TaxTMI Updates e-Newsletter
Jun 24,2022

Regular bail - Duplication of complaints / double prosecution - Harassment by lodging subsequent complaint on identical allegations - Custodial detention - Conditions of bail including undertaking against alienation of property

Regular bail - Duplication of complaints / double prosecution - Harassment by lodging subsequent complaint on identical allegations - Custodial detention - Petitioner entitled to regular bail notwithstanding a subsequent complaint based on allegations identical to an earlier complaint in which bail had been granted. - HELD THAT: - The petitioner had earlier faced a complaint under the GST enactments containing allegations identical to those in the FIR dated 13.03.2021 and had been granted regular bail by the Sessions Court on 18.05.2021. Thereafter a second complaint containing the same allegations was registered and the petitioner was arrested and kept in custody. Although the State's reply asserted that facts of the present case were different, the court found that the allegations were identical and that the second complaint had the effect of denying to the petitioner the benefit already conceded. In these circumstances, and having regard to the custodial status of the petitioner, the court exercised its discretion to grant regular bail subject to specified conditions, including furnishing bail bonds and undertakings restricting travel and alienation of immovable property and prohibiting inducement or threat to witnesses.

Petition allowed; petitioner released on regular bail on furnishing bonds and surety with specified conditions.

Final Conclusion: Writ petition allowed; regular bail granted to the petitioner on conditions including bond and surety, restraint on foreign travel, non-alienation undertaking and prohibition against influencing witnesses, in view of a subsequent complaint raising allegations identical to an earlier complaint in which bail had been granted.

Prospective operation of statutory amendment - retrospective operation of statutory amendment - computation of total turnover for deduction under Section 80HHC - nexus between receipts and export turnover - accounting meaning of "turnover" and "sales"

Prospective operation of statutory amendment - retrospective operation of statutory amendment - The Tribunal's conclusion that the explanation to Section 80HHC had retrospective operation and thereby precluded the assessee from availing the benefit of Section 80HHC was not sustainable. - HELD THAT: - The Tribunal rested its decision on the view that the amendment (explanations in clauses (b), (baa) and (ba) to Section 80HHC) operated retrospectively and therefore the assessee could not claim the benefit. That foundational view was superseded by the Supreme Court's decision in P.R. Prabhakar v. Commissioner of Income Tax which held that the Finance (No.2) Act, 1991 amendment is prospective. Consequently, the Tribunal's retrospective-construction foundation fails and cannot support the impugned conclusion. [Paras 4]

Tribunal's retrospective-construction basis rejected in view of P.R. Prabhakar; foundation of Tribunal's decision does not survive.

Computation of total turnover for deduction under Section 80HHC - nexus between receipts and export turnover - accounting meaning of "turnover" and "sales" - Receipts from storage and handling, throughput charges, management charges, miscellaneous incomes and rentals which had no nexus with the export business could not be included in the assessee's total turnover for computing deduction under Section 80HHC. - HELD THAT: - Applying the principle laid down by the Supreme Court in Commissioner of Income Tax v. Punjab Stainless Steel Industries, "turnover" in ordinary accounting parlance denotes sale proceeds from the goods in which the business is dealing; receipts unconnected with that business are not part of turnover. The Tribunal and revenue had not shown that the storage and handling receipts were connected to the assessee's export of leather and molasses. The assessee's uncontroverted sworn statement, and the authorities' treatment, indicated that storage and handling of liquid cargo at major ports constituted a separate business. On these findings and the legal principle that receipts lacking nexus to export turnover are excluded from total turnover for Section 80HHC, the assessee succeeds on this component. [Paras 5]

Storage and handling and other specified receipts being independent of the export business are not includible in total turnover for Section 80HHC; assessee entitled to succeed on this point.

Final Conclusion: The appeal is allowed; the Income Tax Appellate Tribunal's order is set aside. No costs.

Deduction under section 80IA - "derived from" nexus test - scope of section 14A - remand for verification - computing book profits under section 115JB vis-a -vis deduction under section 80IB

Deduction under section 80IA - "derived from" nexus test - Whether miscellaneous receipts (VAT reimbursement, bank interest, discounts from creditors etc.) qualify as profits "derived from" the eligible business for deduction under section 80IA. - HELD THAT: - The Tribunal applied the settled meaning of the words "derived from" as requiring a direct or immediate nexus with the eligible undertaking. Reliance was placed on the decisions cited in the order which construe "derived from" narrowly to cover only sources not beyond the first degree and to exclude receipts that do not flow directly from the business. Applying that principle, the Tribunal agreed with the CIT(A) that the miscellaneous receipts do not flow directly from the eligible infrastructure/contracting business and therefore do not qualify for deduction under section 80IA. The Tribunal found no illegality in the CIT(A)'s confirmation of the additions made in respect of such receipts. [Paras 9, 10, 11, 12]

Ground dismissed; miscellaneous receipts held not eligible for deduction under section 80IA and the CIT(A)'s confirmation of the addition is sustained.

Scope of section 14A - remand for verification - Validity of the disallowance under section 14A where the assessee contended that no exempt income was earned and that investments were strategic. - HELD THAT: - The Tribunal observed that the Assessing Officer had applied section 14A without addressing the contention that no exempt income was earned during the year. Because the AO had not verified whether exempt income arose from the investments, the Tribunal remitted the matter to the AO for fresh consideration on merits after affording the assessee a reasonable opportunity of being heard. The remand is directed to determine, by verification, whether any exempt income was earned; if none is found, section 14A would not apply. [Paras 13]

Ground partly allowed for statistical purposes; matter remitted to the Assessing Officer for de novo consideration regarding applicability of section 14A.

Computing book profits under section 115JB vis-a -vis deduction under section 80IB - Whether eligible deductions under section 80IB can be deducted from book profit in computing tax liability under section 115JB. - HELD THAT: - The Tribunal followed a Coordinate Bench decision which reviewed High Court authorities holding that deductions under sections like 80IB/80IC are not allowable in computing book profit under section 115JB. The reasoning was built on the special charging and deeming provisions of section 115JB which, read with its saving clause and Explanation 1, preclude reduction of book profit by such deductions. Applying that precedent, the Tribunal dismissed the additional ground raised by the assessee. [Paras 15, 16]

Additional ground dismissed; deduction under section 80IB cannot be used to reduce book profit for section 115JB purposes.

Final Conclusion: Both appeals for A.Y. 2012-13 and 2013-14 are partly allowed for statistical purposes: the disallowance relating to miscellaneous receipts under section 80IA is sustained, the section 14A issue is remitted to the Assessing Officer for verification and fresh adjudication, and the claim to reduce book profits by deduction under section 80IB is dismissed.

Unexplained cash credit under Section 68 - accommodation entries - requirement of independent inquiry and corroborative evidence - retraction of statement and its evidentiary effect

Unexplained cash credit under Section 68 - accommodation entries - requirement of independent inquiry and corroborative evidence - retraction of statement and its evidentiary effect - Whether the share application money of Rs.49,00,000 (and commission of Rs.49,000) received by the assessee constituted unexplained cash credit liable to be added under Section 68. - HELD THAT: - The Assessing Officer treated the share application money as accommodation entries relying principally on a statement recorded from Shri Aseem Gupta and on an Investigation Wing report. A careful reading of the statement shows it did not establish that Shri Aseem Gupta was director of the two companies which invested in the assessee. The remand reports did not demonstrate control of those companies by Shri Aseem Gupta, and the material relied upon by the Department related to cash transactions prior to the impugned assessment year. The assessee furnished confirmations and affidavits from the share applicants showing allotment through banking channels and the first appellate authority admitted the additional evidence. No independent inquiry or other corroborative material was brought on record to show that the amounts were ploughed back as unexplained cash; further the original statement of Shri Aseem Gupta was subsequently retracted. In these circumstances, the additions made by the Assessing Officer and sustained by the Commissioner (Appeals) lacked the necessary evidentiary foundation and could not be sustained. [Paras 10, 11, 12]

The addition of Rs.49,00,000 as unexplained share application money and the addition of Rs.49,000 as commission are deleted and the appeal is allowed.

Final Conclusion: On the facts and evidence, the Tribunal held that additions treating the share application money and related commission as unexplained cash credit under Section 68 were unsustainable for lack of independent inquiry and corroborative material, and therefore deleted the additions and allowed the appeal.

Income from house property vs business income - maintenance/service charges as part of rent - annual value adoption for computation - exemption under Section 54EC - transaction based versus assessment year based - ambiguity in statutory language construed in favour of the assessee

Income from house property vs business income - maintenance/service charges as part of rent - annual value adoption for computation - Characterisation of amounts received under maintenance agreements - whether they form part of income from house property or constitute separate business income, and the method of computing income from house property. - HELD THAT: - The Tribunal examined the rent and maintenance agreements and found overlap between services included in rent agreements and those separately charged as maintenance. Services which are expressly part of the letting (for example car parking where included in the rental agreement) must be treated as forming part of income from house property. Services common to tenants and non tenants or capable of being obtained from third parties (such as cleaning and housekeeping) need not be treated as part of letting. Having regard to the earlier assessment year direction where the CIT(A) accepted the assessee's annual value and excluded certain service charges from the computation of income from house property, the Tribunal directed the Assessing Officer to adopt the annual value shown by the assessee and compute income from house property accordingly, following the approach taken in AY.2012 13. The Tribunal therefore allowed the relevant grounds of appeal for statistical purposes and remitted computation to the Assessing Officer on that basis. [Paras 11]

Directed Assessing Officer to adopt the annual value as shown by the assessee and compute income from house property accordingly; grounds allowed for statistical purposes.

Exemption under Section 54EC - transaction based versus assessment year based - ambiguity in statutory language construed in favour of the assessee - Whether the limit on investment for claiming exemption under Section 54EC is to be applied on a transaction basis or on an assessment year basis, and whether the assessee's investments made across two assessment years but within six months of transfer qualify for exemption. - HELD THAT: - The Tribunal recognised a conflict of High Court decisions on whether Section 54EC is transaction based or assessment year based. Applying the principle that where statutory language is ambiguous, the interpretation favorable to the assessee must be adopted, and relying on the Supreme Court authority that ambiguity should be resolved for the assessee, the Tribunal held that the benefit of the ambiguity must be given to the assessee. Consequently, the Tribunal reversed the CIT(A)'s conclusion disallowing part of the claimed exemption and directed deletion of the addition made on this ground. [Paras 16]

Reversed the CIT(A)'s finding; allowed the exemption claim to the extent contested and deleted the addition.

Final Conclusion: Appeal partly allowed: maintenance/service charge issue remitted for recomputation by directing AO to adopt the assessee's declared annual value (grounds allowed for statistical purposes); exemption under Section 54EC allowed in favour of the assessee by resolving statutory ambiguity contra fiscum and deleting the addition.

Charitable purpose - registration under section 12AA - company under section 8 of the Companies Act, 2013 - amendment of Memorandum of Association - prohibition on distribution of surplus on winding up - miscarriage of justice

Registration under section 12AA - charitable purpose - amendment of Memorandum of Association - miscarriage of justice - Whether the Commissioner (Exemption) was justified in rejecting the assessee's second application for registration under section 12AA on the sole ground that there was no change in objects. - HELD THAT: - The Tribunal found on the record that the assessee, a company incorporated under section 8 of the Companies Act, 2013, had removed the objectionable objects from its Memorandum of Association prior to filing the second application dated 20.01.2020 and had furnished the amended MOA and requisite documents to the CIT(E). The CIT(E)'s second-order refused registration only on the basis that there had been no change in objects; no other reason was assigned. The assessee's contention that each of the objections recorded in the first-order had been addressed was not controverted by the Departmental Representative. In these circumstances the Tribunal concluded that the solitary finding of 'no change in objects' was factually incorrect and that rejection of the second application on that basis resulted in a miscarriage of justice. Having accepted that the objections raised earlier had been removed and that no contrary material was placed before it, the Tribunal directed grant of registration under section 12AA as applied for by the assessee. [Paras 6, 7]

The rejection of the second application was unjustified; the assessee's amended objects and supporting documents satisfied the concerns raised earlier and the CIT(E) is directed to grant registration under section 12AA.

Final Conclusion: Appeal allowed. The Tribunal set aside the CIT(E)'s order rejecting the second application and directed that registration under section 12AA be granted to the assessee, the company having removed the previously objected-to MOA clauses and demonstrated compliance with requirements applicable to a section 8 company.

Estimation of income by application of net/gross profit ratios - use of past years' net profit average in estimation - treatment of undisclosed receipts reflected in bank statements as part of turnover - application of peak credit method for unexplained bank deposits - addition in respect of small borrowings alleged as unexplained cash credits - reopening of assessment - change of opinion as not constituting reason to reopen; need for tangible material for reassessment

Estimation of income by application of net/gross profit ratios - use of past years' net profit average in estimation - treatment of undisclosed receipts reflected in bank statements as part of turnover - Estimation of income on alleged suppressed contract receipts and cash deposits for AY.2011-12 - HELD THAT: - The Tribunal held that estimation must be guided by past results and honest fair guesswork and rejected the assessing officer's estimation at a flat net profit rate of 8% and the CIT(A)'s application of gross profit ratio on the unrecorded contract receipts. The Tribunal noted the assessee's audited net profit ratios for the three relevant years (AY.2009-10, AY.2010-11 and AY.2011-12) and computed the three-year average net profit at 4.79%. Treating the receipts of Rs.64,23,832 and cash deposits in SBI of Rs.84,75,415 as part of the assessee's turnover (total turnover Rs.3,08,25,664), the Tribunal applied an adjusted estimation at 5% of turnover as a reasonable figure in the circumstances and directed the Assessing Officer to compute addition accordingly. The Tribunal concluded that the assessing officer's higher estimate was not based on sound reasoning and that gross profit could not be selectively applied to only the unrecorded receipts when the receipts formed part of overall turnover. [Paras 10, 11, 12]

Partly allowed; directed AO to estimate income at 5% of total turnover Rs.3,08,25,664 and make addition of Rs.7,54,778 (i.e., Rs.15,41,283 less declared profit Rs.7,86,505).

Addition in respect of small borrowings alleged as unexplained cash credits - Deletion of addition made in respect of small borrowings from friends and relatives for AY.2011-12 - HELD THAT: - The Tribunal accepted the assessee's explanation that small sums (each between modest amounts) were borrowed from friends and relatives to meet urgent business requirements and were repaid in subsequent years. The assessing officer produced no evidence to show that these transactions were bogus or constituted the assessee's own funds returning as cash credits. Having regard to the nature and quantum of transactions and absence of contrary material, the Tribunal treated the borrowings as genuine business loans and deleted the addition. [Paras 13]

Allowed; the addition of Rs.2,00,000 made in respect of the twelve small borrowings is deleted.

