TaxTMI Updates e-Newsletter
Jun 20,2022

Principle of natural justice - opportunity of personal hearing - adjudication order set aside for want of hearing - remand for fresh adjudication

Principle of natural justice - opportunity of personal hearing - adjudication order set aside for want of hearing - remand for fresh adjudication - The adjudication order was passed without considering or rejecting the petitioners' specific request for personal hearing; whether the order must be set aside and matter remanded for hearing. - HELD THAT: - The Adjudicating Authority's order records consideration of the petitioners' reply but does not record that the petitioners' specific request for personal hearing was either considered or rejected. The State's counsel did not dispute the record showing that no personal hearing was afforded despite the request. In these circumstances the impugned adjudication order cannot stand as it infringes the principle of natural justice. Accordingly the Court set aside the adjudication order and remanded the matter to the Adjudicating Officer to pass a fresh order after granting the petitioners or their authorised representative an opportunity of personal hearing within the time directed.

Impugned order dated 9th May, 2021 set aside; matter remanded to the Adjudicating Officer for fresh decision after affording personal hearing within eight weeks from communication of this order.

Final Conclusion: Writ petition allowed in part; adjudication order set aside and matter remanded for fresh adjudication after affording the petitioners an opportunity of personal hearing within eight weeks.

Classification of rental income as income from other sources - allowability of quality loss - treatment of penalty and stores and spares

Classification of rental income as income from other sources - Rental income received by the assessee is to be treated as income from other sources. - HELD THAT: - Both the Income Tax Appellate Tribunal and the High Court had held that the rental receipts in question fall under the category of income from other sources. The Supreme Court expressly agreed with the concurrent view taken by the ITAT and the High Court and declined to interfere with that classification.

Treat rental income as income from other sources; concurrent orders affirmed.

Allowability of quality loss - The question relating to the treatment/allowability of quality loss was decided in favour of the assessee as per the findings of the lower authorities. - HELD THAT: - The ITAT and the High Court resolved the controversy on quality loss in a particular manner and the Supreme Court recorded its complete agreement with those conclusions, endorsing the approach of the fora below without further interference.

Findings on quality loss upheld; no interference.

Treatment of penalty and stores and spares - The issues concerning penalty and the treatment of stores and spares were decided by the lower authorities and those decisions were affirmed. - HELD THAT: - The Tribunal and the High Court had dealt with the contentions about penalty and the classification/treatment of stores and spares. The Supreme Court agreed with those determinations and dismissed the Special Leave Petitions without disturbing the conclusions on these points.

Decisions on penalty and on stores and spares affirmed; petitions dismissed.

Final Conclusion: The Special Leave Petitions are dismissed; the Supreme Court concurred with the ITAT and the High Court on classification of rental income, quality loss, and penalty/stores and spares, and declined to interfere with the impugned judgment under Article 136; pending application disposed of.

Prosecution proceedings u/s 279(1) - TDS not deposited in the government treasury within the prescribed statutory time - defaults were in respect of salary as well as non-salary TDS deductions - Company and the person in charge faced the trail - Refund paid towards TDS arrears - HELD THAT:- As huge amount of Rs.3,52,99,059/-, though was deducted by the petitioner-Company as TDS, was not deposited in the Government treasury within the prescribed statutory time. It was deposited after 11 months (may be before 12 months). Therefore, once there was a non-deposit, the necessary consequences shall follow including the prosecution. Whatever the submissions are made on behalf of the petitioner-assessee are all defences which are required to be considered by the trial Court in the trial. Even the same is also observed by the High Court in the impugned judgment and order.

It is also required to be noted that when the petitioner(s) approached the High Court to set aside the sanction order under Article 226 of the Constitution of India by the time the learned Magistrate had already taken the cognizance and issued summons to the petitioner(s).

Therefore, the High Court [2018 (3) TMI 1316 - DELHI HIGH COURT] was justified in observing that the Company and the person in charge are required to face the trial. We are in complete agreement with the view taken by the High Court. No interference of this Court is called for in exercise of powers under Article 136 of the Constitution of India. Hence, the Special Leave Petition stands dismissed.

Amendment to Section 80IB(10) and its retrospective/temporal operation - Applicability of statutory amendment to assessment years - Maintainability of Special Leave Petition under Article 136

Deduction u/s 80IB - HELD THAT:- An amendment was made to Section 801B (10) by the insertion of Clauses (e) and (f). Hence, for assessment year 2011-2012, pertaining to the same assessee, Leave has been granted in SLP(C) (2021 (8) TMI 1317 - SC ORDER)

The above amendment however came into effect from 1 April 2010 and has no application for Assessment Year 2010-11 corresponding to financial year 2009-2010. Since the assessment year in the present case is 2010-2011, the present Special Leave Petition stands on a distinct footing.

Having considered the judgment of the High Court and in view of the above legal position, we are not inclined to entertain the Petition under Article 136 of the Constitution. The Special Leave Petition is dismissed.

Special audit u/s 142(2A) - AO Jurisdiction to give directions for a special audit - necessary approval of the Principal Commissioner of the Income Tax or not? - As per HC Assessing Officer does have the jurisdiction to give directions for a special audit under Section 142(2A) - Period during which both the petitions remained pending i.e. from the date of issuance of notice on 14.6.2021 till the date of pronouncement of judgement, shall be excluded while counting the period prescribed in the proviso to Sub-section (2C) of Section 142 - HELD THAT:- We see no reason to interfere with the impugned judgment and order(s) passed by the High Court [2021 (8) TMI 1014 - GUJARAT HIGH COURT] which is a well reasoned and well considered judgment. Hence, the Special Leave Petitions are dismissed.

Pending applications stand disposed of.

Reopening of assessment under Section 147 - Notice under Section 148 - Escapement of income after four years - omission or failure to disclose material facts - Change of opinion - New material to the assessing officer - Rectification under Section 154 for clerical/arithmetical mistake

Reopening of assessment under Section 147 - Notice under Section 148 - Escapement of income after four years - omission or failure to disclose material facts - Change of opinion - Validity of the notice under Section 148 and reopening proceedings under Section 147 for assessment year 2010-11 - HELD THAT: - The Court examined the recorded reasons for reopening and the original assessment under Section 143(3). The recorded reasons show that the assessing officer sought to increase the disallowance under Section 36(i)(iii) on the same material that had already been considered in the original assessment, attributing the proposed reassessment to an alleged shortfall in the disallowance. The Court held that initiation of reassessment after the four year period requires a satisfiable case of omission or failure on the part of the assessee to disclose fully and truly material facts or the coming into possession of some new material which was not previously available. Neither of these requirements was made out: there was no allegation or finding that the assessee omitted or failed to disclose material facts, nor was any new material identified as coming into the assessing officer's possession after the original assessment. The Court treated the assessing officer's action as a change of opinion on the same material, which is not a permissible ground for reopening under Section 147, and therefore the notice and proceedings were unsustainable. The Court relied on the reasoning in earlier decisions including Calcutta Club Ltd. and Income-Tax Officer v. Techspan India Private Ltd. which support that reassessment cannot be used to alter an original view taken on material already before the assessing officer.

The notice under Section 148 dated 31.03.2017 and all proceedings under Section 147 for AY 2010-11 were quashed as being based on change of opinion and lacking any finding of omission/failure to disclose or new material.

Rectification under Section 154 for clerical/arithmetical mistake - Reopening of assessment under Section 147 - Whether a clerical or arithmetical mistake in calculation of disallowance can justify reopening under Section 147 - HELD THAT: - The recorded reasons suggested that a mistake in calculation of the disallowance may have contributed to the alleged escapement. The Court observed that a clerical or arithmetical mistake apparent from the record is remediable by rectification under Section 154 and does not constitute a ground for reopening assessment under Section 147. Using reassessment proceedings to correct a calculation error where the underlying material was before the original assessing officer was not permissible.

A clerical/arithmetical mistake in calculation is not a legitimate ground for reopening under Section 147 and should be corrected, if at all, by recourse to Section 154.

Final Conclusion: The High Court allowed the writ petition, quashed the notice under Section 148 dated 31.03.2017 and all consequent proceedings under Section 147 relating to assessment year 2010-11, holding that reassessment after four years was unsupported by any omission/failure to disclose or new material and amounted to an impermissible change of opinion; no order as to costs.

Reasonable opportunity of being heard - search and seizure under the Income Tax Act - assessment under Section 153A read with Section 143(3) - penalty proceedings under the Income Tax Act - centralisation/transfer of assessment under Section 127 - pendency of challenge to transfer order does not invalidate search-based assessment absent interim relief

Reasonable opportunity of being heard - search and seizure under the Income Tax Act - Whether the impugned assessment order was passed without affording the petitioner a reasonable opportunity of being heard. - HELD THAT: - The Court found that notices issued in consequence of search and seizure operations were responded to by the petitioner, who requested that previously filed returns be treated as returns for the search-related proceedings and furnished computation and replies which were considered by the Assessing Officer. The impugned assessment reflects examination of the returns and replies and records discrepancies indicating tax evasion discovered during search. The petitioner did not point to any specific statutory provision mandating a different or additional opportunity that was not afforded. On this basis the Court held there was no denial of reasonable opportunity of hearing warranting interference.

No denial of reasonable opportunity was made out; the assessment order was not vitiated on this ground.

Centralisation/transfer of assessment under Section 127 - pendency of challenge to transfer order does not invalidate search-based assessment absent interim relief - Whether pendency of a writ petition challenging transfer/centralisation of the case before another High Court rendered the impugned assessment order invalid or required its adjournment. - HELD THAT: - The petition before the Allahabad High Court contested the legality of the order of transfer/centralisation under Section 127. The Court observed that even if that writ were to be allowed, the legality of the search and seizure operation and the subsequent assessment would not necessarily be affected. Moreover, no interim order had been granted by the Allahabad High Court staying the assessment or search consequences. Consequently, pendency of the transfer challenge did not alone provide a ground to set aside or stay the assessment.

Pendency of the writ challenging transfer did not invalidate the search-based assessment; absence of interim relief meant no interference was warranted.

Penalty proceedings under the Income Tax Act - assessment under Section 153A read with Section 143(3) - Whether issuance of penalty notices prior to or without an assessment order rendered the penalty proceedings invalid. - HELD THAT: - The Court noted that the impugned order was in fact an assessment arrived at after detailed search and seizure proceedings which disclosed involvement in tax evasion. Given that the assessment proceedings under Section 153A read with Section 143(3) were completed and discrepancies were recorded, the Assessing Officer was within jurisdiction to initiate penalty proceedings under the relevant provisions of the Income Tax Act. The contention that penalty notices were impermissibly issued without a prior assessment did not succeed in the face of the assessment based on search outcomes.

