TaxTMI Updates e-Newsletter
Jun 25,2022

Stay of order - Natural justice - Reversal of input tax credit by ex-parte order - Verification of supplier registration and tax payment on GST portal - Interim deposit as condition for stay

Stay of order - Interim deposit as condition for stay - Whether the impugned order dated 31.3.2022 passed by the Additional Commissioner (Appeals) should be stayed pending further consideration - HELD THAT: - The Court, on hearing parties and perusal of record, noted prima facie infirmities in the appellate order and directed an interim arrangement. Having found that the petitioner had produced documents indicating payment of SGST and CGST and that the petitioner may not have been afforded adequate opportunity to rebut the demand (the proprietor being bedridden), the Court considered it appropriate to preserve the status quo while the matter is adjudicated. The stay is granted on the condition of an interim deposit by the petitioner, balancing the public interest in revenue recovery with the petitioner's prima facie case and the need for a fair adjudication.

Order dated 31.3.2022 is stayed subject to the petitioner depositing 20% of the total disputed amount within two weeks of production of certified copy of this order.

Natural justice - Verification of supplier registration and tax payment on GST portal - Reversal of input tax credit by ex-parte order - Whether the factual contentions regarding the supplier's registration and payment of tax require fresh consideration by the authority - HELD THAT: - The Court observed prima facie evidence (annexed to the petition) indicating that the supplier was registered on the GST portal and that the petitioner had paid SGST and CGST as per the invoices. It also noted that the appellate order proceeded without affording adequate opportunity to the petitioner to be heard. Given these circumstances, the Court directed the respondents to file a counter affidavit and permitted the petitioner to file a rejoinder, thereby requiring fresh consideration of the factual and legal contentions by the authority rather than deciding the matter finally at this interim stage.

Respondents directed to file counter affidavit within four weeks and petitioner to file rejoinder within two weeks; matter listed for further hearing in the week commencing 8th August 2022 for fresh consideration.

Final Conclusion: The impugned appellate order dated 31.3.2022 is stayed on furnishing 20% of the disputed amount; respondents to file counter affidavit within four weeks and the petitioner rejoinder within two weeks, with the matter listed for hearing in the week commencing 8th August 2022 for fresh consideration of the issues including verification of supplier registration and tax payments.

Bail - conditions for grant of bail - wrongful availment of Input Tax Credit - supply without issuance of invoice - compoundability of offence - presumption of innocence - economic offences and bail principles - deposit as condition for bail

Bail - conditions for grant of bail - deposit as condition for bail - Whether the applicant should be released on bail and on what terms and conditions. - HELD THAT: - The Court examined the nature and magnitude of the allegations of wrongful availment of Input Tax Credit and supplies without invoices, the maximum sentence applicable (noting offences under the Act are generally bailable and non-cognizable except Section 132(5)), the period of pre-trial detention (since 27.10.2021), grant of bail to co-accused by a co-ordinate Bench, and the contention that the offence is compoundable. Balancing these factors, the Court concluded that bail was appropriate but required stringent conditions to protect the public interest and ensure compliance. The Court therefore ordered release on furnishing a personal bond with surety, mandatory appearance at trial, full disclosure of movable and immovable assets by affidavit, prohibition on alienation of property without court permission, and a directed deposit of a specified sum under protest or admission to be adjusted in accordance with law. The Court warned that non-compliance with conditions would result in automatic cancellation of the bail order.

Bail allowed subject to execution of personal bond with one surety, deposit of Rs.70 lakhs under protest or admission within 45 days, disclosure of assets within 45 days, prohibition on alienation of property, and other standard conditions; failure to comply will automatically cancel bail.

Final Conclusion: Bail application allowed; the applicant is directed to be released on the stated conditions including a personal bond with surety, deposit of Rs.70 lakhs under protest or admission to the Principal Commissioner, CGST, Raipur within 45 days, and disclosure of assets, failing which the bail granted shall stand cancelled automatically.

Input tax credit on self-assessment - reliance on Form GSTR-2A as evidence of accountal by supplier - reconciliation between Form GSTR-2A and Form GSTR-3B - supplier's obligation to file and amend Form GSTR-1 and to accept or reject GSTR-1A - automatic population of credit and system-driven correction mechanism - non-binding nature of Board circulars when inconsistent with statutory provisions - alternative remedy under Section 107 of the CGST Act

Input tax credit on self-assessment - reliance on Form GSTR-2A as evidence of accountal by supplier - reconciliation between Form GSTR-2A and Form GSTR-3B - supplier's obligation to file and amend Form GSTR-1 and to accept or reject GSTR-1A - Validity of demand for reversal of ITC where suppliers' Form GSTR-1 entries do not match the ITC claimed in the recipient's Form GSTR-3B/GSTR-2A - HELD THAT: - The Court held that the GST statutory and rule framework is a complete code providing for system-driven reporting and reconciliation. Suppliers are required to file Form GSTR-1 and the details are auto-populated in recipients' Form GSTR-2A; recipients must reconcile their claims in Form GSTR-3B with the information in Form GSTR-2A and, where discrepancies arise, file modifications in Form GSTR-2 (via GSTR-1A) for supplier action. The supplier may accept or reject such modifications and amend GSTR-1 accordingly; only upon acceptance will the recipient's credit be finally reflected. Where the supplier does not correct or accept the information in GSTR-1, availing ITC solely on the basis of invoices in the recipient's returns is insufficient and the credit so availed is liable to be reversed. System glitches are to be rectified following prescribed procedures and CBIC guidelines, but those circulars do not displace the statutory scheme governing entitlement to ITC. [Paras 25, 26, 27, 28, 29]

The demand for reversal of ITC was held sustainable insofar as the supplier had not reflected/accepted the invoices in Form GSTR-1 and reconciliation procedures were not completed; ITC availed in GSTR-3B without necessary adjustment in GSTR-1/GSTR-2A is liable to be paid back.

Alternative remedy under Section 107 of the CGST Act - non-binding nature of Board circulars when inconsistent with statutory provisions - Maintainability of writ petitions challenging assessment orders where a statutory appellate remedy exists - HELD THAT: - The Court recorded that although various circulars and press releases were relied upon by the petitioner, such clarifications cannot override or substitute the statutory scheme and are not binding on the Court for altering entitlement at the threshold. More importantly, the petitioner had an alternative remedy in the form of an appeal before the Appellate Commissioner under Section 107 of the CGST Act. The recognized exceptions to the rule of alternative remedy were not attracted on the facts. In view of the availability of the statutory appellate remedy, the writ petitions were not maintainable and ought to be dismissed, with liberty granted to the petitioner to pursue the specified statutory appeal within a stipulated period. [Paras 30, 31, 32, 33, 34]

Writ petitions dismissed as not maintainable due to existence of the appellate remedy under Section 107; petitioner granted liberty to file the statutory appeal within thirty days.

Final Conclusion: Writ petitions challenging the assessment orders for Assessment Years 2017-18 and 2018-19 are dismissed on the ground of available statutory remedy under Section 107 of the CGST Act; the Court upheld that ITC availed in Form GSTR-3B must conform to the statutory reconciliation mechanism with suppliers' GSTR-1/GSTR-2A and may be reversed where the supplier has not reflected or accepted the invoices, and liberty was granted to the petitioner to file the prescribed appeal within thirty days.

Passing on benefit of tax rate reduction by way of commensurate reduction in prices - Determination and quantification of profiteering - Responsibility of supplier notwithstanding distributor revenue share - Penalty for profiteering under Section 171(3A) of the CGST Act - Deposit of unidentifiable recipient compensation into Central and State Consumer Welfare Funds - Reinvestigation/remand for verification of Exception Category admissions

Passing on benefit of tax rate reduction by way of commensurate reduction in prices - Determination and quantification of profiteering - Deposit of unidentifiable recipient compensation into Central and State Consumer Welfare Funds - Whether the Respondent failed to pass on the benefit of GST rate reduction in respect of 'Regular Category' admission tickets and the quantum, relief and directions consequential thereto. - HELD THAT: - The Authority accepted that GST rates for admission to cinematograph films were reduced w.e.f. 01.01.2019 and applied the statutory requirement that any reduction in tax rate must be passed on by way of commensurate reduction in prices. On the material before it, including the Respondent's own data and price lists, the Authority found that the Respondent maintained higher base prices post-rate reduction and did not effect the requisite commensurate reduction in selling prices for the 'Regular Category' (Recliner and Regular seats). Having established profiteering, the Authority quantified the net higher realisation for the investigation period and determined the profiteered amount in respect of the 'Regular Category' as Rs. 12,83,999/-, which included both the profiteered amount and GST on that amount. The Authority directed the Respondent to reduce ticket prices for the regular category, refund specified amounts to the applicants with interest, deposit the portion attributable to unidentified recipients equally into the Central and Telangana State Consumer Welfare Funds with interest, and to deposit the profiteered amount with interest within three months, failing which recovery proceedings would follow. The Authority also treated refund of GST as a separate statutory matter to be dealt with under the CGST Act provisions on refund. [Paras 22, 23, 24]

Profiteering established for 'Regular Category' for 01.01.2019 to 30.04.2020; profiteered amount fixed at Rs. 12,83,999/- with directions to reduce prices, refund applicants with interest, deposit portion for unidentified recipients into Central and State CWFs with interest, and recover if not deposited within three months.

Reinvestigation/remand for verification of Exception Category admissions - Responsibility of supplier notwithstanding distributor revenue share - Whether allegations of profiteering in respect of the 'Exception Category' admission tickets were finally adjudicated or required fresh investigation. - HELD THAT: - The Authority reviewed the Respondent's claim that 'Exception Category' ticket rates were fixed after 01.01.2019 (when GST was already 18%) and therefore not liable for profiteering. The record, however, did not contain verifiable pre-01.01.2019 documents establishing the non-existence of the category or that the exceptional rates were fixed only after the rate reduction. Given the absence of requisite documentary evidence on the file to verify the temporal origin and basis of the exception rates, the Authority did not decide the matter on merits and directed that the DGAP reinvestigate the 'Exception Category' issue, collect necessary information/documents from the Respondent and examine whether those rates were fixed pre- or post-01.01.2019 and whether profiteering arose. [Paras 17, 27]

The question of profiteering in respect of the 'Exception Category' is remanded to the DGAP for fresh investigation and verification of documents; no final finding on profiteering for that category was recorded.

Penalty for profiteering under Section 171(3A) of the CGST Act - Whether a penalty proceedings should be initiated against the Respondent for profiteering for the period when Section 171(3A) is in force. - HELD THAT: - The Authority noted that Section 171(3A) (penalty for profiteering) was inserted with effect from 01.01.2020. The investigation covers 01.01.2019 to 30.04.2020; accordingly, the Authority held the Respondent liable for penalty for the portion of profiteering falling within 01.01.2020 to 30.04.2020 and directed that a notice be issued asking the Respondent to explain why penalty under Section 171(3A) read with Rule 133(3)(d) should not be imposed for the profiteered amount collected during that period. [Paras 21, 25]

Notice for imposition of penalty to be issued in respect of profiteered amount collected during 01.01.2020 to 30.04.2020; penalty proceedings not finally disposed of in this order.

Final Conclusion: The Authority held that the Respondent resorted to profiteering in respect of 'Regular Category' admission tickets for the period 01.01.2019 to 30.04.2020 and fixed the profiteered amount at Rs. 12,83,999/-, directed refunds/deposits with interest and reduction of prices; it remanded the issues relating to the 'Exception Category' for fresh investigation by the DGAP; and directed issuance of notice for penalty in respect of profiteered amount falling within 01.01.2020 to 30.04.2020.

Profiteering for failure to pass on benefit of input tax credit - Contravention of Section 171 of the CGST Act, 2017 - Commensurate reduction in price on account of additional ITC - Allocation of input tax credit proportionate to saleable/sold area (including commercial units) - Non retroactivity of penal provision inserted w.e.f. 01.01.2020

Profiteering for failure to pass on benefit of input tax credit - Commensurate reduction in price on account of additional ITC - Allocation of input tax credit proportionate to saleable/sold area (including commercial units) - The Respondent has profiteered by not passing on the additional input tax credit benefit accrued post GST to homebuyers and the amount of profiteering is determined. - HELD THAT: - The Authority accepted the DGAP's recalculation which included commercial shop area in the total saleable area and allocated CENVAT/ITC proportionately to sold area. The comparative ratios of ITC to turnover in the pre GST and post GST periods showed an increase of 3.07% post GST. That additional ITC ought to have resulted in a commensurate reduction in base and cum tax prices under Section 171. Applying the recalibrated ratio to the receipts from homebuyers for the period up to the Occupancy Certificate (08.08.2019), the Authority found that the Respondent had not fully passed on the benefit and therefore realized an excess amount. Although the Respondent had submitted that he had suo moto passed on substantial benefits to buyers, the Authority found on the materials (including Annexure A and tabled computations) that the total profiteered amount to be returned to recipients is as determined in the DGAP report. [Paras 2, 4, 6, 9, 11]

Respondent has profiteered; total amount of profiteering to be returned to the homebuyers is Rs. 2,62,56,652/-, to be passed on/returned with interest at 18% from the date of profiteering until payment.

Contravention of Section 171 of the CGST Act, 2017 - Non retroactivity of penal provision inserted w.e.f. 01.01.2020 - Whether penalty under the provision inserted w.e.f. 01.01.2020 can be imposed for the period 01.07.2017 to 08.08.2019. - HELD THAT: - The Authority found that the Respondent's conduct amounted to contravention of Section 171(1) by not passing on the additional ITC benefit for the relevant period. However, the penal provision in Section 171(3A) was inserted into the CGST Act with effect from 01.01.2020. The contravention occurred between 01.07.2017 and 08.08.2019, when that penal provision was not in force. Consequently, the Authority held that penalty under Section 171(3A) cannot be imposed retrospectively for the earlier period and no notice for imposition of that penalty is required. [Paras 12]

Contravention under Section 171(1) established for the period 01.07.2017 to 08.08.2019; penalty under Section 171(3A) not imposable retrospectively and therefore not issued.

Computation and distribution of profiteered amount - Role of jurisdictional CGST/SGST Commissioner in compliance - Mechanism for compliance: reduction of prices/return of profiteered amount, interest, publication and reporting obligations. - HELD THAT: - The Authority ordered the Respondent to reduce prices/return the determined profiteered amount to each identified recipient as set out in Annexure A, with interest at 18% from the date the amount was profiteered until actual payment. The jurisdictional CGST/SGST Commissioner was directed to ensure compliance, including publication of an advertisement in local newspapers with specified details so that affected buyers may claim the benefit; the Commissioner is also to submit a compliance report to the Authority and DGAP within four months. [Paras 11, 13, 14]

Respondent directed to pass on/return the profiteered amount with interest to identified homebuyers; jurisdictional Commissioner to ensure compliance, publicize the order and report compliance within four months.