Reopening of assessment - change of opinion as not constituting reason to reopen; need for tangible material for reassessment - Validity of reassessment proceedings (reopening) for AY.2010-11 - HELD THAT: - On review of the original assessment order and the reasons recorded, the Tribunal found that the receipts relied upon (the two challenged receipt figures) had already been considered and adjudicated in the original scrutiny assessment under section 143(3). The reasons for reopening did not disclose any new tangible material but merely sought to revisit issues already examined, amounting to a mere change of opinion. Applying the established principle that reopening requires tangible material beyond change of opinion (as explained in the cited authorities), the Tribunal held the reassessment to be unsustainable and upheld the CIT(A)'s order quashing the reopening. [Paras 16, 18]

Revenue's appeal dismissed; reassessment/quashing upheld and additions deleted.

Final Conclusion: The Tribunal partly allowed the assessee's appeal for AY.2011-12 by directing the AO to estimate income at 5% of total turnover and reducing the addition (also deleting the addition in respect of small borrowings), and dismissed the Revenue's appeal for AY.2010-11 by upholding the quashing of the reassessment as constituting a change of opinion without new tangible material.

Reopening of assessment under Section 147 and issuance of notice under Section 148 - scope of reassessment - obligation to assess the income which formed the basis of the reason to believe before assessing other income - jurisdictional limitation on making additions in reassessment where primary escapement is not sustained - quashing of reassessment order where reasons for reopening are not acted upon

Scope of reassessment - reason to believe and 'such income' - quashing reassessment where primary ground not adjudicated - Validity of reassessment where the Assessing Officer, after reopening the assessment on account of unexplained cash deposits, did not assess the income forming the basis of reopening but made other additions. - HELD THAT: - The Assessing Officer recorded reasons to believe that income had escaped assessment on account of unexplained cash deposits in the assessee's bank account, and issued notice accordingly. However, while completing the reassessment, the AO did not make any addition in respect of those cash deposits (the 'such income' forming the basis of the reason to believe) and instead made other disallowances (25% of purchases for want of bills, disallowance of opening capital, and disallowance of license fee). The Tribunal, following the principle that an AO who initiates proceedings under the provisions regarding escaped income must assess or reassess the particular income which gave rise to the reason to believe before proceeding to assess other items, held that where the primary income for which jurisdiction was assumed is not assessed or is accepted as not escaped, the AO cannot independently assess other unrelated items without a fresh notice. Applying that principle to the facts, since the AO did not assess the income which formed the basis for reopening, the reassessment proceedings ceased to justify inclusion of the other additions and the reassessment order is therefore invalid. [Paras 6, 8, 9]

The reassessment order passed under Section 143(3) read with Section 147 is quashed as the Assessing Officer did not assess the income which was the basis for reopening but made other additions.

Final Conclusion: The appeal is allowed; the reassessment order for A.Y. 2010-11 is quashed on the ground that the Assessing Officer failed to assess the income which formed the basis for reopening and therefore lacked jurisdiction to make the other additions.

Allowability of depreciation on intangible assets - classification of shares as intangible or depreciable asset - depreciation under section 32 - user test and ownership/dominion for claiming depreciation - consistency/past practice in successive assessment years - distinguishability of precedents relied upon - acquisition of a company to derive underlying commercial rights

Classification of shares as intangible or depreciable asset - depreciation under section 32 - Depreciation is not allowable on the amount paid for acquisition of shares of RRS Minerals insofar as that amount represents purchase consideration for shares and not a defined depreciable intangible under section 32(1)(ii). - HELD THAT: - The Tribunal examined the nature of the payment of Rs. 31.58 crores made to the shareholders of RRS for acquisition of their shares and the incorporation of that sum into the block of intangible assets as 'Iron Ore rights'. Section 32(1)(ii) permits depreciation on specified intangible assets (eg., know-how, patents, licences, franchises or similar business/commercial rights). The payment made was for shares in a private company; shares as such are financial assets whose value derives from contractual claims and are not enumerated (nor are they of the kind) within the illustrative list in section 32(1)(ii). The earlier capitalisation in the return and acceptance under an earlier unexamined assessment year did not alter the statutory characterization. The Tribunal concluded that the assessing officer was entitled to disallow depreciation proportionate to the cost attributed to acquisition of shares because those shares are not depreciable intangible assets under section 32(1)(ii). [Paras 20, 25, 29]

Disallow depreciation of Rs. 4,44,07,662 (pro rata amount) to the extent attributable to purchase of shares; shares are not depreciable intangible assets under section 32(1)(ii).

Acquisition of a company to derive underlying commercial rights - user test and ownership/dominion for claiming depreciation - Acquisition of shares as a route to obtain underlying commercial rights does not, without more, convert the shares themselves into depreciable intangible assets; the question is substantive classification, not merely form of acquisition or subsequent merger. - HELD THAT: - The Tribunal accepted the factual matrix that RRS possessed exclusive purchase rights in favour of the company and that the assessee paid to acquire RRS (and thereafter merged it). However, the decisive legal question was whether the payment to shareholders should be treated as payment for acquisition of a depreciable commercial right rather than as payment for shares. The Tribunal held that mere fact of acquiring a company which itself holds commercial rights does not automatically recharacterise the payment for shares into a depreciable intangible; the statutory test under section 32 requires that the asset claimed be of a kind eligible for depreciation and vest dominion and use in the taxpayer. The earlier acceptance of the block value in an assessment not scrutinised (u/s 143(1)) does not estop the revenue from examining the true nature of the amount in a later scrutinised assessment year. [Paras 14, 21, 22, 23, 28]

Payment for acquisition of the company was treated as purchase of shares; that characterization does not, by itself, render the payment a depreciable intangible asset eligible for depreciation.

Consistency/past practice in successive assessment years - distinguishability of precedents relied upon - The CIT(A)'s reliance on past practice and authorities (including Mysore Minerals and other High Court decisions) did not validate the claim because those precedents were distinguishable on facts or law and earlier assessment-year allowances were either unexamined or later reopened. - HELD THAT: - The Tribunal considered the CIT(A)'s reliance on consistency and several judicial decisions. It observed that the assessment for AY 2011-12 was processed under section 143(1) and did not evidence examination of the particular question whether the element attributable to shares constituted a depreciable intangible; for AY 2012-13 any initial allowance was subsequently reopened and depreciation disallowed. Therefore the principle of consistency could not be invoked to override the statutory classification. Further, the Mysore Minerals and Surana Pharmaceuticals decisions addressed ownership/dominion and user-tests in different factual contexts (possession/owner-equivalence of immovable property) and did not decide whether shares qua shares are depreciable under section 32(1)(ii). Similarly, authority on goodwill and price paid over tangible value (eg. SMIFS) was noted but the Tribunal held that the present payment was for shares and not shown to be goodwill or another enumerated/depreciable business right. [Paras 21, 23, 24, 26, 27]

CIT(A)'s allowance based on consistency and reliance on cited precedents was not sustainable; those authorities are distinguishable and do not render the payment for shares a depreciable intangible.

Final Conclusion: The Tribunal allowed the Revenue's appeals for AY 2013-14, 2014-15 and 2016-17, reversed the CIT(A)'s deletion of the assessing officer's disallowance and restored the disallowance of the pro rata depreciation attributable to the amount paid for acquisition of shares of RRS on the ground that such payment does not constitute a depreciable intangible asset under section 32.

Treatment of valuation adjustments of dies in profit and loss account as revenue item not constituting a separate capital expenditure - disallowance of interest under section 36(1)(iii) where assessee has interest free funds - characterisation of State Government subsidy/octroi refund as capital receipt applying the purposive test

Treatment of valuation adjustments of dies in profit and loss account as revenue item not constituting a separate capital expenditure - Deletion of addition of Rs. 2,12,63,638/- on account of dies written off - HELD THAT: - The Tribunal found that the amount described as 'dies written off' represented a year end valuation adjustment routed through raw material consumption in the profit and loss account and was not claimed by the assessee as a separate deduction in the computation of taxable income. The change in valuation is reflected annually in profit and loss and is reversed for tax computation; thus the lower authorities erred in treating the adjustment as a capital loss deductible for computing income. On this basis the Tribunal upheld the CIT(A)'s deletion of the addition made by the AO. [Paras 13, 14]

Appeal of the Revenue on this ground dismissed; addition deleted.

Disallowance of interest under section 36(1)(iii) where assessee has interest free funds - Deletion of disallowance of interest of Rs. 21,36,252/- made by the AO and confirmed by the CIT(A) - HELD THAT: - The Tribunal accepted the assessee's demonstration from annual accounts that substantial interest free funds (share capital and reserves) were available and in excess of the deposit given to related parties. Where non interest bearing funds are available, the presumption favours utilisation of such funds for interest free advances and interest disallowance under section 36(1)(iii) does not arise. The Tribunal relied on this principle and supporting precedents to reverse the disallowance. [Paras 15, 16, 18]

Ground allowed; AO directed to delete the disallowance of interest.

Characterisation of State Government subsidy/octroi refund as capital receipt applying the purposive test - Deletion of addition treating subsidy/octroi refund (government grant) as business income; held to be capital receipt - HELD THAT: - Applying the purposive test, the Tribunal held that the subsidy under the State Package Scheme (octroi refund) was granted to promote industrialization and in aid of setting up/expanding business; in substance it was a capital receipt. The Tribunal followed a coordinate bench decision on identical facts which treated such package scheme incentives as capital in nature. Consequently the amounts were not exigible as business income and were not added for tax purposes. [Paras 19, 22, 23]

Assessee's ground allowed; subsidy/octroi refund held to be capital receipt and addition deleted.

Final Conclusion: The Tribunal dismissed the Revenue's appeal and allowed the assessee's appeals for AY 2013-14 and assessment year 2014 - 15: the addition for dies written off was deleted (Revenue ground dismissed), the disallowance of interest under section 36(1)(iii) was deleted, and the State octroi refund/subsidy was held to be a capital receipt not chargeable as business income.

Validity of levy of late fee under section 234E for periods prior to 01.06.2015 - Prospective effect of amendment to section 200A and its impact on power to levy fees under section 234E - Time limit for filing appeal against an order passed under section 154 read with section 200A

Time limit for filing appeal against an order passed under section 154 read with section 200A - Appeal to the Commissioner (Appeals) against the order under section 154 r.w.s. 200A was filed within time. - HELD THAT: - The Tribunal examined the Form No.35 and the dates on record and found that the assessee filed the appeal before the ld. CIT(A) on 08.12.2018 against the order dated 23.11.2018. The filing was therefore within one month of the order impugned and the ld. CIT(A)'s finding that the appeals were time-barred was incorrect. The Tribunal set aside the factual finding of delay recorded by the ld. CIT(A). [Paras 5]

The appeals were held to have been filed in time and the ld. CIT(A)'s conclusion of delay was incorrect.

Validity of levy of late fee under section 234E for periods prior to 01.06.2015 - Prospective effect of amendment to section 200A and its impact on power to levy fees under section 234E - Levy of late fee under section 234E for Quarter-2 of F.Y.2012-13 (period prior to 01.06.2015) is not sustainable and must be deleted. - HELD THAT: - Following precedents of the Pune Tribunal and the reasoning of the Karnataka High Court as applied by the Tribunal, the amendment to section 200A which enabled computation/intimation for payment of fees under section 234E was held to have prospective effect from 01.06.2015. For periods prior to that date, the Assessing Officer processing TDS statements under section 200A was not empowered to levy fees under section 234E; intimation and demand raised on that basis exceeded the adjustment scope of section 200A and were invalid. Applying these rulings to the present appeals, the Tribunal concluded that the late fee levied for the Quarter-2 of F.Y.2012-13 was bad in law and directed deletion of the fee. The same reasoning was applied mutatis mutandis to the consolidated set of sixteen appeals. [Paras 6, 7, 8]

The levy of late fee under section 234E for the period prior to 01.06.2015 (Quarter-2 of F.Y.2012-13) was held invalid and deleted; the appeals were allowed.

Final Conclusion: The Tribunal found the appeals were filed within time and, following Tribunal and High Court authorities, held that the Assessing Officer had no power to levy late fee under section 234E for periods prior to 01.06.2015; the fees charged for Quarter-2 of F.Y.2012-13 were quashed and all sixteen appeals were allowed.

Limited scrutiny - scope of enquiry under CBDT Instruction No.20/2015 - Annual Information Report (AIR) based verification - application of Section 56(2)(vii)(b) - stamp duty valuation as consideration - admission of additional evidence and remand for de novo assessment

Limited scrutiny - Annual Information Report (AIR) based verification - application of Section 56(2)(vii)(b) - stamp duty valuation as consideration - scope of enquiry under CBDT Instruction No.20/2015 - Whether the Assessing Officer could invoke Section 56(2)(vii)(b) and make an addition based on stamp duty (market) value when the case was selected for limited scrutiny on the basis of AIR. - HELD THAT: - The tribunal found it was an admitted fact that the case was selected for limited scrutiny to verify large investment in property as per AIR. AIR contains vendor, vendee, consideration and market value information and was forwarded by CBDT for verification. CBDT Instruction No.20/2015 confines the scope of enquiry in scrutiny cases selected on AIR/CIB/26AS parameters to specific issues pertaining to that data. In the facts of the case the AIR specifically mentioned the market value of the property recorded for stamp duty purposes, and Section 56(2)(vii)(b) treats the market value so recorded by stamp authorities as the relevant consideration. Reading the instructions and the statutory provision together, the AO acted within the scope of limited scrutiny directed by CBDT and rightly invoked Section 56(2)(vii)(b). Consequently the Additional Ground No. I, which challenged the AO's power to make the addition in limited scrutiny, was dismissed. [Paras 4]

The AO was entitled, within limited scrutiny prompted by AIR, to invoke Section 56(2)(vii)(b) based on the stamp duty (market) value; Additional Ground I dismissed.

Admission of additional evidence and remand for de novo assessment - Whether additional documents relating to civil and criminal proceedings could be admitted and whether the matter should be remanded for de novo assessment. - HELD THAT: - The tribunal accepted the explanation that documents were not filed earlier because of subsequent developments in civil and criminal proceedings concerning the impugned land; the materials were relevant to the taxability of the transaction and went to the root of the issue. Exercising its discretion the tribunal admitted the additional evidence but noted they had not been placed before the AO. In view of this and the significance of the newly admitted documents, the tribunal set aside the AO's order and directed a de novo assessment, permitting the assessee to file all relevant evidence and requiring the AO to provide reasonable opportunity of hearing. Additional Grounds II and III and the main grounds 1 and 2 were allowed for statistical purpose to enable fresh consideration. [Paras 5]

Additional evidence admitted; order set aside and matter remanded for de novo assessment with liberty to file documents and opportunity of hearing; other grounds allowed for statistical purpose.