Issuance of penalty notices did not invalidate the penalty process where assessment had been conducted following search and seizure; no interference warranted.

Final Conclusion: Writ petitions dismissed; no interference with the assessment or penalty notices was warranted on the grounds urged. Petitioners granted liberty to pursue statutory appellate remedies within 60 days, which shall be considered on merits and not dismissed on limitation alone if statutory requirements are complied with.

Treatment of income from nursery and agricultural operations - retrospectivity of the Explanation to section 2(1A) as affecting agricultural status - eligibility of captive power undertakings for deduction under section 80IA - application of special incentive provisions to captive undertakings under section 80IC - deduction under section 43B for employees' contribution to PF/ESI paid after statutory due date

Treatment of income from nursery and agricultural operations - retrospectivity of the Explanation to section 2(1A) as affecting agricultural status - Allowability of expenditure claimed as agricultural in relation to raising clonal plants, sugarcane and coconuts and the effect of the Explanation to Section 2(1A) on that classification - HELD THAT: - The Tribunal's allowance of the assessee's claim treating the activities of raising clonal plants, sugarcane and coconuts as agricultural operations is sustained. The Court followed earlier authoritative decisions in Commissioner of Income Tax v. Soundarya Nursery and Commissioner of Income Tax v. Green Gold Tree Farmers (P) Ltd and noted that in the assessee's own earlier assessments (2005-06 and 2006-07) similar questions were decided in the assessee's favour. The CBDT Circular widening the scope of "agriculture income" does not alter the result on the facts because the assessee had demonstrated activities integral to cultivation (land preparation, levelling, bed preparation, sowing, planting and selection of mother plants). De hors the circular, the Tribunal's conclusion, which affirmed the view of the Commissioner (Appeals), cannot be faulted.

Substantial questions of law relating to agricultural character and the Explanation to Section 2(1A) are answered against the revenue and in favour of the assessee.

Eligibility of captive power undertakings for deduction under section 80IA - Whether captive power undertakings supplying power to other business units of the assessee qualify for deduction under Section 80IA - HELD THAT: - The Court applied the decision in the assessee's own earlier case (CIT Kolkata III v. ITC) and held that Section 80IA does not preclude a unit from claiming the deduction merely because the power generated was consumed by the assessee's other businesses rather than sold to outsiders. The legislative purpose to promote infrastructure-generation of power is to be construed liberally and the Tribunal correctly held that setting up the eligible unit within the specified period satisfies the premise for claiming the benefit. Consequently the Tribunal's allowance of the Section 80IA deduction for the captive power undertaking is upheld.

Substantial question of law on eligibility under Section 80IA is answered against the revenue and in favour of the assessee.

Application of special incentive provisions to captive undertakings under section 80IC - interpretive parity between provisions of section 80IA and section 80IC - Entitlement of the captive undertaking to deduction under Section 80IC where the unit's products are supplied to the assessee's own Food Business Division - HELD THAT: - The Tribunal and the Commissioner (Appeals) were right to treat Section 80IC as attracting the application of provisions of Section 80IA by virtue of the statutory cross-reference. The Court observed that Section 80IC is a special provision conferring benefits to undertakings in specified states and that the liberal interpretive approach applied to Section 80IA (to further the objective of promoting infrastructure and industrial growth) equally applies to Section 80IC. Reliance on the Division Bench and Supreme Court authorities endorsing liberal construction of incentive provisions supports the Tribunal's conclusion that the captive undertaking qualifies for the deduction despite supplying products to the assessee's own division.

Substantial question of law on entitlement under Section 80IC is answered against the revenue and in favour of the assessee.

Deduction under section 43B for employees' contribution to PF/ESI paid after statutory due date - Whether the revenue's appeal on disallowance under Section 43B for employees' contributions to PF/ESI paid after the due date can be pursued in this appeal - HELD THAT: - The Court noted that the substantive legal question on Section 43B remains contested in other matters before the Court but declined to decide the issue here because the tax effect in the present assessment year is below the threshold limit fixed by the CBDT for filing appeals. The disallowance recorded in the assessment is quantitatively small and therefore the revenue was not permitted to pursue this ground in the present appeal. The Court expressly left the substantial question on Section 43B open.

The question relating to deduction under Section 43B is left open and not adjudicated in this appeal for want of sufficient tax effect.

Final Conclusion: The appeal is dismissed. Substantial questions of law relating to the agricultural character of nursery operations and retrospectivity of the Explanation to Section 2(1A), and to deductions under Sections 80IA and 80IC, are answered against the revenue and in favour of the assessee; the challenge under Section 43B is left open because the tax effect is below the CBDT threshold.

Re-opening of assessment under Section 147 of the Income Tax Act - Proviso to Section 147 - four year bar - Explanation 1 to the proviso - insufficiency of account books / disclosure - Assessing Officer's jurisdiction to record reasons for reopening - Scope of judicial review under Articles 226 and 227 regarding sufficiency of reasons

Re-opening of assessment under Section 147 of the Income Tax Act - Proviso to Section 147 - four year bar - Explanation 1 to the proviso - insufficiency of account books / disclosure - Validity of notice issued under Section 147 for assessment year 2013-14 beyond four years in light of the proviso and Explanation 1. - HELD THAT: - The Court examined Section 147 as it stood prior to 01.04.2021 including the proviso which ordinarily bars action after four years from the end of the relevant assessment year, and Explanation 1 which qualifies the proviso by providing that production of account books or other evidence from which material could, with due diligence, have been discovered will not necessarily amount to disclosure. The Court held that the four-year bar in the proviso is subject to exceptions, notably failure to make a return and failure to disclose fully and truly all material facts, and that Explanation 1 circumscribes the latter exception by permitting reopening where the books or material furnished were insufficient such that escaped income could not have been discovered despite due diligence. The Assessing Officer's reasons that the material and books were insufficient thus fall within the statutory scheme permitting action under Section 147 for assessment year 2013-14. [Paras 6, 7]

The notice dated 27.03.2021 for reopening assessment for AY 2013-14 is not vitiated merely by being issued beyond four years where Explanation 1 applies; the Assessing Officer has jurisdiction to invoke Section 147 on the stated grounds.

Assessing Officer's jurisdiction to record reasons for reopening - Scope of judicial review under Articles 226 and 227 regarding sufficiency of reasons - Whether the High Court in writ or supervisory jurisdiction may probe the sufficiency of the reasons recorded by the Assessing Officer for reopening under Section 147. - HELD THAT: - The Court held that where the power exercised and the reasons assigned for reopening are traceable to a statutory provision, the High Court will not ordinarily interfere with the sufficiency of those reasons in writ or supervisory jurisdiction. The Court observed that it cannot go into the sufficiency of the Assessing Officer's reasons while the matter remains pending before the Assessing Officer and that challenge to sufficiency is not sustainable so long as reasons are statute-based. Accordingly, the petitioner was relegated to participate in the assessment proceedings and to pursue such remedies as may be available in law. [Paras 8, 9, 10]

Writ relief is declined; the High Court will not examine sufficiency of reasons here and the petitioner must pursue remedies in the assessment proceedings.

Final Conclusion: The petition challenging the reopening notice under Section 147 for AY 2013-14 is dismissed: Explanation 1 permits reopening beyond four years where books or material were insufficient to disclose escaped income despite due diligence, and the Court will not, in exercise of Articles 226/227, interfere with the Assessing Officer's reasons traceable to the statute; petitioner to participate in assessment proceedings and pursue other legal remedies.

Reopening of assessment - failure to disclose fully and truly all material facts - change of opinion - exercise of power under section 147 and section 148 of the Income Tax Act, 1961

Reopening of assessment - failure to disclose fully and truly all material facts - change of opinion - section 147 and section 148 of the Income Tax Act, 1961 - Validity of the notice under Section 148 (and assumption of jurisdiction under Section 147) to reopen assessment for A.Y. 1997-98 - HELD THAT: - The reasons supplied for reopening showed no allegation or finding of any failure by the assessee to disclose fully and truly all material facts; that requirement is mandatory for assumption of jurisdiction under Sections 147/148. Instead, the reassessment was sought on the basis that depreciation had been written back and that depreciation had been computed on the straight line method rather than the W.D.V. method, which amounted to a post facto change of opinion by the assessing officer. The Court held that reopening an assessment on the basis of a mere change of opinion, absent any concealment or nondisclosure of material facts, is impermissible and cannot sustain the notice under Section 148. Applying settled law on the limits of reassessment powers, the Court concluded that the notice and the order rejecting objections were invalid. [Paras 8, 9]

The notice under Section 148 and the order disposing of objections were quashed and the petition was allowed as prayed.

Final Conclusion: The petition was allowed; the reassessment notice dated 29 March 2004 and the order dated 14 February 2005 were set aside as the reopening was founded on a change of opinion and there was no failure to disclose material facts permitting exercise of power under Sections 147/148.

Reopening of assessment - notice under Section 148 - exercise of jurisdiction under Article 226/227 - jurisdictional error versus error within jurisdiction - availability of alternative remedies under the Income-tax Act

Notice under Section 148 - reopening of assessment - availability of alternative remedies under the Income-tax Act - Whether the High Court should interfere by quashing the notice issued under Section 148 and the order under Section 148A(d) at the pre-assessment stage. - HELD THAT: - The Court applied settled precedent that when the assessing officer has issued a notice under Section 148 and the assessment/reassessment proceedings are not yet concluded, the writ jurisdiction should not ordinarily be invoked to enter into merits of the case. Authorities cited show that the statutory machinery under the Income-tax Act is the appropriate forum for determination of facts and law relevant to reopening, and that mere assertion of factual error in exercise of jurisdiction does not justify premature interference. The judgment distinguishes jurisdictional error from an error within jurisdiction and notes that the latter is remediable under the Act by the prescribed statutory remedies; therefore, the correctness of the order under Section 148A(d) challenged on factual grounds does not warrant quashing at this stage. The Court observed that intervention is only permissible where from the bare reading of the notice it is apparent that the authority has exceeded its jurisdiction, which is not the case here. Reliance was placed on earlier decisions holding that sufficiency or correctness of material for reopening is not to be adjudicated by the High Court at the notice stage and that the assessee has efficacious recourse under the Act. [Paras 10, 11]

Writ petition dismissed; no interference with the notice under Section 148 or the order under Section 148A(d) at the pre-assessment stage.

Final Conclusion: The petition seeking quashing of the notice under Section 148 and the order under Section 148A(d) for assessment year 2015-16 is dismissed without expressing any opinion on the merits; statutory remedies before the assessing and appellate authorities remain available.