Final Conclusion: The Authority accepted the DGAP's recalculated investigation and held that M/s Suncity Projects Pvt. Ltd. contravened Section 171(1) by not passing on additional ITC benefit for the period 01.07.2017 to 08.08.2019; the profiteered amount of Rs. 2,62,56,652/- (inclusive of GST) must be returned to identified homebuyers with interest at 18%, penalty under Section 171(3A) cannot be imposed retrospectively and is therefore not issued, and the jurisdictional Commissioner is directed to ensure compliance and report within four months.

Requirement of personal hearing where books of account are to be examined - compliance with CBDT instructions for e proceedings and show cause procedure - notice under Section 143(2) as basis for show cause proceedings - quashing of assessment for procedural infraction and remand for fresh adjudication

Requirement of personal hearing where books of account are to be examined - principles of natural justice - Whether the assessment order dated 18.02.2021 is vitiated for want of personal hearing when books of account were examined during survey - HELD THAT: - The Court found that survey under Section 133A was conducted and materials from the petitioner's books were examined, and the department proceeded to treat book figures as basis for proposed additions. Instruction No.3 of 2018 (CBDT) prescribes that where books of account have to be examined, personal hearing is required in e proceedings. Although the petitioner did not expressly seek a personal hearing in its reply dated 12.02.2021, the Court held that where examination of books is involved a personal hearing is mandatory to satisfy principles of natural justice. The failure to provide such a hearing constituted a procedural infraction rendering the assessment order infirm. [Paras 20, 21, 22, 24, 25]

The assessment order was quashed on grounds of procedural infraction for lack of mandatory personal hearing where books were examined.

Notice under Section 143(2) as basis for show cause proceedings - treatment of subsequent notice as show cause notice - Whether the notice dated 06.02.2021 operated as the show cause notice for completing the assessment - HELD THAT: - The Court examined the sequence of notices: an earlier Section 143(2) notice dated 26.09.2019 (to which the assessee did not respond) and a subsequent notice dated 06.02.2021 which articulated the basis for proposed assessment and called for reply by 12.02.2021. The Court held that the 06.02.2021 communication constituted the show cause notice for completing the assessment, and noted the petitioner filed a detailed reply on 12.02.2021. Nevertheless, the adequacy of procedure in issuing and disposing of that show cause notice was open to challenge given the need for personal hearing when books were examined. [Paras 20, 21, 24]

The notice dated 06.02.2021 is to be treated as the show cause notice for purposes of completing the assessment, subject to the requirement of providing personal hearing as mandated.

Quashing of assessment for procedural infraction and remand for fresh adjudication - directions for e proceedings, filing of replies and personal hearing via video conferencing - Remedial consequence and directions on remand following quashing of the assessment order - HELD THAT: - Having found procedural non compliance, the Court quashed the impugned assessment order and remitted the matter to the Assessing Officer for fresh consideration. The Court directed that the quashed order shall be treated as a show cause notice; the petitioner may file objections/reply within thirty days of receipt of the order; relevant books of account entries are to be uploaded; proceedings shall be conducted through video conferencing; and the Department must facilitate e filing and personal hearing on the web portal. A time frame of preferably three months from receipt of the order was prescribed for passing an appropriate order. [Paras 24, 25]

Assessment order quashed and matter remitted for fresh adjudication with directions to afford opportunity of personal hearing through e proceedings and to permit filing/uploading of supporting entries within prescribed time.

Final Conclusion: The writ petition is allowed: the assessment order dated 18.02.2021 for Assessment Year 2018-2019 is quashed for procedural infraction (failure to provide mandatory personal hearing where books were examined); the order is treated as a show cause notice and the matter is remitted to the Assessing Officer for fresh disposal in e proceedings with opportunity to file/upload relevant accounts and to seek personal hearing by video conferencing within the timelines directed.

Limitation period exclusion due to COVID-19 dispensation by the Supreme Court - condonation of delay in filing appeals pursuant to Supreme Court directions - application of maximum marginal rate to an Association of Persons - taxation of a public charitable trust as representative assessee and rate applicable - application of individual slab rates after allowing basic exemption to trusts where beneficiaries have no share - relevance of CBDT Circular No. 320 (11-01-1982) on rate of tax for societies, clubs and trusts

Limitation period exclusion due to COVID-19 dispensation by the Supreme Court - condonation of delay in filing appeals pursuant to Supreme Court directions - Condonation of delay in filing the appeals by the assessee under the extension of limitation granted by the Supreme Court. - HELD THAT: - The Tribunal noted that the appeals were filed after the original limitation period and considered the Supreme Court's suo motu directions excluding the period from 15-3-2020 to 2-10-2021 in computing limitation and providing a further rule for a 90-day period from 3-10-2021. Applying those directions to the facts, the Tribunal held that the assessee's appeals fell within the extended/excluded period and therefore condoned the delay and admitted the appeals for adjudication on merits. [Paras 4]

Delay in filing the appeals is condoned and the appeals are admitted for hearing.

Application of maximum marginal rate to an Association of Persons - taxation of a public charitable trust as representative assessee and rate applicable - application of individual slab rates after allowing basic exemption to trusts where beneficiaries have no share - relevance of CBDT Circular No. 320 (11-01-1982) on rate of tax for societies, clubs and trusts - Whether the income of the assessee trust should be taxed at the maximum marginal rate as an AOP or at the slab rates applicable to an individual after allowing the basic exemption where beneficiaries are not entitled to any share. - HELD THAT: - The Tribunal examined the factual position that the assessee is a public charitable trust (non-discretionary) whose trustees/members are not entitled to any share in the income. Relying on a coordinate-bench decision involving identical facts and on the relevant CBDT circular, the Tribunal accepted that where members/trustees have no entitlement to income, the provisions attracting maximum marginal rate do not apply. Consequently, the trust's income below taxable limit must be taxed by applying the rate ordinarily applicable to the total income of an individual, allowing the basic exemption and slab rates rather than the maximum marginal rate. The Revenue did not place any binding contrary authority or demonstrate distinguishing facts to displace the coordinate-bench view; accordingly the Tribunal followed that decision. [Paras 12, 13, 15]

The appeals are allowed on merits: the trust's income is to be taxed by applying individual slab rates after allowing the basic exemption, and not at the maximum marginal rate.

Final Conclusion: The Tribunal condoned the delay in filing the appeals pursuant to the Supreme Court's exclusion of limitation during the COVID-19 period, and on merits allowed both appeals for Assessment Years 2016-17 and 2017-18, holding that the trust should be taxed at individual slab rates after allowing the basic exemption rather than at the maximum marginal rate.

Processing under section 143(1)(a) - debatable issue - deduction under section 11(1) - accumulation under section 11(2)

Processing under section 143(1)(a) - debatable issue - deduction under section 11(1) - Reduction of claim for deduction under section 11(1) made by intimation under section 143(1)(a). - HELD THAT: - The Tribunal held that where the correctness of a deduction claimed under section 11(1) raises a debatable question-one on which more than one opinion is possible-no prima facie adjustment disallowing that deduction ought to be made in the ex parte process of intimation under section 143(1)(a). The Coordinate Bench's decision in the assessee's own case for the immediately preceding assessment year, which treated the issues as debatable and deleted similar adjustments made under section 143(1), was followed. Applying that principle to the present assessment year, the Tribunal concluded that the reduction of the claimed deduction in the intimation could not be sustained in the ex parte proceedings.

Deduction disallowance made in the intimation under section 143(1)(a) was deleted; appeal allowed in respect of the deduction under section 11(1).

Processing under section 143(1)(a) - debatable issue - accumulation under section 11(2) - Disallowance of amount claimed to be accumulated under section 11(2) made by intimation under section 143(1)(a). - HELD THAT: - Following the same reasoning adopted for the deduction issue, the Tribunal held that the question whether the claimed accumulation under section 11(2) was allowable was debatable and therefore not amenable to a prima facie disallowance in an ex parte intimation proceedings under section 143(1)(a). The Tribunal respectfully followed the Coordinate Bench decision in the assessee's own case for AY 2015-16, which had deleted similar disallowances, and applied that principle to delete the accumulation disallowance for AY 2016-17.

Disallowance of accumulation under section 11(2) made in the intimation under section 143(1)(a) was deleted; appeal allowed in respect of the accumulation.

Final Conclusion: The Tribunal allowed the assessee's appeal for AY 2016-17, deleting both disallowances made by way of intimation under section 143(1)(a) on the ground that the matters were debatable and could not be conclusively adjusted in ex parte processing.

Re-opening of assessment under Section 148 of the Income Tax Act, 1961 - binding effect of an approved resolution plan under Section 31 of the Insolvency and Bankruptcy Code, 2016 - extinguishment of pre-approval claims by an approved resolution plan - moratorium under the Insolvency and Bankruptcy Code and its impact on pending or threatened proceedings - crystallisation of tax claim for purposes of being extinguished by the resolution plan - inconsistency between the Insolvency and Bankruptcy Code and other laws in force

Re-opening of assessment under Section 148 of the Income Tax Act, 1961 - binding effect of an approved resolution plan under Section 31 of the Insolvency and Bankruptcy Code, 2016 - crystallisation of tax claim for purposes of being extinguished by the resolution plan - moratorium under the Insolvency and Bankruptcy Code and its impact on pending or threatened proceedings - Whether proceedings under Section 148 of the Income Tax Act, 1961 were ousted by the petitioners' voluntary CIRP and subsequent sanction of a resolution plan by the NCLT, such that tax reassessment for the relevant assessment years could not be proceeded with by the Income Tax Department. - HELD THAT: - The Court examined the effect of a resolution plan approved by the NCLT in the light of the Supreme Court decisions relied upon by the petitioners and the factual position that notices under Section 148 were issued in March 2018 prior to the approval and without tax dues being contemplated in the resolution plan. Although authoritative statements in Ghanashyam Mishra & Sons recognise that once a resolution plan is approved claims not part of the plan stand extinguished, the Court found that the petitioners' resolution plan did not contemplate the Income Tax Department's claims and the proceedings under Section 148 had not crystallised at the stage the plan was submitted. The petitioners, having initiated CIRP shortly before the re-opening, were under an obligation to ensure that the Income Tax Department was given notice and appropriate concessions were obtained in the resolution plan. The NCLT did not consider or extinguish the tax claims when approving the plan. The Court further held that the IBC cannot be interpreted so as to be inconsistent with other laws in force; consequently the sanctioned resolution plan cannot be construed to impinge on the statutory powers of the Income Tax Department to reopen assessments under Section 148 read with Sections 143(3) and 147. On these conclusions the Court held that the Income Tax Department was not precluded from reopening the assessments and passing fresh assessment orders. [Paras 34, 35, 36, 37, 38]

Proceedings under Section 148 were not ousted by the petitioners' CIRP or the approved resolution plan; the writ petitions are dismissed and the assessments passed pursuant to the interim order are to be furnished to the petitioners.

Final Conclusion: The Writ Petitions are dismissed. The respondent shall furnish the Assessment Orders passed pursuant to the interim order to the respective petitioners within thirty days; petitioners are granted liberty to prefer appeals before the Commissioner (Appeals) within thirty days from communication of the Assessment Orders.

Extinguishment of claims under approved resolution plan - Overriding effect of the Insolvency and Bankruptcy Code over Income tax proceedings - Binding nature of approved resolution plan under Section 31 of the IBC - Claims not part of the resolution plan stand extinguished

Extinguishment of claims under approved resolution plan - Overriding effect of the Insolvency and Bankruptcy Code over Income tax proceedings - Binding nature of approved resolution plan under Section 31 of the IBC - Claims not part of the resolution plan stand extinguished - Whether the appeal against assessment for AY 2014-15 is maintainable after approval of a resolution plan and amalgamation of the assessee-company under the IBC. - HELD THAT: - The Tribunal recorded that the assessee-company was subject to CIRP and subsequently amalgamated pursuant to NCLT orders which approved a resolution plan. The NCLT order expressly provides that after payment of dues as per the resolution plan, all liabilities, including claims of Government/Statutory Authorities and contingent or unconfirmed dues, shall stand permanently extinguished and that the provisions of the resolution plan are binding with effect from the appointed date. The Tribunal relied on the legal position declared by the Hon'ble Supreme Court in Ghanshyam Mishra & Sons P. Ltd. Vs. Edelweiss Asset Reconstruction Co. Ltd. , holding that once a resolution plan is approved under section 31 of the IBC, claims included in the plan are frozen and binding, and claims not part of the plan stand extinguished and cannot be the subject of continuing proceedings. In the present case the tax demand arose prior to NCLT approval but no claim by the Income tax Department was included in the resolution plan; an ex gratia amount to operational statutory creditors was provided under the plan and the company stood amalgamated. Applying the overriding effect of the IBC and the binding nature of an approved resolution plan, the Tribunal held that proceedings in relation to claims not preserved in the resolution plan could not be continued and therefore the appeal was not maintainable. [Paras 8, 9, 10, 11]

Appeal dismissed as not maintainable because the tax claim for AY 2014-15 stood extinguished by the approved resolution plan and subsequent NCLT orders.

Final Conclusion: The Tribunal dismissed the appeal as not maintainable on the ground that the approved resolution plan and NCLT orders operating under the IBC extinguished claims not included in the plan, thereby precluding continuation of the tax proceedings for AY 2014-15.

Treatment of cash seizures as unexplained income under section 69A and taxation under section 115BBE - ex-parte hearing and right to be heard - remand for fresh adjudication and opportunity to substantiate sources

Ex-parte hearing and right to be heard - Whether the learned CIT(A) erred in passing an ex-parte order without affording the assessee a final opportunity of hearing. - HELD THAT: - The Tribunal noted the assessee's grievance that the learned CIT(A) passed an ex-parte order and requested an opportunity to substantiate the sources of cash. The record before the Tribunal showed multiple hearing notices and instances of non-compliance, but in the interest of justice the Tribunal considered it appropriate to direct the learned CIT(A) to grant one last opportunity to the assessee to appear and substantiate her case. The Tribunal therefore restored the matter to the file of the learned CIT(A) with a specific direction that the assessee must appear and substantiate her case without seeking adjournment, failing which the learned CIT(A) may proceed to decide as per law. [Paras 9, 10]

Matter restored to the file of the learned CIT(A) for one final opportunity of hearing; grounds allowed for statistical purposes.

