunal to entertain the petition. - HELD THAT: - The registered office of the corporate debtor is in Delhi; therefore the Tribunal found that it had territorial jurisdiction to entertain and decide the Section 9 application as per the statutory scheme. [Paras 14]

The Tribunal held that it had jurisdiction to try the application.

Appointment of Interim Resolution Professional and moratorium - Appointment of an Interim Resolution Professional (IRP), imposition of moratorium and related directions. - HELD THAT: - Having admitted the application under Section 9(5), the Tribunal appointed an IRP named in the order subject to compliance and consent formalities, directed payment of an initial deposit by the operational creditor to meet IRP expenses, and declared that the moratorium under Section 14 would follow with its statutory consequences. Directions were also given for communication of the order to the IRP, IBBI and ROC and for supply of the paper book to the IRP. [Paras 17, 18, 19, 20]

The Tribunal appointed the IRP, imposed the moratorium and issued consequential administrative directions including deposit of funds for IRP expenses.

Final Conclusion: The Tribunal admitted the Section 9 application: it found an operational debt and default established (including admission of liability by the corporate debtor), held service of the demand notice valid, rejected limitation and pre-existing dispute/arbitration as bars to admission, exercised jurisdiction, appointed an IRP, directed a security deposit for the IRP and ordered the moratorium and consequential communications and compliances.

Initiation of liquidation - resolution of the Committee of Creditors under Section 33(2) of the Insolvency and Bankruptcy Code - appointment of liquidator - moratorium under Section 33(5) of the Insolvency and Bankruptcy Code - notice of discharge under Section 33(7) of the Insolvency and Bankruptcy Code - investigation of financial affairs under Section 35(1) of the Insolvency and Bankruptcy Code - preliminary report under Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016

Resolution of the Committee of Creditors under Section 33(2) of the Insolvency and Bankruptcy Code - initiation of liquidation - Whether the corporate debtor should be placed under liquidation pursuant to the CoC resolution passed on 28.01.2021 - HELD THAT: - The Tribunal examined the Resolution Professional's application and the minutes of the 6th meeting of the Committee of Creditors held on 28.01.2021 in which, after consideration of the two received resolution plans, the CoC resolved by the requisite majority that the plans were not feasible or viable and accorded consent to file for initiation of liquidation under the Code. Having considered the process followed by the RP (including issuance of Form G, receipt and evaluation of resolution plans, and exclusion of the Covid-19 period), the Tribunal concluded that the case is fit for liquidation and that the CoC's resolution to commence liquidation is operative and warrants adjudication by the Authority.

The application for initiation of liquidation pursuant to the CoC resolution dated 28.01.2021 is allowed and the company is ordered to be liquidated.

Appointment of liquidator - preliminary report under Regulation 13 of the Insolvency and Bankruptcy (Liquidation Process) Regulations, 2016 - Appointment of the Liquidator and directions governing the liquidation process - HELD THAT: - The Tribunal appointed the existing Resolution Professional as Liquidator to conduct the liquidation in terms of the Code. The Liquidator was directed to proceed with the liquidation process in accordance with Chapter III of Part II of the Code and relevant regulations, to continue investigations into the corporate debtor's financial affairs under Section 35(1), to pursue pending applications and recovery steps as permissible by law, and to submit a Preliminary Report to the Adjudicating Authority within seventy-five days from the liquidation commencement date as required by Regulation 13. Registry was directed to communicate the order to statutory authorities and copies were to be sent to financial creditors and the corporate debtor for necessary action.

The existing Resolution Professional is appointed as Liquidator and is directed to carry out the liquidation process and file the Preliminary Report in terms of the Code and regulations.

Moratorium under Section 33(5) of the Insolvency and Bankruptcy Code - notice of discharge under Section 33(7) of the Insolvency and Bankruptcy Code - Effect of liquidation order on moratorium and employment status - HELD THAT: - The Tribunal ordered that the earlier moratorium under Section 14 cease and that a fresh moratorium under Section 33(5) shall commence on liquidation. The order is also to be treated as a notice of discharge to the officers, employees and workmen of the corporate debtor in accordance with Section 33(7) of the Code, thereby giving legal effect to the change in the company's status consequent to initiation of liquidation.

The moratorium under Section 14 shall cease and a moratorium under Section 33(5) shall commence; the order shall operate as notice of discharge under Section 33(7).