Violation of principles of natural justice by proceeding without responding to an application for extension of time - requirement to grant reasonable opportunity under the Faceless Assessment Scheme including consideration of applications for extension of time - obligation to consider and decide objections and to grant opportunity of hearing on remand

Violation of principles of natural justice by proceeding without responding to an application for extension of time - requirement to grant reasonable opportunity under the Faceless Assessment Scheme including consideration of applications for extension of time - Assessment order dated 24.04.2021 was passed in breach of principles of natural justice because the assessing authority did not respond to the petitioner's request for an extension of time before proceeding with assessment. - HELD THAT: - The Faceless Assessment Scheme contemplates that an assessee may file a response within the time specified or within an extended time on the basis of an application. The petitioner sought a four day extension citing the need to gather material from multiple sources. Once such an application was made, the assessing officer was obliged to communicate acceptance or rejection of the request; that response forms part of the basic requirements of natural justice. In the absence of any communication, the petitioner could reasonably have expected the request to be accepted, and the assessing authority ought not to have proceeded with the assessment on the originally mentioned date. The failure to respond to the adjournment application therefore amounted to a clear breach of the principles of natural justice and vitiates the assessment order. [Paras 8]

Ext.P8 (assessment order dated 24.04.2021) is set aside for violation of natural justice.

Obligation to consider and decide objections and to grant opportunity of hearing on remand - requirement to grant reasonable opportunity under the Faceless Assessment Scheme including consideration of applications for extension of time - Respondents must be given an opportunity to consider objections afresh and pass appropriate orders after granting hearing, subject to specified timelines under the Faceless Assessment regime. - HELD THAT: - Although the assessment order is set aside for non compliance with natural justice, the respondents are entitled to reopen and decide the assessment consistent with procedure. The court directed that the respondents shall open the link for filing objections; if the petitioner files objections within thirty days of that opening, the respondents shall consider the objections, grant an opportunity of hearing to the petitioner, and pass appropriate orders expeditiously, in any event within two months from the date the link is opened. These directions preserve the right to be heard while permitting fresh consideration in accordance with the Faceless Assessment Scheme. [Paras 9]

Matter remanded for fresh consideration: respondents to accept objections within thirty days of the link opening, grant hearing, and decide the assessment expeditiously and within two months from the date of opening of the link.

Final Conclusion: Writ petition allowed; the impugned assessment order dated 24.04.2021 is set aside for breach of natural justice, and the assessment is remitted to the respondents to permit filing of objections and to reconsider and decide the matter after granting an opportunity of hearing within the timelines directed.

Reopening of assessment - new material - Section 142(1) notice - Section 148 notice - assessment under Section 147 - insufficiency of show cause notice - lack of opportunity / specificity - Padma Sundara Rao principle - Kelvinator principle - remand to proceed from earlier notice

Reopening of assessment - new material - Kelvinator principle - Padma Sundara Rao principle - Whether the legality of reopening the assessment could be assailed after the assessee had fully participated in proceedings post-reopening and the impugned assessment order had been passed and challenged. - HELD THAT: - The Court held that, in the factual matrix of this case, the objection to the foundational sufficiency for reopening (i.e., absence of new material) could not be entertained at this stage where the assessee had responded to the reopening, participated in the proceedings and the impugned assessment order had been passed and was under challenge. The Court relied on authorities dealing with the proposition that alleged insufficiency of reasons for reopening cannot normally be raised post-assessment where the assessee has engaged in the post-reopening process. The Court emphasised that precedents must be applied with attention to factual differences (Padma Sundara Rao principle) and observed that the factual trajectory here - including the Departmental examination of multiple aspects and the DRP's findings - did not make Kelvinator, Cholamandalam or India Cements attract relief for the assessee. Accordingly the challenge on grounds of absence of new material was not allowed to prevail in the writ jurisdiction. [Paras 9, 10, 11, 13, 17]

The Court refused to permit the assessee to succeed in assailing the reopening on the ground of absence of new material after participating in post-reopening proceedings; the challenge on that ground was not accepted.

Section 142(1) notice - insufficiency of show cause notice - lack of opportunity / specificity - remand to proceed from earlier notice - Whether the impugned assessment should be set aside for lack of adequate opportunity and specificity in the show cause notice and whether the matter should be remitted for fresh action. - HELD THAT: - The Court found that particulars of the immovable property relied upon by the Department (relevant to proposed variation) were not provided with sufficient specificity and that the show cause notice dated 13.09.2021 afforded an insufficient period for response. Although the Department had issued earlier notices under Section 142(1), the absence of detailed particulars and the short time in the SCN justified interference to the limited extent of setting aside the impugned assessment. Balancing the rights of the assessee and the Revenue, the Court directed that the proceedings be restored to the stage of the Section 142(1) notice dated 10.08.2021, permitting the Department to issue additional, more specific notices if considered necessary, and ordered completion of the exercise expeditiously within a specified timeframe. The Court made no comment on the merits of the tax issues, leaving all questions open for determination in the remitted proceedings. [Paras 14, 15, 16, 18]

Impugned assessment order dated 17.09.2021 set aside for lack of opportunity and specificity; matter remitted to proceed from the Section 142(1) notice dated 10.08.2021 with leave to the Department to issue more specific notices and to conclude the proceedings expeditiously.

Final Conclusion: Writ petition allowed in part: impugned assessment order dated 17.09.2021 set aside on grounds of lack of opportunity and specificity; proceedings remitted to the stage of the Section 142(1) notice dated 10.08.2021 with liberty to the Department to issue additional specific notices and to conclude the exercise expeditiously (within the period directed). The Court expressed no opinion on the merits and left all substantive questions open.

Exemption under section 10(2A) - characterisation of LLP profit versus salary - respect for partnership/LLP agreement on profit sharing - genuineness of LLP and sham device doctrine - recharacterisation by assessing officer

Exemption under section 10(2A) - characterisation of LLP profit versus salary - Claim of exemption under section 10(2A) for the assessee's 95% share of LLP profit is taxable as share of profit and not to be recharacterised as salary. - HELD THAT: - The Tribunal upheld the finding of the first appellate authority that the assessee received the share of profit in accordance with the LLP agreement and that the LLP's profit share credited to the assessee is entitled to exemption under section 10(2A). The Assessing Officer had treated the excess over proportionate capital contribution as salary by invoking section 17(2)(iii), but the CIT(A) and the Tribunal found no legal basis to recharacterise the amount where the LLP was genuine, the profit sharing arrangement was embodied in the deed and acted upon by independent parties. The Tribunal observed that the LLP was assessed regularly, its audited accounts showed the profit distribution, and no tangible material disproving the LLP's genuineness was brought on record; accordingly the entire sum allocated in the LLP books to the assessee must be treated as exempt share of profit. [Paras 4, 8, 9, 10]

The assessee's entire share of profit as recorded in the LLP books is exempt under section 10(2A) and the addition made by the AO treating the excess as salary is deleted.

Respect for partnership/LLP agreement on profit sharing - recharacterisation by assessing officer - Whether partners must share profits in proportion to capital contribution or whether agreed profit sharing ratio governs entitlement. - HELD THAT: - The Tribunal concurred with the CIT(A) that neither the Income tax Act nor the LLP Act mandates that profit sharing must follow capital contribution. Partners are free to agree on profit and loss sharing ratios. The AO's approach of restricting the assessee's entitlement to a share proportionate to capital contribution lacked legal foundation. The partnership deed conferred substantial management and investment responsibilities on the assessee (designated partner and head of investment decisions), justifying the agreed profit sharing ratio irrespective of relative capital contribution. [Paras 4, 9]

The agreed profit sharing ratio in the LLP deed governs the assessee's entitlement; the AO was not justified in equating entitlement with proportionate capital contribution.

Genuineness of LLP and sham device doctrine - Whether the LLP was a sham or a device to confer tax free benefit on the assessee. - HELD THAT: - The Tribunal accepted the CIT(A)'s finding that the Assessing Officer did not bring forward tangible material to disprove the LLP's genuineness. The LLP had been assessed previously and its accounts and returns were accepted; the LLP carried on investment activities with audited financial statements showing profits and losses. The Tribunal found that the assessee's expertise and the commercial rationale for Enam Shares & Securities Pvt. Ltd. to provide investible funds and rely on the assessee's investment acumen furnished a bona fide commercial basis for the arrangement. Absent concrete evidence of sham, the device allegation could not justify recharacterisation of income. [Paras 4, 9]

The LLP is genuine and not a sham; the AO's allegation of a device to grant tax free benefit is not sustained.

Final Conclusion: Revenue's appeal is dismissed; the addition treating the assessee's share of LLP profits as salary is deleted and the Assessing Officer is directed to allow exemption under section 10(2A) in respect of the entire share of profit as recorded in the LLP accounts for AY 2016-17.

Levy of late fee under section 234E - intimation under section 200A - prospective effect of statutory amendment - rectification under section 154 read with section 200A - time bar and filing period for appeals - binding precedents of the Tribunal and High Court

Time bar and filing period for appeals - Form No.35 filing date - Whether the appeal against the order under section 154 read with section 200A was filed within the statutory period or was rightly held by the CIT(A) to be time barred. - HELD THAT: - The Tribunal examined the Form No.35 and the date of the order under section 154 read with section 200A. The order under section 154 was passed on 01.12.2018 and the Form No.35 was filed on 19.12.2018. Consequently the appeal to the CIT(A) was filed within one month of the order impugned. The CIT(A)'s finding that the appeal was out of time was a factual error not supported by the record. [Paras 6, 7]

The finding of the CIT(A) that the appeal was time barred is incorrect; the appeal was filed in time and the CIT(A)'s dismissal on that ground is set aside.

Levy of late fee under section 234E - intimation under section 200A - prospective effect of statutory amendment - binding precedents of the Tribunal and High Court - Whether late fee under section 234E could be validly levied by issuing intimation under section 200A for periods prior to 01.06.2015 (specifically Quarter 2 of FY 2012 13). - HELD THAT: - The Tribunal followed earlier decisions of the Pune Bench of the ITAT and the reasoning of the Karnataka High Court which held that the amendments to section 200A effective from 01.06.2015 are to be given prospective effect and that an Assessing Officer processing TDS statements for periods prior to 01.06.2015 was not empowered to charge fee under section 234E by issuing intimation under section 200A. Applying those precedents, the Tribunal held that the intimation issued under section 200A for the relevant period was beyond the Assessing Officer's jurisdiction and the resultant demand by charging fee under section 234E was invalid. The Tribunal therefore directed deletion of the late fee levied for Quarter 2 of FY 2012 13 and applied the same reasoning mutatis mutandis to the other consolidated appeals. [Paras 8, 9, 13, 14]

The levy of late fee under section 234E for the period prior to 01.06.2015 (Quarter 2 of FY 2012 13) is invalid and is deleted; the same view is applied to the remaining consolidated appeals.