Treatment of cash seizures as unexplained income under section 69A and taxation under section 115BBE - remand for fresh adjudication and opportunity to substantiate sources - Whether the addition of Rs.22,00,000 as unexplained cash (and consequential taxation) should be sustained or re-examined. - HELD THAT: - The Tribunal recorded that the Assessing Officer had, on inquiry under section 131(1)(d), seized cash and treated Rs.22.00 lakhs as unexplained, making additions under the provisions relating to unexplained cash and special taxation. Given the assessee's plea to substantiate the claimed sources (moneylending repayments, accumulated savings and house property income) and the absence of documentary proof before the Assessing Officer, the Tribunal did not decide the merits on record but directed that the learned CIT(A) re-examine the addition after giving the assessee a final opportunity to produce evidence and substantiate the sources. The issue is thus remanded for fresh consideration on facts and law. [Paras 9]

Addition remitted to the learned CIT(A) for fresh adjudication after affording the assessee one final opportunity to substantiate the sources of the seized cash.

Final Conclusion: The appeal is allowed for statistical purposes by restoring the matter to the learned CIT(A) with directions to grant one last opportunity to the assessee to substantiate the sources of the seized cash and to decide the addition under the relevant provisions in accordance with law; failure of the assessee to appear shall entitle the learned CIT(A) to pass appropriate orders.

Condonation of delay - credit of Dividend Distribution Tax - grant of tax credit where deductor's error in challan - Assessing Officer's duty to verify and facilitate correction of tax credit entries - preference for substantial justice over technicalities

Condonation of delay - preference for substantial justice over technicalities - Whether the delay in filing the appeal was to be condoned. - HELD THAT: - The Tribunal found the appeal was time-barred by 671 days but accepted the assessee's explanation that the delay resulted from pursuing alternate remedies (multiple rectification applications with CPC) and awaiting responses. Relying on the principle that courts should adopt a liberal approach to limitation when substantial justice would otherwise be defeated, and noting absence of mala fides or dilatory strategy, the Tribunal exercised discretion in favour of the assessee and condoned the delay in the interests of justice. [Paras 3]

Delay in filing the appeal is condoned.

Credit of Dividend Distribution Tax - grant of tax credit where deductor's error in challan - Assessing Officer's duty to verify and facilitate correction of tax credit entries - Whether the assessee was entitled to credit of Dividend Distribution Tax deposited though the challan was erroneously coded, and the consequent direction to the revenue/AO. - HELD THAT: - The Tribunal accepted the undisputed fact that DDT was deposited by the assessee within time but credit was denied because the assessee inadvertently selected the wrong challan code. The Tribunal observed that the assessee had repeatedly approached CPC under section 154 without effective relief and that the CIT(A) dismissed the appeal on the ground that the assessee had not approached the bank/jurisdictional AO for correction. Applying the principle that denial of tax credit due to a third party's or technical error results in unwarranted hardship, and taking into account precedents and the practical difficulties in getting deductor-upload corrections, the Tribunal held that the assessee should not be deprived of the benefit of tax paid. Consequently, the Tribunal directed the revenue to grant the DDT credit by issuing necessary directions to the jurisdictional Assessing Officer to correct the data uploaded to the OLTAS database and grant credit to the assessee. [Paras 7, 8]

Assessee entitled to credit of DDT; revenue directed to instruct the jurisdictional Assessing Officer to correct OLTAS entries and grant the credit.

Final Conclusion: The Tribunal condoned the delay in filing the appeal and allowed the appeal on merits by directing the revenue to ensure correction of OLTAS data and grant the assessee credit for the Dividend Distribution Tax deposited for Assessment Year 2015-16.

Forfeiture of Chapter VI-A deductions for belated return under section 80AC(ii) - Deduction under Chapter VI-A - Section 80P entitlement - Acceptance of belated return where further proceedings are pending - Remand for fresh adjudication - Restoration for merits hearing

Forfeiture of Chapter VI-A deductions for belated return under section 80AC(ii) - Deduction under Chapter VI-A - Section 80P entitlement - Acceptance of belated return where further proceedings are pending - Remand for fresh adjudication - Whether deduction claimed under section 80P could be sustained despite return being filed beyond the due date, and the appropriate disposal of the appeals. - HELD THAT: - The CIT(A) had sustained the disallowance on the ground that, following the Finance Act, 2018 amendment to section 80AC(ii), Chapter VI A deductions (including section 80P) are not allowable where the return is not furnished on or before the due date under section 139(1). The Tribunal noted the CIT(A)'s reliance on that provision but observed established authority that a belated return may be accepted and acted upon for entertaining a claim under section 80P where further proceedings in the statutory hierarchy are pending. Having regard to the short delay (approximately two months) in filing the returns for AY 2018 19 and AY 2019 20 and the interests of justice, the Tribunal did not decide the claim on merits; instead it restored the matter to the file of the CIT(A) for fresh adjudication on merits after affording the assessee an opportunity of hearing. [Paras 5, 6, 7]

The disallowance was not finally adjudicated by the Tribunal; the matters are remanded to the CIT(A) for fresh adjudication on merits after hearing the assessee.

Final Conclusion: The appeals are restored to the file of the CIT(A) for fresh adjudication on merits (with opportunity of hearing) in respect of AY 2018 19 and AY 2019 20; the appeals are allowed for statistical purposes.

Condonation of delay - "sufficient cause" and advancement of substantial justice - audi alteram partem - requirement to state reasons under Section 250(6) of the Act - ex parte order without adjudication on merits - restoration/remand for fresh adjudication - levy of costs for negligent conduct in appellate proceedings

Condonation of delay - "sufficient cause" and advancement of substantial justice - Delay of 389 days in filing the appeal was condoned. - HELD THAT: - The Tribunal examined the explanation that delay arose from a communication gap between the assessee and his counsel and applied the established principle that the expression "sufficient cause" must be given a liberal construction to advance substantial justice. Relying on precedents and the dictum that substantial justice should prevail over technicalities, and noting absence of any allegation of deliberate delay by the Revenue (including no opposing affidavit), the Tribunal held the explanation adequate and exercised its discretion to condone the delay and admit the appeal for hearing on merits. [Paras 4]

Delay of 389 days condoned and appeal admitted for adjudication on merits.

Audi alteram partem - requirement to state reasons under Section 250(6) of the Act - ex parte order without adjudication on merits - restoration/remand for fresh adjudication - Impugned ex parte order of the Commissioner (Appeals) was not decided on merits and the appeal was restored to the file of the Commissioner (Appeals) for fresh adjudication after affording opportunity of hearing. - HELD THAT: - The Tribunal found that the Commissioner (Appeals) affirmed the Assessing Officer's order ex parte without recording reasons as required by Section 250(6) and without calling for assessment records to consider submissions made before the AO. Observing that the principle of audi alteram partem is fundamental and that the assessee had cooperated before the AO, the Tribunal concluded that the appellant was entitled to a fresh hearing. In exercise of its powers under Tribunal Rules, the Tribunal restored the appeal to the CIT(A) for reconsideration of all grounds after giving the assessee proper opportunity to be heard. [Paras 7, 8, 9, 11]

Appeal restored to the Commissioner (Appeals) for fresh adjudication after affording opportunity of hearing; hence allowed for statistical purpose.

Levy of costs for negligent conduct in appellate proceedings - A cost was imposed on the assessee for negligent conduct before the Commissioner (Appeals). - HELD THAT: - While preferring to advance substantial justice by restoring the appeal, the Tribunal noted the assessee's negligent/dilatory approach before the Commissioner (Appeals), which warranted admonition. Balancing the need to afford a fresh hearing with accountability for inaction, the Tribunal directed deposit of a monetary cost as a condition precedent to the hearing before the CIT(A). [Paras 10]

Assessee directed to deposit a cost of Rs. 5,000 to the Income Tax Department prior to the commencement of the rehearing before the Commissioner (Appeals).

Final Conclusion: The Tribunal condoned the delay in filing the appeal for Assessment Year 2012-2013, restored the appeal to the file of the Commissioner (Appeals) for fresh adjudication after providing opportunity to the assessee to be heard (appeal treated as allowed for statistical purposes), and directed the assessee to deposit a cost of Rs. 5,000 before the rehearing.

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - penalty unsustainable where additions are purely estimated on the basis of third party information without independent enquiry - reliance on Sales Tax Department report as sole basis for addition - distinction between estimation/difference of opinion and concealment of income

Penalty under section 271(1)(c) for furnishing inaccurate particulars of income - penalty unsustainable where additions are purely estimated on the basis of third party information without independent enquiry - Whether the penalty levied under section 271(1)(c) can be sustained where the assessing officer made additions on the basis of estimated/non genuine purchases relying on a Sales Tax Department report and without independent inquiry. - HELD THAT: - The Tribunal found that the assessing officer's addition arose from information received from the Sales Tax Department and was made on an estimated/ad hoc basis without any independent inquiry or production of incriminating material by the AO. The Co ordinate Bench in the related quantum appeal had restricted the disallowance to 10% after noting the absence of independent verification. Following co ordinate decisions which hold that penalty is not justified where the assessee makes a bona fide claim supported by documents and the AO's disallowance is merely an estimate (and no contradictory evidence disproving the assessee's explanation is brought on record), the Tribunal concluded that estimation or a difference of opinion does not establish concealment of income or furnishing of inaccurate particulars. In those circumstances, imposition of penalty under section 271(1)(c) is not sustainable. [Paras 8, 11]

Penalty levied under section 271(1)(c) deleted.

Final Conclusion: Appeal allowed; penalty confirmed by lower authority set aside and deleted because the addition was based on estimation and third party information without independent inquiry, and therefore did not establish concealment or furnishing of inaccurate particulars.

Condonation of delay - sufficient cause - liberal construction of limitation to advance substantial justice - mistake of authorised representative as sufficient ground for condonation - section 50C proviso permitting adoption of stamp valuation as on agreement date where consideration (or part) received non-cash before agreement - curative/retrospective effect of remedial statutory amendments - valuation by Government approved Registered Valuer versus Departmental Valuation Officer (DVO) - choice/option to adopt stamp duty valuation on agreement date for computation of full value of consideration - determination of indexed cost using fair market value as on 01.04.1981

Condonation of delay - sufficient cause - mistake of authorised representative as sufficient ground for condonation - Whether the Tribunal should condone the delay of 1457 days in filing the appeal. - HELD THAT: - The Tribunal examined the affidavit and oral submissions and found that the delay arose from inadvertence and the mistake/neglect of the assessee's Authorized Representative. The Bench rejected the Revenue's contention of mala fides because, at the time the appeal was filed, the assessee had no knowledge that the co-owner's matter had already been decided in his favour. Applying settled principles that 'sufficient cause' must be construed liberally to advance substantial justice and that mistake of a lawyer/accountant may constitute sufficient cause, the Tribunal held the explanation to be bona fide and adequate and accordingly condoned the delay and admitted the appeal for hearing. [Paras 6, 7, 8, 10]

Delay of 1457 days is condoned and the appeal is admitted for hearing.

Section 50C proviso permitting adoption of stamp valuation as on agreement date where consideration (or part) received non-cash before agreement - curative/retrospective effect of remedial statutory amendments - remand to Assessing Officer for fresh computation - Whether the stamp duty valuation to be adopted under section 50C should be the value as on the date of the registered agreement (29.09.2010) and whether the matter should be remitted to the AO for this purpose. - HELD THAT: - The Tribunal noted that the coordinate Bench in the co owner's case examined the proviso inserted into section 50C (Finance Act, 2016) and the Easwar Committee rationale, and held that where (a) an agreement fixing consideration predates registration and (b) part/whole consideration was received by non cash mode on or before the agreement date, the stamp valuation as on the agreement date may be taken for computing full value of consideration. That decision also considered the character of the proviso as remedial/curative and addressed retrospective application in appropriate circumstances. Applying that precedent on identical facts, the Tribunal directed that the AO should verify whether a registered agreement dated 29.09.2010 was in fact executed and partial consideration was received through banking channels; if so, the AO was to adopt the stamp duty valuation as on 29.09.2010 for computation of capital gains (with liberty to refer to DVO if required), and proceed to adjudicate afresh by a speaking order. [Paras 13]

The issue is remitted to the Assessing Officer to determine and, if satisfied about the registered agreement and non cash receipt, to adopt stamp duty valuation as on 29.09.2010 for computing full value of consideration and recompute capital gains.

Valuation by Government approved Registered Valuer versus Departmental Valuation Officer (DVO) - determination of indexed cost using fair market value as on 01.04.1981 - Whether the indexed cost of acquisition should be computed on the basis of the value estimated by the Registered Valuer (adopted rate) rather than the value determined by the DVO, and what rate per sq. meter should be applied for computing indexed cost as on 01.04.1981. - HELD THAT: - On the facts the Tribunal found that the DVO's valuation (at a low rate per sq. meter) had been adopted by the AO despite the Registered Valuer's detailed report and without pointing out cogent defects in that report. The Tribunal followed coordinate Bench precedents which had accepted valuation methodologies employed by government approved Registered Valuers (including reverse calculation and averaging methods) where sale instances for the relevant period were not comparable or available. Considering the location and attributes of the assessee's land and the body of Tribunal orders on identical facts, the Tribunal concluded that a fair market value of Rs.607 per sq. meter as on 01.04.1981 should be adopted for purposes of computing indexed cost of acquisition and thereby deleted the addition to the extent indicated in the coordinate Bench's order. [Paras 15, 22]

Indexed cost to be computed adopting fair market value at Rs.607 per sq. meter as on 01.04.1981; the addition insofar as based on the DVO's lower valuation is deleted in accordance with the coordinate Bench decision.

Final Conclusion: The Tribunal condoned the delay and admitted the appeal. Following coordinate bench precedents on identical facts, it remitted the section 50C issue to the Assessing Officer to verify the existence of the registered agreement and non cash receipts and, if established, to adopt stamp duty valuation as on the agreement date for computation of capital gains; simultaneously, the Tribunal directed that indexed cost be computed adopting a fair market value of Rs.607 per sq. metre as on 01.04.1981 and allowed the appeal to that extent.