Final Conclusion: The Tribunal allowed the RP's application under Section 33(2), held that liquidation was warranted on the basis of the CoC resolution, appointed the existing RP as Liquidator with directions to conduct the liquidation (including investigation under Section 35(1) and submission of the Preliminary Report under Regulation 13), directed communication of the order to statutory authorities and stakeholders, and declared commencement of the statutory moratorium and discharge consequences arising on liquidation.

Rejection of proof of claim by Liquidator - Proof of employment and continuity of service - Reliance on bank statements, Form 16 and Form 26AS as evidence - Obligation to furnish income tax returns and documentary proof in liquidation claims - Access to corporate email/server in liquidation (discovery and inspection) - Maintainability of employee claim in liquidation in absence of supporting evidence

Rejection of proof of claim by Liquidator - Proof of employment and continuity of service - Reliance on bank statements, Form 16 and Form 26AS as evidence - Obligation to furnish income tax returns and documentary proof in liquidation claims - Validity of the Liquidator's rejection of the Applicant's claim for unpaid salary - HELD THAT: - The Tribunal examined the materials placed on record and the respondent's pleadings and found that documentary evidence established that the applicant was not in the employment of the corporate debtor after April 2013. The applicant failed to comply with the Tribunal's direction to produce income tax returns and Form 26AS for the period March 2013 to March 2018; the documents furnished (ITR V for AYs 2012 13 and 2013 14) and the Form 26AS for later assessment years indicated remuneration from other employers. Bank transaction vouchers and other records were relied upon to show the applicant's receipt of payments from other companies. Given the absence of cogent documentary proof of continuous employment with the corporate debtor after 2013 and the applicant's failure to produce the directed tax documentation, the Tribunal concluded that the claim lacked prima facie force and could be treated as bogus. In these circumstances the Liquidator's decision to reject the claim was found to be sustainable and not warranting interference.

The rejection of the applicant's proof of claim dated 28.01.2019 by the Liquidator is upheld and MA/140/IB/2019 is dismissed.

Access to corporate email/server in liquidation (discovery and inspection) - Maintainability of employee claim in liquidation in absence of supporting evidence - Application for access to the corporate debtor's mailbox/server (discovery and inspection) filed by the Applicant - HELD THAT: - The application for access to the corporate mailbox was considered in the factual matrix that the Liquidator was unable to retrieve certain mails and returned hardware on an 'as is where is' basis, and that the applicant had not established continuous employment or furnished the tax documents directed by the Tribunal. As the primary claim was found to be unsustainable on the basis of the available evidence and non compliance with directions to produce tax records, the ancillary relief seeking discovery/inspection of the office mail server could not be sustained. The Tribunal also observed that statements from the other companies were material to determine the applicant's employment status, which the applicant did not secure or place before the Tribunal.

MA/661/2019 seeking access to the corporate mailbox/server is dismissed as consequential to the dismissal of the primary claim.

Final Conclusion: The Tribunal found the applicant's claim for unpaid salary to be unsubstantiated due to lack of documentary proof of continuous employment and non compliance with directions to produce tax records; the Liquidator's rejection is upheld, MA/140/IB/2019 is dismissed, and MA/661/2019 seeking access to the corporate mailbox/server is dismissed consequentially.

Power to conduct further investigation after filing of complaint - requirement of leave for further investigation vis-a -vis supervisory jurisdiction under Section 173(8) CrPC - scope of Magistrate's supervisory jurisdiction to order further investigation - interim protection from coercive action subject to cooperation - arguable issue requiring adjudication

Power to conduct further investigation after filing of complaint - requirement of leave for further investigation vis-a -vis supervisory jurisdiction under Section 173(8) CrPC - scope of Magistrate's supervisory jurisdiction to order further investigation - Whether respondent no. 2 could continue further investigation in the ECIR despite no express leave having been recorded by the Designated Court. - HELD THAT: - The Court examined the complaint which expressly prayed for leave to conduct further investigation but noted that the Designated Court's order issuing process did not expressly grant such leave. The Court referred to the Supreme Court's decisions (including Vinubhai Haribhai Malaviya and State of Andhra Pradesh v. A. S. Peter) discussing the continued power of the investigating agency to carry out further investigation and the Magistrate's supervisory jurisdiction under Section 173(8) CrPC. On the rival contentions, the Court found that an arguable legal question arises requiring consideration, but in the meantime held that further investigation by respondent no. 2 may proceed subject to the ultimate result of the present writ petition. [Paras 12, 13, 14, 15, 16]

Further investigation by respondent no. 2 may continue for the present, subject to the final outcome of the writ petition.