Final Conclusion: Appeal partly allowed: the tribunal upheld the AO's invocation of Section 56(2)(vii)(b) within the scope of limited scrutiny based on AIR, but admitted additional evidence and set aside the assessment for de novo consideration, permitting the assessee to file documents and be heard.

Disallowance under u/s.43B - transfer of assets and liabilities - treatment of liabilities on transfer between entities - remand for verification of facts - ex parte decision - bad debts written off

Disallowance under u/s.43B - transfer of assets and liabilities - treatment of liabilities on transfer between entities - remand for verification of facts - Whether the disallowance under section 43B of bank interest and service tax relating to liabilities claimed to have been transferred from India Cements Capital Ltd. to the assessee is sustainable or requires verification. - HELD THAT: - The Tribunal recorded that the assessee asserted the bank interest and service-tax liabilities were transferred from India Cements Capital Ltd. pursuant to an earlier transfer of assets and liabilities effective 01.10.2005 and that those amounts were not claimed in the transferor's returns for the relevant period. The Tribunal noted that these factual contentions and the earlier Tribunal order in India Cements Capital Ltd. could be verified by the AO. The Revenue did not oppose remand. Given the factual nature of whether the liabilities pertain to the period 01.10.2005 to 31.03.2006 and whether they were claimed earlier by the transferor, the Tribunal found it appropriate to remit the matter to the AO for verification and determination in accordance with law. [Paras 6]

Both disallowances under section 43B in respect of bank interest and service tax transferred from India Cements Capital Ltd. are remanded to the file of the AO for verification; appeal allowed for statistical purposes.

Ex parte decision - bad debts written off - remand for verification of facts - Whether the CIT(A)'s ex parte confirmation of disallowance of bad debts written off by the assessee should stand or requires fresh verification. - HELD THAT: - The Tribunal noted that the CIT(A) decided the appeal ex parte and that the assessee contended it had furnished details of the receivables and bad debts arising from the transferred business, which required verification. The Revenue conceded that the factual claims could be examined by the AO. In view of the absence of opportunity at the appellate stage and the factual nature of the dispute-whether the bad debts related to receivables transferred and whether they were already claimed by the transferor-the Tribunal concluded the matter ought to be remanded to the AO for verification. [Paras 9]

The disallowance of bad debts written off is remanded to the file of the AO for verification; appeal allowed for statistical purposes.

Final Conclusion: Both appeals are remitted to the Assessing Officer for factual verification of the claimed transferred liabilities and bad debts; accordingly the Tribunal allowed the appeals for statistical purposes and directed the AO to examine the transferor's and transferee's books and returns and determine the applicability of section 43B in accordance with findings.

Assessment under Section 153C read with Section 153A - Jurisdiction tied to date of receipt of seized books/documents - Requirement of incriminating material for non-abated year assessments - Acceptance of assessee's explanation for cash receipts by sale of jewellery

Assessment under Section 153C read with Section 153A - Jurisdiction tied to date of receipt of seized books/documents - Requirement of incriminating material for non-abated year assessments - Validity of assessment framed under Section 153C r.w.s. 153A for AY 2008-09 - HELD THAT: - The Tribunal examined the date on which documents seized during search came into the possession of the jurisdictional officer (recorded as 20/10/2014) and applied the proviso to Section 153C construing jurisdiction for the other person from the date of receiving the seized material. Since the seized material was received in the officer's possession in the assessment year relevant to AY 2015-16, the Assessing Officer only had jurisdiction to assess the assessee under Section 153C for assessment years commencing from 2009-10 onwards and not for AY 2008-09. Further, for a non-abated year, additions in a Section 153C assessment must be founded on incriminating material belonging to the assessee; the impugned addition was not based on any such incriminating material. On these bases the Tribunal held the assessment for AY 2008-09 to be bad in law and unsustainable. [Paras 4, 5]

Assessment for AY 2008-09 under Section 153C r.w.s. 153A is invalid and the additions not based on incriminating material are unsustainable; grounds allowed.

Acceptance of assessee's explanation for cash receipts by sale of jewellery - Sustainability of addition of unexplained cash of Rs.14.90 Lacs in AY 2012-13 - HELD THAT: - The assessee produced a cash flow statement and declared the sale of jewellery in the return of income filed on 30.03.2014 to explain the cash used for introduction into M/s Ultratech Housing Ltd. The Revenue treated the claim as an after-thought because the sale was reflected as occurring after the search on 19.04.2012, but no evidence was brought on record to disprove the declared sale transaction. The Tribunal found the Revenue's allegation to be without basis and accepted the assessee's explanation as a legitimate source of cash, thereby deleting the impugned addition. [Paras 6, 7, 8]

Addition of Rs.14.90 Lacs in AY 2012-13 deleted and grounds allowed.

Final Conclusion: Both appeals are partly allowed: the assessment for AY 2008-09 under Section 153C r.w.s. 153A is held invalid for lack of jurisdiction and absence of incriminating material, and the addition in AY 2012-13 is deleted on acceptance of the assessee's explanation of cash receipt by sale of jewellery.

Computation of book profits under Section 115JB - Explanation 1 clause (iii) to section 115JB(2) - deduction of brought forward loss or unabsorbed depreciation - Explanation 1 clause (vii) - exclusion of profits of sick industrial companies from MAT - treatment of profits and losses of sick industrial companies for arriving cumulative book loss

Computation of book profits under Section 115JB - Explanation 1 clause (vii) - exclusion of profits of sick industrial companies from MAT - Explanation 1 clause (iii) to section 115JB(2) - deduction of brought forward loss or unabsorbed depreciation - treatment of profits and losses of sick industrial companies for arriving cumulative book loss - Whether profits of the assessee for years when it was a sick industrial company (years ending 31.03.2004 and 31.03.2006) must be excluded under Explanation 1 clause (vii) to section 115JB for computing book profits for AY 2014 15, and whether those excluded profits can be notionally set off against brought forward book losses when arriving at cumulative book loss. - HELD THAT: - Explanation 1 to section 115JB(2) defines book profits as profit per profit & loss account subject to specified increases and reductions. Clause (iii) permits reduction by brought forward business loss or unabsorbed depreciation (lower of the two) but applies when there is positive book profit. Clause (vii) separately provides that profits of a sick industrial company, for the period from becoming sick until net worth becomes equal to or exceeds accumulated losses, are to be reduced from book profits. The Tribunal found on record that the assessee was a sick company for the years ending 31.03.2004 and 31.03.2006 and that documentary proof of BIFR registration and subsequent derecognition was filed. Applying clause (vii), the book profits of those sick years stand excluded (reduced to nil) for MAT purposes. The AO's approach of first notionally adjusting those years' profits by brought forward losses under clause (iii) and then applying clause (vii) is incorrect: profits excluded by clause (vii) do not give rise to positive book profits in the sick period and therefore the brought forward losses/depreciation are not available to be set off against such excluded profits. The Tribunal accepted the assessee's method of netting the earlier profits (of sick years) against accumulated losses in the books and directing that brought forward losses/unabsorbed depreciation be adjusted starting only from the years when positive book profits arose after the company ceased to be sick. [Paras 6, 7, 8, 9]

Profits of the assessee for years when it was a sick industrial company (31.03.2004 and 31.03.2006) are excluded under Explanation 1 clause (vii) to section 115JB and the assessee's adjustment of brought forward losses/unabsorbed depreciation (as claimed) is to be allowed; the AO's contrary notion of first adjusting those sick year profits is set aside.

Final Conclusion: Appeal allowed: Tribunal held that clause (vii) of Explanation 1 to section 115JB excludes profits of the sick years from book profits, and directed that the assessee's method of adjusting brought forward book losses/unabsorbed depreciation (commencing only from years with positive book profits after the sick period) be accepted.

Section 153A - non-abated assessment - completed assessment - incriminating material - assessment on basis of seized material - scope of assessment under Section 153A

Section 153A - non-abated assessment - completed assessment - incriminating material - assessment on basis of seized material - Validity of additions/disallowances made in assessment years which were non-abated on the date of search (AYs 2001-02 to 2005-06). - HELD THAT: - The Tribunal held that where a completed assessment existed on the date of search (a non-abated year), the Assessing Officer can interfere with that completed assessment under Section 153A only on the basis of incriminating material unearthed during the search or on books/documents discovered in the search which were not produced in the original assessment. The AO in the present matters imposed ad hoc disallowances and treated agricultural receipts as income from other sources without referring to any incriminating material found during search. Applying the principle, and relying on the reasoning in relevant High Court decisions reproduced in the record, the Tribunal held that such additions/disallowances are unsustainable in law in the absence of seized or other post-search material establishing undisclosed income; accordingly the legal grounds assailing those additions were allowed and the appeals for the non-abated years were partly allowed. [Paras 4, 5, 6, 11, 16]

For AYs 2001-02 to 2005-06 the additions/disallowances made by the AO are unsustainable in law for lack of incriminating material unearthed during search; the corresponding legal ground is allowed and the appeals are partly allowed.

Section 153A - scope of assessment under Section 153A - assessment on basis of seized material - Assessment and adjustments in AY 2006-07 and AY 2007-08 where assessments were not non-abated and specific factual adjustments were contested. - HELD THAT: - The Tribunal found that for AY 2006-07 the time limit for issue of notice under Section 143(2) had not expired and the AO was thus entitled to examine declared income; however, factual findings showed the assessee possessed agricultural land and regularly earned agricultural income. The Tribunal directed that agricultural income for AY 2006-07 be treated as agricultural income (not treated as nil or as income from other sources) and upheld that business loss shown cannot be allowed where no business income was reflected. For AY 2007-08 the Tribunal applied the same approach and directed the AO to adopt the agricultural income figure accepted in the Tribunal's view. Other AO additions which lacked basis in the return or in seized material were deleted. These determinations were made on the facts of possession, prior acceptance of agricultural income, and absence of material justifying AO's contrary treatment. [Paras 17, 21, 22, 23, 25]

For AY 2006-07 the AO's jurisdiction to examine income was upheld but the agricultural income must be treated as agricultural income (not extinguished by spouse's non-declaration); business loss shown is not allowable where no business income is reflected. For AY 2007-08 the Tribunal directed the AO to adopt the Tribunal's finding on agricultural income; appeals partly allowed.

Final Conclusion: The appeals are partly allowed. For AYs 2001-02 to 2005-06 the additions/disallowances sustained by the lower authorities are set aside for want of incriminating material discovered in the search; for AYs 2006-07 and 2007-08 the Tribunal upheld the AO's power to examine income but directed specific factual adjustments in favour of the assessee (notably treatment of agricultural income and related adjustments) and otherwise deleted unsupported additions.

Re-export - personal hearing - administrative determination of classification and assessment - pending adjudication and investigation - perishable goods / national waste - judicial restraint in directing factual determinations

Re-export - perishable goods / national waste - personal hearing - Representations by the petitioners for permission to re-export the imported consignment were directed to be considered after personal hearing. - HELD THAT: - The petitioners had submitted representations seeking permission to re-export the detained consignment on grounds of perishability. The Court recorded that the representations were received and pending. Rather than adjudicating the factual and administrative questions itself, the Court directed that the petitioners be permitted to appear before the first respondent for a personal hearing on the specified date and that the first respondent shall take a view on the representations in accordance with law. The Court also required the petitioners to cooperate with the respondents in the pending proceedings and notices. The decision on the representations was remitted to the competent authority for fresh consideration following the personal hearing, with a firm timeline for decision-making. [Paras 6, 7]

Petitioners permitted to appear before R1 on 16.06.2022 at 10:30 a.m.; R1 to decide the representations in accordance with law within four weeks of that personal hearing.

Administrative determination of classification and assessment - pending adjudication and investigation - judicial restraint in directing factual determinations - Prayer for a writ directing respondents to re-export the consignment was refused. - HELD THAT: - The Court declined to grant the substantive relief sought by the petitioners to direct re-export. It held that re-export involves determination of factual and statutory questions-classification, assessment of duty, and whether goods are prohibited-which are matters for the administrative authorities conducting the investigation and adjudication. Given that those inquiries were pending and within the competence of the authorities, the Court refused to substitute its view or direct re-export. [Paras 3, 8]

Prayer for a direction to respondents to re-export the consignment not acceded to.

Final Conclusion: Writ petitions disposed by directing a personal hearing for the petitioners before the first respondent and remitting the pending representations for decision within four weeks of that hearing; the substantive prayer for a court-directed re-export was declined, and the petitioners were directed to cooperate with the ongoing proceedings.

Cost Recovery Charges - Handling of Cargo in Customs Areas Regulations, 2009 - waiver/exemption from payment of Cost Recovery Charges - regularization of amounts already paid - compensatory nature of cost recovery and illegitimacy of recovering entire salary

Cost Recovery Charges - compensatory nature of cost recovery and illegitimacy of recovering entire salary - Validity of the impugned demand for Cost Recovery Charges from 25.06.2015 to 31.03.2020 for the entire sanctioned strength of posts although the approved staff were not deputed for the entire period. - HELD THAT: - The Court held that the challenge to the demand must be considered in light of earlier reasoning in Sun Global Logistics, which concluded that Cost Recovery Charges can only be compensatory and cannot justify recovery of the entire salary payable to Customs officers from Customs Cargo Service Providers. Absent a government notification specifying rates and a lawful machinery for collection under the Regulations, levying CRC equivalent to full salaries is not justified. The practice of demanding full salary from service providers without a statutory or notified basis is contrary to the Regulatory scheme and constitutional/legislative constraints identified in the said precedent. Applying those conclusions, the impugned demand for the full sanctioned strength for periods when staff were not posted (or only partly posted) is unwarranted.

Impugned demand set aside to the extent it seeks full salary recovery for un-deputed/partially deputed sanctioned posts; writ allowed on this ground.

Waiver/exemption from payment of Cost Recovery Charges - regularization of amounts already paid - Handling of Cargo in Customs Areas Regulations, 2009 - Relief in respect of past payments and entitlement to waiver/exemption under the existing CBEC circulars and direction for administrative regularisation. - HELD THAT: - Relying on Sun Global Logistics, the Court observed that where a licensee has met the benchmark criteria set out in the CBEC circular of 12.09.2005, consideration for waiver/exemption ought to be given prospectively from the date the benchmark was achieved. The Court noted absence of statutory notification fixing CRC rates and directed that past payments already collected should be regularized (and not ordered to be refunded) because the incidence may have been passed on to customers. The Court further directed appropriate administrative action by respondents in accordance with the principles in the precedent, including regularising the petitioner's case and considering grant of waiver from the date the petitioner fulfilled the prescribed benchmark.

Petitioner entitled to consideration for waiver/exemption from CRC prospectively from the date benchmarks were met; past payments to be regularized rather than refunded; respondents directed to grant waiver/regularisation in accordance with the identified principles.