Capital receipt - revenue receipt - excise duty refund/subsidy (excise rollback) - nature of receipt-subsidy characterisation - precedent and stare decisis effect of Coordinate Bench and High Court decisions

Capital receipt - revenue receipt - excise duty refund/subsidy (excise rollback) - nature of receipt-subsidy characterisation - precedent and stare decisis effect of Coordinate Bench and High Court decisions - Whether the excise duty refund/subsidy (excise rollback) received by the assessee in AY 2015-16 is a capital receipt or a revenue receipt. - HELD THAT: - The Tribunal examined earlier decisions including a Coordinate Bench decision in the assessee's own case for AY 2013-14 and the judgment of the Jammu & Kashmir High Court in CIT v. Shree Balaji Alloys, which has been sustained by the Apex Court, holding excise duty and related interest subsidies granted under the new industrial policy to be capital receipts. The Assessing Officer's attempt to distinguish those precedents on the ground that the assessee had earlier availed weighted deduction @100% and thereafter changed the tax treatment was rejected. The Tribunal held that the loss of a tax benefit (weighted deduction) in later years does not alter the intrinsic nature of the subsidy; prior authoritative holdings that such subsidies are capital in nature are binding for the matter at hand. Respectfully following the Coordinate Bench and High Court/Apex Court precedent, the Tribunal found no error in the view taken by the First Appellate Authority that the excise rollback subsidy is capital in nature.

Appeal dismissed; subsidy held to be a capital receipt.

Final Conclusion: The Revenue's appeal is dismissed. The excise duty refund/subsidy (excise rollback) received by the assessee for AY 2015-16 is held to be a capital receipt, following the Coordinate Bench and higher court precedent; the Assessing Officer's distinction based on prior availability of weighted deduction is not accepted.

Charitable purpose - first proviso to section 2(15) - government grant as corpus donation versus taxable income - application of income for charitable purpose - allowance of depreciation on assets treated as application of income - prospective effect of amendment to section 11(6)

Charitable purpose - first proviso to section 2(15) - government grant as corpus donation versus taxable income - Whether the government grant received by the assessee constituted corpus (not chargeable to tax) or taxable income by operation of the first proviso to section 2(15). - HELD THAT: - The Tribunal, following its coordinate-bench decision in the assessee's own case involving identical facts and relying on the ratio of the jurisdictional High Court (Gujarat Safai Kamdar Vikas Nigam) and relevant precedents, held that the grants from the Government were given for specific projects to achieve the objects of the trust and were correctly taken to the corpus in the balance-sheet. The Assessing Officer's contention that absence of an express donor direction made the grants taxable was rejected as the scheme and purpose of the grants showed they were for implementing particular projects and hence constituted corpus. The Revenue did not place any material before the Tribunal to distinguish the earlier coordinate-bench decision or to show contrary binding authority; accordingly the Tribunal upheld the order of the CIT(A) allowing treatment of the grants as corpus and dismissing the addition made by the AO. [Paras 10]

The grant from the Government is corpus of the trust and not taxable; Revenue's ground is dismissed.

Application of income for charitable purpose - allowance of depreciation on assets treated as application of income - prospective effect of amendment to section 11(6) - Whether the capital expenditure/capital assets acquired by the assessee qualify as application of income permitting allowance of depreciation, notwithstanding the amendment to section 11(6). - HELD THAT: - The Tribunal followed its earlier coordinate-bench ruling and the decision of the Hon'ble Supreme Court in CIT v. Rajasthan & Gujarati Charitable Foundation (which held that the amendment to section 11(6) is prospective), and held that the assessee's capital expenditure/assets, applied for charitable purposes, qualify as application of income and attract allowance of depreciation. The AO's disallowance was therefore not sustained. The Revenue did not produce any material to show that the earlier decisions relied upon had been set aside or that the facts were distinguishable; accordingly the Tribunal directed that the claim for depreciation be allowed. [Paras 16, 17]

Capital expenditure/assets are application of income for charitable purposes and depreciation is allowable; Revenue's ground is dismissed.

Final Conclusion: Both grounds of appeal raised by the Revenue are dismissed: the government grant is held to be corpus not exigible to tax, and the capital expenditure/claim for depreciation is held to be an application of income and allowable; the Assessing Officer is directed to give effect to these conclusions.

Disallowance of expenses - personal use of business asset - non-speaking order - remand for fresh consideration - credit for tax deducted at source (TDS) - opportunity to be heard - precedent of Coordinate Bench

Disallowance of expenses - personal use of business asset - non-speaking order - remand for fresh consideration - opportunity to be heard - precedent of Coordinate Bench - Whether the disallowance of one-tenth of total car expenses was justified and whether the matter requires reconsideration by the Ld. CIT(A). - HELD THAT: - The Assessing Officer disallowed 10% of total car expenses on the ground that personal use could not be ruled out, but the order contains only a cryptic remark without any discussion or materials to justify the 10% disallowance. The Ld. CIT(A) confirmed the disallowance by observing that the assessee failed to produce details, yet the appellate order does not record what specific details were called for during assessment or on appeal. The Tribunal observed that both the AO's and the Ld. CIT(A)'s orders are non-speaking and devoid of rationale and that the record does not presently contain material permitting a final adjudication. The Tribunal also noted an earlier Coordinate Bench decision in the assessee's own case for an earlier year and directed that the Ld. CIT(A) give due consideration to that order. For these reasons the Tribunal set aside the disallowance and remanded the issue to the file of the Ld. CIT(A) for fresh adjudication in accordance with law, directing the Ld. CIT(A) to specify the details to be produced by the assessee and to afford reasonable opportunity to the assessee before passing a fresh order.

Disallowance set aside and remitted to the Ld. CIT(A) for fresh consideration with directions to specify required details, consider the earlier Coordinate Bench order, and afford the assessee an opportunity to be heard.

Credit for tax deducted at source (TDS) - non-speaking order - remand for fresh consideration - opportunity to be heard - Whether the claim for TDS credit as filed in the return was correctly adjudicated and whether the ground relating to TDS credit requires fresh adjudication by the Ld. CIT(A). - HELD THAT: - The assessees' ground challenging restriction of TDS credit was not adjudicated by the Ld. CIT(A) in the impugned appellate order. The Tribunal found that the record before it does not contain the relevant material necessary for final determination. In view of the absence of adjudication and material, the Tribunal set aside the TDS-credit issue to the file of the Ld. CIT(A) with a direction to adjudicate the ground in the appeal pending before the Ld. CIT(A) and to give the assessee reasonable opportunity before passing fresh orders.

Ground remitted to the Ld. CIT(A) for adjudication with direction to consider the claim afresh and to afford the assessee a reasonable opportunity of hearing.

Final Conclusion: The appeal is disposed of by remitting the issues of car-expenses disallowance and TDS credit to the Ld. CIT(A) for fresh adjudication in accordance with law after giving the assessee reasonable opportunity to produce specified details; appeal treated as partly allowed for statistical purposes.

Revision under section 263 - assessment under section 143(3) - treatment of unexplained cash deposits - verification of receipts and registers - inclusion of interest income

Revision under section 263 - treatment of unexplained cash deposits - verification of receipts and registers - inclusion of interest income - Validity of the revision under section 263 and correctness of the assessment in relation to cash deposits and interest income. - HELD THAT: - The Tribunal found that the Assessing Officer selected the return for scrutiny, examined bank statements, receipts, registers and other particulars produced by the assessee and, after verification, treated 8% of total cash deposits as the assessee's income and brought the same to tax. The Assessing Officer also examined bank statements and included interest receipts in the total income. The Principal CIT's revision was predicated on an assertion that the Assessing Officer had not properly examined the bank deposits because the assessee, as managing trustee, had deposited certain fees in his personal account instead of the trust account. The Tribunal observed that nowhere in the assessment order was it recorded that regular term/tuition fees had been deposited in the assessee's personal account and that, on the contrary, the Assessing Officer had verified the materials produced and reached a reasoned conclusion by estimating a portion of the cash deposits as income and by including interest receipts. On this basis the Tribunal concluded that the revisionary order under section 263 was not sustainable and quashed it. [Paras 6]

Revision under section 263 quashed; the assessment order, including the addition of 8% of cash deposits as income and inclusion of interest receipts, is upheld and the appeal is allowed.

Final Conclusion: The Tribunal quashed the revision order passed under section 263, held that the Assessing Officer had examined and verified the receipts, registers and bank statements before making the additions, upheld the assessment treatment of a portion of cash deposits and interest receipts, and allowed the assessee's appeal.

Classification as parts versus complete machines or apparatus - interpretation of Heading 8517 and its sub-headings - requirement of independent functioning to attract machine classification - classification of populated, loaded or stuffed printed circuit boards as parts - application of Note 2(a) to Section XVI on classification of parts - reliance on product catalogue and technical literature as evidentiary basis for classification

Classification as parts versus complete machines or apparatus - interpretation of Heading 8517 and its sub-headings - requirement of independent functioning to attract machine classification - classification of populated, loaded or stuffed printed circuit boards as parts - reliance on product catalogue and technical literature as evidentiary basis for classification - Whether the imported 'Cards' (populated printed circuit boards) for Photonic Service Switch (PSS) 1830 are classifiable under CTH 8517 70 10 as parts or under CTH 8517 62 70 as machines/apparatus. - HELD THAT: - The Tribunal examined the scope and explanatory notes of Heading 8517 and the relevant Chapter/Section Notes and applied the settled principle that a good designed to function only when incorporated in another machine, with no independent or distinct function, is a part of that machine and not a complete machine itself. The product literature and catalogue for the PSS 1830 demonstrated that the imported items are populated printed circuit boards inserted into designated slots of the DWDM platform and do not perform independent reception, conversion, transmission or regeneration functions on a standalone basis. The Tribunal noted absence of any technical evidence from the Department showing independent functionality; it observed that the Department had not procured sample testing or expert opinion despite long-standing imports. Reliance was placed on precedent (Modicom and N.I. Systems) and on HSN explanatory guidance which distinguishes complete communication apparatus from parts; network interface cards and other items which do have standalone network-connection function are different in character from the impugned cards. Applying Note 2(a) to Section XVI, the Tribunal held that parts which are goods required to be classified in respective headings must nevertheless be treated as parts where they lack independent machine status and are integrally incorporated in the host equipment. Consequently, the impugned populated PCBs were found to be parts of the Photonic Service Switch and classifiable under sub-heading 8517 7010. The Tribunal therefore affirmed the Commissioner (Appeals) findings and rejected Revenue's contention that the imported cards are complete machines/apparatus classifiable under 8517 62 70. [Paras 14, 16, 18, 21, 22]

Impugned goods are parts (populated printed circuit boards) of PSS 1830 and are classifiable under CTH 8517 7010; appeals by Revenue dismissed.

Final Conclusion: The Tribunal upheld the Commissioner (Appeals) that the imported populated printed circuit boards are parts of the Photonic Service Switch (PSS 1830) and not independent machines or apparatus; they are classifiable under CTH 8517 7010, and the Revenue's appeals were dismissed.

Just and equitable winding up - appointment of Company Liquidator from IBBI panel - powers and duties of Company Liquidator in winding up - restraint on disposition of assets during winding up - payment of costs and liquidator's fees from company assets - statutory compliance with communication to Registrar of Companies

Just and equitable winding up - Order for winding up the Respondent company under the just and equitable ground was made. - HELD THAT: - The Tribunal examined the materials including that the Respondent had been non-operational since April 2008, had no contracts or revenue prospects (recorded at 5.1), had not held a properly constituted Board since FY 2019-20, and that various corporate stakeholders and competent authorities including the Management Committee of the shareholder, Board resolutions of the parent entities and the approval of Hon'ble Justice (Retd.) D.K. Jain supported initiation of winding up. Notices to the company returned unserved and no objections were filed (5.3-5.6). On the basis of these facts and the approvals and resolutions placed on record, the Tribunal concluded that it is just and equitable that the company be wound up and accordingly passed the winding up order under the provisions of Section 271(e) of the Companies Act, 2013 (6-7). [Paras 5, 6, 7]

The Company, Infrastructure Development Company of Nagaland Pvt. Ltd., is ordered to be wound up under Section 271(e) of the Companies Act, 2013.

Appointment of Company Liquidator from IBBI panel - powers and duties of Company Liquidator in winding up - statutory compliance with communication to Registrar of Companies - Appointment of a Company Liquidator and directions as to his powers, reporting and statutory communications were made. - HELD THAT: - Pursuant to the winding up order, the Tribunal appointed an insolvency professional empanelled by IBBI for the NCLT Guwahati Bench as Company Liquidator and directed him to take immediate possession of assets, books and records and to conduct the affairs for winding up (7.1). The Liquidator was directed to submit quarterly progress reports starting the quarter ending September 2022 and to endeavour completion of the winding up within one year from the order (7.1). The Liquidator was also directed to communicate a copy of the order to the Registrar of Companies and other concerned statutory authorities within fourteen days of receipt of an authentic copy (7.5). The Tribunal thereby conferred the liquidator the powers necessary to carry out the winding up and imposed reporting and statutory compliance obligations. [Paras 7]

Mr. Ujwal Kumar Kalita is appointed Company Liquidator with directions to take possession, carry out winding up, file quarterly reports and communicate the order to the Registrar of Companies and other authorities.

Restraint on disposition of assets during winding up - payment of costs and liquidator's fees from company assets - Interim restraints on disposal of assets, and directions on payment of costs and liquidator's fees were issued. - HELD THAT: - The Tribunal restrained the company from disposing of its assets and properties pending winding up (7.2). It directed that costs and incidental expenses of the petition be paid out of the proceeds of the company's assets and that winding up cost must not increase due to delay (7.3). Noting the petitioner's statement that there were no assets, the Tribunal fixed the Liquidator's fee at a monthly amount to be paid by the petitioner, while permitting the petitioner to recover such payments from available proceeds of the company's assets if realized (7.4). The Tribunal also left the liquidator free to apply for early dissolution in view of the reported absence of assets and lack of viable business (7.6). [Paras 7]

The company is restrained from disposing assets; costs and liquidator's fees to be met as directed, and the Liquidator may seek early dissolution if appropriate.

Final Conclusion: CP No. 08/GB/2022 is allowed and the Tribunal ordered winding up of Infrastructure Development Company of Nagaland Pvt. Ltd. under Section 271(e) of the Companies Act, 2013, appointed a Company Liquidator with specified reporting and compliance directions, restrained disposition of assets, fixed interim fee arrangements and permitted recovery of costs from any realized assets, with liberty to apply for early dissolution.