Interim protection from coercive action subject to cooperation - arguable issue requiring adjudication - Whether petitioner no. 4 should be restrained from arrest or other coercive action in the interim. - HELD THAT: - Noting that petitioner nos. 1 to 3 already enjoy interim protection from the Supreme Court, the High Court considered the specific apprehension of petitioner no. 4. Balancing the parties' contentions and the Court's view that further investigation may proceed, the Court granted limited interim relief to petitioner no. 4: no coercive action shall be taken against him until the returnable date, on the condition that he extends cooperation to respondent no. 2 in response to the impugned summons. [Paras 15, 16, 18]

No coercive action shall be taken against petitioner no. 4 until the returnable date, provided he cooperates with respondent no. 2.

Final Conclusion: Notice issued returnable on 30.04.2021; meanwhile further investigation by respondent no. 2 may continue subject to the result of the writ petition, and petitioner no. 4 is granted interim protection from coercive action until the returnable date provided he cooperates with the investigation.

Place of removal - Cenvat credit - input services - FOR sales / FOR contract - remand for fresh consideration

Place of removal - Cenvat credit - input services - FOR sales / FOR contract - Appellate Tribunal's failure to consider Circular No.1065/4/2018-CD dated 08.06.2018 and its impact on the question of admissibility of Cenvat credit for outward transportation of final goods - HELD THAT: - The Court examined whether the Appellate Tribunal had considered the Government of India, Central Board of Indirect Taxes and Customs Circular No.1065/4/2018-CD dated 08.06.2018 which clarifies determination of place of removal and exceptions applicable to FOR contract / destination sales (paras. 3 and 4 of the Circular). The appellant had pointed out the Circular to the Tribunal in its synopsis, but the impugned CESTAT order does not record any consideration of the Circular or its impact on the admissibility of Cenvat credit of service tax paid on outward transportation. The High Court held that non-consideration of the Circular was material and fatal to the Tribunal's conclusion, because the Circular bears directly on whether transportation up to buyer's premises falls outside the scope of credit where the place of removal is the factory gate or, alternatively, where facts fall within recognized exceptions for FOR/destination sales. Consequently, the Court did not decide the substantive question of credit admissibility on merits but directed fresh consideration by the Appellate Tribunal after taking the Circular (paras. 3 and 4) into account and after affording the appellant an opportunity of hearing. [Paras 10, 11]

Order of the Appellate Tribunal set aside and the matter remanded to the Appellate Tribunal for fresh consideration of the issue in light of Circular No.1065/4/2018-CD dated 08.06.2018, with opportunity of hearing and de novo disposal on merits.

Final Conclusion: Appeal allowed; CESTAT order dated 12.6.2020 set aside and matter remanded for fresh consideration of the admissibility of Cenvat credit for outward transportation in light of Circular No.1065/4/2018-CD dated 08.06.2018; no order as to costs.

Penalty for fraud or wilful neglect - show cause notice must disclose factual foundation - principles of natural justice and fair procedure - jurisdictional error - power to impose enhanced penalty - remand for fresh show cause notice

Show cause notice must disclose factual foundation - penalty for fraud or wilful neglect - principles of natural justice and fair procedure - jurisdictional error - Impugned penalty imposed at the enhanced rate was invalid because the show cause notice did not allege or set out the factual foundation of fraud or wilful neglect. - HELD THAT: - The Court held that the show cause notice was laconic and failed to indicate any factual averments that the assessee had committed fraud or wilful neglect in under declaring tax. The initial onus lay on the department to aver the factual foundation for alleging fraud or wilful neglect in the show cause notice so that the dealer could be put on notice and given an opportunity to meet a charge that would attract the maximum penalty under the statute. The authority could not rely, after the event, on its finding of absence of a plausible explanation to convert a bare notice into one alleging wilful neglect. In the absence of such averments in the notice, imposing the enhanced penalty amounted to a jurisdictional error and offended the requirements of fair procedure and natural justice.

Impugned penalty order set aside on the ground that the show cause notice did not disclose the factual basis of fraud or wilful neglect and therefore the imposition of enhanced penalty was invalid.