Final Conclusion: The Tribunal allowed all eleven consolidated appeals: the CIT(A)'s dismissal for alleged delay is set aside as the appeals were filed in time, and the demands raised by levying fee under section 234E for periods prior to 01.06.2015 are held invalid and deleted; directions follow for deletion of the said late fees.

Unexplained money under section 69A of the Income-tax Act, 1961 - Cash deposits during demonetisation period / Specified Bank Notes (SBNs) - Proof of source by cash book and rental receipts - Distinction between personal cash-in-hand and business cash-in-hand for ITR disclosure - Onus of rebuttal by the Revenue to controvert documentary evidence

Unexplained money under section 69A of the Income-tax Act, 1961 - Cash deposits during demonetisation period / Specified Bank Notes (SBNs) - Proof of source by cash book and rental receipts - Distinction between personal cash-in-hand and business cash-in-hand for ITR disclosure - Onus of rebuttal by the Revenue to controvert documentary evidence - Addition made by the Assessing Officer treating cash deposits of SBNs during the demonetisation period as unexplained money under section 69A was deleted on finding that the deposits were explained by rental income and other receipts. - HELD THAT: - The Tribunal examined the documentary evidence furnished by the assessee - month-wise and tenant-wise rent details, cash books, and balance sheets - showing cash-in-hand balances and correlation of cash-book entries with bank deposits of SBNs. The Assessing Officer had noted ITR disclosure of 'nil' cash-in-hand for the business, but the Tribunal accepted the assessee's explanation that the ITR reflected business cash (proprietary accounts) while the cash deposits originated from the assessee's personal accounts arising from rental receipts. The Revenue failed to rebut or controvert the cash-book entries and tenant-wise rental particulars when confronted. On this record the Tribunal concluded that the source of the deposited SBNs was satisfactorily explained and the addition under section 69A was not justified. [Paras 3, 5, 6, 7]

The cash deposits of SBNs amounting to Rs.36.73 lakhs were held to be satisfactorily explained as arising from rental income and related receipts; the addition under section 69A is deleted and the appeal is allowed.

Final Conclusion: The Tribunal allowed the appeal, holding that the cash deposits of Specified Bank Notes during the demonetisation period were adequately explained by rental income and related documentary evidence, and therefore the addition under section 69A confirmed by the CIT(A) is deleted.

Waiver of demurrage and detention charges - storage of imported goods in warehouse pending clearance under Section 49 of the Customs Act, 1962 - custodian prohibition on charging rent or demurrage under Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009 - authorised carrier prohibition on container detention charges and 60 day proviso under Regulation 10(1) of the Sea Cargo Manifest and Transhipment Regulations, 2018 - mis declaration of imported goods

Waiver of demurrage and detention charges - storage of imported goods in warehouse pending clearance under Section 49 of the Customs Act, 1962 - custodian prohibition on charging rent or demurrage under Regulation 6(1)(l) of the Handling of Cargo in Customs Areas Regulations, 2009 - authorised carrier prohibition on container detention charges and 60 day proviso under Regulation 10(1) of the Sea Cargo Manifest and Transhipment Regulations, 2018 - mis declaration of imported goods - Entitlement of the petitioner to waiver of demurrage/detention charges from the custodians/carrier beyond 13.01.2022 - HELD THAT: - The customs authorities, invoking the storage power under Section 49, permitted warehousing and issued advice removing liability for demurrage/detention from the date of detention (08.11.2021) up to the date of the permission/advice (13.01.2022). Regulation 6(1)(l) of the 2009 Regulations bars custodians from charging rent or demurrage on goods seized or detained for the period indicated by the customs advice. Regulation 10(1) of the 2018 Regulations similarly bars authorised carriers from demanding detention charges while verification is in progress, but its proviso permits charging only after expiry of sixty days. Those provisions together limited the period for which a waiver could be validly claimed to the timeframe covered by the customs communications, i.e., up to 13.01.2022. The permission letter itself required any application for further extension to be made to the Commissioner of Customs before expiry of thirty days; the petitioner did not make such application. Given (a) the statutory and regulatory ceiling on waiver (the sixty day rule and the procedural requirement for seeking extension), and (b) the absence of an application by the petitioner for extension within the time prescribed, the court held that the petitioner was not entitled as of right to a waiver of demurrage or detention charges beyond 13.01.2022. The court also observed that the petitioner had mis declared the goods and had paid revised duty, penalty and redemption charges, limiting equitable sympathy. The court nonetheless permitted the petitioner to pursue private negotiations with the custodians/carrier for any concession as to charges from 14.01.2022 and directed the custodians/carrier to consider any such request in light of the pendency of these writ petitions. [Paras 61, 63, 68, 69, 70]

The petitioner is not entitled to waiver of demurrage/detention charges beyond 13.01.2022; the writ petitions are dismissed on that claim, but the petitioner may negotiate privately with the custodians/carrier and those parties are directed to consider any request for concession.

Final Conclusion: Writ petitions dismissed insofar as they claim waiver of demurrage/detention charges beyond 13.01.2022; custodians and carrier to consider any private request for concession from the petitioner, and there shall be no order as to costs.

Laches / delay as bar to equitable relief under Article 226 - stale cause of action cannot be revived - failure to prosecute / acquiescence disentitles to discretionary writ relief - absence of appeal or vigilance by claimant and prejudice to third parties

Laches / delay as bar to equitable relief under Article 226 - failure to prosecute / acquiescence disentitles to discretionary writ relief - stale cause of action cannot be revived - Whether the writ petition seeking enforcement of the order dated 22.11.1983 for redemption/return of seized gold can be entertained after unexplained and inordinate delay of decades. - HELD THAT: - The Court found that the petitioner sought enforcement of the order dated 22.11.1983 only after an inordinate delay (some 39 years since the order and 41 years since seizure) and that there is no material to show any appeal was filed nor that the petitioner acted vigilantly to ascertain whether an appeal existed. Reliance was placed on established principles that delay and laches are relevant in exercising discretionary writ jurisdiction under Article 226, that a stale or dead cause of action cannot be revived by belated proceedings or by subsequent consideration of representations, and that unexplained delay coupled with potential prejudice to others disentitles a party to equitable relief. The Court recorded that repeated citations of precedent establish that representations do not ordinarily excuse long inaction and that courts may refuse relief where the claimant's conduct has put others in a position that would render grant of relief unjust. Applying these principles to the facts, the petitioner's long acquiescence and failure to prosecute his claimed right warranted refusal to exercise extraordinary jurisdiction. [Paras 5, 6, 7, 8]

Petition dismissed on account of inordinate and unexplained delay; relief under Article 226 refused.

Final Conclusion: The High Court dismissed the writ petition seeking return/redemption of seized gold under the order dated 22.11.1983 on the ground of inordinate delay and laches, holding that the stale claim did not merit exercise of discretionary writ jurisdiction.

Town seizure - onus under Section 123 to explain licit source - proof of succession by will as explanation for possession - confiscation under Section 111(m) - confiscation under Section 111(l) - option to redeem on payment of duty and redemption fine - penalty under Section 112(a) - penalty under Section 114AA

Town seizure - onus under Section 123 to explain licit source - proof of succession by will as explanation for possession - Whether the appellant discharged the onus to explain licit possession of the seized gold bars by producing the copy of the will and related evidence - HELD THAT: - Admittedly the recovery was a town seizure from the appellant's residence and the seized gold bars bore foreign markings, placing the burden on the appellant under Section 123 to explain lawful acquisition. During investigation the appellant mentioned inheritance under his father's will and subsequently produced a copy of the will at adjudication. The Tribunal found that the adjudicating authority erred in arbitrarily rejecting the will: the will also bequeathed other movable and immovable property to family members, providing corroboration and diminishing doubts about its genuineness. Documentary evidence of the will, supported by oral material, was held to outweigh earlier inconsistent oral statements and to reasonably explain possession by succession. However, the will did not specify how the father had acquired the gold, so the licit source of acquisition by the father remains unestablished. [Paras 19, 20]

Appellant has reasonably explained his lawful possession of the two gold bars by succession under his father's will, but the father's source of acquisition is not established.

Confiscation under Section 111(m) - confiscation under Section 111(l) - option to redeem on payment of duty and redemption fine - What is the appropriate adjudicatory consequence for the seized gold bars given the accepted explanation of possession by succession - HELD THAT: - Although the appellant's possession by succession was accepted, the Tribunal noted absence of proof about how the father acquired the foreign-marked gold. In view of that lacuna the Tribunal modified the adjudication: confiscation under Section 111(m) was upheld but with an express option to the appellant to redeem the goods on payment of duty and a redemption fine. Confiscation under Section 111(l) (relating to excess over declaration) was set aside in view of the accepted succession explanation. [Paras 20]

Confiscation under Section 111(m) upheld with option to redeem on payment of duty and a redemption fine; confiscation under Section 111(l) set aside.

Penalty under Section 112(a) - penalty under Section 114AA - Whether the penalties and their quantum imposed by the adjudicating authority should be maintained, reduced or set aside - HELD THAT: - The adjudicating authority had imposed penalties under Section 112(a) and Section 114AA. Given the Tribunal's acceptance of the appellant's explanation of possession by succession (albeit with incomplete proof of the father's source), the Tribunal exercised its appellate discretion to moderate monetary consequences: the penalty under Section 112(a) was reduced, and the penalty under Section 114AA was set aside. [Paras 20]

Penalty under Section 112(a) reduced; penalty under Section 114AA set aside.

Final Conclusion: Appeal allowed in part: appellant's possession by succession accepted; confiscation under Section 111(m) sustained with option to redeem on payment of duty and a redemption fine; confiscation under Section 111(l) and penalty under Section 114AA set aside; penalty under Section 112(a) reduced.