Maintainability of petition under Section 241(1) of the Companies Act, 2013 - requirement of written consent of shareholders under Section 244(2) - consent in writing to filing company petition - dismissal for want of maintainability

Maintainability of petition under Section 241(1) of the Companies Act, 2013 - requirement of written consent of shareholders under Section 244(2) - consent in writing to filing company petition - Company Petition under Section 241(1) is not maintainable for want of the prescribed written consents under Section 244(2). - HELD THAT: - The Tribunal examined the petitioner's averment that all shareholders except Respondent No.2 and one other had consented orally to the filing of the petition but found no written consents on record. Reliance was placed on the principle that the statutory 'consent in writing' requires that each consenting member must have known the specific action, reliefs sought and grounds on which the petition is founded before giving consent; a blanket or vague oral assent is insufficient. Authorities cited in the judgment (Kuttanad Rubber Co. Ltd. and M.C. Duraiswami) were applied to hold that consent must be to filing a particular petition with particular allegations and reliefs, and cannot be inferred from general statements. In the absence of the required written consents, the statutory precondition in Section 244(2) was not satisfied. Because maintainability was lacking, the Tribunal did not proceed to adjudicate the substantive allegations of oppression and mismanagement. [Paras 16, 17, 18, 19, 20]

TCP No. 116/KOB/2019 dismissed as not maintainable for want of the prescribed written consents; merits not considered.

Final Conclusion: The petition was dismissed for failure to produce the written shareholder consents required by statute; the Tribunal did not decide the merits of the allegations of oppression and mismanagement.

Judicial review of economic policy - reasonableness of regulatory caps on fees - SEBI's regulatory power to specify fees for investment advisers - choice of fee modes (Assets under Advice or fixed fee) - balancing protection of investors and freedom to carry on profession under Article 19(1)(g) - permissible restriction under Article 19(6)

SEBI's regulatory power to specify fees for investment advisers - reasonableness of regulatory caps on fees - choice of fee modes (Assets under Advice or fixed fee) - judicial review of economic policy - Validity of Regulation 15A of the SEBI (Investment Advisers) Regulations, 2013 as inserted by the 2020 Amendment and Circular No. SEBI/HO/IMD/DF-I/CIR/P/2020/182 dated 23.09.2020 fixing maximum fees and prescribing fee modes for investment advisers. - HELD THAT: - The Court accepted SEBI's position that the power to regulate fees for investment advisers is within the regulatory framework enacted under the SEBI Act and that Regulation 15A and the impugned circular were introduced after consultations and in exercise of SEBI's expert regulatory role. The Court applied the settled principle that judicial intervention in economic or fiscal policy is limited and warranted only where a policy is patently arbitrary, discriminatory, mala fide or contrary to statute, citing earlier decisions including Ehsan Khalid Vs. Union of India , Zippers Karamchari Union Vs. Union of India , Bhavesh D. Parish Vs. Union of India , and the doctrine explained in Small Scale Industrial Manufacturers Association Vs. Union of India . The Court observed that the impugned measures provide choice to advisers and clients between two modes (AUA-based or fixed fee), permit fees to increase with AUA, and contain safeguards (e.g., advance fee limits, family-of-client aggregation, change-of-mode timing and refund/breakage rules). The petitioners' contention that caps would disincentivise high-performing advisers was held insufficient to render the regulatory scheme arbitrary, particularly because profit-sharing/performance-fee models were considered inappropriate for advisory services given clients bear investment risk. Reliance on precedents that courts must respect regulatory expertise in economic matters, including R.K. Garg , Nandlal Jaiswal and Permian Basin Area Rate Cases , supported the conclusion that the Court should not replace SEBI's policy choice unless it is manifestly unreasonable. On this basis the challenge to Regulation 15A and the circular was rejected.

The challenge to Regulation 15A and the circular dated 23.09.2020 is dismissed; the regulatory prescription of maximum fees and the two fee modes is upheld as intra vires and not demonstrably arbitrary.

Final Conclusion: The writ petition seeking quashing of Regulation 15A and the SEBI circular of 23.09.2020 is dismissed; the Court declined to interfere with SEBI's regulatory prescription of maximum fees and the choice of fee modes, finding the measures to be within SEBI's statutory authority and not patently arbitrary.

Extinguishment of pre-effective date claims under approved resolution plan - effect of approved resolution plan and order of NCLT on pre-CIRP liabilities - governmental exemption of statutory dues - issuance of fresh claims for post-effective date dues - obligation to pay post-effective date dues upon demand

Extinguishment of pre-effective date claims under approved resolution plan - governmental exemption of statutory dues - effect of approved resolution plan and order of NCLT on pre-CIRP liabilities - Pre-effective date dues in respect of the applicant's vehicles stand extinguished. - HELD THAT: - The Tribunal recorded that the approved resolution plan stated that claims and demands prior to the effective date would stand extinguished. The Government of Assam issued a notification exempting outstanding liabilities of Road Tax/MV tax etc. prior to 20.09.2018 for vehicles of the gardens under the applicant registered in specified District Transport Offices. Having perused the submissions and the notification, the Tribunal found that the outstanding liabilities prior to 20.09.2018 have been exempted by the State and therefore the petition seeking extinguishment has become infructuous. [Paras 6]

Outstanding liabilities prior to 20th September, 2018 are exempted and the petition in respect of those dues is rendered infructuous.

Issuance of fresh claims for post-effective date dues - obligation to pay post-effective date dues upon demand - Respondents must issue fresh claims for dues arising on and from 21st September, 2018 and the applicant must pay those dues upon receipt of demand. - HELD THAT: - In view of the exemption of pre-effective date liabilities, the Tribunal directed the Transport Department to issue fresh claims for dues from the post-effective date period (on and from 21st September, 2018) within fifteen days. The applicant was directed to pay the dues from 21/09/2018 onwards within fifteen days from receipt of the demand notice or letter from the Respondents. These directions implement the practical consequence of the exemption and provide a timeline for issuance and payment of post-effective date demands. [Paras 7, 8]

Respondents to issue fresh claims for dues from 21st September, 2018 onwards within 15 days; applicant to pay those dues within 15 days of receipt of demand.

Final Conclusion: The Tribunal held that the applicant's pre-effective date liabilities (prior to 20th September, 2018) stand exempted by the Government of Assam, rendering the petition infructuous, and directed the Respondents to issue fresh claims for dues from 21st September, 2018 onwards and the applicant to pay such dues within the prescribed timelines.

Voluntary liquidation - dissolution of corporate person - declaration of solvency - liquidator's final report and winding up - compliance with the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - filing requirement under Section 59(7) to (9) of the Insolvency and Bankruptcy Code, 2016

Liquidator's final report and winding up - declaration of solvency - compliance with the Insolvency and Bankruptcy Board of India (Voluntary Liquidation Process) Regulations, 2017 - Whether the affairs of the corporate person have been completely wound up and its assets completely liquidated in accordance with the voluntary liquidation process, thereby justifying dissolution. - HELD THAT: - The Tribunal examined the liquidator's filings, including the preliminary and final reports, audited certificates of liquidation, the public announcement under Regulation 14, verification of claims and payments to creditors, repayment of share capital to members, and closure of the liquidation bank account. The directors had executed a declaration of solvency and the members passed the special resolution for voluntary liquidation; requisite filings with the Registrar of Companies and intimation to tax authorities were made. The Tribunal found that there were no remaining tangible or intangible assets except TDS receivables and bank balances, that creditors' claims were attended to and payments made, and that the liquidator had closed the liquidation account after distributing the available realizations. On that basis the Tribunal concluded that the affairs were wound up and assets liquidated in conformity with the relevant regulations and statutory requirements. [Paras 8, 9, 10, 11, 13]

The Tribunal accepted the liquidator's report and found that the corporate person's affairs have been completely wound up and its assets completely liquidated, warranting voluntary dissolution.

Filing requirement under Section 59(7) to (9) of the Insolvency and Bankruptcy Code, 2016 - voluntary liquidation - Whether the Tribunal should order dissolution and direct statutory filings consequent to dissolution. - HELD THAT: - Pursuant to the finding that winding up and liquidation were complete, the Tribunal invoked the statutory mechanism for dissolution. It ordered that the corporate person stand dissolved from the date of the order and directed the liquidator to file a copy of the order with the Registrar of Companies, Kerala, and with the Insolvency and Bankruptcy Board of India within fourteen days, in compliance with the statutory provision quoted in the petition. [Paras 12, 14]

The Tribunal approved the voluntary liquidation and ordered dissolution, directing the liquidator to make the prescribed filings with the Registrar of Companies and the IBBI within fourteen days.

Final Conclusion: The Tribunal allowed the company petition, approved the voluntary liquidation, ordered that the corporate person stands dissolved from the date of the order, and directed the liquidator to file the order with the Registrar of Companies, Kerala, and the Insolvency and Bankruptcy Board of India within fourteen days.

Admission of petition under the Insolvency and Bankruptcy Code - Corporate Insolvency Resolution Process - Moratorium under section 14 of the IBC - Limitation - date of default - Appointment of Interim Resolution Professional and vesting of management - Public announcement of CIRP and invitation of claims - Duty to provide information and documents to the IRP - Financial Creditor's deposit for CIRP expenses

Admission of petition under the Insolvency and Bankruptcy Code - Limitation - date of default - Petition under section 7 of the IBC was maintainable and was admitted on the ground of debt and default within limitation. - HELD THAT: - The Tribunal found that the petitioner, a financial creditor, produced a promissory note, account confirmation and acknowledgment letters evidencing a loan and its non payment. The cheques handed over by the corporate debtor were dishonoured on 16.12.2016, which the Tribunal treated as the date of default and the cause of action. Applying the settled rule that limitation runs from the date of default, the petition filed on 25.10.2019 was held to be within the limitation period. The Tribunal accordingly concluded that there was a debt, there was default, and the statutory preconditions for admission under section 7 were satisfied, and proceeded ex parte after noting the corporate debtor's failure to appear despite opportunities to be heard.

CP (IB) 3863/MB/2019 under section 7 of the IBC was admitted.

Moratorium under section 14 of the IBC - Corporate Insolvency Resolution Process - A moratorium under section 14 was imposed upon admission of the CIRP. - HELD THAT: - On admission of the petition, the Tribunal ordered the statutory moratorium to operate from the date of the order until completion of CIRP or until approval of a resolution plan or order of liquidation. The moratorium bars institution or continuation of suits or proceedings against the corporate debtor, transfer or disposal of its assets, enforcement of security interests including under SARFAESI, and recovery of property occupied by the corporate debtor, subject to statutory exceptions for essential supplies and transactions notified by the Central Government.

Moratorium under section 14 of the IBC was declared with the specified statutory scope and temporal effect.

Appointment of Interim Resolution Professional and vesting of management - Duty to provide information and documents to the IRP - An Interim Resolution Professional was appointed and management of the corporate debtor was vested in the IRP with a direction to furnish documents and information. - HELD THAT: - Pursuant to admission, the Tribunal appointed an IRP and directed that the management of the corporate debtor shall vest in the IRP for the CIRP period. Officers and managers of the corporate debtor were directed to provide all documents in their possession and furnish every information within one week of receipt of the order, with a warning of coercive steps for non compliance. The IRP was directed to perform functions as contemplated by the IBC and relevant regulations, and the fee payable was to comply with IBBI regulations, circulars and directions.

IRP appointed and management vested in the IRP with mandatory cooperation directions to the corporate debtor's officers.

Public announcement of CIRP and invitation of claims - Financial Creditor's deposit for CIRP expenses - Directions were issued for public announcement of CIRP, deposit of funds by the financial creditor for CIRP expenses, and consequential administrative compliances. - HELD THAT: - The Tribunal directed immediate public announcement of the CIRP as prescribed by the IBC and regulations, and required the financial creditor to deposit a specified sum with the IRP to meet initial CIRP expenses subject to CoC approval. The Registry was directed to communicate the order to parties and the IRP, and the IRP was directed to intimate the Registrar of Companies for master data updation and report compliance within a week, thereby ensuring commencement of requisite statutory and administrative steps for the CIRP.

Public announcement, creditor deposit for expenses and administrative directions to Registry, IRP and ROC were ordered.

Final Conclusion: The Tribunal admitted the section 7 petition against Varsha Corporation Limited, declared the moratorium, appointed an Interim Resolution Professional with vesting of management in him, directed immediate public announcement and procedural steps for commencement of CIRP, and ordered initial deposit by the financial creditor to meet CIRP expenses.

Refund of CIRP costs - priority under Section 53(1)(a) of the Insolvency and Bankruptcy Code, 2016 - admissibility of claim prior to final distribution of liquidation proceeds - modification of stakeholders list by the Liquidator - liquidator's duty to include verified CIRP costs on direction of Adjudicating Authority

Refund of CIRP costs - admissibility of claim prior to final distribution of liquidation proceeds - The Operational Creditor is entitled to repayment of the amount deposited with the IRP towards initial CIRP expenses. - HELD THAT: - The Tribunal found that the Operational Creditor deposited the sum with the erstwhile IRP to meet initial CIRP expenses and that the first Committee of Creditors had resolved to refund the amount. The receipt dated 12/01/2022 issued by the former IRP corroborated the payment and the CoC resolution. Delay by the former IRP in furnishing documents to the Liquidator does not disentitle the Operational Creditor from reimbursement; absence of earlier communication from the IRP or the creditor is not a ground to deny the claim where documentary proof of payment and the CoC resolution exist. The sum is thus rightly payable to the Operational Creditor when liquidation proceeds are finalized and before distribution, consistent with the principle that a creditor may prove a debt prior to final distribution of assets. [Paras 10, 11, 12]

Allow the application insofar as the Operational Creditor is entitled to refund of the deposited amount towards initial CIRP expenses; the Liquidator is directed to refund the amount at the time of distribution of liquidation proceeds with due priority.

Priority under Section 53(1)(a) of the Insolvency and Bankruptcy Code, 2016 - modification of stakeholders list by the Liquidator - liquidator's duty to include verified CIRP costs on direction of Adjudicating Authority - The Liquidator must include the unpaid CIRP cost in the stakeholders list and the order rejecting the claim is set aside; the Liquidator is directed to give the claim due priority under Section 53(1)(a). - HELD THAT: - The Tribunal held that, having found the amount to be legally payable to the Operational Creditor, the Liquidator should include the unpaid CIRP costs in the stakeholders list and give the claim priority as mandated by the Code. While the Liquidator had contended that modification of the stakeholders list requires direction from the Adjudicating Authority and that he lacked requisite documents, the Tribunal exercised its power to direct modification in view of the receipt and CoC resolution. Consequently, the earlier rejection communicated by the Liquidator was quashed. [Paras 12, 13, 14]

Direct the Liquidator to modify the stakeholders list to include the unpaid CIRP costs and to refund the amount with priority under Section 53(1)(a); set aside the Annexure A8 order rejecting the claim.

Final Conclusion: The application is allowed: the Operational Creditor is entitled to repayment of the amount deposited for initial CIRP expenses; the Liquidator is directed to include the unpaid CIRP cost in the stakeholders list and to refund the amount at distribution with priority under Section 53(1)(a); the Liquidator's rejection order is set aside.