Handling of Cargo in Customs Areas Regulations, 2009 - regularization of amounts already paid - Administrative directions to CBEC and jurisdictional Commissioners to remedy the systemic deficiency identified by the Court. - HELD THAT: - The Court recorded that circular practice cannot substitute for formal statutory machinery and directed the Central Board of Excise and Customs to issue notifications within six months specifying rates/charges payable by Customs Cargo Service Providers under the Regulations and to suitably amend the Regulations to incorporate provisions for waiver/exemption from CRC. The jurisdictional Commissioners were directed to regularize petitioners' cases by granting waiver/exemption with effect from the date the benchmark was achieved in accordance with the CBEC circular referenced.

CBEC directed to notify rates and amend Regulations; jurisdictional Commissioners directed to regularize and grant waiver/exemption as directed.

Final Conclusion: Writ petition allowed: the impugned demand for Cost Recovery Charges in the stated period is unsustainable to the extent it seeks full salary recovery for un deputed or partially deputed sanctioned posts; petitioner to be considered for waiver/exemption from the date benchmarks were met and past payments to be regularized; CBEC and jurisdictional authorities directed to take the administrative steps specified.

Provisional release under Section 110A of the Customs Act, 1962 - over-valuation to circumvent import restriction / Minimum Import Price - quantification of duty and security by way of bond - independence of ongoing investigation and adjudication - waiver of demurrage and container detention charges governed by applicable rules

Provisional release under Section 110A of the Customs Act, 1962 - over-valuation to circumvent import restriction / Minimum Import Price - Provisional release of the seized consignment of black pepper under Section 110A of the Customs Act, 1962 was to be granted following the ratio in earlier orders. - HELD THAT: - The Court held that the present facts are directly and squarely covered by earlier decisions (including the Division Bench order in Al Qahir International and Single Judge orders in similar matters) where goods seized on the ground of alleged over-valuation to circumvent the Minimum Import Price were ordered to be provisionally released. Considering the perishable nature of the commodity and the fact that earlier identical orders had been accepted and complied with by the Department, the writ petition for release was allowed. The Court adopted the approach of permitting provisional release subject to protective conditions to secure the revenue while not stifling the adjudicatory process.

The writ petition is allowed and provisional release is directed in line with the precedents relied upon.

Quantification of duty and security by way of bond - Release was directed to be subject to payment of quantified duty and execution of bonds/security to cover interest, penalty or other charges as quantified by the Customs authority. - HELD THAT: - Following the precedent, the Court directed the Joint Commissioner (assessing authority) to quantify the duty and the bond/security amounts and to communicate the same to the petitioner forthwith. The petitioner was to remit the quantified duty and execute bonds equal to the amount quantified for interest, penalty or charges; on such remittance and execution, the goods were to be released within one week. This condition was imposed to protect the revenue while facilitating release of perishable consignments.

The second respondent is directed to quantify duty/bond amounts and release the consignment within one week of remittance/execution of bonds.

Independence of ongoing investigation and adjudication - The order for provisional release does not inhibit or influence the ongoing investigation or the adjudication process; those proceedings may continue and reach their own conclusions. - HELD THAT: - The Court expressly recorded that nothing in its order would stand in the way of independent inquiry or adjudication. It clarified that no opinion was expressed on the merits of the allegations leading to seizure, and that show-cause notices and adjudication proceedings could proceed uninfluenced by the release order. The protective bond/payments were directed as measures to safeguard the revenue during such ongoing processes.

Provisional release ordered without prejudice to the course and outcome of independent investigation and adjudication.

Waiver of demurrage and container detention charges governed by applicable rules - The question of waiver of demurrage and container detention charges was left open to be determined by the authorities in accordance with the applicable rules and regulations. - HELD THAT: - While earlier orders had dealt with relief on demurrage in context, the Court in the present matter refrained from adjudicating on waiver of demurrage and container detention charges. It left the issue to the administrative authorities to decide in light of the relevant statutory provisions and regulations, permitting the petitioner to pursue that relief before the competent authority.

Issue of waiver of demurrage charges is left open to be considered by the authorities under applicable rules.

Final Conclusion: The writ petition is allowed by directing provisional release of the seized consignment on payment of quantified duty and execution of bonds/security within one week; the release is without prejudice to ongoing investigation and adjudication, and the question of waiver of demurrage charges is left to the authorities under applicable rules.

Depreciation to be allowed up to the date of payment of duty - binding effect of Tribunal remand directions - implementation of Tribunal order on remand - application of the explanation to Notification 13/81 permitting depreciation until date of payment

Binding effect of Tribunal remand directions - implementation of Tribunal order on remand - Whether the lower authorities erred in failing to implement the Tribunal's remand direction to allow depreciation up to the date of payment of duty. - HELD THAT: - The Tribunal's earlier remand expressly directed that depreciation shall be allowed up to the date of payment of duty, rejecting the Revenue's contention that depreciation was to be restricted to the date of application for de-bonding. The adjudicating authority's order dated 28.03.2002 applied depreciation only up to the date of permission for de-bonding, contrary to the Tribunal's clear remand direction. The Appellate Tribunal on review records disapproval of the lower authorities for not following those directions and holds that the authorities were bound to apply depreciation until the date of payment of duty as per the Tribunal's remand. The impugned order therefore fails to give effect to the Tribunal's remand and is not sustainable in law. [Paras 4]

Impugned order set aside for failure to implement the Tribunal's remand direction; depreciation must be allowed up to the date of payment of duty.

Depreciation to be allowed up to the date of payment of duty - application of the explanation to Notification 13/81 permitting depreciation until date of payment - Whether, on applying depreciation up to the date of payment as directed by the Tribunal, any duty remains payable. - HELD THAT: - The appellant submitted that when depreciation is allowed up to the date of payment of duty, the assessable value (and hence duty) would be nil. The Tribunal records that this submission was unrebutted on the record. In view of the binding direction to allow depreciation until payment and the absence of any contrary material, the earlier duty demand cannot be sustained. [Paras 4, 5]

Demand held unsustainable; appeal allowed with consequential relief as per law.

Final Conclusion: The appeal is allowed; the impugned order is set aside because the lower authorities failed to implement the Tribunal's remand direction to allow depreciation up to the date of payment of duty, and on that basis the duty demand is unsustainable, with consequential relief as applicable.

Lok Adalat award treated as compromise decree - maintainability of writ petition by a third party aggrieved by fraud - Order 23 Rule 3 CPC - court's obligation to record satisfaction before recording compromise - bar on independent suit under Order 23 Rule 3 A CPC - preponement of hearing and duty to give adequate notice - allocation of pending administrative application to another competent officer - NCLT scheme of arrangement - effect of transfer of demerged undertaking and pending Section 231 application

Lok Adalat award treated as compromise decree - Order 23 Rule 3 CPC - court's obligation to record satisfaction before recording compromise - Characterisation of the award dated 09.12.2016 passed by the Daily Lok Adalat and legal consequences thereof - HELD THAT: - The Court held that the award passed by the Daily Lok Adalat presided over by the Civil Judge (Jr. Divn.) is to be treated akin to a compromise decree under Order 23 Rule 3 CPC. Consequent legal consequences follow: a decree based on such a compromise is generally not amenable to appeal and an independent fresh suit is barred by the statutory scheme; the Court noted the statutory requirement that the forum recording a compromise must apply its judicial mind and record satisfaction, but treated the impugned award as having the legal efficacy of a compromise decree for purposes of determining available remedies. [Paras 37]

Award characterised as a compromise decree under Order 23 Rule 3 CPC; therefore the normal bar on independent suits and the consequences attendant to compromise based decrees apply.

Maintainability of writ petition by a third party aggrieved by fraud - bar on independent suit under Order 23 Rule 3 A CPC - Whether the petitioner, as a non party to the Lok Adalat proceedings, can maintain the present writ petition to quash the award dated 09.12.2016 - HELD THAT: - The Court found that the petitioner had acquiesced to and expressly pleaded knowledge of the civil suit, the compromise and the exchange deeds, and therefore the petition was tainted by delay and laches. While recognising precedents that a third party aggrieved by fraud in a Lok Adalat award may challenge the award, the Court concluded on the material before it that the petitioner cannot maintain the present writ petition at this belated stage and having acquiesced the subject matter, the petition fails on grounds of delay and laches. The Court observed that remedies exist (including raising issues before the same civil court or pursuing rights under the Scheme/NCLT proceedings) and did not grant the relief of quashing the award. [Paras 37, 38]

Petitioner not permitted to maintain the writ petition to quash the Lok Adalat award due to acquiescence and delay; petitioner to pursue other remedies in accordance with law.

Preponement of hearing and duty to give adequate notice - allocation of pending administrative application to another competent officer - Lawfulness of respondent No.2's unilateral preponement of the hearing and remedial direction in relation to the pending change of land use application - HELD THAT: - The Court deprecated respondent No.2's unilateral preponement of the hearing from 24.02.2022 to 09.12.2021 without adequate notice to the petitioner and found that such conduct, which left the petitioner with only one day's intimation, was unjustified. To allay the petitioner's apprehensions about fair processing before respondent No.2, the Court directed administrative remedial action: if respondent No.2 is the sole authority, respondent No.1 should allocate the pending application for change of land use to some other competent officer or respondent No.1 may itself take up the matter for processing, so as to ensure impartiality and adequate opportunity to the petitioner. [Paras 39, 40, 41]

Respondent No.1 shall, within two weeks, allocate the pending change of land use application to another competent officer or take up the processing itself; the preponement without adequate notice was deprecated.

NCLT scheme of arrangement - effect of transfer of demerged undertaking and pending Section 231 application - Status and effect of the pending application under Section 231 before the National Company Law Tribunal (NCLT) and availability of remedies to the petitioner under the approved Scheme - HELD THAT: - The Court noted that the Scheme of Arrangement approved by the NCLT transfers the demerged undertaking and associated rights to the resulting company and that an application under Section 231 filed by the petitioner before the NCLT was pending. The Court left the determination of those corporate law issues to the NCLT, observing that the pending application under Section 231 would be decided by the NCLT in accordance with law and that the petitioner may seek remedies available under Sections 232(4) to 232(7) of the Companies Act. [Paras 39]

The pending Section 231 application and related questions arising from the Scheme of Arrangement are to be decided by the NCLT in accordance with law; the High Court has not adjudicated those corporate proceedings.

Final Conclusion: Writ petition disposed: petitioner not permitted to quash the Lok Adalat award on the present record (petition barred by acquiescence and delay); petitioner free to pursue available remedies before appropriate fora including the NCLT which shall decide the pending Section 231 matter; administratively, respondent No.1 is directed to re allocate the pending change of land use application to another competent officer or itself take up the processing within two weeks to allay apprehensions of bias.

Restoration of company struck off under section 252(3) - Power of Registrar to strike off under section 248 - Requirement of notice prior to striking off - Criteria for restoration: company carrying on business or in operation - Conditional restoration subject to filing of pending statutory documents and payment of fees - Tribunal's power to impose costs and consequent directions on restoration

Restoration of company struck off under section 252(3) - Maintainability of appeal by shareholder - The appeal under section 252(3) by a shareholder for restoration of the company's name is maintainable. - HELD THAT: - The Tribunal found that the petitioner, claiming to be a shareholder, is eligible to file the appeal for restoration of the company's name. The Tribunal therefore entertained the petition and proceeded to consider its merits. [Paras 6]

The appeal is maintainable and admitted for consideration.

Restoration of company struck off under section 252(3) - Limitation for filing restoration appeal - The appeal was filed within the prescribed period for restoration proceedings and is not barred by limitation. - HELD THAT: - Record shows the company's name was struck off on 08.02.2022 and the appeal was filed on 12.04.2022. The Tribunal held that the appeal thus lay within the statutory time frame for seeking restoration and was not time-barred. [Paras 7]

The appeal is within limitation and can be heard on merits.

Power of Registrar to strike off under section 248 - Requirement of notice prior to striking off - The fact of striking off and the non-filing of statutory returns were noted, but the Tribunal did not set aside the Registrar's action for procedural infirmity; it proceeded to consider restoration on merits. - HELD THAT: - The record indicates the company's name was struck off for non-filing of returns for specified years. Respondent's affidavit states notices under section 248 (Form STK-1) and subsequent publications (STK-5 and STK-7) were issued and the company was shown in STK-7 published in the Official Gazette. Although the petitioner contended no notice was received, the Tribunal did not adjudicate that the strike-off was procedurally invalid; instead it treated the strike-off as the operative fact and examined whether revival was appropriate. [Paras 4, 5, 8]

The strike-off and non-filing were recorded as established facts for the purpose of the restoration petition; the Tribunal considered restoration without declaring the strike-off invalid.

Criteria for restoration: company carrying on business or in operation - Conditional restoration subject to filing of pending statutory documents and payment of fees - Tribunal's power to impose costs and consequent directions on restoration - On the merits, the Tribunal found it just and equitable to restore the company's name, subject to specified conditions including filing pending documents, payment of fees/fines and costs, and compliance with directions. - HELD THAT: - The Tribunal evaluated the petitioner's material that the company is operational, has audited accounts, files income-tax returns, maintains bank transactions, and that failure to file statutory returns was inadvertent. Accepting this as sufficient for relief, the Tribunal exercised its power under section 252(3) to direct restoration but imposed conditions: filing all pending statutory documents from FY 2016-17 onward with prescribed/additional fees, payment of a specified cost for revival via the MCA portal, delivery of a certified copy of the order to the ROC within thirty days, and publication of the order in the Official Gazette. The Tribunal also clarified the restoration would not preclude the ROC from taking lawful action for other violations committed before or during the struck-off period. [Paras 9, 10, 11, 12]

The petition is partly and conditionally allowed; the ROC is directed to restore the company's status to 'Active' upon compliance with the listed conditions.

Final Conclusion: The Tribunal admitted and entertained the shareholder's appeal, held it was filed in time, and, finding it just and equitable, ordered conditional restoration of Mangang Constructions Private Limited's name to the ROC register subject to specified compliance (filing pending returns/accounts with fees, payment of revival cost, delivery of certified copy and Gazette publication), while reserving the ROC's right to take action for any other violations.