Duty of Customs Broker to undertake KYC and exercise due diligence - Requirement of physical verification of exporter not mandated by CBLR - Proportionality of punishment under Customs Broker Licensing Regulations - Revocation versus lesser penalties (suspension/penalty/forfeiture) - Weight of Inquiry Officer's report vis-a -vis adjudicating authority

Duty of Customs Broker to undertake KYC and exercise due diligence - Requirement of physical verification of exporter not mandated by CBLR - Weight of Inquiry Officer's report vis-a -vis adjudicating authority - Whether the Customs Broker violated obligations under Regulation 10(a), 10(d), 10(n) and Regulation 13(12) of CBLR, 2018 - HELD THAT: - The Tribunal found that the Inquiry Officer's detailed fact finding and reliance on precedents establish that the appellant had obtained and retained prescribed KYC documents and there was no statutory mandate to undertake physical verification or personal meeting before undertaking the job. The adjudicating authority's rejection of the Inquiry Officer's report rested substantially on recorded statements made during investigation, which were not corroborated and did not demonstrate active collusion or abetment by the CB in the post stuffing substitution. On the material before it the Tribunal held that the Inquiry Officer's conclusions that the charges under Regulations 10(a), 10(d) and 13(12) were not proved were more tenable; at best the CB could be regarded as having failed in due diligence in relation to Regulation 10(n), but no conscious participation in smuggling or clear culpability was established. [Paras 4]

Findings of violation under Regulations 10(a), 10(d) and 13(12) are not sustained; culpability, if any, is limited and the Inquiry Officer's exoneratory findings are preferred (with only a possible minor lapse under Regulation 10(n)).

Proportionality of punishment under Customs Broker Licensing Regulations - Revocation versus lesser penalties (suspension/penalty/forfeiture) - Whether revocation of the CB licence, forfeiture of the entire security deposit and imposition of the prescribed penalty were justified and proportionate - HELD THAT: - Applying the principle of proportionality recognized in authorities and having regard to (i) absence of proven collusion or mens rea, (ii) the Inquiry Officer's report exonerating the CB on major charges, and (iii) the fact that substitution occurred after stuffing and sealing, the Tribunal held that revocation and forfeiture were disproportionate. The Tribunal observed that revocation is a grave, irreversible penalty and should be reserved for very serious culpability which is not made out here. In exercise of appellate powers the Tribunal set aside the revocation and forfeiture and reduced the monetary penalty to a lesser amount as commensurate with the limited lapse found. [Paras 4]

Order of revocation of licence and forfeiture of security deposit set aside; penalty reduced to a lesser sum to meet the requirement of proportionality.

Weight of Inquiry Officer's report vis-a -vis adjudicating authority - Whether the adjudicating authority was justified in disagreeing with the Inquiry Officer's report and recording independent adverse findings - HELD THAT: - The Tribunal examined the grounds on which the Principal Commissioner disagreed with the Inquiry Officer and found those grounds insufficient. The adjudicating authority relied on investigative statements that were uncorroborated and did not supplant the Inquiry Officer's detailed documentary findings that KYC was obtained and that substitution occurred after the CB's involvement had ceased. Consequently, the Tribunal held that the Inquiry Officer's reasoned conclusions deserved primacy and that the adjudicating authority's disagreement did not sustain extreme punitive measures. [Paras 2, 4]

Disagreement memo and consequent extreme sanctions could not be sustained in face of the Inquiry Officer's findings; Inquiry Officer's conclusions are preferred.

Final Conclusion: The appeal is partly allowed: the Tribunal sets aside the revocation of the Customs Broker licence and the forfeiture of the security deposit, reduces the monetary penalty to a lesser amount (as a proportionate sanction), and upholds that physical verification is not mandated by CBLR where prescribed KYC documents are available; major charges against the CB are not sustained while a limited lapse may be indicated under Regulation 10(n).

Moratorium under the Insolvency and Bankruptcy Code and bar on initiation or continuation of proceedings against the corporate debtor - Suspension of powers of the board of directors on appointment of Interim Resolution Professional - Criminal liability of drawer directors under the Negotiable Instruments Act despite CIRP moratorium - Presumption of liability from issuance of a signed cheque under the Negotiable Instruments Act

Moratorium under the Insolvency and Bankruptcy Code and bar on initiation or continuation of proceedings against the corporate debtor - Criminal liability of drawer directors under the Negotiable Instruments Act despite CIRP moratorium - Maintainability of prosecution under Section 138 of the Negotiable Instruments Act against the directors of a corporate debtor which is under CIRP and subject to moratorium. - HELD THAT: - The court accepted that moratorium declared under the IBC interdicts initiation or continuation of proceedings against the corporate debtor itself and that powers of the board are suspended on appointment of an interim resolution professional. However, applying the principle articulated by the Apex Court in P. Mohanraj, the statutory bar of moratorium operates only in respect of the corporate debtor; natural persons covered by the Negotiable Instruments Act (including drawer directors) remain statutorily liable and may be prosecuted. The court therefore held that prosecution against the petitioners in their capacities as directors could be maintained notwithstanding that the corporate debtor is under CIRP and moratorium was in force. [Paras 7, 10, 11, 12]

Prosecution under Section 138 NI Act against the directors is maintainable despite the corporate debtor being under CIRP and subject to moratorium; the petitioners cannot obtain quashment on this ground.

Presumption of liability from issuance of a signed cheque under the Negotiable Instruments Act - Effect of inconsistency between the cheque date in the complaint and the petitioners' admission that the cheques were issued earlier. - HELD THAT: - The court noted that while the complaint records the cheques as dated 19.04.2018, the petitioners' own pleadings admit issuance in 2016. The discrepancy as to the date is factual and evidentiary in nature; it does not afford a basis for summary quashment of the prosecution. Reliance was placed on the settled principle that a signed cheque attracts the presumption of issuance towards discharge of debt, and such matters must be traversed in evidence rather than by way of pre trial quashment. [Paras 6, 12]

Discrepancy in the pleaded cheque date is an evidentiary matter; it does not warrant quashing the complaint.

Final Conclusion: The petition to quash the criminal proceedings is dismissed: moratorium under the IBC bars proceedings only against the corporate debtor but does not protect drawer directors from prosecution under the Negotiable Instruments Act, and factual discrepancies regarding cheque dates are matters for trial and not for summary quashment.

Corporate Insolvency Resolution Process - maintainability of application under Section 7 - financial creditor - existence of default - appointment of Interim Resolution Professional - public announcement by Interim Resolution Professional - moratorium - duties and powers of Interim Resolution Professional

Maintainability of application under Section 7 - financial creditor - existence of default - Application under Section 7 of the Insolvency and Bankruptcy Code, 2016 filed by the applicant financial creditor is maintainable and is admitted. - HELD THAT: - The Tribunal examined whether the applicant falls within the definition of a financial creditor and whether there was a debt due and a default. Material placed on record - including bank statements, Form 26AS, audit report, financial statements, ledger account and a demand notice - supported the claim of an outstanding financial debt. In view of Section 4 of the Code, the admitted default met the minimum threshold for filing under Section 7. The Form I was found complete and there was no infirmity in the application. The corporate debtor did not contest the default and was proceeded against ex parte. On these findings the Tribunal was satisfied that the requirements for admission under Section 7 were fulfilled. [Paras 8, 9, 10, 11]

The Section 7 application is admitted.

Appointment of Interim Resolution Professional - disclosures and eligibility of IRP - The proposed person is fit for appointment as Interim Resolution Professional and is accordingly appointed. - HELD THAT: - The applicant nominated Mr. Anil Tayal and produced his consent in Form 2 together with declarations that no disciplinary proceedings were pending and other required disclosures under the IBBI Regulations. The Tribunal found that the requirement of Section 7(3)(b) was satisfied and there was no bar to his appointment. [Paras 6, 12]

Mr. Anil Tayal is appointed as Interim Resolution Professional for the corporate debtor.

Moratorium - duties and powers of Interim Resolution Professional - Moratorium under Section 14 is declared and the Interim Resolution Professional is directed to perform statutory functions and protect the corporate debtor's assets. - HELD THAT: - Upon admission of the Section 7 application the Tribunal declared the moratorium and recorded that its consequences arise from the statutory provisions. The order specifies that the moratorium's prohibitions apply subject to exceptions notified by the Central Government and those provided by amendment (including non-application to sureties as per the 2018 amendment). The Interim Resolution Professional is directed to perform functions under the Code and Regulations, to preserve the value of the corporate debtor's assets, and the personnel, promoters and management are obliged to extend cooperation; remedies are reserved against any violation or tainted/illegal transactions by the ex-management. [Paras 15, 16, 17]

A moratorium is imposed and the Interim Resolution Professional is directed to carry out statutory functions and protect the corporate debtor's assets; cooperation from management and personnel is mandated.

Public announcement by Interim Resolution Professional - costs and deposits for resolution process - The Interim Resolution Professional is directed to make the statutory public announcement and the financial creditor is directed to deposit funds to meet IRP expenses. - HELD THAT: - In terms of Section 13(2) and the IBBI Regulations, the Tribunal directed the Interim Resolution Professional to make the public announcement immediately (with three days as prescribed by the Regulation). The Tribunal also directed the applicant financial creditor to deposit a sum with the Interim Resolution Professional to meet expenses in accordance with the Regulations, subject to adjustment towards resolution process costs. Administrative directions were given for communication of the order to relevant parties and the Registrar of Companies. [Paras 13, 14, 18]

The Interim Resolution Professional shall make the public announcement within the prescribed time and the financial creditor shall deposit the directed amount to meet the IRP's expenses; the office shall communicate the order to concerned parties.

Final Conclusion: The Tribunal admitted the Section 7 petition filed by the financial creditor against the corporate debtor, appointed Mr. Anil Tayal as Interim Resolution Professional, declared the moratorium and directed statutory public announcement and deposit of funds to meet the IRP's expenses, with consequential administrative directions.

Maintainability of Section 7 IBC application - financial creditor status - certificate of recovery versus order of attachment - order of attachment under the Haryana Protection of Interest of Depositors in Financial Establishment Act, 2013 - cause of action arising from a recovery certificate

Maintainability of Section 7 IBC application - certificate of recovery versus order of attachment - financial creditor status - Application under Section 7 of the Insolvency & Bankruptcy Code, 2016 is not maintainable against the respondent. - HELD THAT: - The Tribunal examined whether the applicants could invoke Section 7 on the basis of the District Magistrate's orders. It found that the Memorandum of Understanding was executed between the applicants and M/s. ABW Infrastructure Limited and that there was no evidence that the respondent was a party to the MOU or that any money pursuant to that MOU was paid to the respondent. The Tribunal further held that the orders of the District Magistrate were in the nature of attachment under Section 4 of the Haryana Protection of Interest of Depositors in Financial Establishment Act, 2013 and did not constitute a decree or certificate for recovery of money which would give rise to a fresh cause of action under Section 7. Because the statutory provision under the Haryana Act empowers the District Magistrate to order attachment and not recovery, the applicants could not rely on those orders as a recovery certificate to sustain a Section 7 petition. Applying these findings, the Tribunal concluded that the applicants failed to establish that the respondent was liable as a corporate debtor or that a recoverable decree/certificate existed against the respondent, and therefore the Section 7 application was not maintainable. [Paras 15, 16, 17]

The Section 7 application is dismissed as not maintainable.