Return of seized foreign exchange in kind - conversion of foreign currency to Indian rupees - compliance with court direction for restitution of foreign exchange - interest on delayed restitution - procedure for encashment and deposit of foreign currency under section 42(4) of the Foreign Exchange Regulation Act, 1973

Return of seized foreign exchange in kind - procedure for encashment and deposit of foreign currency under section 42(4) of the Foreign Exchange Regulation Act, 1973 - The Division Bench's order of 30 September 2010 directed return of the seized foreign exchange (US$1,300) to the appellant and that direction must be given effect to. - HELD THAT: - The Court examined the impugned appellate order and the statutory regime governing foreign currency. Section 42(4) and the definitions of 'foreign currency' and 'currency' were noted, and no rule or government direction was shown to require that seized foreign currency, when ordered returned, be converted into rupees. The Division Bench's order was held to be specific in directing return of 'foreign exchange' so that the appellant could deal with it in accordance with law. The Enforcement Directorate's contention based on a general encashment procedure did not displace the clear mandate of the earlier order, and the Court recorded that the Department had not produced any directive permitting return in rupees in place of foreign currency. [Paras 5, 6]

The order of 30 September 2010 must be complied with as directing return of the foreign exchange (US$1,300).

Conversion of foreign currency to Indian rupees - compliance with court direction for restitution of foreign exchange - interest on delayed restitution - Though the Division Bench directed return of foreign exchange, the Court directed compliance by converting US$1,300 into Indian rupees at the rate prevailing on 14 June 2022 and ordered payment with interest at the rate specified in the 30 September 2010 order. - HELD THAT: - Acknowledging that the appellant had become agreeable to receiving the equivalent in Indian rupees to put a quietus to protracted litigation, and noting the Enforcement Directorate's prolonged non-compliance and casual prosecution of the application, the Court exercised its remedial discretion. It ordered the Enforcement Directorate to convert US$1,300 into rupees at the exchange rate as on 14 June 2022 and to pay that amount to the appellant within eight weeks, together with interest. The Court refused the Enforcement Directorate's plea to dispense with interest on the ground that the Department had purportedly offered rupees earlier, observing that the original order of 30 September 2010 fixed interest at 10% and that the Department had not followed the procedure under section 42(4), nor had it promptly complied. The stated rate of interest in the earlier order was therefore retained. [Paras 8, 9, 10]

US$1,300 to be converted into Indian rupees at the rate prevailing on 14 June 2022 and paid to the appellant within eight weeks, together with interest at the rate specified in the 30 September 2010 order.

Final Conclusion: The Enforcement Directorate must comply with the Division Bench's direction of 30 September 2010 by returning the foreign exchange; exercising discretion in view of the appellant's concession and the Department's delay, the Court directed conversion of US$1,300 into rupees at the rate of 14 June 2022 and payment within eight weeks with interest as fixed by the earlier order.

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - electronic payment requirement under Section 127(5) of the Finance Act, 2019 - technical failure in payment gateway / re-credit of payment - entitlement to scheme benefit despite system-induced payment failure - conditional acceptance subject to compliance with scheme conditions - quashing of administrative communication and direction for fresh compliance

Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019 - technical failure in payment gateway / re-credit of payment - entitlement to scheme benefit despite system-induced payment failure - Petitioner cannot be denied the benefit of the SVLDRS scheme solely on account of the fact that payment made through the bank's RTGS facility was re-credited due to a technical/system failure. - HELD THAT: - The Court found the material facts undisputed: the petitioner attempted payment through the bank's RTGS facility and the sum debited was subsequently re-credited to the petitioner's account because of a technical glitch. Although the scheme requires electronic payment as indicated by Form SVLDRS-3, the failure to effect and retain the payment resulted from the system which did not accept the remittance. The Court held that a system-induced failure to effect the payment bonafide made by the declarant disentitles neither the petitioner from the benefit of the scheme nor justifies denial where the attempt to pay was made within the prescribed period. Consequently, the communication and order denying benefit on the ground of non-payment were unsustainable in the facts of this case. [Paras 19, 21, 22]

Impugned communication and appellate order quashed insofar as they deny scheme benefit on account of the re-credit; petitioner entitled to pursue acceptance under the scheme because payment attempt was bona fide and failed due to system error.

Electronic payment requirement under Section 127(5) of the Finance Act, 2019 - conditional acceptance subject to compliance with scheme conditions - quashing of administrative communication and direction for fresh compliance - conditional remand for compliance and verification - The court directed remedial steps permitting the petitioner to re-present the payment and required the authority to close the case on acceptance, or otherwise to decide on merits if payment is not made within the time directed. - HELD THAT: - Balancing the statutory requirement of electronic payment and the factual finding of system failure, the Court exercised remedial discretion: it quashed the impugned orders/communication and permitted the petitioner to pay the amounts for which payment was attempted through RTGS on 29.03.2020 within 30 days of receipt of the order. If the petitioner makes payment within that period, the respondents are directed to accept the payment and bring the matter to closure subject to other conditions of the scheme. If the petitioner fails to comply, the appellate authority (fourth respondent) is directed to decide the matter on merits in accordance with law after hearing. This constitutes a conditional remand for compliance and verification rather than an adjudication on merits in respect of any disputed liability. [Paras 23, 24]

Petitioner permitted to make payment within 30 days; upon such payment respondents to accept and close the case subject to scheme conditions; failure to pay will invite fresh adjudication by the appellate authority.

Final Conclusion: Writ petitions allowed in part: impugned communication and appellate order quashed to the extent they deny SVLDRS relief due to a system-induced re-credit; petitioner granted 30 days to re-present the attempted payment, upon which respondents shall accept and close the matter subject to scheme conditions, failing which the appellate authority shall decide on merits.

Reverse charge mechanism for services provided from outside India - treatment of foreign branch / permanent establishment as a separate person for determining place of provision of service - services received in India versus services provided to and consumed by overseas site office - Business Auxiliary Service - requirement to specify applicable sub-clause for classification - Supply of tangible goods service - transfer of effective control and possession test - Cargo handling service - exclusion of handling of export cargo from taxable ambit - Technical testing and analysis - distinction between reimbursed travel expenses and consideration for testing - Legal consultancy service - taxation only where service is provided to and consumed by recipient in India - services provided and paid abroad with local tax payment - indicator of consumption outside India

Reverse charge mechanism for services provided from outside India - services received in India versus services provided to and consumed by overseas site office - Whether service tax could be levied in India on bank charges and bank guarantee commissions said to be charged by foreign banks. - HELD THAT: - The Tribunal found no evidence that foreign banks charged the appellant directly; the Indian banks had paid amounts to foreign banks and the appellant dealt only with Indian banks. Any service, if at all, was received by the Indian banks and not by the appellant. Applying the principle that services provided to and consumed by the overseas site/branch are not taxable in India, and relying on consistent precedents, the Tribunal held that the amounts charged by foreign banks to Indian banks cannot prima facie be treated as services received by the appellant in India and the reverse charge demand in respect of Banking and Other Financial Services could not be sustained. [Paras 5]

Demand in respect of Banking and Other Financial Services set aside.

Business Auxiliary Service - requirement to specify applicable sub-clause for classification - treatment of foreign branch / permanent establishment as a separate person for determining place of provision of service - Whether demand under Business Auxiliary Service could be sustained where the SCN/impugned order did not specify the sub-clause and foreign site offices had paid and consumed the services abroad. - HELD THAT: - The Tribunal held that the definition of Business Auxiliary Services contains multiple sub-clauses and Revenue must identify the specific sub-clause under which the demand is made; failure to do so renders the demand unsustainable. Further, Section 66A(2) treats foreign branches as separate persons for determining place of provision; since payments were made by overseas site offices and local taxes were paid abroad, the services were provided to and consumed by the foreign site offices and not received in India. Reliance on the British Airways reasoning showed that only where the head office centrally sources location specific services or the branch is merely a facilitator can the Indian branch be treated as recipient. On the facts the foreign offices had acted as consuming entities. [Paras 5]

Demand under Business Auxiliary Service set aside.

Legal consultancy service - taxation only where service is provided to and consumed by recipient in India - services provided and paid abroad with local tax payment - indicator of consumption outside India - Whether service tax on legal consultancy charges could be levied in India where invoices were raised on and payments were made by overseas site offices. - HELD THAT: - The Tribunal observed that payments to overseas consultants were made by overseas project/site branches on invoices addressed to those branches and local tax had been discharged abroad. Applying the same reasoning as for other services, the Tribunal held such legal services were provided to and consumed by the overseas offices and therefore not taxable in India. The Tribunal also held that mere booking of amounts under a general accounting head 'Legal and Professional Expenses' does not establish the service classification required under the statute without verifying the nature of the expense. [Paras 5]

Demand in respect of Legal Consultancy Service set aside.

Supply of tangible goods service - transfer of effective control and possession test - services provided to overseas branch and consumption abroad - Whether hire/lease of imported machinery fell within 'supply of tangible goods service' so as to attract service tax under reverse charge. - HELD THAT: - On record the Tribunal found that under the lease agreements the appellant had exclusive right to use the equipment in India, operated the machinery through its own operators, and the lessor had no control over use; thus effective control and possession were transferred to the appellant during the lease period. Applying precedents that where possession and effective control rest with the lessee the supply of tangible goods service does not arise, the Tribunal held the impugned demand unsustainable. Separately, where invoiced services originated from and were consumed by overseas site offices (e.g., survey and technical consultancy by HIDELECO for Algeria), those services were provided and consumed outside India and not taxable here. [Paras 5]

Demand under Supply of Tangible Goods Service set aside.

Technical testing and analysis - distinction between reimbursed travel expenses and consideration for testing - Actual consideration under Rule 7(1) of Service Tax (Determination of Value) Rules for reverse charge - Whether reimbursements of travel and accommodation paid to overseas representatives for witnessing tests constitute taxable technical testing and analysis services. - HELD THAT: - The Tribunal examined records and found payments were reimbursements of travel and accommodation to buyer representatives who merely witnessed testing carried out by the appellant, not payments for testing or analysis services. Rule 7(1) requires the value for reverse charge to be the actual consideration charged for the service; where amounts are mere reimbursements and no testing fees were paid, they cannot be treated as consideration for Technical Testing and Analysis Service. Precedents distinguishing reimbursable expenses from taxable consideration were followed. [Paras 5]

Demand under Technical Testing and Analysis Service set aside.

Cargo handling service - exclusion of handling of export cargo from taxable ambit - services provided to and consumed by overseas site office - Whether cargo handling charges relating to exported goods and paid/borne by overseas site offices are taxable under Cargo Handling Service. - HELD THAT: - The Tribunal noted the statutory definition of cargo handling service excludes handling of export cargo and mere transportation. The appellant exported goods and the services relied upon related to export cargo, with payments made by overseas site offices and supported by documents. Board circular clarified services in relation to export cargo are excluded even if transhipped before export. Accordingly, and applying the principle that foreign branches are separate persons and services consumed abroad are not taxable in India, the Tribunal held the cargo handling demand unsustainable. [Paras 5]

Demand under Cargo Handling Service set aside.

Services provided and paid abroad with local tax payment - indicator of consumption outside India - General insurance and IT services received and paid abroad not taxable in India - Whether general insurance premiums and information technology / computer related expenses incurred and paid by overseas site offices are taxable in India under reverse charge. - HELD THAT: - The Tribunal recorded that insurance premiums and IT/computer expenses were invoiced to and paid by overseas site/project offices, and local taxes were discharged abroad. The Tribunal applied Section 66A(2) reasoning that such services provided to and consumed by foreign branches are not services received in India. Consequently, demands in respect of General Insurance Service and Information Technology Software Service, being services provided and used abroad and paid abroad, were found unsustainable. [Paras 5]

Demands in respect of General Insurance Service and Information Technology Software Service set aside.

Final Conclusion: The Tribunal allowed the appeals and set aside the adjudicating authority's order: the reverse charge demands confirmed in respect of the eight categories of services were held unsustainable on the merits because the impugned services were, on the record, provided to and consumed by overseas site/branch offices or were not within the taxable entries as claimed; consequential relief, if any, to follow as per law.

Cenvat credit reversal for non-availability of documentary evidence - typographical error in challan number in show cause notice - remand for fresh appreciation of evidence - reconciliation of Cenvat credit with service tax register - benefit of CBEC Circular No. 207/05/2017 dated 28.9.2017

Cenvat credit reversal for non-availability of documentary evidence - reconciliation of Cenvat credit with service tax register - typographical error in challan number in show cause notice - remand for fresh appreciation of evidence - Whether the partial demand confirmed for want of challan copies and documentary evidence should be sustained or the matter should be remanded for fresh appreciation of the documents and verification of typographical errors in challan numbers. - HELD THAT: - The adjudicating authorities confirmed reversal of Cenvat credit on the ground that requisite documentary evidence was not produced to establish receipt of services prior to 1.7.2017. The appellant contends that the necessary challans and supporting documents were placed on record and that the show cause notice and consequent orders rely on incorrect/typographical challan numbers differing from those in the audit compilation and the appellant's Service Tax register. The Commissioner (Appeals) had already allowed part of the claim by applying the CBEC Circular dated 28.9.2017, but upheld a remaining demand for want of specific challans. Given the appellant's persistent assertion that the documents were filed and the Department's representative raised no objection to remand, the Tribunal concluded that the matter requires fresh factual appreciation. The Tribunal therefore directed remand to the Commissioner (Appeals) to examine the challans and other documents produced by the appellant, to verify whether typographical errors exist in the challan numbers relied upon in the show cause notice and earlier orders, and thereafter to pass a fresh decision uninfluenced by the findings in the Tribunal's order. [Paras 6, 7]

Matter remanded to the Commissioner (Appeals) for fresh appreciation of the challans and other documents, including verification of any typographical errors, and for passing a fresh decision.

Final Conclusion: The appeal is allowed by way of remand; the matter is sent back to the Commissioner (Appeals) to re-examine the challans and documentary evidence (including any typographical errors in challan numbers) and to decide afresh without being influenced by this order.