Remand for fresh show cause notice - power to impose enhanced penalty - Whether the department may proceed afresh after setting aside the impugned order. - HELD THAT: - The Court declined to remit the petitioner to the alternative remedy of appeal and, having quashed the defective notice and consequent penalty order, granted the department liberty to issue a fresh show cause notice in accordance with law. The decision preserves the department's statutory power to impose an enhanced penalty provided that any fresh notice properly avers the factual foundation for alleging fraud or wilful neglect and affords the assessee a fair opportunity to answer those allegations.

Liberty given to the department to issue a fresh show cause notice and proceed in accordance with law; no order as to costs.

Final Conclusion: Writ petition allowed; impugned penalty order dated 27.03.2021 set aside for want of a show cause notice alleging the factual basis of fraud or wilful neglect; department permitted to issue a fresh notice in accordance with law.

Stay of recovery pending statutory appeal under Section 33(6)(a) of the APVAT Act, 2005 - Mandatory deposit requirement for prosecuting appeals and effect of deposit (12.5% at first appeal and additional 37.5% before Tribunal) - Prohibition on adjudicating merits while deciding a stay application - Judicial interference under Article 226 of the Constitution in exercise of writ jurisdiction to grant interim relief

Stay of recovery pending statutory appeal under Section 33(6)(a) of the APVAT Act, 2005 - Mandatory deposit requirement for prosecuting appeals and effect of deposit (12.5% at first appeal and additional 37.5% before Tribunal) - Prohibition on adjudicating merits while deciding a stay application - Validity of the order of the Joint Commissioner dated 22.01.2021 declining to grant stay of recovery pending the appeal before the Andhra Pradesh VAT Appellate Tribunal. - HELD THAT: - The Court recorded that the petitioner had complied with the statutory deposit requirements by paying 12.5% at first appeal and an additional 37.5% on preferring the appeal before the Tribunal, thereby having deposited 50% of the disputed tax. The memo of grounds before the Tribunal raised contentions that go to the root of the assessment and penalty, and therefore the Joint Commissioner ought not to have declined the stay application by venturing into the merits of those contentions. In these circumstances the Court found no justification for the respondent to refuse interim relief and held that the impugned order was unsustainable, setting it aside and allowing the stay pending disposal of the appeal before the Tribunal. [Paras 12, 13]

Order of the Joint Commissioner dated 22.01.2021 declining stay set aside; stay allowed and to remain in force pending disposal of the appeal before the Tribunal.

Judicial interference under Article 226 of the Constitution in exercise of writ jurisdiction to grant interim relief - Prohibition on adjudicating merits while deciding a stay application - Whether the High Court should interfere under Article 226 to grant interim relief by staying recovery pending the statutory appeal. - HELD THAT: - Having found that the petitioner had made the statutory deposits and that the grounds of appeal raised substantial questions touching the core of the assessment and penalty, the Court exercised its writ jurisdiction to correct the impugned administrative denial of stay. The exercise of Article 226 was held appropriate because the Joint Commissioner, in declining relief, had improperly gone into merits instead of considering balance of convenience and the effect of the statutory deposits; absence of perversity in reasoning was not found to preclude interference where the respondent had declined to grant interim protection contrary to those considerations. [Paras 12, 13]

High Court interfered under Article 226 and granted interim relief by staying recovery pending disposal of the appeal before the Tribunal.

Final Conclusion: Writ petition allowed; impugned order of the Joint Commissioner dated 22.01.2021 set aside and the stay application filed by the petitioner is allowed to operate until the Tribunal disposes of the appeal; no order as to costs.

Entitlement to concessional inter state purchase using C Forms - Inclusion of goods in registration certificate - Binding effect of High Court and Supreme Court precedents - Quashing of administrative circulars inconsistent with judicial decisions - Article 14 - invidious classification

Inclusion of goods in registration certificate - Entitlement to concessional inter state purchase using C Forms - The petitioner is entitled to inclusion of High Speed Diesel Oil in its registration certificate and to obtain 'C' Forms for inter state purchases at the concessional rate. - HELD THAT: - The Court held that the petitioner's request for inclusion of High Speed Diesel Oil in the registration certificate must be allowed and that, consequentially, the petitioner is entitled to use 'C' Forms for inter state purchases at the concessional rate. The decision rests on the principle that a dealer's right to purchase restricted items at concessional rates under existing registration cannot be withdrawn merely because the dealer is not selling those goods, a conclusion affirmed by prior High Court authority relied upon in the judgment. In view of the controlling precedents, the petitioner's claim for inclusion and for issuance of declaration in 'C' Forms was accepted and the respondents were directed to give effect to the inclusion and permit the issuance/download of 'C' Forms within four weeks. [Paras 3, 5]

Writ petition allowed; inclusion of High Speed Diesel Oil in registration certificate directed and request for issuance of 'C' Forms permitted; exercise to be completed within four weeks.