Final Conclusion: The application filed under Section 7 of the Insolvency & Bankruptcy Code, 2016 is dismissed as not maintainable because the District Magistrate's orders are attachment orders under the Haryana Act and not recovery certificates, and there is no evidence that the respondent was party to the underlying MOU or received the funds claimed.

Operational creditor petition under Section 9 of IBC, 2016 - pre-existing dispute - limitation for filing section 9 petition - service of demand notice under section 8 - moratorium under section 14 - appointment of Interim Resolution Professional - code of conduct for insolvency professional - limit on assignments

Operational creditor petition under Section 9 of IBC, 2016 - pre-existing dispute - service of demand notice under section 8 - limitation for filing section 9 petition - Admission of the section 9 petition and whether a pre-existing dispute or limitation barred initiation of CIRP. - HELD THAT: - The Adjudicating Authority found it an admitted fact that the operational creditor supplied the goods. The corporate debtor's contention of a pre-existing dispute rested on a letter dated 16.04.2018 which was not supported by contemporaneous evidence, was not followed up by the corporate debtor by instituting any proceedings, and was held to be an afterthought given that the corporate debtor issued cheques on 25.04.2018 to discharge the liability. The FIR relied upon by the corporate debtor concerned an employee of the corporate debtor and contained no allegation against the operational creditor; it was therefore held to have no evidentiary value for establishing a pre-existing dispute. With regard to limitation, the cheques were dishonoured on 07.05.2018 and the petition was filed on 09.01.2020; the Authority recorded that the petition was within limitation. On these findings the Authority concluded that no plausible pre-existing dispute preventing admission of the petition was shown and the petition was to be admitted. [Paras 6]

The section 9 petition was admitted and CIRP initiated as no pre-existing dispute or time-bar was established.

Appointment of Interim Resolution Professional - code of conduct for insolvency professional - limit on assignments - Selection and appointment of the Interim Resolution Professional (IRP) proposed by the operational creditor. - HELD THAT: - The proposed IRP named by the operational creditor was found, on scrutiny of Form-2, to already have more than ten assignments as resolution professional. Having regard to clause 22 of the Code of Conduct (First Schedule) of the IBBI (Insolvency Professional) Regulations, 2016, which cautions against accepting too many assignments and clarifies a limit of ten assignments as resolution professional, the Authority declined the proposed nominee. The Authority exercised its powers to appoint an IRP from the IBBI list and directed the appointed professional to take immediate charge and comply with statutory duties. [Paras 7]

An IRP was appointed from the IBBI list (Mr. Vikky Dang) in place of the proposed nominee who exceeded the acceptable assignment limit.

Moratorium under section 14 - supply of essential goods or services during moratorium - duties and powers of IRP - Declaration of moratorium and directions concerning the conduct of CIRP and interim measures. - HELD THAT: - The Authority declared moratorium effective from the date of the order until completion of the CIRP and specified the statutory prohibitions on institution or continuation of suits or execution of decrees, transfer or disposal of assets, enforcement of security, and recovery of property in the possession of the corporate debtor. It clarified that supply of essential goods or services for the corporate debtor's project shall not be terminated during the moratorium as provided under the Code. The IRP was directed to comply with Sections 13(2), 15, 17 and 18 of the Code, to make the public announcement, call for claims, and the directors and persons associated with management were directed to cooperate. The operational creditor was ordered to provide initial finance as an advance towards CIRP costs, adjustable by the Committee of Creditors. [Paras 9, 10, 11, 12, 13]

Moratorium declared with statutory prohibitions and procedural directions; IRP directed to take charge, make public announcement and proceed with CIRP; operational creditor directed to provide initial interim finance.

Final Conclusion: The Tribunal admitted the section 9 petition and initiated CIRP against the corporate debtor, appointed an IRP from the IBBI list in place of the proposed nominee who exceeded assignment limits, declared moratorium with attendant statutory prohibitions and procedural directions, and ordered provision of interim finance to the IRP.

Service by substituted publication - undisputed operational debt - limitation for Section 9 petition - completeness of Form 5 and threshold limit for initiation - admission under Section 9(5)(i) of the Code - declaration of moratorium under Section 14 - appointment of Interim Resolution Professional and vesting of management - directions for public announcement, claims collation and constitution of Committee of Creditors

Service by substituted publication - Service of the Form 3 demand notice and subsequent notices on the corporate debtor was adequate and the respondent was correctly proceeded against ex parte. - HELD THAT: - The Tribunal recorded that the order dated 30.01.2020 was sent to the corporate debtor at the registered address but returned; substituted service was effected by publication in two daily newspapers and no one appeared for the corporate debtor. Having regard to the returned postal service and the published notice, the Adjudicating Authority proceeded ex parte against the respondent and treated service as sufficient for the purposes of adjudication. [Paras 7]

Service by substituted publication was accepted and the corporate debtor was placed ex parte.

Undisputed operational debt - The claimed operational debt and default were held to be proved and undisputed. - HELD THAT: - The petitioner produced invoices, ledger accounts and bank statements showing supplies and unpaid operational debt. No appearance or defence was placed on behalf of the corporate debtor. On the record before the Tribunal the petitioner established both the existence of the operational debt (principal amount) and the default, satisfying the evidentiary requirement for admission under Section 9. [Paras 4, 12, 13]

The operational debt was found proved and undisputed.

Limitation for Section 9 petition - The petition under Section 9 was filed within limitation. - HELD THAT: - The petition was filed on 15.11.2019 and the default dates relied upon fall between 03.09.2018 and 09.01.2019; the Tribunal recorded that the application was filed within the prescribed limitation period and therefore not time-barred. [Paras 11]

The Section 9 petition was held to be within limitation.

Completeness of Form 5 and threshold limit for initiation - Form 5 was complete and the claimed debt exceeded the statutory threshold applicable at the time, enabling initiation of CIRP. - HELD THAT: - The Tribunal examined the petition and accompanying documents in Form 5 and found them complete. The unpaid operational debt exceeded the monetary threshold in force prior to the subsequent amendment, satisfying the threshold requirement for initiating corporate insolvency proceedings under the Code. [Paras 6, 12]

Form 5 was complete and the claimed debt met the threshold for initiation.

Admission under Section 9(5)(i) of the Code - The petition under Section 9 was admitted and CIRP was ordered to be initiated against the corporate debtor. - HELD THAT: - Having found service adequate, the debt proved and undisputed, the petition within limitation and the petition complete, the Tribunal held that the conditions of Section 9(5)(i) were fulfilled. On that basis the Tribunal admitted the petition and directed initiation of the Corporate Insolvency Resolution Process against the corporate debtor. [Paras 14]

The Section 9 petition was admitted and CIRP initiated.

Declaration of moratorium under Section 14 - A moratorium under Section 14 was declared with the specified prohibitions and scope. - HELD THAT: - The Tribunal declared the moratorium effective from the date of the order until completion of CIRP or approval of a resolution plan or liquidation. The moratorium was framed to prohibit institution or continuation of suits or execution, transfer or disposal of assets, enforcement of security interests and recovery of property occupied by the corporate debtor, while preserving exceptions for supply of essential goods and other statutory exceptions. [Paras 15, 16, 17]

Moratorium was declared and its scope specified.

Appointment of Interim Resolution Professional and vesting of management - directions for public announcement, claims collation and constitution of Committee of Creditors - An Interim Resolution Professional was appointed and directed to assume management, make public announcement, collate claims, constitute the Committee of Creditors and report progress; ancillary directions including consent, ethical conduct and fortnightly reporting were issued. - HELD THAT: - No interim resolution professional was proposed by the petitioner; the Tribunal appointed Mr. Prem Chand Goyal after verifying credentials. The IRP's term was to follow Section 16(5); he was directed to file Form-2 consent, to take control of management whose powers stand suspended under Section 17, prepare inventory, make public announcement under the Regulations, collate claims, certify constitution of the Committee of Creditors within thirty days and convene its first meeting. The IRP was also directed to send fortnightly progress reports and to act in accordance with the Code and professional conduct. [Paras 6, 18]

Mr. Prem Chand Goyal was appointed as Interim Resolution Professional with the prescribed duties and directions.

Direction to deposit CIRP operational expenses - The petitioner was directed to deposit an amount to meet immediate CIRP expenses, recoverable as CIRP cost. - HELD THAT: - The Tribunal directed the petitioner to deposit a specified sum with the Interim Resolution Professional within two weeks to meet immediate expenses of CIRP; the sum is to be accountable and reimbursable by the Committee of Creditors as part of CIRP costs. [Paras 19]

Petitioner ordered to deposit the directed amount with the IRP to meet immediate CIRP expenses.

Final Conclusion: The Section 9 petition was admitted: service by substituted publication was accepted, the operational debt and default were found proved and undisputed, the petition was within limitation and complete, and the Tribunal initiated CIRP against the corporate debtor, declared moratorium, appointed an Interim Resolution Professional with directions for management, public announcement, claims collation and constitution of the Committee of Creditors, and directed the petitioner to deposit an amount towards immediate CIRP expenses.

Admission of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - initiation of corporate insolvency resolution process (CIRP) - continuous default - service of demand notice under Section 8 - appointment of Interim Resolution Professional (IRP) on consent - invocation of moratorium under Section 14 - powers and duties of IRP during CIRP

Admission of application under Section 9 of the Insolvency and Bankruptcy Code, 2016 - continuous default - service of demand notice under Section 8 - Application under Section 9 of the IBC filed by the operational creditor is admitted and grounds for initiation of CIRP against the corporate debtor are satisfied. - HELD THAT: - The Tribunal found that the applicant supplied goods to the corporate debtor on running account basis and produced sale invoices. A statutory demand notice under Section 8 was issued and proved served. The claim in Form 5 set out the principal outstanding and claimed interest, and the Tribunal recorded that no dispute regarding quality or pending adjudication in another forum was shown. The Tribunal concluded that the conditions prescribed under Section 9 are fulfilled, noting the claim of continuous default from 04.03.2019 and the corporate debtor's failure to make payment as per the notice. [Paras 5, 6, 7, 10]

CP No. (IB)- 02/9/JPR/2022 admitted and CIRP against M/s Sewa Steels Pvt. Ltd. is ordered to commence.