Interim reliefs in proceedings under sections 241/242 of the Companies Act, 2013 - oppression and mismanagement - restoration of a director as interim measure - joint operation of company bank accounts as protective relief - restraint on disposal of fixed assets and creation of third party interests - marking a company as under management dispute by the Registrar of Companies - prima facie satisfaction and irreparable loss as grounds for interim intervention

Interim reliefs in proceedings under sections 241/242 of the Companies Act, 2013 - prima facie satisfaction and irreparable loss as grounds for interim intervention - oppression and mismanagement - Grant of interim reliefs on prima facie satisfaction of oppression/mismanagement and risk of irreparable loss. - HELD THAT: - The Tribunal examined pleadings and reply and found prima facie materials - reduction of petitioners' shareholding to negligible levels by alleged right issue/private placements, removal of petitioners from directorship without plausible explanation, and absence of adequate justification for raising funds by equity issuance - which could cause irreparable loss to petitioners and prejudice the company. On that basis and at the interim stage, the Tribunal concluded that circumstances justified intervention under the provisions invoked and granted protective orders pending final disposal. [Paras 8, 10, 11]

Interim intervention was warranted and protective orders were granted pending final disposal of the petition.

Restoration of a director as interim measure - appointment of a special officer or director - Restoration of petitioner no.1 as director instead of appointing a Special Officer or Director. - HELD THAT: - While petitioners sought appointment of a Special Officer/Director, the Tribunal directed restoration of petitioner no.1 to his directorship position from the date of removal. The order reflects the Tribunal's choice of restoration as the appropriate interim management remedy in light of the facts and perceived need to protect corporate and petitioner interests until final adjudication. [Paras 11]

Petitioner no.1 to be restored as director in lieu of appointment of a Special Officer or Director.

Joint operation of company bank accounts as protective relief - Requirement that existing or new bank accounts of the company be operated by joint signatures of either the respondents or petitioner no.1. - HELD THAT: - To prevent unilateral disposal or dissipation of funds and to protect the company's and petitioners' interests during the pendency of the petition, the Tribunal ordered that all existing or new bank accounts shall be operated by joint signatures either of the respondents or petitioner no.1. This is a provisional financial control measure granted as an interim relief. [Paras 11]

All existing or new bank account(s) of the company shall be operated by joint signatures either of the respondents or petitioner no.1.

Restraint on disposal of fixed assets and creation of third party interests - Prohibition on disposal or creation of third party interests in the company's fixed assets till disposal of the petition without leave of the Tribunal. - HELD THAT: - Given the petitioners' apprehension regarding disposal of assets and the Tribunal's prima facie satisfaction that interim protection was necessary, the Tribunal restrained disposal of fixed assets including plant and machinery and land and building, and barred creation of third party interests in them until final disposal of the petition or without leave of the Tribunal. [Paras 11]

Fixed assets shall not be disposed of nor shall any third party interest be created therein until disposal of the petition without leave of the Tribunal.

Marking a company as under management dispute by the Registrar of Companies - Direction to the Registrar of Companies to mark the company as 'under management dispute'. - HELD THAT: - In order to officially note the existence of a management dispute and to provide appropriate public record while the petition remains pending, the Tribunal directed the Registrar of Companies to mark the company as 'under management dispute'. This order is an interim administrative protection aimed at regulatory visibility of the dispute. [Paras 11]

Registrar of Companies shall mark the company as 'under management dispute'.

Final Conclusion: On prima facie satisfaction of oppression/mismanagement and risk of irreparable loss, interim protective reliefs were granted: restoration of petitioner no.1 as director, joint operation of company bank accounts with petitioner no.1 or respondents, restraint on disposal or creation of third party interests in fixed assets, and direction to the Registrar of Companies to mark the company as 'under management dispute'; the main petition is listed for final disposal.

Prima facie case - discharge under section 245 of Cr.P.C. - vicarious liability of directors under section 27 of the SEBI Act - onus to prove lack of knowledge or exercise of due diligence (proviso to section 27(1)) - inadmissibility of defence at the framing/ discharge stage - SEBI enforcement for unlawful public issue and refund directions

Prima facie case - discharge under section 245 of Cr.P.C. - inadmissibility of defence at the framing/ discharge stage - Whether the petitioners should have been discharged under section 245 Cr.P.C. on the materials on record or whether a prima facie case existed to frame charge against them. - HELD THAT: - The High Court held that the learned Special Court correctly considered the materials on record and found a prima facie case against the petitioners for violations relating to issuance of redeemable preference shares without complying with statutory/public-issue norms. The Court affirmed the settled principle that defences which involve disputed questions of fact (such as an accused's lack of knowledge of the company's activities) cannot be adjudicated at the stage of framing charge; a roving or fishing inquiry into detailed defence contentions is impermissible at that stage. Consequently, the Trial Judge's conclusion that the petitioners' claim of ignorance could be examined only during the trial was legally sound and justified rejection of the discharge applications. [Paras 13, 20, 30, 33]

The rejection of the petitioners' applications for discharge was upheld; a prima facie case exists and the question of defence must be tried at trial.

Vicarious liability of directors under section 27 of the SEBI Act - onus to prove lack of knowledge or exercise of due diligence (proviso to section 27(1)) - SEBI enforcement for unlawful public issue and refund directions - Whether the petitioners, as directors, can be treated as guilty under section 27 of the SEBI Act and where the burden lies to displace that deeming fiction. - HELD THAT: - The Court explained that section 27(1) of the SEBI Act deems every person who at the time of contravention was in charge of and responsible to the company for conduct of its business to be guilty of the contravention, while the proviso permits such person to avoid punishment if he proves that the contravention was committed without his knowledge or that he exercised all due diligence to prevent it. The Court held that once a prima facie case of contravention by the company is established, the onus shifts to the directors to prove lack of knowledge or due diligence. That burdened enquiry involves disputed factual and evidentiary matters and hence must be conducted at trial; it does not justify discharge at the framing stage. The findings of SEBI (including directions for refund and restraint) and the appellants' admitted communications were relevant material from which prima facie responsibility could be inferred. [Paras 21, 22, 23, 28, 29]

Directors are prima facie liable under section 27 when the company is shown to have contravened the law; the proviso places onus on them to prove lack of knowledge or exercise of due diligence, a matter for trial.

SEBI enforcement for unlawful public issue and refund directions - prima facie case - Whether the SEBI inquiry and consequent adjudicatory findings and Appellate Tribunal order furnished sufficient material to sustain a prima facie case against the petitioners. - HELD THAT: - The Court noted SEBI's adjudicatory finding that the company raised substantial funds through issuance of redeemable preference shares without complying with public-issue norms and directed refund to investors. The Securities Appellate Tribunal upheld SEBI's order and the petitioners' limited admissions (including sending notices and seeking exclusion of post-resignation collections) reinforced the factual matrix. The High Court concluded these materials collectively constituted sufficient prima facie evidence to require trial rather than discharge, and that absence of detailed minute books or notices at the stage of framing did not negate the prima facie case. [Paras 3, 6, 9, 25, 26]

SEBI's findings and the Appellate Tribunal's order supplied adequate material to hold a prima facie case and support the framing of charge; the matter must proceed to trial.

Final Conclusion: The revisional applications were dismissed. The High Court found no illegality or perversity in the Special Court's refusal to discharge the petitioners: a prima facie case was established from SEBI's findings and related materials, directors are prima facie liable under section 27 of the SEBI Act subject to their proving lack of knowledge/due diligence at trial, and contested factual defences cannot be resolved at the framing/discharge stage.

Auction purchaser's liability for antecedent lease arrears and interest - effect of "AS IS WHERE IS" / "NO RECOURSE" sale in liquidation - step into the shoes doctrine under IBC for transferee/lessee - contractual obligations of transferee under lease deed and transfer memorandum - doctrine of caveat emptor and constructive notice in property transactions - approbate and reprobate / election doctrine - scope and limits of writ jurisdiction under Article 226 in contractual disputes - non-registration of claim under IBC does not extinguish lessor's claim on leasehold dues

Auction purchaser's liability for antecedent lease arrears and interest - effect of "AS IS WHERE IS" / "NO RECOURSE" sale in liquidation - contractual obligations of transferee under lease deed and transfer memorandum - Whether the petitioner, having purchased leasehold rights in liquidation, is liable to pay past lease rentals and interest despite the sale being on "AS IS WHERE IS"/"NO RECOURSE" basis. - HELD THAT: - The Court held that purchase in liquidation on an "as is where is" basis did not absolve the petitioner from contractual liabilities attaching to leasehold land. The lease deed defines "lessee" to include successors and assigns and expressly creates a first charge on the demised premises for unpaid lease rent and interest; the Transfer Memorandum (24.12.2020) and subsequent Sale Certificate incorporated and reaffirmed those covenants. The sale certificate and transfer memorandum, signed by the petitioner, bound it to the lease terms; defects were patent and discoverable from published liquidation notices and auction documents, invoking caveat emptor. IBC affords limited protection for acquisition in liquidation but does not nullify the transferee's obligation to honour pre-existing lease covenants where the transfer instrument so provides. [Paras 36, 37, 38, 48, 86]

The petitioner is liable to pay the arrears of lease rent and interest; the "AS IS"/"NO RECOURSE" language does not relieve it of those contractual obligations.

Non-registration of claim under IBC does not extinguish lessor's claim on leasehold dues - step into the shoes doctrine under IBC for transferee/lessee - Whether GNIDA's failure to register its claim in the insolvency process bars it from claiming outstanding lease dues from the petitioner-transferee. - HELD THAT: - The Court found that mere non-registration of GNIDA's claim in IBC proceedings does not extinguish GNIDA's statutory and contractual rights as lessor over leasehold property. The lease covenants and Transfer Memorandum require the transferee to make good unpaid lease rentals and interest; no provision of law was pointed out to demonstrate that non-registration operated to deprive GNIDA of the right to recover such dues from a transferee who steps into the lessee's position. [Paras 45, 46, 48, 86]

GNIDA's claim for unpaid lease rentals and interest is not negated merely because it did not get its claim registered under IBC.

Approbate and reprobate / election doctrine - conduct disentitling equitable relief - Whether the petitioner's conduct of accepting transfer and possession but seeking refund constitutes approbation and reprobation, disentitling it to relief. - HELD THAT: - The Court applied the doctrine that a party cannot approbate and reprobate: the petitioner signed the Transfer Memorandum, accepted the sale certificate, assumed lessee status and enjoyed possession, yet sought to avoid the attendant obligations. In the absence of any timely challenge to the transfer instruments, the petitioner's conduct showed acceptance of benefits and simultaneous rejection of burdens, barring equitable relief. [Paras 35, 60, 61, 64, 86]

The petitioner has approbated and reprobated and is disentitled to equitable relief; its conduct precludes refund.

Scope and limits of writ jurisdiction under Article 226 in contractual disputes - mandamus for refund of disputed contractual payment - Whether a writ petition under Article 226 seeking a solitary mandamus for refund of amounts paid to discharge contractual obligations is maintainable. - HELD THAT: - The Court reiterated that writ jurisdiction is not a substitute for civil remedies to resolve pure contractual disputes or to effect recovery of disputed contractual payments. Authorities hold that a petition seeking only refund of money paid under contract is ordinarily not maintainable; where the petition's real purpose is to reopen settled contractual obligations, Article 226 is not the appropriate forum. The petitioner did not impugn the Transfer Memorandum or Sale Certificate in any timely proceeding, and sought only refund, rendering the writ petition inappropriate. [Paras 70, 71, 82, 86, 87]

The writ petition seeking a solitary refund is not maintainable; Article 226 cannot be used to avoid contractual obligations.

Final Conclusion: The writ petition was dismissed. The Court held that the petitioner, as auction transferee who signed the Transfer Memorandum and Sale Certificate, is bound by the lease covenants and liable for past lease rentals and interest; non-registration of GNIDA's IBC claim does not extinguish those rights; the petitioner's conduct constituted approbation and reprobation; and a solitary mandamus for refund of disputed contractual payments is not maintainable under Article 226.

Pre-existing dispute - dismissal of Section 9 application for initiation of Corporate Insolvency Resolution Process where pre-existing dispute exists - operational debt under Section 9 of the I&B Code, 2016 - demand notice under Section 8 of the I&B Code, 2016 - effect of prior communication raising defects on maintainability of insolvency petition

Pre-existing dispute - operational debt under Section 9 of the I&B Code, 2016 - demand notice under Section 8 of the I&B Code, 2016 - Whether the Adjudicating Authority was justified in dismissing the Section 9 application on the ground of a pre-existing dispute between the parties. - HELD THAT: - The Tribunal examined the record and noted that prior to the demand notice dated 27.11.2017 the Respondent had, by letter dated 03.03.2016, expressly communicated alleged defects and outstanding scope of work to the Appellant and called for rectification and completion within a time-frame. The Appellant acknowledged receipt of that communication. Having regard to that contemporaneous correspondence which raised substantive complaints about performance and outstanding works, the Tribunal held that a dispute existed before issuance of the Section 8/Section 9 demand notice. Consequently the Adjudicating Authority correctly concluded that the claim was subject to a pre-existing dispute and therefore dismissed the Section 9 application. The Tribunal found no infirmity or illegality in that conclusion and affirmed the Adjudicating Authority's order. [Paras 11, 12]

The Adjudicating Authority's dismissal of the Section 9 application on the ground of a pre-existing dispute is upheld.

Final Conclusion: The appeal is dismissed; the order of the Adjudicating Authority dated 10.03.2022 dismissing the application for initiation of CIRP is affirmed. No order as to costs.

Corporate Insolvency Resolution Process - default in repayment of a financial debt - admission under section 7 of the Insolvency and Bankruptcy Code, 2016 - moratorium under section 14 of the Insolvency and Bankruptcy Code - threshold limit for default under the Code - appointment of Interim Resolution Professional - evidentiary burden to prove repayment

Default in repayment of a financial debt - admission under section 7 of the Insolvency and Bankruptcy Code, 2016 - threshold limit for default under the Code - moratorium under section 14 of the Insolvency and Bankruptcy Code - The company petition under section 7 was maintainable and liable to be admitted on the ground of default. - HELD THAT: - The Tribunal found that the loan disbursement, its nature as a loan and the six month repayment term were admitted by the corporate debtor. Documentary evidence produced by the financial creditor and correspondence demanding repayment supported the existence of a debt and default. The corporate debtor's assertion of partial repayment was not substantiated by receipts or vouchers acknowledged by the financial creditor. The amount of default exceeded the statutory threshold at the time of filing. In view of these findings, the application met the requirements of the Code and there was no impediment to admission; accordingly, moratorium under the Code was ordered and consequential directions were issued. [Paras 9, 10, 11, 12, 15]

The petition under section 7 was admitted, moratorium ordered and directions for commencement of CIRP given.

Evidentiary burden to prove repayment - preponderance of evidence on repayment - The corporate debtor's plea of having paid substantial amounts (by NEFT and cash) was rejected for lack of documentary proof. - HELD THAT: - Although the corporate debtor alleged payments by NEFT and cash in lieu of dishonoured cheques and produced a chart, it failed to place on record receipts, vouchers or acknowledgements from the financial creditor to corroborate those payments. Given the commercial relationship and the absence of contemporaneous documentary proof on the corporate debtor's side, the Tribunal was not persuaded that the debt had been discharged. The Tribunal also noted correspondence from the financial creditor seeking repayment which was not contradicted by documentary evidence from the corporate debtor. [Paras 10, 11]

Allegations of repayment by the corporate debtor were not established; the claim of outstanding debt stands.