Availability of cenvat credit for installation of pre-fabricated/pre-engineered structures - Exclusion Clause in Rule 2(l) of the Cenvat Credit Rules, 2004 - temporal operation of statutory amendment (w.e.f. 1.7.2012) - invocation of extended period of limitation for concealment - recording of transactions in books of account and cenvat credit register

Exclusion Clause in Rule 2(l) of the Cenvat Credit Rules, 2004 - temporal operation of statutory amendment (w.e.f. 1.7.2012) - availability of cenvat credit for installation of pre-fabricated/pre-engineered structures - Entitlement to cenvat credit on service invoices for supply and installation of pre-fabricated/pre-engineered steel building executed prior to 1.7.2012 - HELD THAT: - The Tribunal held that the exclusion introduced in Rule 2(l) by notification w.e.f. 1.7.2012 cannot be applied to transactions and invoices relating to the installation and supply of pre-fabricated/pre-engineered structures which were executed and invoiced prior to that date. Since the impugned transactions fell within the period September 2009 to December 2010, they do not fall within the mandate of the post 1.7.2012 exclusion and the show cause notice insofar as it seeks to disallow such credit on that basis is misconceived.

Credit taken on the invoices for supply and installation of pre-fabricated structures for the period in question is not barred by the Exclusion Clause introduced w.e.f. 1.7.2012; the disallowance on that ground is set aside.

Invocation of extended period of limitation for concealment - recording of transactions in books of account and cenvat credit register - Whether extended period of limitation could be invoked in respect of the said cenvat credit - HELD THAT: - The Tribunal found no material to demonstrate concealment or suppression by the assessee; the transactions and the credit entries were duly recorded in the books of account and cenvat credit register in the normal course of business. In absence of concealment the conditions for invoking the extended period of limitation were not satisfied, and therefore the extended limitation could not be validly invoked.

Extended period of limitation was not invocable; the show cause notice relying on extended limitation is unsustainable.

Final Conclusion: Appeal allowed. The impugned order and the show cause notice insofar as they disallowed the cenvat credit taken for supply and installation of pre-fabricated structures during September 2009 to December 2010 and relied upon the post 1.7.2012 exclusion or extended period of limitation are set aside.

Eligibility for CVD and SAD credit - denial of CENVAT credit for payment after demand without finding of fraud, collusion or wilful misstatement - payment after intimation/demand not disqualifying credit absent fraud - transitional refund under Section 142(3) CGST Act, 2017 - refund of unutilisable pre-GST CENVAT credit in cash

Eligibility for CVD and SAD credit - denial of CENVAT credit for payment after demand without finding of fraud, collusion or wilful misstatement - payment after intimation/demand not disqualifying credit absent fraud - Whether the appellant is entitled to refund/credit of Countervailing Duty (CVD) and Special Additional Duty (SAD) paid to regularise excess imports made under advance authorisations where duties were paid after receipt of departmental intimation/demand but without any adjudicated finding of fraud, collusion, wilful misstatement or suppression of facts. - HELD THAT: - The Tribunal examined Rule 9(1)(b) of the Cenvat Credit Rules, 2004 which permits supplementary documents evidencing payment of additional duty but disallows credit where payment became recoverable on account of non-levy or short-levy by reason of fraud, collusion or any wilful mis-statement or suppression of facts with intent to evade duty. The Department rejected the refund invoking Rule 9(1)(b) solely because a demand/intimation was issued and duties were paid thereafter. On review of the alleged demand/intimation, the communication was found to be an intimation and not an adjudicatory demand under Customs/Excise statute, and there was no finding or evidence of fraud, collusion, wilful misstatement or suppression of facts. In absence of any adjudicated culpability or proof that the duties were recoverable for reasons listed in Rule 9(1)(b), denial of credit was not sustainable. The Tribunal further applied the transitional mandate of Section 142(3) of the CGST Act, 2017 that refunds of amounts of CENVAT credit under the existing law shall be disposed of and paid in cash. Reliance on precedents where identical facts led to allowance of refund was noted. On these grounds the Tribunal held the appellant entitled to refund/credit of CVD and SAD paid. [Paras 11, 12]

Refund claims of CVD and SAD paid by the appellant are allowable; impugned orders rejecting refund set aside and appeals allowed with consequential relief as per law.

Final Conclusion: The Tribunal allowed the appeals, holding that CVD and SAD paid to regularise excess imports are eligible for refund/credit where duties were paid after an intimation/demand in the absence of any adjudicated finding of fraud, collusion, wilful misstatement or suppression of facts; refunds to be granted in accordance with law.

Appeal against any order - pre-deposit of part of the disputed tax as condition precedent to admission of appeal - proof of payment of twelve and half percent of difference of tax as proviso to admission - pre-deposit requirement not applicable where appeal does not challenge assessment or quantify tax - stay of recovery on furnishing security or part payment

Appeal against any order - pre-deposit of part of the disputed tax as condition precedent to admission of appeal - proof of payment of twelve and half percent of difference of tax as proviso to admission - pre-deposit requirement not applicable where appeal does not challenge assessment or quantify tax - Whether the appellate authority could reject the appeal for non-deposit of 12.5% of the disputed tax where the appeal sought only to challenge refusal to accept 'H' Forms and did not dispute any assessed tax liability. - HELD THAT: - The Court construed Section 31(1)-(3)(a) of the A.P. VAT Act and observed that the phrase "any order" in Section 31 is not confined to assessment orders. The proviso requires production of proof of payment of tax admitted to be due and proof of payment of 12.5% of the difference between tax assessed and tax admitted when an appeal is preferred against an order that relates to tax assessment or quantification of tax. Where, as in the present case, the lis before the appellate authority concerned only the refusal to consider belatedly produced 'H' Forms and not any quantification or imposition of tax, insistence on the 12.5% pre-deposit as a condition precedent to entertain the appeal was held to be improper. The Court relied on prior orders of the Division Bench and reasoned that pre-deposit is required only when the appeal is filed against the assessment order or where tax has been quantified; since the endorsement under challenge did not quantify tax, rejecting the appeal for non-deposit of 12.5% was unsustainable. The Court therefore set aside the appellate order and directed the appellate authority to entertain and decide the appeal without insisting on payment of 12.5% of the disputed tax, in accordance with law. [Paras 9, 10, 11, 12]

The appellate order rejecting the appeal for non-deposit of 12.5% is set aside and the appellate authority is directed to entertain the appeal against the endorsement refusing to accept 'H' Forms without insisting on the 12.5% pre-deposit.

Final Conclusion: Writ petition allowed; impugned appellate order dated 29.07.2021 is quashed and respondent No.2 is directed to admit and decide the appeal against the endorsement dated 28.09.2020 without insisting on payment of 12.5% of the disputed tax.

Alternative remedy by statutory revision - maintainability of writ petition where alternative remedy exists - compounding fee under the Act - entertainment of belated revision without raising limitation

Maintainability of writ petition - alternative remedy by statutory revision - Whether the writ petition is maintainable in view of the availability of a statutory revision remedy under Section 54 of the Act - HELD THAT: - The Court held that the grievance now relates only to the imposition of compounding fee and that the revisional remedy under Section 54 of the Act is the appropriate and final fact-finding forum for such disputes. In the absence of any evident statutory violation, lack of jurisdiction or breach of principles of natural justice, the petitioner must first avail the alternative remedy provided under the statute. Exercising extraordinary jurisdiction under Article 226 is not warranted where an effective statutory remedy exists. [Paras 11, 12]

Writ not maintainable at this stage; petitioner should pursue revision under Section 54 of the Act.

Entertainment of belated revision without raising limitation - condonation of delay in statutory revision - Whether the revisional authority should be directed to entertain the petitioner's revision despite the expiry of the prescribed limitation period - HELD THAT: - Noting that the statutory period for revision and condonation (a total of 60 days) had elapsed, the Court nonetheless exercised its supervisory power to avoid depriving the petitioner of an effective remedy. In view of the delay in approaching this Court and the facts and circumstances of the case, the Court directed that the revisional authority shall entertain the revision petition if filed within two weeks from receipt of the order and shall not raise the limitation point. [Paras 13]

Revisional authority directed to entertain the revision filed within two weeks and not to raise limitation.

Compounding fee under the Act - Determination of the liability for the compounding fee - HELD THAT: - The Court recorded that the tax component has already been paid and that the remaining dispute pertains to the compounding fee imposed in the adjudication. The Court did not decide the merits of the compounding fee; instead, it left the factual and legal determination to the revisional authority under Section 54, where the petitioner may challenge the imposition on facts and law. [Paras 6, 11, 12]

Merits of liability for compounding fee left open for decision by the revisional authority on revision.

Final Conclusion: The writ petition is disposed of by relegating the petitioner to the statutory revisional remedy under Section 54; the revisional authority is directed to entertain any revision filed within two weeks from receipt of this order without raising the limitation objection, and the substantive dispute on the compounding fee is to be decided in that revision.

Conviction under the Abkari Act for dealing in spirit (offence under Section 55(a)) - criminal liability for attempted suicide - sentence modification in view of long delay and absence of criminal antecedents - directions for surrender and execution of remaining sentence

Conviction under the Abkari Act for dealing in spirit (offence under Section 55(a)) - reliability of prosecution evidence and trial court findings - Conviction of the appellant under the Abkari Act for dealing in spirit was upheld. - HELD THAT: - The Supreme Court examined the trial record including statements of PW1 to PW11 and the appellant's statement under Section 313 CrPC, and found no reason to depart from the trial court's finding of guilt which was affirmed by the High Court. Having considered the evidence and the conclusions recorded at trial and on appeal, the Court confirmed the conviction under the Abkari Act for dealing in spirit. [Paras 9]

Conviction under the Abkari Act (offence under Section 55(a)) is upheld.

Criminal liability for attempted suicide - setting aside of conviction under Section 309 IPC - The conviction under Section 309 IPC (criminal attempt to commit suicide) was not sustained for the appellant. - HELD THAT: - The High Court had set aside the appellant's conviction and sentence under Section 309 IPC on appeal. The Supreme Court, while confirming the conviction under the Abkari Act, did not disturb the High Court's decision to set aside the Section 309 IPC conviction and did not reinstate any such conviction against the appellant. [Paras 4, 8]

Conviction and sentence under Section 309 IPC remain set aside as decided by the High Court.

Sentence modification in view of long delay and absence of criminal antecedents - principles of reduction of sentence on consideration of delay and antecedents - The sentence for the upheld conviction was reduced by this Court in view of the long delay since the incident and the appellant's lack of criminal antecedents. - HELD THAT: - Although the conviction under the Abkari Act was affirmed, the Court took into account that 23 years had elapsed since the incident and that the appellant had no prior criminal record as noted in the High Court's judgment. In exercise of appellate sentencing powers and considering the overall aspect of the matter, the Court modified the sentence to simple imprisonment for one year and a fine, with a shorter default term, as a proportionate sentence in the circumstances. [Paras 10]

Sentence modified to simple imprisonment for one year and payment of the prescribed fine, with a reduced default period.

Directions for surrender and execution of remaining sentence - The appellant was directed to surrender and undergo the remaining part of the modified sentence within a specified time, failing which authorities were to act as per law. - HELD THAT: - Having modified the sentence and noted that the appellant had earlier been exempted from surrender, the Court ordered that the appellant shall surrender and undergo the remaining part of the sentence within four weeks. The Court directed that if the appellant fails to surrender within the time permitted, appropriate action shall be taken by the authorities in accordance with law. [Paras 11, 12]

Appellant to surrender and undergo remaining sentence within four weeks; failure to do so will invite appropriate legal action by authorities.

Final Conclusion: The appeal is disposed of by upholding the conviction under the Abkari Act for dealing in spirit, setting aside of conviction under Section 309 IPC is not disturbed, the sentence is reduced in view of long delay and lack of antecedents, and the appellant is directed to surrender and undergo the remaining sentence within four weeks.

Conviction under the Abkari Act - modification of sentence - principle of delay and advanced age in sentencing - concurrent substantive sentences - reliance on ocular evidence of PW1 and PW3

Conviction under the Abkari Act - reliance on ocular evidence of PW1 and PW3 - The appellant's conviction under Section 8(1) read with 8(2) and Section 55(g) of the Abkari Act was upheld. - HELD THAT: - The Court examined the trial and High Court records and considered the evidence of PW1 and PW3. Although both witnesses were extensively cross-examined, nothing material was elicited to discredit their testimony. On that basis the Supreme Court found no reason to depart from the conclusions reached by the Courts below and affirmed the conviction of the appellant for the offences charged under the Abkari Act. [Paras 11]

Conviction affirmed.

Modification of sentence - principle of delay and advanced age in sentencing - concurrent substantive sentences - The sentence imposed on the appellant was modified having regard to the long delay, absence of criminal antecedents and the appellant's advanced age. - HELD THAT: - While upholding the conviction, the Court took into account that approximately fifteen years have elapsed since the date of the incident, there were no criminal antecedents shown against the appellant and he is above 63 years of age. In light of these mitigating factors and the overall circumstances, the Court exercised its power to reduce the sentence imposed by the Courts below. The substantive concurrent sentences were modified so that the appellant would undergo simple imprisonment for one year under Section 55(g) with a fine, and in default simple imprisonment for six months. [Paras 12]

Sentence reduced to simple imprisonment for one year under Section 55(g) with a fine; in default, simple imprisonment for six months; substantive sentences to run concurrently as modified.

Final Conclusion: The convictions under the Abkari Act were affirmed on the evidence of PW1 and PW3; however, having regard to the long delay, absence of antecedents and the appellant's age, the sentence was commuted and reduced to simple imprisonment for one year under Section 55(g) with the specified fine, in default simple imprisonment for six months, and the appeal is disposed of with the pending applications also disposed.

Compounding of offence under the Negotiable Instruments Act - settlement between parties - deposit of 5% of the cheque amount as compounding fee with State Legal Services Authority - setting aside conviction and sentence upon compounding - application of precedent in grants of compounding

Compounding of offence under the Negotiable Instruments Act - settlement between parties - deposit of 5% of the cheque amount as compounding fee with State Legal Services Authority - setting aside conviction and sentence upon compounding - Application for compounding of the offence under Section 147 of the Negotiable Instruments Act was allowed and the convictions and sentence were set aside. - HELD THAT: - The Court recorded that the dispute which gave rise to prosecution under Section 138 of the Negotiable Instruments Act had been amicably settled between the parties and that, in compliance with the Court's earlier directions, 5% of the cheque amount had been deposited by the petitioner with the HP State Legal Services Authority as compounding fee (receipt taken on record). The petitioner sought exercise of the Court's power to compound the offence relying on the precedent of Damodar S. Prabhu . In view of the settlement between the parties and the deposit of the prescribed compounding amount, the High Court exercised its power to compound the offence and, consequentially, set aside the conviction and sentence recorded by the trial court and affirmed by the appellate court. [Paras 3, 5]

Compounding allowed; deposit receipt taken on record; conviction and sentence of the trial court and its affirmation on appeal set aside; petition and compounding application disposed of.