Appointment of Interim Resolution Professional (IRP) on consent - powers and duties of IRP during CIRP - Mr. Arun Chadha is appointed as Interim Resolution Professional and vested with the powers of the IRP to conduct CIRP in accordance with the Code and Rules. - HELD THAT: - The operational creditor proposed a name for IRP and the proposed person filed written consent in Form-2. The Tribunal checked credentials on the IBBI website and found nothing adverse. The IRP was directed to exercise the powers and perform duties under the Code and Rules, including undertaking steps enumerated in Sections 15, 17, 18, 19, 20 and 21, to take over management, invite claims by public notice and collate claims, and to report the progress of CIRP to the Adjudicating Authority. [Paras 11, 12, 13]

Mr. Arun Chadha appointed as IRP with directions to act in accordance with the Code and Rules.

Invocation of moratorium under Section 14 - directions for interim funding and cooperation from promoters and directors - Upon admission, the moratorium under Section 14 is invoked and directions are issued regarding deposit for IRP expenses and cooperation of personnel of the corporate debtor. - HELD THAT: - As a consequence of admission, the Tribunal directed invocation of moratorium under Section 14 for the duration of CIRP. The applicant was directed to deposit an advance to meet IRP's fees and expenses, to be reimbursed proportionately upon constitution of the Committee of Creditors. The Tribunal also recorded that powers of promoters and directors stand suspended under the Code and they must cooperate with the IRP while management vests in the IRP. [Paras 14]

Moratorium invoked; applicant directed to deposit amount for IRP expenses and personnel of the corporate debtor directed to cooperate with the IRP.

Communication to IBBI and service of orders - The order of admission, appointment of IRP and related records are to be communicated to the parties and to IBBI; registry to transmit soft copy to the IRP. - HELD THAT: - The Tribunal directed that the order be communicated to the applicant, corporate debtor and the IRP within one week and a copy be sent to the Insolvency and Bankruptcy Board of India for its records. The registry was directed to forward a soft copy of the application and order to the IRP by e-mail, and the applicant and counsel were instructed to serve copies on the IRP by all modes. [Paras 14, 15, 16]

Order communicated and registry/parties directed to serve copies on IRP and IBBI as directed.

Final Conclusion: The Tribunal admitted the Section 9 petition, initiated CIRP against the corporate debtor, appointed Mr. Arun Chadha as IRP on his consent, invoked the moratorium, directed provisional funding for the IRP and ordered communications to the IRP and IBBI; CP No. (IB)- 02/9/JPR/2022 stands admitted.

Admission of petition under Section 9 of the Insolvency and Bankruptcy Code - validity of demand notice under Section 8 of the IBC - existence of operational debt and occurrence of default - pre-existing dispute test in Section 9 proceedings - moratorium under Section 14 of the IBC - public announcement and submission of claims under the CIRP - appointment of Interim Resolution Professional

Validity of demand notice under Section 8 of the IBC - existence of operational debt and occurrence of default - pre-existing dispute test in Section 9 proceedings - admission of petition under Section 9 of the Insolvency and Bankruptcy Code - The petition under Section 9 was maintainable: the Operational Creditor established existence of an operational debt, occurrence of default and the demand notice was valid; no pre-existing bona fide dispute barred admission. - HELD THAT: - The Adjudicating Authority examined the Operational Creditor's letter dated 22.12.2017, the Corporate Debtor's confirmation dated 30.12.2017, the agreement between the Corporate Debtor and ESAB India Limited and the invoice dated 31.01.2018 together with proof of delivery. The Corporate Debtor's confirmation reinforced the Operational Creditor's entitlement to the consultancy fee. The Operational Creditor filed the requisite affidavit under Section 9(3)(b) and complied with procedural formalities. The Corporate Debtor raised contentions of defect in the petition, denial of receipt of invoice and alleged pre-existing disputes relating to title and other dealings with the vendor; the Tribunal found these defences unconvincing on the material before it and held that no bona fide pre-existing or contemporaneous dispute had been demonstrated to defeat the petition. The Operational Creditor also identified the date of default as 2nd March, 2018. On this basis the Tribunal concluded that the requirements for admission under Section 9 were satisfied and therefore the petition was liable to be admitted. [Paras 30, 31, 32]

Petition under Section 9 admitted; Operational Creditor proved debt and default and no pre-existing dispute prevented admission.

Moratorium under Section 14 of the IBC - public announcement and submission of claims under the CIRP - appointment of Interim Resolution Professional - Consequences flowing from admission were ordered: moratorium declared, public announcement and claims procedures directed, and an Interim Resolution Professional appointed. - HELD THAT: - On admission, the Tribunal declared the moratorium for the purposes specified under Section 14 and directed the IRP to make the public announcement and call for claims in accordance with the Code. The moratorium prohibitions (institution or continuation of suits, transfer or disposal of assets, enforcement of security, recovery of property) were specified in the order. As the Operational Creditor had not proposed an IRP, the Tribunal appointed Mr. Manish Jain as Interim Resolution Professional and directed him to carry out statutory functions including filing Form-2, ascertaining particulars of creditors, convening the Committee of Creditors and identifying prospective resolution applicants within the prescribed timeline. The Tribunal also directed deposit of an amount for preliminary expenses with the IRP and communication of the order to concerned authorities. [Paras 32, 33]

Moratorium declared; public announcement and claims process to be initiated; Mr. Manish Jain appointed as Interim Resolution Professional with directions to perform CIRP functions.

Final Conclusion: The Tribunal admitted the Section 9 petition filed by the Operational Creditor, finding that the demand notice, documents and correspondence established an operational debt and default and that no pre-existing bona fide dispute barred admission; accordingly moratorium was declared, public announcement and claims procedures ordered, and an Interim Resolution Professional appointed to conduct the CIRP.

Refund of pre-deposit under Section 35F - Doctrine of unjust enrichment - Applicability of Section 11B to pre-deposit refunds - Deposit under protest to acquire right of appeal - CBEC circulars on refund processing of pre-deposits - Accounting treatment not determinative of pass-on of duty

Refund of pre-deposit under Section 35F - Doctrine of unjust enrichment - Applicability of Section 11B to pre-deposit refunds - CBEC circulars on refund processing of pre-deposits - Deposit under protest to acquire right of appeal - Entitlement to refund of amounts deposited in compliance with Section 35F as a pre-deposit for prosecuting an appeal and whether the doctrine of unjust enrichment / Section 11B procedure can be invoked to deny such refund. - HELD THAT: - The Tribunal examined Section 35F which required deposit of duty, interest and penalty as a condition precedent to maintain an appeal and found that the appellant's payment, accompanied by a contemporaneous letter stating it was made to secure the right of appeal, qualified as a pre-deposit under Section 35F (para 5). Having so found, the Bench held that the CBEC circulars relied upon by the appellant, which provide for processing refund of such pre-deposits without subjecting the claimant to the Section 11B refund mechanism, applied to the case (para 6). The Tribunal further applied the principle in the cited precedents to conclude that the doctrine of unjust enrichment is not a bar to refund of deposits made solely to acquire the right of appeal; Section 11B procedures and unjust enrichment analysis do not ordinarily apply to such pre-deposits (para 6). On this basis the Tribunal found the Commissioner (Appeals) was not justified in diverting the sanctioned refund to the Consumer Welfare Fund and set aside that decision (paras 6 and 8). [Paras 5, 6, 8]

Pre-deposit made under Section 35F to obtain the right of appeal is refundable; Section 11B/unjust enrichment cannot be invoked to withhold such refund and the Commissioner (Appeals) order diverting the refund is set aside.

Accounting treatment not determinative of pass-on of duty - Doctrine of unjust enrichment - Whether the showing of the deposited amount as an expense in the assessee's books of account establishes that the duty burden was passed on to customers and thereby precludes refund on unjust enrichment grounds. - HELD THAT: - The Tribunal rejected the Department's contention that recording the deposited amount as an expense in the profit and loss account gives rise to a presumption that the duty burden was passed on. Relying on the Bombay High Court's observations, the Bench held that the mere accounting description does not establish that the burden was passed to a third party and therefore cannot, by itself, be the basis to invoke unjust enrichment to deny refund (para 7). The conditionalities imposed in the Order-in-Original for establishing absence of unjust enrichment were held to lack authoritative support and to be contrary to the precedents relied upon. [Paras 7]

Accounting entries showing the deposited amount as an expense do not, by themselves, establish pass-on of duty; such entries cannot be the sole basis to deny refund on unjust enrichment grounds.

Final Conclusion: The appeal is allowed. The Commissioner (Appeals) order diverting the sanctioned refund is set aside and the appellant is entitled to refund of the pre-deposit with applicable interest, to be paid by the Department within three months of this order.

Refund of unutilized CENVAT credit on input services - claim under Rule 5 of the CENVAT Credit Rules, 2004 - treatment of SEZ units and SEZ refund procedure under Notification No. 9/2009 ST

Refund of unutilized CENVAT credit on input services - claim under Rule 5 of the CENVAT Credit Rules, 2004 - treatment of SEZ units and SEZ refund procedure under Notification No. 9/2009 ST - Whether an SEZ unit providing exported services can claim refund of unutilized CENVAT credit under Rule 5 of the CENVAT Credit Rules, 2004 instead of following the SEZ refund procedure under Notification No. 9/2009 ST. - HELD THAT: - The Tribunal examined the statutory scheme and found no provision in the CENVAT Credit Rules, 2004 that bars an SEZ unit from claiming refund of unutilized credit under Rule 5 when output services are exported. The authorities below rejected the refund solely because the appellant was an SEZ unit and had not followed the procedure in Notification No. 9/2009 ST. That ground was held to be legally improper. While earlier allowances of similar claims do not create an estoppel permitting perpetuation of an incorrect practice, the absence of any allegation that input services were not used or that services were not exported meant there was no basis to deny refund under Rule 5. The Tribunal therefore set aside the rejection and allowed the appeals, observing that the SEZ notification procedure could not be invoked to preclude the appellant from claiming the statutory remedy available under Rule 5. [Paras 6]

Rejection of refund claims was not justified; appeals allowed and impugned order set aside.

Final Conclusion: The Tribunal allowed the appeals, set aside the impugned order rejecting refund claims, and granted consequential reliefs to the appellant, holding that an SEZ unit could not be precluded from claiming refund under Rule 5 of the CENVAT Credit Rules, 2004 for the specified periods.