Appointment of Interim Resolution Professional - adherence to eligibility and authorisation requirements for IRP - The proposed Interim Resolution Professional was found eligible and was appointed. - HELD THAT: - The financial creditor filed an application proposing a new IRP whose AFA was valid and who had furnished consent. The Tribunal found no material showing any pending disciplinary proceedings or other disqualification against the proposed IRP. Consequently, the proposal complied with the Code and regulations, and the proposed person was appointed to act as IRP with directions regarding his functions and fee compliance. [Paras 13, 15, 18]

The proposed IRP was appointed and the application for change of IRP was disposed of.

Final Conclusion: The company petition under section 7 of the IBC was admitted on the finding of default; moratorium was imposed and CIRP ordered to commence. The corporate debtor's assertions of repayment were not proved, and the proposed Interim Resolution Professional was held eligible and appointed.

Overriding effect of the non obstante clause in section 240A on eligibility restrictions for promoters of MSMEs - eligibility criteria in Expression of Interest and power of the Resolution Professional under section 25(2)(h) - application of section 29A disqualifications vis a vis MSME promoters - maintainability of interlocutory relief under section 60(5) to reopen or admit a belated EOI - completion of CIRP and protection against misuse or delay of the insolvency process

Overriding effect of the non obstante clause in section 240A on eligibility restrictions for promoters of MSMEs - eligibility criteria in Expression of Interest and power of the Resolution Professional under section 25(2)(h) - application of section 29A disqualifications vis a vis MSME promoters - Whether the applicant promoter of an MSME could be permitted to submit a belated Expression of Interest/Resolution Plan despite not meeting the EOI eligibility criteria, relying on section 240A, and whether the Tribunal should direct the RP to accept such EOI or stay the CIRP proceedings. - HELD THAT: - The Tribunal examined the factual and procedural matrix and concluded that the applicant sought to submit a letter, dated after the EOI deadline and some 41 days after last date for submission, asking the RP to treat that letter as an EOI without demonstrating compliance with the published EOI conditions. The RP had published the EOI with timelines, verified prospective applicants, circulated a provisional list and was then scrutinising received resolution plans; ninety days' extension to complete CIRP had been granted. The Tribunal noted the limited scope of section 240A as an exception from certain disqualifications in section 29A (clauses (c) and (h)) for MSME promoters but accepted the RP's position that other eligibility requirements and additional criteria approved by the CoC under section 25(2)(h) remain applicable. The applicant had admitted inability to meet the specified eligibility conditions and proffered an unsupported claim of illness; no cogent justification was shown for relief under section 60(5). Allowing the belated and non compliant submission would prejudice the timely completion of CIRP and risk misuse of the insolvency process. In these circumstances the Tribunal found no merit in directing the RP to admit the belated EOI or in staying the CIRP. [Paras 5, 6, 7, 8]

Interlocutory Application dismissed for lack of merit; RP directed to complete the CIRP without further loss of time.

Final Conclusion: The Tribunal rejected the applicant's plea to admit a belated, non compliant EOI and to stay CIRP proceedings, holding that the RP acted within the code and CoC approved EOI framework, that section 240A does not render other eligibility criteria otiose, and that permitting the relief would impede timely completion of CIRP; IA dismissed and RP directed to proceed.

Financial debt - CIRP initiation under Section 7 - sham or collusive transactions - assessment order as admissible material to test genuineness of transactions - forensic audit as corroborative evidence - summary jurisdiction under the Insolvency and Bankruptcy Code - reliance on Phoenix Arc principle that collusive ICDs do not constitute financial debt - in pari delicto

Financial debt - CIRP initiation under Section 7 - sham or collusive transactions - assessment order as admissible material to test genuineness of transactions - forensic audit as corroborative evidence - reliance on Phoenix Arc principle that collusive ICDs do not constitute financial debt - Existence of a bona fide financial debt capable of sustaining an application under Section 7 of the IBC against the Corporate Debtor. - HELD THAT: - The Tribunal examined the loan agreements, partial bank records and the material relied upon by the Corporate Debtor - notably the Income Tax assessment order (dated 31.12.2018 for AY 2015-16) and the Final Forensic Audit Report (14.01.2021) - alongside the Financial Creditors' pleadings. Applying the Supreme Court's ratio in Phoenix Arc concerning collusive inter-corporate deposits, the Tribunal found multiple indicia undermining the genuineness of the alleged loans: identical form loan agreements, immediate reciprocal bank entries (credits followed by near-immediate debits), common directors and a common registered office for the lender entities, absence of full supporting bank records, lack of explanation as to the purpose of the advances, adverse findings in the assessment order describing the lenders as paper/shell companies and characterising the transactions as arranged accommodation entries, and an unexplained delay by the Financial Creditors in seeking repayment. The Tribunal treated the assessment order and the forensic audit as cogent material capable of informing the enquiry into the real nature of the transactions (without treating those documents as binding on the Financial Creditors). On the totality of these facts the Tribunal, exercising summary jurisdiction under the Code, concluded that it could not be satisfied that a bona fide financial debt existed and that the alleged claims were tainted by suspicion of being sham/collusive, thereby not qualifying as financial debt for the purposes of initiating CIRP. [Paras 28, 29, 31, 32, 33]

The petition under Section 7 is dismissed as the Tribunal is not satisfied that a bona fide financial debt exists capable of initiating CIRP.

Final Conclusion: On the material before it - including bank records, the Income Tax assessment for AY 2015-16 and the forensic audit - and applying the Phoenix Arc principle, the Tribunal concluded the alleged loans bore indicia of sham or collusive transactions and therefore did not constitute financial debt; the Section 7 petition was dismissed.

Corporate Insolvency Resolution Process - operational debt - dispute within the meaning of Section 8 and Section 9 of the IBC, 2016 - limitation for filing application under Section 9 - moratorium - appointment of Interim Resolution Professional

Operational debt - dispute within the meaning of Section 8 and Section 9 of the IBC, 2016 - Whether there existed a bona fide dispute entitling the Corporate Debtor to resist the Section 9 application - HELD THAT: - The Tribunal found that supplies were made and invoices remained unpaid. The Corporate Debtor relied on a letter dated 11.08.2017 alleging inferior quality and a counterclaim, but the material showed that the letter did not accept the loss outright and contemplated adjustment against future supplies. The evidence of return by a third party was for a lesser amount than the claimed loss, and no cogent linkage was established between alleged defects and the finished products. The Tribunal concluded that the Corporate Debtor's contentions were self-serving, unsubstantiated and did not constitute a pre-existing dispute within the statutory meaning capable of defeating the Section 9 petition. [Paras 10, 11, 12, 13, 17]

There was no dispute within the meaning of Section 8 & 9 of the IBC, 2016; the operational debt claim was maintainable.

Limitation for filing application under Section 9 - Whether the Section 9 application was time-barred - HELD THAT: - The Tribunal noted that the debt fell due on 20.07.2017 and the application under Section 9 was filed on 08.08.2019. Notice of default under Section 8 had been delivered and an affidavit under Section 9(3)(b) was filed. On that basis the Tribunal held the petition was filed within the applicable limitation period. [Paras 16]

The application was within limitation and not time-barred.

Corporate Insolvency Resolution Process - moratorium - appointment of Interim Resolution Professional - Whether the Section 9 application should be admitted and the consequential reliefs (moratorium, public announcement, appointment of IRP) ordered - HELD THAT: - Having found the application complete, the debt above the threshold and absence of a legitimate dispute or malicious initiation, the Tribunal held the Section 9 petition was liable to be admitted. Consequential directions were issued: declaration of moratorium and public announcement in terms of the Code; appointment of an Interim Resolution Professional from the IBBI panel; and directions for public announcement, claim submissions and constitution of the Committee of Creditors. The Tribunal also directed the Operational Creditor to deposit a specified preliminary amount with the IRP for expenses. [Paras 17, 18, 19]

The Section 9 application was admitted; moratorium was declared and an Interim Resolution Professional was appointed with consequential directions.

Final Conclusion: The Tribunal admitted the Section 9 application filed by the Operational Creditor, holding there was no dispute within the meaning of Sections 8 and 9 and that the application was within limitation; it declared moratorium, directed public announcement, appointed an Interim Resolution Professional from the IBBI panel and gave ancillary directions including a deposit for preliminary IRP expenses.

Debt due and payable - pre-existing dispute - admission of debt by acknowledgment and statement of intention to pay - initiation of Corporate Insolvency Resolution Process under section 9 - date of default

Debt due and payable - pre-existing dispute - admission of debt by acknowledgment and statement of intention to pay - date of default - Whether the petition under section 9 is admissible on the ground that a debt is due and payable and there is no demonstrable pre-existing dispute which would bar admission - HELD THAT: - The Adjudicating Authority found that a business relationship existed between the parties and that supplies of whole spices had been made and ad hoc payments were made, but certain invoices remained unpaid. The Corporate Debtor relied on allegations of non-receipt of goods, substandard quality and collusion; however, the record did not establish that the alleged spurious powdered spices related to the batches supplied by the Operational Creditor, nor did it substantiate the claimed collusion. The letters relied upon by the Corporate Debtor were misaddressed and, even if treated as bona fide mistakes, did not prove that the goods for the disputed invoices were not supplied by the Operational Creditor. The Corporate Debtor's letter expressing intention to pay by RTGS was treated as an acknowledgment of liability. In the absence of cogent evidence proving a pre-existing dispute affecting the claimed invoices, and having regard to the material on record including issued cheques and correspondence, the Authority was satisfied that a debt was due and that default had occurred as recorded (date of default furnished by the Operational Creditor). Consequently the petition was held to be complete and admissible for initiation of CIRP under section 9. [Paras 49, 50, 51, 52, 53]

The petition under section 9 is admitted; the Adjudicating Authority is satisfied that a debt is due and payable and that no pre-existing dispute has been established to bar admission.

Final Conclusion: The Company Petition under section 9 is admitted and CIRP against the Corporate Debtor is ordered to commence; moratorium is imposed and an Interim Resolution Professional is appointed, with consequential directions for public announcement, cooperation and deposit for CIRP expenses.

Prohibition on voting while confined in prison under Section 62(5) of the Representation of the People Act, 1951 - statutory nature of the right to vote and its regulation by the Representation of the People Act, 1951 - scope of judicial discretion to act contrary to an express statutory prohibition - exception for preventive detention in second proviso to Section 62(5) - object of preventing criminalisation of politics and preserving purity of electoral process

Prohibition on voting while confined in prison under Section 62(5) of the Representation of the People Act, 1951 - exception for preventive detention in second proviso to Section 62(5) - statutory nature of the right to vote and its regulation by the Representation of the People Act, 1951 - Whether persons confined in custody (other than detenues under preventive detention) can be permitted to vote in Legislative Council elections notwithstanding the prohibition in Section 62(5) of the R.P. Act, 1951. - HELD THAT: - The Court held that Section 62(5) is a clear statutory prohibition barring any person confined in prison or in lawful custody from voting at any election, subject only to the proviso excluding preventive detention. The Representation of the People Act, 1951 regulates elections to the State Legislative Council and Parliament; Parliament has not distinguished between classes of elections in prescribing the disqualification. The constitutional validity of Section 62(5) has been upheld by the Supreme Court (Anukul Chandra Pradhan and subsequent decisions), which recognised the reasonable classification between persons in custody and those not in custody and emphasised objectives such as preventing criminalisation of politics and practical considerations of law and order and logistics. Even if the right to vote has been described as having constitutional dimension in later jurisprudence, that right as an elector within an electoral college is nonetheless subject to statutory regulation enacted by Parliament. The second proviso demonstrates legislative awareness that the prohibition operates even in indirect elections and only narrowly preserves elector status for those subject to preventive detention. Consequently, the prohibition applies to persons in custody during investigation or trial and precludes permitting them to vote in the Legislative Council election. [Paras 16, 21, 22, 28, 29]

Section 62(5) operates as a statutory bar to persons in custody (other than preventive detenues) voting in Legislative Council elections and the Applicants cannot be permitted to vote despite that prohibition.

Scope of judicial discretion to act contrary to an express statutory prohibition - object of preventing criminalisation of politics and preserving purity of electoral process - Whether the High Court may, in exercise of judicial discretion, direct temporary release or permit escorted attendance to enable persons in custody to cast their vote so as to remove the embargo created by Section 62(5). - HELD THAT: - The Court found that judicial discretion cannot be exercised to give effect to a course of action that is contrary to an express statutory prohibition; discretion exists only where there are lawful alternatives. The Applicants sought release or escorted attendance solely to override the statutory interdict, which would amount to permitting an outcome proscribed by statute. While the Court acknowledged an exceptional factual scenario-such as orchestrated imprisonment on the eve of election to deprive members of their franchise-where relief might be appropriate to prevent abuse of process, no such circumstance was shown here. The Applicants had been in custody for a long period and no motive to incarcerate them to prevent voting was established. Consequently, absent evidence of malafide or exceptional abuse of custody to subvert the electoral process, the Court must respect the statutory bar and cannot use discretion to authorize voting contrary to Section 62(5). [Paras 30, 31, 32, 34]

The Court will not exercise discretion to release or escort persons in custody to enable them to vote where such relief would subvert an express statutory prohibition; no exceptional circumstances warranting interference were established.

Final Conclusion: Applications by the members of the Legislative Assembly seeking release or escorted attendance to enable them to vote in the Maharashtra Legislative Council election were refused: Section 62(5) of the Representation of the People Act, 1951 precludes persons in custody (except preventive detenues) from voting, and the Court will not override that statutory prohibition in the absence of exceptional circumstances demonstrating abuse of custody to defeat the electoral process.

Look Out Circular - right to personal liberty and freedom of movement - freedom of speech and expression - coercive measure - issuance of LOC where accused is evading summons/arrest or fails to appear despite Non-Bailable Warrant - quashing of administrative action interfering with fundamental rights - balancing investigative interest and fundamental rights - conditional relief subject to undertaking and security

Look Out Circular - coercive measure - issuance of LOC where accused is evading summons/arrest or fails to appear despite Non-Bailable Warrant - Validity of the Look Out Circular issued against the petitioner - HELD THAT: - The Court found that the LOC was issued in haste and without any precondition necessitating such a measure. An LOC is a coercive step that interferes with the petitioner's right of personal liberty and free movement and is to be employed only where the accused is deliberately evading summons or arrest or fails to appear despite a Non Bailable Warrant. The record did not contradict the petitioner's assertion that she had appeared on each date when summoned and had cooperated with the investigating agency. In the absence of cogent material to presume that the petitioner would evade the investigation, the impugned LOC was held to be without merit and liable to be set aside for infringing the petitioner's fundamental rights. [Paras 11, 12]

The impugned Look Out Circular is set aside and quashed.