Final Conclusion: The High Court allowed the application for compounding of the offence under the Negotiable Instruments Act upon settlement between the parties and deposit of the compounding fee, set aside the conviction and sentence recorded by the trial court and affirmed on appeal, and disposed of the revision petition and related applications.

Quashing of complaint under Section 482 of the Code of Criminal Procedure - Liability of newly inducted partners under Section 138 of the Negotiable Instruments Act - Section 31(2) of the Indian Partnership Act, 1932 - non liability for acts of the firm done before becoming a partner - Triable issues and scope of interference by the High Court in criminal complaints

Quashing of complaint under Section 482 of the Code of Criminal Procedure - Liability of newly inducted partners under Section 138 of the Negotiable Instruments Act - Section 31(2) of the Indian Partnership Act, 1932 - non liability for acts of the firm done before becoming a partner - Triable issues and scope of interference by the High Court in criminal complaints - Whether the complaint under Section 138 of the Negotiable Instruments Act against the petitioners (partners inducted on 10.02.2011) should be quashed on the ground that Section 31(2) Partnership Act protects them from liability for acts of the firm prior to their induction. - HELD THAT: - The petitioners were inducted as partners on 10.02.2011 but the cheque whose dishonour occasioned the complaint bears date 15.03.2013, i.e. after their induction. The Court declined to delve into the merits of the underlying claim of liability attributable to a pre induction period because such questions are triable matters for the trial court. Since the cause of action in a Section 138 complaint arises from issuance and dishonour of the cheque and the cheque is dated after induction of the petitioners, Section 31(2) of the Partnership Act does not, at this threshold stage, provide a ground to quash the complaint. Interference under Section 482 is inappropriate where the allegation is that the wrongful act (issuance/dishonour of cheque) occurred post induction and the question of liability requires trial. [Paras 10, 11]

Petitioners have not made out a case for quashing the complaint; the petition is dismissed.

Triable issues and scope of interference by the High Court in criminal complaints - Section 31(2) of the Indian Partnership Act, 1932 - non liability for acts of the firm done before becoming a partner - Whether the contention that the cheque was issued to discharge a pre induction liability (and thus petitioners are not liable) can be adjudicated in the present petition or requires trial court determination. - HELD THAT: - The High Court refrained from deciding the factual and legal contention that the cheque was issued to discharge liabilities incurred prior to the petitioners' induction. The Court observed that the question whether the liability underlying issuance of the cheque relates to a pre induction period is a matter for the trial court to decide after evidence and appropriate adjudication. The High Court's limited role under Section 482 does not extend to resolving such triable factual issues at interlocutory stage. [Paras 10]

The question whether the cheque discharged a pre induction liability is left to the trial court for adjudication.

Final Conclusion: The petition under Section 482 CrPC is dismissed; the complaint under Section 138 NI Act is not quashed at this stage because the cheque is dated after the petitioners' induction as partners. The factual question whether the cheque related to pre induction liability is left open for determination by the trial court; the observations made are confined to this petition and shall not influence the trial court.

Dishonour of cheque under Section 138 of the Negotiable Instruments Act - Compensation by applying Section 357 of the Code of Criminal Procedure - Limit on appellate enhancement of sentence under Section 386(b)(iii) Cr.P.C. - Requirement of legally enforceable debt (Explanation to Section 138) - Modulation of sentence in exercise of appellate/revisional jurisdiction

Compensation by applying Section 357 of the Code of Criminal Procedure - Limit on appellate enhancement of sentence under Section 386(b)(iii) Cr.P.C. - Dishonour of cheque under Section 138 of the Negotiable Instruments Act - Whether the Appellate Court, in an appeal preferred by the accused, could award compensation (equivalent to the cheque amount) when the Trial Court had imposed a fine only and the complainant had not appealed seeking compensation. - HELD THAT: - The court analysed the statutory scheme: Section 138 NI Act permits sentence and fine (up to twice the cheque amount); Section 357 Cr.P.C. permits application of fine towards compensation and Sub section (4) expressly empowers an Appellate Court to make an order under Section 357. However, the power of the Appellate Court is circumscribed by Section 386(b)(iii) Cr.P.C., which forbids enhancement of sentence in an appeal preferred by an accused. Where the Trial Court consciously imposed only a fine (and did not order compensation), an Appellate Court entertaining an appeal by the accused cannot, in effect, enhance the sentence by ordering compensation in addition to what the Trial Court awarded, because compensation under Section 357 must come out of the fine which forms part of the sentence. Applying these principles to the facts, the High Court found no perversity in the conviction itself but held that the Appellate Court's order awarding compensation equal to the cheque amount - when it confirmed the conviction and the original fine without alteration - was beyond its power and perverse, and therefore liable to be set aside. [Paras 27, 28, 31, 34, 35]

The Appellate Court's order awarding compensation of the cheque amount in the appeal preferred by the accused is perverse and beyond its power and is set aside.

Dishonour of cheque under Section 138 of the Negotiable Instruments Act - Requirement of legally enforceable debt (Explanation to Section 138) - Modulation of sentence in exercise of appellate/revisional jurisdiction - Whether the conviction under Section 138 was vitiated by defects in the complainant's case, and whether the sentence required modification. - HELD THAT: - The High Court examined the evidence accepted by the Courts below, including the complainant's testimony about advancing the amount and supporting bank evidence, and the Postal Inspector's evidence regarding service of the statutory notice. The lower courts' rejection of the defence that the cheque was issued to a third person and subsequently misused was not found to be perverse. Consequently, the conviction under Section 138 was upheld. Having regard to the elapsed time since the transaction (2007) and the accused's changed financial circumstances, the Court applied the principles permitting modulation of sentence in revision to mitigate punishment and reduced the sentence from one year simple imprisonment to six months simple imprisonment while leaving the fine intact. [Paras 18, 20, 21, 36, 37]

Conviction under Section 138 is upheld; sentence modified from one year S.I. to six months S.I. with the original fine preserved; period already undergone to be set off and the accused directed to surrender to serve the remaining term.

Final Conclusion: The revision is partly allowed: the conviction under Section 138 is maintained but the appellate order awarding compensation equal to the cheque amount is set aside as beyond the Appellate Court's power; the custodial sentence is reduced from one year to six months (fine unchanged), with credit for time already served and directions for surrender to undergo the remaining modified sentence.

Vicarious liability of company directors under Section 141 of the Negotiable Instruments Act - criminal liability for dishonour of cheque under Section 138 of the Negotiable Instruments Act - cheques issued as security versus cheques given for discharge of legally enforceable debt - power of High Court under Section 482 Cr.P.C. to quash criminal complaints

Criminal liability for dishonour of cheque under Section 138 of the Negotiable Instruments Act - cheques issued as security versus cheques given for discharge of legally enforceable debt - vicarious liability of company directors under Section 141 of the Negotiable Instruments Act - Whether the complaint under Section 138 NI Act against the Company and its directors is liable to be quashed on the ground that the cheques were issued only as security and that certain directors are non executive and not liable. - HELD THAT: - The complaint contains specific averments that the directors participated in negotiations, monitored the projects and insisted on timely completion, and that four dated cheques were issued and handed over to the complainant prior to appointment of an auditor. The petitioners' defence that the cheques were issued only as security and that some directors were non executive is a disputed factual plea which cannot be resolved by invoking Section 482 Cr.P.C. at the threshold. Applying the principles in S.M.S. Pharmaceuticals and subsequent decisions, vicarious liability under Section 141 requires appropriate averments as to who was in charge of and responsible for the company's business; however, where the complaint makes specific allegations of participation and overt acts by directors, the High Court should not exercise the extraordinary power to quash a complaint merely because the accused assert defences or challenge their characterisation as executive or signatory. The cheques carried specific dates and amounts and were presented before the auditor's report on which the petitioners now rely; these facts establish triable issues as to whether the instruments were given to discharge an enforceable debt or were only security to be decided at trial. Accordingly, summary quashing is inappropriate and a mini trial is impermissible under Section 482. [Paras 14, 15, 16, 17, 18]

The petition to quash the complaint is refused; the accused must face trial on the allegations in the complaint.

Final Conclusion: The High Court dismissed the petition under Section 482 Cr.P.C., holding that the complaint alleging participation of the directors and issuance of cheques for an enforceable debt raises triable issues and cannot be summarily quashed.

Offence under Section 138 of the Negotiable Instruments Act - Presumption of cheque validity under Sections 118 and 139 of the Negotiable Instruments Act - Dishonour of cheque for insufficiency of funds - Failure to rebut statutory presumption - Concurrent findings of fact and appreciation of evidence

Offence under Section 138 of the Negotiable Instruments Act - Dishonour of cheque for insufficiency of funds - Concurrent findings of fact and appreciation of evidence - Whether the conviction and sentence under Section 138 of the Negotiable Instruments Act, recorded by the trial court and confirmed by the appellate court, should be interfered with in criminal revision. - HELD THAT: - The High Court examined the entire record, including oral and documentary evidence accepted by the courts below, and found that the complainant proved issuance of the cheque in discharge of a legally enforceable liability, its presentation and return marked 'insufficient funds', and service of the statutory notice. Both trial and appellate courts considered the evidence and applied the law; their reasoning is held to be neither perverse nor illegal. In view of concurrent findings of fact and proper appreciation of the materials by the two lower courts, the High Court declined to disturb the conviction and sentence affirmed below. [Paras 11, 12]

Criminal revision dismissed; concurrent conviction and sentence under Section 138 upheld.

Presumption of cheque validity under Sections 118 and 139 of the Negotiable Instruments Act - Failure to rebut statutory presumption - Whether the statutory presumptions under Sections 118 and 139 were rightly applied and whether the accused successfully rebutted those presumptions. - HELD THAT: - The trial court, as affirmed by the appellate court, held that the statutory presumptions under Sections 118 and 139 operated in favour of the complainant once the cheque, its presentation and return were proved. The courts found cogent evidence that the cheque was issued for the debt owing for batteries supplied and that the accused did not produce sufficient evidence to rebut the statutory presumption of liability. The High Court observed that the accused failed to rebut these presumptions and that the trial court had meticulously dealt with the documents and legal presumptions, justifying the finding of guilt. [Paras 8, 9]

Statutory presumptions under Sections 118 and 139 correctly applied; accused failed to rebut them.

Final Conclusion: The High Court dismissed the criminal revision, upholding the conviction and sentence under Section 138 of the Negotiable Instruments Act and affirming that the statutory presumptions were rightly applied and not rebutted by the accused.

Material alteration - Effect of material alteration under Section 87 of the Negotiable Instruments Act, 1881 - Presumption as to negotiable instrument and date under Section 118 of the Negotiable Instruments Act, 1881 - Burden on holder to prove alteration not improper

Material alteration - Effect of material alteration under Section 87 of the Negotiable Instruments Act, 1881 - Presumption as to negotiable instrument and date under Section 118 of the Negotiable Instruments Act, 1881 - Burden on holder to prove alteration not improper - Whether the promissory notes (Exs. A1 to A4) suffered material alteration in the year of execution (alteration of '1' to '7'), and if so whether the plaintiff can enforce them against the defendant. - HELD THAT: - The defence accepted execution of the promissory notes but alleged that the year '2001' was altered to '2007'. The Forensic Science Laboratory (Ex. C1) opined that numerical '1' was altered to '7' with a different tint of ink, and the expert (C.W.1) corroborated the report in evidence. While Section 118 creates presumptions as to negotiable instruments and their dates where twin conditions are satisfied, an established material alteration engages Section 87 which renders the instrument void as against a party who did not consent to the alteration. Material alteration includes change of date. The law places upon the holder the obligation to show that an apparent alteration was not improperly made or falls within exceptions (consent of the other party or to carry out common intention). The trial Court found, on the expert opinion and evidence, that the numerical '1' was altered to '7' and that the exceptions under Section 87 did not apply. Therefore Section 87 operates to prevent enforcement of the altered promissory notes despite the presumptions under Section 118. [Paras 15, 16, 19, 20, 21]

There was a material alteration of the year in Exs. A1 to A4 (numerical '1' altered to '7'); consequently Section 87 renders the instruments unenforceable as against the defendant and the plaintiff's suit is dismissed.

Final Conclusion: On the evidence, including the Forensic Science report and expert testimony, the Court upheld the finding of material alteration of the promissory notes' year and dismissed the plaintiff's suit; the altered instruments cannot be enforced against the defendant under Section 87 of the Negotiable Instruments Act, 1881.

Compounding of offence - amicable settlement between parties - deposit with State Legal Services Authority as condition for compounding - extension of time to furnish bail bonds - interim protection

Compounding of offence - amicable settlement between parties - deposit with State Legal Services Authority as condition for compounding - Case to be listed after four weeks and petitioner permitted to file an application for compounding of the offence subject to deposit of 5% of the cheque amount with the State Legal Services Authority within the same period. - HELD THAT: - The petitioner and the respondent have informed the Court that the dispute has been amicably settled and dues have been paid by the petitioner. In view of the settlement and the respondents' ratification, the Court allowed the matter to be kept for further consideration on an application for compounding. The Court imposed a specific condition precedent for filing the compounding application - the petitioner must deposit 5% of the cheque amount with the State Legal Services Authority within the four week period. The order directs listing of the matter after four weeks to enable the petitioner to comply and for the Court to consider the compounding application thereafter.

Matter listed after four weeks; petitioner may file application for compounding subject to depositing 5% of the cheque amount with the State Legal Services Authority within that period.

Extension of time to furnish bail bonds - Extension of time granted for furnishing bail bonds in terms of earlier order dated 21.01.2022; bail bonds to be furnished within two weeks. - HELD THAT: - At the hearing, learned counsel for the petitioner sought additional time to fulfil the condition of furnishing bail bonds as ordered earlier. The Court acceded to this request and extended the timeline, directing that the bail bonds required by the order dated 21.01.2022 be furnished within two weeks from the date of the order. The extension is granted to enable compliance with the earlier direction while the matter remains listed.

Time extended; bail bonds to be furnished within two weeks in terms of the order dated 21.01.2022.

Interim protection - Interim protection granted earlier shall continue. - HELD THAT: - Having permitted adjournment for filing the compounding application and having extended time for furnishing bail bonds, the Court expressly ordered that the interim protection previously granted to the petitioner remains in force. No alteration or vacating of the protection was made pending compliance with the conditions imposed.

Interim protection granted to the petitioner shall continue.

Final Conclusion: Proceedings adjourned for four weeks to permit the petitioner to move for compounding on deposit of 5% of the cheque amount with the State Legal Services Authority; bail bonds' time extended for two weeks; interim protection to continue; matter listed on 06.07.2022.