Binding effect of High Court and Supreme Court precedents - Quashing of administrative circulars inconsistent with judicial decisions - Article 14 - invidious classification - Reliance on the departmental circular to deny the petitioner relief is misplaced in view of prior judicial pronouncements which have been upheld by the Supreme Court. - HELD THAT: - The Court found that the circular relied upon by the Revenue could not stand against the subsequent judicial pronouncements, including the decision reported in 2020 (3) TMI 450 and the dismissal of Special Leave Petitions by the Supreme Court, which recognised the same view in multiple High Courts and declined interference. The Division Bench's reasoning - that denying concessional purchase rights would amount to an invidious classification contrary to Article 14 - was accepted as a valid exposition of law. Accordingly, administrative instructions inconsistent with those judicial decisions could not be enforced against the petitioner. [Paras 2, 3, 4]

Revenue's reliance on the circular rejected; the circular's restrictive effect cannot be applied where it conflicts with the judicially declared position upheld by the Supreme Court.

Final Conclusion: The writ petition is allowed. The petitioner is entitled to inclusion of High Speed Diesel Oil in the registration certificate and to obtain 'C' Forms for concessional inter state purchases; respondents directed to give effect to this within four weeks. No costs.

Entitlement to inclusion of commodity in registration certificate - use of 'C' Forms for concessional inter state purchases - binding effect of precedents and dismissal of Special Leave Petitions - inapplicability of departmental circular in face of judicial pronouncement - equality before law and prohibition of invidious classification under Article 14

Entitlement to inclusion of commodity in registration certificate - use of 'C' Forms for concessional inter state purchases - equality before law and prohibition of invidious classification under Article 14 - The petitioner is entitled to have 'High Speed Diesel Oil' included in its registration certificate and to obtain 'C' Forms for concessional inter state purchases. - HELD THAT: - The Court held that the petitioner's request to include High Speed Diesel Oil in the registration certificate must be allowed and that consequential permission to obtain 'C' Forms follows. The Division Bench decision in The Commissioner of Commercial Taxes v. The Ramco Cements Ltd. established that registered dealers who have the right to sell restricted items under the earlier regime cannot be deprived of the right to purchase them at concessional rates merely because they are not selling those goods; denying the concession would result in an invidious classification contrary to Article 14. The High Court's view, affirmed by reference to consistent decisions of nine High Courts and the dismissal of Special Leave Petitions by the Supreme Court, compels allowing the inclusion and issuance of declaration in 'C' Forms. The petitioner's registration certificate shall be amended and the request for 'C' Forms granted within the time directed by this Court. [Paras 3, 5]

Petition allowed; inclusion of 'High Speed Diesel Oil' in the registration certificate directed and entitlement to 'C' Forms granted within four weeks.

Inapplicability of departmental circular in face of judicial pronouncement - binding effect of precedents and dismissal of Special Leave Petitions - Reliance on the departmental circular dated 05.09.2019 to deny the petitioner's prayer is misplaced and unsustainable in view of subsequent judicial pronouncements upheld by the Supreme Court. - HELD THAT: - The Court found that the circular relied upon by the Revenue cannot override the clear judicial trend favouring grant of concessional purchase rights and use of 'C' Forms. The Division Bench of this Court in the cited decision quashed the departmental circular of 31.05.2018 and directed non restriction of 'C' Forms for the six commodities; the State's Special Leave Petitions were dismissed by the Supreme Court which noted consistent High Court decisions and declined to interfere. Given those authoritative pronouncements, the Department cannot sustain refusal based on its circular and the writ petition must be allowed. [Paras 2, 3, 4]

The circular relied upon is inapplicable; the departmental restriction cannot be enforced in the face of controlling judicial decisions.

Final Conclusion: Writ petition allowed; petitioner entitled to amendment of registration certificate to include High Speed Diesel Oil and to issuance of 'C' Forms for concessional inter state purchases; respondent directed to carry out the exercise within four weeks; no costs.