Penalty under Rule 26 of the Central Excise Rules, 2002 - liability for issuing invoices without actual delivery - knowledge or reason to believe goods are liable to confiscation - corporate liability under Rule 26 - penalty where confiscation is not proposed - proprietor and proprietary concern are not distinct legal entities

Penalty under Rule 26 of the Central Excise Rules, 2002 - liability for issuing invoices without actual delivery - knowledge or reason to believe goods are liable to confiscation - Whether persons who issued excise invoices showing clearance of goods without actual delivery are liable to penalty under Rule 26. - HELD THAT: - The Tribunal held that Rule 26 applies to any person who 'acquires possession of or in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing or in any other manner deals with any excisable goods' when such person knows or has reason to believe that the goods are liable to confiscation. The findings of the adjudicating authority and admissions on record (including the director's statement and transporters' statements) established that the appellants issued invoices and facilitated passing of wrongful cenvat credit without actual delivery. Issuing invoices and thereby enabling wrongful availment of credit amounted to being 'concerned' with the excisable goods within the meaning of Rule 26 and attracted penal liability. The Tribunal rejected the contention that a supplier could avoid liability by saying it merely issued invoices, and affirmed that active participation and connivance establish culpability under Rule 26.

Penalty under Rule 26 sustained against appellants who issued invoices without delivery and actively facilitated wrongful availment of cenvat credit; appeals dismissed in respect of those appellants.

Penalty under Rule 26 of the Central Excise Rules, 2002 - penalty where confiscation is not proposed - Whether imposition of penalty under Rule 26 is contingent upon confiscation of the excisable goods or a proposal for confiscation. - HELD THAT: - The Tribunal held that imposition of penalty under Rule 26 is not conditional upon confiscation or a proposal for confiscation. Rule 26 targets persons dealing with excisable goods who know or have reason to believe those goods are liable to confiscation; it does not require that confiscation actually be proposed or effected. The Tribunal relied on the factual finding that appellants had knowledge about clearance without delivery and that the activities would render the goods liable for confiscation, thereby justifying penalty even in the absence of confiscation proceedings.

Penalty under Rule 26 can be imposed notwithstanding that confiscation of goods was not proposed or effected.

Corporate liability under Rule 26 - penalty under Rule 26 of the Central Excise Rules, 2002 - Whether a company can be subjected to penalty under Rule 26. - HELD THAT: - The Tribunal accepted the settled principle that a company, as a juristic person, can be made liable for penal consequences under relevant statutes, although imprisonment cannot be imposed on it. Relying on the reasoning reproduced from the Supreme Court authorities, the Tribunal concluded that the term 'person' in Rule 26 encompasses a company and that penal consequences such as fines or penalties can be imposed on corporate entities. Consequently, the appellants' contention that a company cannot be penalised under Rule 26 was rejected.

Rule 26 is applicable to companies; penalty may be imposed on a corporate entity.

Penalty under Rule 26 of the Central Excise Rules, 2002 - proprietor and proprietary concern are not distinct legal entities - Whether both the proprietor and his proprietary concern can be separately punished under Rule 26 for the same conduct where the proprietary concern has already been penalised. - HELD THAT: - The Tribunal examined the relationship between a proprietor and his proprietary firm and held that the proprietary concern is not a separate legal entity from the proprietor. While the transporter (proprietary concern) and its owner were implicated for issuing fictitious LRs and facilitating non-delivery, the Tribunal agreed with the submission that imposing separate penalties on both the firm and its proprietor for the same acts was not tenable. Accordingly, although the penalty on the trading firm was sustained, the separate penalty imposed on the proprietor in his personal capacity was set aside.

Penalty confirmed against the proprietary firm (M/s B.S. Roadways) but the separate penalty on the proprietor (Shri Saleem Saheb Patel) was set aside.

Final Conclusion: The Tribunal dismissed the appeals of M/s Shreeji Aluminium Pvt. Ltd., Shri Paresh Babubhai Patel, M/s Steel & Metal and M/s B.S. Roadways, upholding penalties under Rule 26 for issuance of invoices and facilitation of wrongful cenvat credit without delivery; the appeal of Shri Saleem Saheb Patel was allowed by setting aside the separate penalty imposed on him as proprietor.

Penalty under Rule 26 of Central Excise Rules - Search and seizure - One Time Settlement under SVLDR Scheme, 2019 - Insufficient evidence / reliance on statements

Penalty under Rule 26 of Central Excise Rules - One Time Settlement under SVLDR Scheme, 2019 - Insufficient evidence / reliance on statements - Whether the balance penalty imposed under Rule 26 should be set aside where the assessee has settled tax dues under the SVLDR Scheme, 2019 for the same period and the supplier's appeal for the same period was allowed by the Tribunal for insufficiency of evidence. - HELD THAT: - The Tribunal noted that the demand and penalty in question arose from the same search and seizure records relating to the stated period. The appellant paid and obtained a settlement certificate under the SVLDR Scheme, 2019 for the tax dues arising from that search (certificate in Form SVLDRS-4 dated 09.12.2019). Separately, the Tribunal had earlier allowed the appeal of the alleged supplier for the same period, holding that the allegations were based on assumptions and presumptions and that there was no independent incriminating evidence against the supplier apart from the statement of the director of the purchaser. In view of the settlement of tax dues by the appellant for the same period and the Tribunal's finding of insufficient evidence against the supplier arising from the same set of facts, the Tribunal considered it appropriate in the interests of justice to set aside the balance penalty under Rule 26. The reasoning rests on the concurrence of (a) settlement of the tax liability under the statutory SVLDR mechanism for the identical period and (b) the earlier adjudication that the related supplier's liability was unsupported by evidence, undermining the basis for imposing the remaining penalty on the appellant. [Paras 5, 6, 8]

Penalty under Rule 26 set aside.

Final Conclusion: The appeal is allowed and the penalty imposed under Rule 26 of the Central Excise Rules is set aside in view of the appellant's SVLDR settlement for the same period and the Tribunal's earlier finding of insufficient evidence against the related supplier.

Concessional rate of tax for goods used in manufacture - Form XVII declaration - packing materials excluded from concessional rate prior to amendment - section 3(3) of the TNGST Act - concessional rate for inputs used in manufacture - penalty under section 23 of the TNGST Act - judicial restraint in supplying casus omissus

Concessional rate of tax for goods used in manufacture - Form XVII declaration - packing materials excluded from concessional rate prior to amendment - section 3(3) of the TNGST Act - concessional rate for inputs used in manufacture - Purchase of tin containers for packing during the assessment years 1990-91, 1991-92 and 1992-93 is not eligible for concessional rate of tax at 3% under section 3(3) against Form XVII. - HELD THAT: - Section 3(3) as it stood during the relevant years granted a concessional rate only in respect of goods (other than consumables) used by the purchaser "in the manufacture inside the State" of items in the First Schedule. The provision was subsequently amended in 1993 to expressly include packing materials, labels and consumables, which demonstrates that prior thereto packing materials were excluded. The petitioner purchased tin containers before the amendment and there is no cogent material establishing that the tins formed an integral part of the manufacturing process such that they changed identity or became part of the product. The court cannot supply a legislative omission; interpretation cannot be used to read packing materials into pre 1993 section 3(3) absent clear statutory warrant. In these circumstances the findings of the assessing officer, appellate authority and Tribunal disallowing the concessional claim are not interfered with. [Paras 15]

Claim for concessional rate under section 3(3) is rejected for the assessment years in question; purchase of tin containers held to be packing materials not entitled to 3% concession.

Penalty under section 23 of the TNGST Act - cross violation of conditions of Form XVII - Imposition of penalty under section 23 for procurement of tin containers against Form XVII when concessional rate was not permissible is justified. - HELD THAT: - Having held that the petitioner was not entitled to purchase tin containers at concessional rate under section 3(3), the procurement in contravention of that statutory condition amounted to misuse of the declaration. Section 23 empowers levy of penalty not exceeding one and a half times the tax payable. The Tribunal correctly held that such contravention attracts penalty under the statutory provision and there is no basis to set aside the imposition of penalty in principle. [Paras 16]

Liability to pay penalty under section 23 is sustained.

Penalty under section 23 of the TNGST Act - Quantum of penalty is excessive in the facts and is reduced. - HELD THAT: - Section 23 permits imposition of penalty up to 150% of the tax payable, leaving a range for the assessing authority to determine the quantum. The assessing officer imposed the maximum (150%), the first appellate authority reduced it to 100% and the Tribunal affirmed that reduction. Notwithstanding statutory power to impose the higher amount, the High Court, exercising its supervisory jurisdiction, found the imposed quantum somewhat high in the circumstances of this case and reduced the penalty to 50%. This is a judicial moderation of quantum permitted under the statute. [Paras 17]

Penalty reduced to 50% of the tax payable.

Final Conclusion: The Tribunal's dismissal of the appeals is upheld insofar as the claim for concessional rate under pre 1993 section 3(3) is concerned and liability to penalty under section 23 is sustained; however, the quantum of penalty is reduced to 50%. The writ petitions are disposed of with no costs.

Deposit as condition for admission of appeal - amended Section 148 of the Negotiable Instruments Act - retrospective application - purposive interpretation of statutory amendment - discretion of the appellate court to direct deposit - prevention of delay tactics in appeals under Section 138 N.I. Act

Deposit as condition for admission of appeal - amended Section 148 of the Negotiable Instruments Act - retrospective application - discretion of the appellate court to direct deposit - Validity of the appellate court's refusal to direct deposit as a condition for admission of an appeal on the ground that the amendment to Section 148 of the Negotiable Instruments Act was enacted after filing of the appeal. - HELD THAT: - The High Court held that the fact that the appeal was filed prior to the amendment to Section 148 does not preclude the first appellate court from directing the convicted appellant to deposit a minimum percentage of the compensation as a condition for admission. Relying on the purposive interpretation adopted in Surinder Singh Deswal (quoted in the judgment), the court observed that the amendment was intended to prevent delay tactics by appellants and to protect the object and purpose of Section 138. The amended provision, though using the word "may", is to be construed so as to operate as a rule (i.e., normally to require deposit of not less than 20%) and exceptions to directing deposit require special reasons. Applying that reasoning, the High Court found the appellate court's view that the amendment has no retrospective effect to be unsustainable where such a construction would frustrate the amendment's object. Consequently, the impugned rejection of the complainant's prayer for deposit was set aside and the court directed deposit of 20% of the compensation as a condition precedent to admission of the appeal, with specified consequences in case of non-deposit.

Impugned order rejecting the prayer for deposit set aside; convict appellant directed to deposit 20% of the compensation before the trial court within two weeks as condition for admission of the appeal, failing which execution to follow.

Final Conclusion: The revisional application succeeded: the appellate court's refusal to require deposit on the ground of non-retrospectivity of the amendment was set aside and the convict-appellant was directed to deposit 20% of the compensation as a condition precedent to admission of the appeal, with the appeal to be admitted and execution stayed upon compliance.