Balancing investigative interest and fundamental rights - quashing of administrative action interfering with fundamental rights - conditional relief subject to undertaking and security - Whether quashing the LOC should be subject to conditions to protect the investigation - HELD THAT: - While quashing the LOC for being unjustified and infringing fundamental rights, the Court recognised the legitimate interest of the investigating agency to continue its probe. To strike a balance, the Court granted conditional relief: the petitioner was directed to intimate travel dates and itinerary to the agency, deposit a fixed deposit receipt of the specified amount with the Enforcement Directorate at Mumbai, refrain from tampering with evidence or influencing witnesses, return to India on the specified date, and undertake to appear before the agency upon return and on any dates fixed for interrogation. The Court emphasised that setting aside the LOC does not affect ongoing or future criminal proceedings against the petitioner. [Paras 12, 13, 14]

Quashing granted subject to conditions of itinerary intimation, deposit of security, non-tampering, specified return date and undertaking to cooperate with further investigation; observations do not affect criminal proceedings.

Final Conclusion: Writ petition allowed: the Look Out Circular issued against the petitioner is quashed for want of justification and for infringing fundamental rights, but the quashing is made subject to specified conditions (intimation of travel, deposit of security, non tampering, return on the stipulated date and undertaking to cooperate); the order does not impede the continuation of any criminal proceedings.

Look Out Circular (LOC) as a coercive measure to secure presence - Balancing investigative interest and right to personal liberty and freedom of movement - Power of subordinate courts to recall or cancel LOC commensurate with cancellation of non-bailable warrants - Conditional recall of LOC subject to furnishing of security, sureties and attendance obligations

Look Out Circular (LOC) as a coercive measure to secure presence - Power of subordinate courts to recall or cancel LOC commensurate with cancellation of non-bailable warrants - Balancing investigative interest and right to personal liberty and freedom of movement - Conditional recall of LOC subject to furnishing of security, sureties and attendance obligations - Quashing of the LOC issued against the applicant and modification of prior orders to permit travel outside India subject to conditions - HELD THAT: - The court held that the legal purpose of an LOC is to secure the presence of a person in the investigation and that the subordinate courts possess power to affirm or cancel an LOC commensurate with their jurisdiction in respect of non-bailable warrants. In the present case the applicant was not shown to be an accused; he had appeared as summoned and there was no material demonstrating a reasonable apprehension that he would not return in absence of an LOC. Relying on principles that an investigating agency cannot indefinitely insist on production of every document and that coercive measures are to be used only where necessary to prevent evasion, the court found no justifiable reason to continue the LOC. However, recognising the need to balance the investigative interest and the applicant's personal liberty, the court recalled the LOC subject to protective conditions: furnishing security and sureties and continuing to appear before the investigating agency as earlier directed. The court further modified travel restrictions by quashing the LOC (thereby permitting travel) but required the applicant to continuously intimate the investigating agency if he travels outside Dubai, UAE, and to comply with the conditions set out in the predecessor order as modified by the High Court. These directions were imposed to secure the investigative process while restoring the applicant's freedom of movement. [Paras 5, 6, 7]

The LOC is recalled; the applicant is permitted to travel (subject to his legal rights) but must furnish security and sureties, appear before the investigating agency as directed, and intimate the investigating agency of travels outside Dubai, UAE; application disposed accordingly.

Final Conclusion: The application is allowed to the extent that the LOC issued against the applicant is recalled; this recall is subject to conditions of security, sureties and attendance to protect the investigation, and the applicant is at liberty to travel while being required to intimate the investigating agency as directed.

Sabka Vishwas (Legacy Dispute Resolution) Scheme - strict compliance with scheme terms - time bound compliance - no judicial extension of statutory scheme deadlines - modification of a scheme is prerogative of the Government

Sabka Vishwas (Legacy Dispute Resolution) Scheme - strict compliance with scheme terms - no judicial extension of statutory scheme deadlines - Whether the respondents were obliged to accept tax deposited after the last date prescribed under the SVLDRS Scheme and to grant benefit under the Scheme despite late payment. - HELD THAT: - The petitioner applied under the SVLDRS Scheme and was required to deposit the discounted tax within the time specified by the Scheme. Although the Government had extended the last date to 30.06.2020 by notification, the petitioner failed to deposit the amount by that date and made the deposit only on 14.02.2022. The Court held that the Scheme must be applied within its four corners and that courts cannot, by judicial order, extend or modify the time limits prescribed by a statutory scheme. The High Court relied on the Division Bench decision of the Allahabad High Court, which was upheld by the Supreme Court, confirming that failure to comply with the time limit disentitles an applicant from relief under the Scheme and that any extension or modification of the Scheme's terms is for the Government alone to effectuate. Consequently, acceptance of the belated deposit and grant of Scheme benefits would amount to impermissible tinkering with the Scheme.

Petition dismissed; respondents rightly declined to accept the belated deposit or grant benefit under the SVLDRS Scheme.

Final Conclusion: The writ petition seeking direction to accept a belated deposit and confer benefit under the SVLDRS Scheme was dismissed: time bound conditions of the Scheme must be strictly followed and cannot be extended by the court.

Infructuous appeal - Remand and de novo adjudication - Limitations on appellate forum directing independent statutory authorities - Disposal of miscellaneous application for addition of party

Infructuous appeal - Remand and de novo adjudication - Appeal rendered infructuous insofar as the remand to the lower authority had been implemented and the de novo adjudication concluded. - HELD THAT: - The Commissioner(Appeals) had remanded the matter to the original authority for fresh decision (Order-in-Appeal No.116/Kol-South/2021 dated 10.09.2021). Subsequent proceedings before the lower authority resulted in a de novo adjudication and an order dated 08.02.2022 holding the refund claim inadmissible and directing credit to the Consumer Welfare Fund. Given that the remand remedy sought by the department has been executed and a fresh adjudicatory order has been passed, the departmental appeal against the remand became academic. The Tribunal therefore found no live controversy between the parties on the remand issue and concluded that continuation of the appeal was unnecessary. [Paras 3, 4, 7]

Appeal dismissed as infructuous.

Limitations on appellate forum directing independent statutory authorities - Application for a direction to the Commissioner(Appeals) to expeditiously decide further proceedings was not entertainable by this Bench and was declined. - HELD THAT: - Counsel for the respondent requested a direction to the Commissioner(Appeals) to expedite decision-making. The Tribunal observed that such a direction was not part of the appeal before it and, as a statutory forum, the Bench cannot issue directions in respect of matters not properly before it. The respondents were left free to pursue relief before the appropriate appellate authority. The Tribunal therefore refused to grant the ancillary direction sought. [Paras 7]

Request for direction to Commissioner(Appeals) rejected as not within the scope of the proceedings before the Tribunal; respondents may pursue the matter before the appropriate authority.

Disposal of miscellaneous application for addition of party - Miscellaneous Application No.75094 of 2022 (Addition of Party) disposed of as consequential to dismissal of the appeal. - HELD THAT: - With the appeal dismissed as infructuous, the ancillary miscellaneous application seeking addition of a party no longer required separate adjudication. The Tribunal accordingly disposed of the Miscellaneous Application in consequence of the main order. [Paras 7]

Miscellaneous Application No.75094 of 2022 disposed of.

Final Conclusion: The departmental appeal against the remand was dismissed as infructuous following completion of de novo adjudication by the lower authority; the Tribunal declined to direct the Commissioner(Appeals) to act and disposed of the miscellaneous application for addition of party.

Refund of service tax paid twice - credit notes and cancellation of invoices - transition from service tax to GST and its effect on liability - obligation of public authorities to disgorge wrongly collected sums - statutory interest under Section 11BB of the Central Excise Act, 1944

Refund of service tax paid twice - double taxation - obligation of public authorities to disgorge wrongly collected sums - Whether the appellant was entitled to refund of service tax paid where the same transaction was subsequently subjected to GST and the appellant in fact paid GST, resulting in double payment. - HELD THAT: - The Court accepted the undisputed factual matrix that the appellant had paid service tax for invoices issued in April-June 2017 and thereafter paid GST in respect of the same transactions after issuance of fresh GST invoices. The Commissioner of Central Tax (Appeals-II) had recorded that the appellant was not liable to pay GST, a fact reproduced by the Tribunal. Applying the principle that public bodies must disgorge sums later found to have been wrongly recovered, and having regard to the authorities cited, the Court held that rejection of the refund claim was untenable. The determinative reasoning is that where tax has been paid and liability extinguished or found not to subsist, the revenue must refund the amount paid, together with statutory interest, rather than retain an undue payment. [Paras 11, 12]

Refund of the service tax paid is allowable and the appeal is allowed in favour of the assessee.

Credit notes and cancellation of invoices - transition from service tax to GST and its effect on liability - statutory interest under Section 11BB of the Central Excise Act, 1944 - Whether issuance of credit notes cancelling the original service-tax invoices and the renegotiation/issuance of fresh GST invoices disentitled the appellant from claiming refund of the earlier service tax paid. - HELD THAT: - The Court noted that the appellant issued credit notes to customers and raised fresh GST invoices, and that the factual finding recorded by the Commissioner was that the appellant was not liable to pay GST. On that basis, the Court treated the cancellation by credit notes and the subsequent invoicing under GST as removing any subsisting liability in respect of the earlier service-tax invoices. Consequently, the refund claim relating to the service tax paid on the cancelled invoices could not be rejected. The Court directed refund of the amount paid with statutory interest as payable under the Central Excise Act, 1944. [Paras 3, 11, 12]

The cancellation of the service-tax invoices by credit notes and subsequent GST invoicing vindicates the appellant's entitlement to refund, and respondents are directed to refund the service tax with statutory interest.

Final Conclusion: Appeal allowed; substantial questions of law answered in favour of the assessee. Respondents directed to refund the service tax paid by the appellant with statutory interest under Section 11BB of the Central Excise Act, 1944 within three months from receipt of the order.

Confirmation of excise duty demand after departmental verification - interest payable on unpaid duty - penalty equal to duty under Section 11AC of the Central Excise Act, 1944 - penalty under Rule 26 of the Central Excise Rules, 2002 linked to confiscation - liability of corporate officer for penalty

Confirmation of excise duty demand after departmental verification - interest payable on unpaid duty - Extent of excise duty liability after verification of invoices and the balance amount payable with interest. - HELD THAT: - The departmental verification in respect of 62 invoices established that duty of Rs.20,91,667/- had been discharged, thereby negating the bulk of the show-cause demand. The Tribunal accepted the Range Superintendent's verification as fair and reliable and found that a balance duty of Rs.1,64,778/- remained unpaid. That balance was held to be payable by the appellants along with interest under Section 11B of the Central Excise Act, 1944. The appellant's unsubstantiated assertions of additional payment were rejected for want of evidence. The determinative finding is that the original demand is reduced to the unpaid balance identified in the verification report and that interest is leviable on that unpaid amount. [Paras 6]

Demand limited to the unpaid balance of Rs.1,64,778/-, payable with interest under Section 11B.

Penalty equal to duty under Section 11AC of the Central Excise Act, 1944 - Whether penalty equal to the unpaid duty is leviable under Section 11AC. - HELD THAT: - Having found that a balance duty remained unpaid, the Tribunal held that an equal amount of penalty under Section 11AC is leviable against the appellants. In view of the substantial collapse of the Department's larger allegation of widespread evasion, the Tribunal nonetheless confined penalty to the unpaid duty amount and declined to impose any additional penalties. The penalty under Section 11AC was therefore confirmed to the extent of the unpaid duty. [Paras 6, 7]

Penalty equal to the unpaid duty confirmed under Section 11AC.

Penalty under Rule 26 of the Central Excise Rules, 2002 linked to confiscation - liability of corporate officer for penalty - Sustainability of penalty under Rule 26 and imposition of penalty on the Managing Director. - HELD THAT: - The show-cause notice and adjudication did not seek confiscation of goods, nor did the adjudicating authority order confiscation. The Tribunal held that penalty under Rule 26 is inextricably linked to an order of confiscation and, absent confiscation, cannot be sustained. Consequently, the Tribunal found no basis to impose penalty under Rule 26 either on the company or on its Managing Director. The procedural infractions alleged were held to be adequately addressed by the penalty confirmed under Section 11AC, and no separate Rule 26 penalty or personal penalty on the Managing Director was upheld. [Paras 7]

Penalty under Rule 26 and any personal penalty on the Managing Director set aside; no confiscation was ordered.

Final Conclusion: The appeal was partly allowed: the excise demand was reduced to the unpaid balance identified by the Department, interest was held leviable on that balance, an equal penalty under Section 11AC was confirmed, and penalties under Rule 26 (and any personal penalty on the Managing Director) were not sustained.

Extended period for issuance of show cause notice under proviso to section 11AC - suppression of material facts or fraud - bona fide reliance on certificate issued by competent authority - eligibility for exemption under Notification No.108/95-CE - invocation of extended period impermissible in absence of mens rea to evade duty

Extended period for issuance of show cause notice under proviso to section 11AC - suppression of material facts or fraud - invocation of extended period impermissible in absence of mens rea to evade duty - Invocation of the extended period for issuance of show cause notice was not permissible. - HELD THAT: - The Tribunal found that the appellant had informed the jurisdictional authority by letter dated 14.02.2001 of its intention to avail exemption on the strength of a certificate furnished by the competent authority and commenced clearances from 20.02.2001, while filing RT-12 returns regularly. The department did not raise any objection at that time and initiated action only in June 2003. There was no finding of mistake, willful misstatement, suppression of material facts or fraudulent activity by the appellant with intent to evade duty. The Tribunal applied the principle that the proviso permitting extended limitation cannot be invoked unless there is material suppression or fraud warranting invocation of the extended period. In the factual matrix, and having regard to contemporaneous disclosure and reliance on the certificate, the invocation of the extended period was held to be improper. The Tribunal also noted relevant precedent where similar certificates were held to be invalid only later, and that such later developments cannot retroactively convert bona fide disclosure into suppression. [Paras 7, 8]

Extended period could not be invoked; extended limitation held inapplicable.

Bona fide reliance on certificate issued by competent authority - eligibility for exemption under Notification No.108/95-CE - Appellant entitled to benefit of exemption claim insofar as invocation of extended period failed; there was bona fide belief in certificate validity. - HELD THAT: - The Tribunal recorded that the certificate was issued by MSEB and counter-signed by the Principal Secretary (Energy), Government of Maharashtra, and that the appellant communicated the position to the departmental officer before making clearances. Given that the challenge to the validity of such certificates arose later (notably by Tribunal decisions in 2003), the appellant acted in bona fide belief that the exemption under Notification No.108/95-CE was available. In these circumstances, and because the department did not show suppression or intent to evade duty, the appellant could not be faulted for availing the exemption and the orders confirming demand could not be sustained on the ground of extended limitation. [Paras 1, 7, 8]

Appellant's bona fide reliance on the certificate disentitles the department from invoking extended limitation; consequent demand unsustainable.

Final Conclusion: Impugned orders confirming duty, interest and penalty by invoking the extended period are set aside; appeal allowed with consequential relief as per law.

Admissibility of Cenvat credit for input services - manpower supply service as an input service - GTA/inward freight service as an input service - security agency service as an input service - pest control service as an input service - precedential value of tribunal's earlier final order

Admissibility of Cenvat credit for input services - manpower supply service as an input service - GTA/inward freight service as an input service - security agency service as an input service - pest control service as an input service - precedential value of tribunal's earlier final order - Cenvat credit in respect of Manpower Supply Agency Service, GTA Inward Freight Service, Security Agency Service and Pest Control Service is admissible and the corresponding demand is not sustainable. - HELD THAT: - The Tribunal applied its earlier Final Order No. A/12463-12466/2021 dated 07.10.2021 in the appellant's own case for a different period, which had held that services of the nature involved are admissible as input services. That earlier order considered and relied upon multiple decisions recognising similar services as input services, including authorities recorded in the impugned order (for example, 2019 (2) TMI 1487 - CESTAT AHMEDABAD and 2019 (2) TMI 1488 - CESTAT AHMEDABAD among others). In view of the binding effect of the tribunal's prior final decision in the appellant's favour, and on the consolidated reasoning that such services are used for overall business activity and therefore qualify as input services, the present demands in respect of Manpower, Freight (GTA), Security and Pest Control services were held unsustainable and set aside. The order also notes that an item (Outdoor catering service) for which credit was allowed in the earlier order is not under appeal in the present proceedings and does not affect the present decision.

The demand in respect of Manpower Supply Agency Service, GTA Inward Freight Service, Security Agency Service and Pest Control Service is set aside and the appeal is allowed.

Final Conclusion: Following the Tribunal's earlier final order in the appellant's own case, Cenvat credit for the specified services is allowable as input services; the corresponding demands are quashed and the appeal is allowed.

Cenvat Credit - Input service - Supply of Tangible Goods service - use of service in manufacturing - allowability of credit where service directly used in activity of manufacture

Cenvat Credit - Input service - Supply of Tangible Goods service - use of service in manufacturing - Appellant entitled to Cenvat credit for service tax paid on Supply of Tangible Goods service (hiring of forklifts) used within factory for handling material forming part of the manufacturing process. - HELD THAT: - The Tribunal held that although "Supply of Tangible Goods service" is not specifically listed in the inclusion clause of the definition of Input service under the Cenvat Credit Rules, 2004, the main clause of the definition is wide enough to cover services that are directly used in the activity of manufacture. The hired forklift, used within the factory to handle material that is part of the manufacturing process, was held to be directly used for manufacturing activity and therefore falls within the ambit of an Input service eligible for Cenvat Credit. The Tribunal relied on earlier decisions permitting credit in similar circumstances and applied that reasoning to allow credit in the present case. [Paras 2, 4, 5]

Impugned order set aside and appeal allowed; Cenvat credit on service tax paid for hiring forklifts permitted.

Final Conclusion: Credit for service tax paid on hiring of forklifts for handling material within the factory, being directly used in the manufacture of final product, is allowable as Cenvat credit; impugned order set aside and appeal allowed.

Purchase suppression - onus of proof - loan transaction versus sale - reopening of assessment under Section 12(8) of the Orissa Sales Tax Act, 1947 - enhancement of gross taxable turnover - penalty for suppression

Purchase suppression - onus of proof - loan transaction versus sale - enhancement of gross taxable turnover - penalty for suppression - The authorities were not justified in treating the alleged loan transaction as suppression of purchases and in enhancing turnover and imposing penalty on that basis. - HELD THAT: - The Assessee explained that the sum received from Mr. Sikaria represented recovery of a personal loan (principal plus interest) and placed documentary material including a letter and the account statement from Mr. Sikaria to substantiate the contention. Having denied the factum of purchases, the initial onus lay on the Revenue to disclose evidence disproving the Assessee's case; an assessee cannot be expected to adduce positive proof of a negative fact. The Tribunal recorded and limited its enhancement to the alleged suppression amount, but the authorities below proceeded on a presumption that the transaction was purchase suppression without discharging the onus to contradict the loan explanation. In the absence of material by the Department to show that the transaction in truth mimicked a purchase, the addition and the penalty were unsustainable and the impugned orders had to be set aside. [Paras 11, 12, 13]

The question is answered in favour of the Assessee; the additions and penalty imposed on the basis that the loan was suppression are set aside and the impugned orders are quashed.

Final Conclusion: Revision allowed: the assessment reopening and consequent enhancement and penalty based on the finding of purchase suppression in respect of the alleged loan transaction are quashed; no order as to costs.

Best judgment assessment - enhancement of taxable turnover on account of suppression - reasonableness and arbitrari ness standard in interference with administrative discretion - cross appeal by the Department restoring assessing officer's order - consideration of limited period of business/new venture in assessment

Best judgment assessment - enhancement of taxable turnover on account of suppression - consideration of limited period of business/new venture in assessment - reasonableness and arbitrariness standard in interference with administrative discretion - Validity of the Tribunal's order setting aside the ACST's reduction of enhanced taxable turnover and restoring the STO's best-judgment enhancement. - HELD THAT: - The STO completed assessment on a best-judgment basis and enhanced taxable turnover substantially (nearly five times the detected suppression) for the year 2004-05. The ACST, on appeal, reduced the enhancement to three times the actual detected suppression, having regard to the material fact that the dealer had conducted business for only four months in the year and that it was a new venture. The Tribunal, in departmental cross-appeal, restored the STO's original enhancement. The High Court examined whether the ACST's exercise of discretion in moderating the STO's estimate was arbitrary or unreasonable. The Court held that consideration of the short trading period and the possibility that the assessee, being a new venture, may not have been fully aware of legal requirements were valid and relevant factors. In that view, the ACST's decision to limit enhancement to three times the detected suppression was a supportable exercise of discretion and did not merit interference. Consequently the Tribunal's order restoring the STO's higher enhancement was set aside and the ACST's order was restored. [Paras 6, 7, 9, 10, 11]

Tribunal's restoration of the STO's enhancement set aside; ACST's order limiting enhancement to three times the detected suppression restored.

Final Conclusion: The revision petition is allowed: the High Court set aside the Tribunal's order and restored the ACST's order which limited the enhancement to three times the detected suppression for the year 2004-05, holding the ACST's exercise of discretion reasonable in view of the assessee's limited period of business.

Enhancement of assessment without compliance with Rule 50(3) of the Orissa Sales Tax Rules, 1947 - non-issuance of notice for cross-objection under Rule 57 of the Orissa Sales Tax Rules, 1947 - reliability of sampling and eye-estimation in stock verification - stock deficiency alone not sufficient to infer suppressed sales; necessity of proof that deficient stock was sold - lawful nexus between detected shortage and determination of taxable turnover

Enhancement of assessment without compliance with Rule 50(3) of the Orissa Sales Tax Rules, 1947 - Legality of the Tribunal enhancing the assessment without issuing notice under Rule 50(3) of the Orissa Sales Tax Rules, 1947. - HELD THAT: - The Tribunal directed enhancement of the assessment without following the procedure mandated by Rule 50(3). On a bare reading of the impugned order the Court found that the basic requirements of natural justice and the relevant rule were not followed. Reliance was placed on this Court's earlier treatment of similar non-compliance where enhanced assessment was set aside and remitted for fresh consideration. The non-compliance vitiated the Tribunal's enhancement and weighed materially in favour of the petitioner. [Paras 7, 11, 12]

Tribunal's enhancement made without compliance of Rule 50(3) is unsustainable; the impugned order is set aside and the ACST order is restored.

Non-issuance of notice for cross-objection under Rule 57 of the Orissa Sales Tax Rules, 1947 - Validity of disposal of the second appeal by the Tribunal without service of notice inviting cross-objection under Rule 57 of the Rules read with Section 23(3)(b) of the OST Act. - HELD THAT: - The Court observed that the Tribunal had an obligation to issue notice for filing cross-objection as envisaged by Rule 57 and Section 23(3)(b). While the petitioner could have itself filed a cross-appeal if aggrieved, the procedural requirement to afford notice for cross-objection was not complied with and constituted an irregularity in the appellate proceedings. [Paras 8, 12]

Disposal without compliance of Rule 57 was procedurally unjustified; this procedural lapse supports interference with the Tribunal's order.

Reliability of sampling and eye-estimation in stock verification - lawful nexus between detected shortage and determination of taxable turnover - Whether the Tribunal could lawfully rely on stock verification made by sampling/eye-estimation (each bag taken at 75 Kg) to enhance taxable turnover. - HELD THAT: - The inspecting officers used sampling and eye-estimation, recording each bag at 75 Kg though earlier vigilance records had taken samples at 64 Kg per bag. The ACST concluded that sampling by eye-estimation without physical weighment was not proper and that discrepancies could arise from driage and handling. The Court endorsed the view that eye-estimation and sample-based uniform pegging of bag weight, without confrontation or physical weighment, is an improper basis for fixation of weight and consequent enhancement. The Tribunal failed to give due weight to the ACST's findings on the unreliability of the method employed by the vigilance unit. [Paras 6, 9, 10]

Enhancement based on sampling/eye-estimation of bag weight lacked a proper factual and lawful nexus and cannot sustain the Tribunal's enhancement.

Stock deficiency alone not sufficient to infer suppressed sales; necessity of proof that deficient stock was sold - Whether mere detection of stock deficiency can be the basis for enhancement of turnover in absence of material showing that the deficient stock was sold. - HELD THAT: - The Court followed precedents holding that shortage of stock simpliciter cannot support enhancement of turnover unless the department adduces evidence that the missing stock was sold. In the present case there was no material to show that the alleged shortfall was actually sold by the assessee. Given the absence of such evidence and the further concerns about the method of stock measurement, the Tribunal's conclusion that the shortage amounted to suppressed sales was not sustainable. [Paras 10, 11]

Without proof that the deficient stock was sold, mere stock deficiency is insufficient to enhance taxable turnover; the Tribunal's enhancement on that basis is unsustainable.

Final Conclusion: The revision petition is allowed. The Tribunal's order enhancing assessment is set aside-its enhancement was vitiated by non-compliance with Rule 50(3) and Rule 57, reliance on unreliable sampling/eye-estimation, and absence of any material showing that deficient stock had been sold; the ACST order is restored. No order as to costs.

Dismissal of complaint under Section 256 Cr.P.C. - Requirement of complainant's personal attendance before taking complaint on file - Magistrate's discretionary power under Section 256 Cr.P.C. - Illegality of pre-cognizance dismissal - Inherent powers of High Court under Section 482 Cr.P.C. to set aside illegal orders

Illegality of pre-cognizance dismissal - Dismissal of complaint under Section 256 Cr.P.C. - The learned Magistrate's dismissal of the private complaint invoking Section 256 Cr.P.C. before the complaint was taken on file and before issuance of summons was illegal and liable to be set aside. - HELD THAT: - Section 256 Cr.P.C. contemplates acquittal of the accused where summons have been issued and, on the day appointed for the appearance of the accused (or any adjourned date), the complainant does not appear; the provision presupposes that the complaint has been taken on file and process has been issued. The power under Section 256 is exercisable judicially and fairly, with the court considering whether to adjourn or whether personal attendance of the complainant is unnecessary. The Trial Court in the present case dismissed the complaint while it remained unnumbered and prior to taking cognizance or issuing process to the accused, thereby misconstruing the scope of Section 256 and failing to exercise its discretion correctly. Reliance was placed on earlier authorities which emphasize that dismissal under Section 256 is tied to the summons-procedure and cannot validly be applied at the pre-cognizance stage.

Impugned dismissal under Section 256 Cr.P.C. passed at pre-cognizance stage set aside as illegal.

Requirement of complainant's personal attendance before taking complaint on file - Magistrate's discretionary power under Section 256 Cr.P.C. - For a private complaint under Section 138 of the Negotiable Instruments Act the personal attendance and oath of the complainant is ordinarily necessary before the complaint is taken on file, and the Magistrate must consider whether such attendance is essential before dismissing under Section 256. - HELD THAT: - A private complainant (not a public servant) must normally be examined on oath before the complaint is taken on file; Section 256's safeguard is designed to protect accused persons from dilatory tactics by complainants but also requires judicial assessment whether to adjourn or to dispense with personal attendance. The High Court noted that absence of the complainant during the pandemic did not relieve the Magistrate of the duty to consider adjournment or other measures, and that the Trial Court did not show that personal attendance was unnecessary or that it had lawfully issued process and appointed a date under the summons procedure prior to dismissal.

Complainant's personal attendance and examination was required before taking the complaint on file; dismissal without such process was improper.

Inherent powers of High Court under Section 482 Cr.P.C. to set aside illegal orders - The High Court, invoking its inherent powers under Section 482 Cr.P.C., was justified in setting aside the Trial Court's pre-cognizance dismissal and directing that the complaint be taken on file. - HELD THAT: - An appeal ordinarily lies against an order under Section 256, but where an order is illegal because passed prior to cognizance and without following the procedure envisaged by law, the High Court may use its inherent powers to set aside such order. The Court found the Trial Court had not exercised discretion judicially and fairly and therefore set aside the impugned order and directed remedial steps rather than remitting by appeal.

Impugned order set aside under Section 482 Cr.P.C.; directions issued for presentation and recording of sworn statement.

Remand for recording sworn statement and taking complaint on file - The matter was remitted to the Trial Court for presentation of the complainant, recording of his sworn statement and taking the complaint on file within a stipulated period. - HELD THAT: - Having set aside the pre-cognizance dismissal, the High Court directed that the complainant present before the Trial Court within four weeks of receipt of the order; upon appearance the Magistrate was directed to record the complainant's sworn statement and thereafter take the complaint on file, thereby permitting the statutory summons-procedure to be followed afresh. This remand was for the limited purpose of completing the pre-cognizance formalities and is not a final adjudication on merits.

Complainant to appear within four weeks; court to record sworn statement and take complaint on file for further proceedings.

Final Conclusion: The High Court set aside the Magistrate's dismissal of the unnumbered complaint as an illegal pre-cognizance order under Section 256 Cr.P.C., exercised its inherent jurisdiction under Section 482 Cr.P.C. to quash that order, and directed the complainant to appear within four weeks so that the Magistrate may record his sworn statement and take the complaint on file for further proceedings.